Block, the fintech firm led by the former Twitter CEO Jack Dorsey, saw its share price jump by more than 20% to over $52 in after-hours trading on Thursday, after reporting better-than-expected Q3 earnings.

The company, formerly known as Square, posted a net revenue of $5.62 billion, up 24% year-over-year (YoY), and an adjusted EBITDAearnings before interest, taxes, depreciation and amortizationof $477 million, up 32% over the same period of time.

The strong performance was largely driven by a 37.5% yearly growth in Bitcoin revenue through Block’s key product, Cash App, which accounted for more than half of Block’s total net revenue in Q3, reaching $2.42 billion, up from $1.76 billion the previous year.

Cash App, which last month celebrated its 10th anniversary since its launch, is a mobile payment service that allows users to send and receive fiat money, buy and sell Bitcoin, and invest in stocks.

“The year-over-year increase in Bitcoin revenue and gross profit was driven by an increase in both the average market price of Bitcoin and the quantity of Bitcoin sold to customers,” Block said in its Q3 earning report.

Overall, Cash App generated $3.58 billion of revenue and $984 million of gross profit, up 34% and 27% year over year, respectively. Excluding Bitcoin revenue, Cash App revenue was $1.16 billion, up 26% year over year.

The company’s other payment platform, Square, reported revenues of $1.98 billion, up 8% over the year. Square is a point-of-sale system that enables merchants to accept card payments and manage their businesses.

Block’s Bitcoin gross profit saw a 22% increase, reaching $45 million compared to $36 million the previous year, per the report

No impairment loss on Block’s Bitcoin holdings

Despite the earnings beat, accounting rules created a discrepancy of $114 million between the market and book values of Block’s Bitcoin holdings, valued at $216 million.

However, no impairment loss was recorded in Q3 2023, as the company follows the lower of cost or market method, which means that it only recognizes losses when the market value falls below the cost basis, but not gains when the market value rises above the cost basis.

Block revised its full-year guidance for 2023, raising its adjusted EBITDA from $1.5 billion to between $1.66 and $1.68 billion and its operating income from $25 million to between $205 and $225 million.

The company also provided a 2024 adjusted operating income guidance of $875 million and projected a gross profit for 2023 between $7.44 and $7.46 billion.

In his letter to shareholders, Dorsey said that “we’ve been quiet lately because we’ve been focused,” adding that Block aims to “build simple, fair, and accessible financial services for everyone” and to “empower people with economic freedom.”

According to Dorsey, there have been “a number of things” holding the company back, and when it comes to future growth, the firm is looking to focus more on artificial intelligence.

“We believe artificial intelligence can be a powerful assistant to help sellers further grow their businesses as it can enable greater creativity, efficiency, and productivity,” said the report.

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