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Block Inc. fell short of revenue and earnings expectations for its latest quarter, but shares of the payment-technology company formerly known as Square were headed higher in Thursday’s aftermarket trading.
The company reported a first-quarter net loss of $204 million, or 38 cents a share, whereas it posted net income of $39.0 million, or 8 cents a share, in the year-earlier quarter.
On an adjusted basis, Block
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earned 18 cents a share, down from 41 cents a share a year earlier, while analysts tracked by FactSet were expecting 20 cents a share.
Block’s revenue fell to $3.96 billion from $5.06 billion, reflecting a drop-off in bitcoin
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revenue as other categories saw sales grow. Analysts tracked by FactSet were modeling $4.14 billion in total revenue.
Shares were up more than 5% in after-hours trading Thursday after declining more than 10% in the regular session.
The company generated overall gross profit of $1.29 billion, up from $964 million a year before, while the FactSet consensus was for $1.30 billion. Analysts pay close attention to Block’s gross profit as the company’s revenue line is often swayed by initiatives like bitcoin trading that bring in substantial revenue without much profit. (Bitcoin revenue was $1.73 billion in the latest quarter, while bitcoin costs totaled $1.69 billion.)
Block noted that gross profit for its Cash App mobile wallet stood at $624 million in the first quarter, up 26% from a year prior. Its Square merchant business saw gross profit rise 41% to $661 million.
In response to a question about the impact of inflation on Block’s business, Chief Financial Officer Amrita Ahuja told reporters following the results that the company had seen “strong” recent performance, including through April, with “growth across both discretionary and nondiscretionary areas of spend for each of the Square and Cash App platforms.”
“What we’ve seen in times of rapid macro changes,” such as earlier in the pandemic, is “that our platform is resilient,” she continued.
Block’s overall gross payment volume jumped to $43.5 billion from $33.1 billion a year earlier, whereas analysts had been modeling $45.3 billion.
Block generated $1.23 billion in transaction-based revenue in the latest quarter, up from $959.7 million a year before. Subscription and services revenue increased to $959.6 million from $557.7 million, while hardware revenue rose to $37.3 million from $28.8 million.
The company launched free tax-filing services in January, and Ahuja shared that more than 1.5 million people opted to file their taxes that way, helping to drive inflows to the Cash App as filers could get their refunds direct-deposited to the platform.
“We found these filers were more engaged with the broader ecosystem,” she said.
Square changed its corporate name to Block late last year in a move that it said would reflect the broader company’s growing focus on areas beyond payment-processing for merchants. The seller business retained the Square name.
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