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Business

Block misses profit estimates as bitcoin boost fades

(Reuters) -Block Inc, the fintech firm led by Twitter founder Jack Dorsey, missed market estimates for first-quarter profit on Thursday as demand for bitcoin softened due to a decline in cryptocurrency prices.

The company’s bitcoin revenue more than halved in the quarter to $1.73 billion, hit by a drop in interest from retail traders after a frenetic price rally last year that was fueled by rising mainstream acceptance of digital currencies.

Prices of bitcoin – the largest cryptocurrency – have dropped 21% so far this year as investors flee riskier assets due to the Russia-Ukraine conflict and a more hawkish outlook for Federal Reserve policy tightening.

Overall, Block’s revenue fell 22% to $3.96 billion in the three months ended March 31. The company earned an adjusted profit of 18 cents per share, falling short of analysts’ estimates of 21 cents, according to IBES data from Refinitiv.

But in a bright spot, the company’s Cash App – which lets individuals send payments including in bitcoin – posted a 26% jump in gross profit.

The strong performance was underpinned by higher use of its Cash Card as consumers spent heavily on travel and dining out after two years of the pandemic despite pressure from inflation.

Shares of the company were 10% higher in extended trading.

Peers American Express Co and Mastercard Inc have posted strong results this quarter on the back of strong consumer spending.

(Reporting by Manya Saini and Niket Nishant in Bengaluru; Editing by Aditya Soni)

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