Salem Radio Network News Wednesday, May 18, 2022

Business

Dorsey-led Block’s profit disappoints as bitcoin boost fades

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

The company’s bitcoin revenue halved in the quarter to $1.73 billion, hit by a drop in interest from retail traders as prices of the cryptocurrency retreated after a sharp rally last year that was fueled by its rising acceptance in the mainstream.

Bitcoin – the largest cryptocurrency – has dropped 21% so far this year because of the risk-off mood sparked by the Russia-Ukraine conflict and a more hawkish outlook for Federal Reserve policy tightening.

During the quarter, Block closed its $29 billion purchase of Australian buy now, pay later pioneer Afterpay Ltd, creating a transactions giant that competes with banks and tech firms in the financial sector’s fastest-growing business.

Afterpay contributed $92 million of gross profit in the period, which was recorded under the Square and Cash app units. That helped Cash App – a service that lets individuals send payments including in bitcoin – post a 26% jump in gross profit.

“We’ve been focused on bringing the demand generation capabilities of Afterpay to Cash App and are in the early days of building out a broader commerce platform,” Chief Financial Officer Amrita Ahuja said.

She added that Afterpay’s gross merchandise value – the value of all goods sold – was expected to rise 15% in April.

Shares of Block, formerly known as Square, were 10% higher in extended trading.

In the three months ended March 31, Block’s revenue fell 22% to $3.96 billion. 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.

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

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