Block’s Share Price Soars After Better-Than-Expected Q3 Earnings
The fintech firm Block, led by former Twitter CEO Jack Dorsey, experienced a surge in its share price of over 20% in after-hours trading on Thursday. This was in response to the company’s Q3 earnings report, which exceeded expectations.
Strong Financial Performance Driven by Bitcoin Revenue
Block, formerly known as Square, reported a net revenue of $5.62 billion, a 24% increase compared to the previous year. The company’s adjusted EBITDA reached $477 million, up 32% over the same period.
The standout driver of this strong performance was a 37.5% yearly growth in Bitcoin revenue through Block’s mobile payment service, Cash App. In Q3, Cash App generated $2.42 billion in revenue, accounting for more than half of Block’s total net revenue.
Cash App Continues to Thrive
Cash App celebrated its 10th anniversary last month and has become a popular platform for sending and receiving fiat money, buying and selling Bitcoin, and investing in stocks. The increase in Bitcoin revenue and gross profit was attributed to both the rising market price of Bitcoin and an increase in the quantity sold to customers.
Square Reports Positive Revenues
Block’s other payment platform, Square, reported revenues of $1.98 billion, an 8% increase over the previous year. Square is a point-of-sale system that enables merchants to accept card payments and manage their businesses.
No Impairment Loss on Bitcoin Holdings
Despite a discrepancy between the market and book values of Block’s Bitcoin holdings, no impairment loss was recorded in Q3 2023. The company follows the lower of cost or market method, recognizing losses only when the market value falls below the cost basis.
Revised Guidance and Future Growth Plans
Block revised its full-year guidance for 2023, increasing its adjusted EBITDA and operating income projections. The company also provided a 2024 adjusted operating income guidance and projected a gross profit for 2023.
Block aims to build simple, fair, and accessible financial services for everyone. It plans to focus on artificial intelligence as a means to further drive growth and empower sellers with greater creativity, efficiency, and productivity.
Hot Take: Block’s Strong Q3 Performance Boosts Share Price
Block, led by former Twitter CEO Jack Dorsey, experienced a significant surge in its share price after reporting better-than-expected Q3 earnings. The strong financial performance was largely driven by the growth in Bitcoin revenue through Block’s Cash App. Cash App continues to thrive as a mobile payment service that allows users to send and receive money, buy and sell Bitcoin, and invest in stocks.
Despite a discrepancy in the values of Block’s Bitcoin holdings, no impairment loss was recorded in Q3. Block has revised its guidance for 2023 and is focusing on artificial intelligence to drive future growth.
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