Shares of payment technology firm Block Inc. experienced a decline in after-hours trading, despite the company’s second-quarter results surpassing earnings expectations. Notably, Block reported a remarkable 34% year-on-year increase in Bitcoin (BTC) revenue. The company’s Q2 earnings call revealed that it recorded $2.4 billion in Bitcoin sales on its Cash App platform, with a gross profit of $44 million from these sales, reflecting a 7% increase from the same period last year. Interestingly, nearly half of the firm’s revenue for the quarter, which totaled $5.53 billion, came solely from Bitcoin sales.
Block attributed the rise in Bitcoin revenue to customers’ persistence in purchasing the cryptocurrency despite its decline in price over the past year. The company stated, “The year-over-year increase in bitcoin revenue and gross profit was driven by an increase in the quantity of bitcoin sold to customers, partially offset by a decrease in the average market price of bitcoin compared to the prior-year period.”
However, the market reacted unfavorably, resulting in a 5.6% decrease in Block’s share price during after-hours trading. This was evident in the data provided by Google Finance. Despite exceeding earnings expectations, Block’s shares experienced a decline in value.
On another note, Block highlighted its own Bitcoin investments, disclosing that it purchased $50 million worth of Bitcoin in Q4 2020, followed by an additional $170 million in Q1 2021. The earnings report stated, “As of June 30, 2023, the fair value of our investment in Bitcoin was $245 million based on observable market prices, which was $142 million greater than the carrying value of the investment after cumulative impairment charges.”
Ultimately, Block Inc. reported a gross profit of $1.87 billion, reflecting a significant 27% increase compared to the previous year. Moreover, its Cash App continued to demonstrate strength, generating $968 million in gross profits, indicating a notable 37% increase year-on-year.
Despite these positive financial figures, the decline in Block’s share price suggests that investors were not entirely satisfied. It is worth noting that the market’s response to a company’s earnings is influenced by various factors, including market sentiment, investor expectations, and macroeconomic conditions.
In conclusion, Block Inc.’s second-quarter results showcased a substantial increase in Bitcoin revenue, which contributed significantly to its total revenue. However, the reaction from the market was less enthusiastic, as the company’s share price experienced a decline in after-hours trading. Block’s strong performance in other areas, such as its Cash App, demonstrates its overall financial resilience.