Jack Dorsey’s Block experienced an impressive $2.16 billion in bitcoin (BTC) sales during Q1, with the company’s flagship product, Cash App, reporting a 25% increase in bitcoin revenue year over year. While the surge in sales can be chalked up to the increment in bitcoin bought by customers, it was partly offset by a decrease in bitcoin’s market price compared to the same period in 2022.
The fintech giant registered a 26% year-on-year growth in sales during the first quarter, exceeding analysts’ expectations with earnings per share of 40 cents, a 14% increase. Block’s Q1 2023 shareholder letter specifies that bitcoin revenue, defined as the total sales of the digital asset to customers, increased 18% yearly from Q4 and 25% year-on-year from Q1 2022. In addition, Q1 2023 revenues for Cash App reached an impressive $931 million, a 49% increase compared to the previous year.
However, Cash App’s profits were meager compared to Block’s $1.71 billion in gross profit, and the company’s widely-used business payment service Square saw a slight decline in profit from the previous quarter, dropping 3.8% in Q1 2023. Despite this, Block’s earnings reports were well-received by the stock market, with the fintech’s share price spiking 5% in after-hours trading before settling at a 2.5% gain.
This increase in share price offered some respite after a 25% decline fueled by a scathing report from prominent short-sellers Hindenburg Research. During an earnings conference call, Block CEO Jack Dorsey touched on adaptability in the face of significant shifts occurring in the global financial system, highlighting artificial intelligence and “open protocols.” He cited de-dollarization and bank failures in the United States as primary factors.
It’s worth noting that Hindenburg accused Block of “systematically taking advantage of the demographics it claims to aid,” arguing that Cash App’s success relies solely on Block’s “willingness to facilitate fraud against consumers and the government.” In response to the allegations, Block claimed that Hindenburg’s attacks were designed to allow short-sellers to profit from a declining stock price, stating that the report was conceived to mislead and confuse investors.
As blockchain and crypto markets continue to evolve, the performance of fintech companies like Block will undoubtedly face scrutiny. While their financial results showcase short-term successes, it remains to be seen whether these companies can maintain growth and provide long-term stability to both investors and the rapidly expanding cryptocurrency ecosystem.
Source: crypto.news
