Block Inc., an American digital payments company, saw its second quarter (Q2) revenue drop by 6% year over year to $4.4 billion. The Associated Press reported that the company suffered a loss in the quarter of $208 million, despite still exceeding Wall Street’s expectations at $4.35 billion.
Block shares fell 5.35% to $84.90 after the Q2 results. After-hours trading continued on Thursday.
Block closed 2021 with a 62% increase in revenue YoY to $4.42 Billion, thanks to bitcoin purchases that contributed $.96 Billion.
BTC Price Drives Down Revenue
The company’s latest quarterly report stated that the main reason Jack Dorsey-led firm experienced a drop in Q2 revenue was due to the decline in bitcoin prices and consumer demand.
Block stated in its Shareholder Letter that Cash App generated $1.79 Billion of bitcoin revenue and $41 Million of bitcoin gross profit during quarter two of 2022. This is a decrease of 34% and 24% respectively year over year.
According to the company, BTC revenue and BTC gross profit grew by 143% and 168% respectively over a 3-year basis. Block anticipates that bitcoin revenue and gross profits will fluctuate in the upcoming quarters, depending on changes in consumer demand or BTC price.
It stated that the year-over-year decrease in bitcoin revenue was primarily due to a decline of consumer demand and the price bitcoin. This was partly related to greater uncertainty around crypto assets which more than offset volatility in the bitcoin price during the quarter.
Revenues up, excluding BTC
Block’s Q2 revenue increased 34% to $2.62 Billion, excluding bitcoin. Its earnings per share were 18 cents, beating Wall Street’s expectation of 17 cents. Block’s Q2 Gross Profit was 29% higher year-over-year at $1.47 Billion. Square and Cash App both saw 29% increases in gross profits of $755 million and $705 millions, respectively.
It stated that “Bitcoin revenue was relatively consistent with the first quarter 2022,” and that gross profit was also fairly consistent.
Food and beverage saw the highest gross profit of all verticals.
Block Bullish on Bitcoin
The Jack Dorsey-led Block is always bullish about bitcoin. The Block Head (TBD), one Block’s bitcoin business units announced plans in June to tap the network. It called Web5 an additional decentralized web platform. Developers will be able to create a better user experience by using this platform. They will still own their data and digital identities.
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