Block, the fintech company founded by Jack Dorsey, reported a substantial revenue of nearly $2 billion from Bitcoin during the third quarter, representing close to one-third of its total revenue of $6.11 billion. In a recent filing with the Securities and Exchange Commission, the company disclosed a net income of $461.5 million for the quarter, reflecting an 18% year-over-year increase in gross profit.
In a letter addressed to shareholders, Block highlighted the performance of its Cash App and Square platforms, noting a notable 24% growth in Cash App and a 9% increase in Square. The firm’s shares closed at $70.94, marking a decline of 3.7%, and further dipped to $64.10 in after-hours trading.
Despite analysts’ expectations for a revenue of $6.34 billion and an earnings-per-share figure of $0.63, Block’s reported figures fell just short, achieving $6.11 billion in revenue and an adjusted earnings per share of $0.54. The gross profit for the quarter reached $2.66 billion, which marked an 18% increase compared to the previous year, while net income saw a significant rise of 64%. The company projects fourth-quarter gross profit to be around $2.75 billion, indicating a potential 19% growth annually.
Adjusted operating income stood at $409 million, which did not meet consensus estimates of $473 million. EBITDA increased by 3% to $833 million but also fell short of projections that anticipated $840 million. Bitcoin revenue has seen a slight decline, totaling $1.97 billion compared to $2.4 billion during the same time last year. However, it continues to be the company’s second-largest revenue source, following subscriptions and services. The costs associated with Bitcoin dropped from $2.36 billion to $1.89 billion year-over-year.
As of September 30, Block’s Bitcoin holdings were reported at 8,780 BTC, an increase from 8,485 BTC at the start of the year. Valued at over $1 billion, these holdings experienced a negative remeasurement of $59 million for the quarter and $178 million year-to-date.
Block has been proactive in enhancing its Bitcoin ecosystem; in October, it introduced new payment tools and a merchant wallet, allowing sellers to accept Bitcoin directly. Additionally, the company recently settled allegations with the New York Department of Financial Services for $40 million regarding compliance concerns related to its Bitcoin operations.
Dorsey’s vision for Block has evolved from a simple payment processor to a comprehensive financial platform with significant involvement in digital assets. The company’s recent inclusion in the S&P 500 marks a significant milestone as one of the most prominent Bitcoin-integrated entities in the United States.
Despite the decline in share prices following the earnings report, analysts remain optimistic about Block’s long-term strategy regarding Bitcoin investment, especially as institutional adoption of cryptocurrency continues to grow. Dorsey’s push for practical Bitcoin usage resonates in Washington, with Senator Cynthia Lummis crafting legislation to exempt small crypto transactions from capital gains taxes, inspired by Dorsey’s advocacy for using Bitcoin as a medium of exchange rather than merely a store of value.
