Shares of Block rose 10% in extended trading although the company, formerly known as Square, reported lower-than-expected adjusted profit as bitcoin demand weakened due to a decline cryptocurrency prices.
The company, which offers payment services for merchants and an app that allows people to trade cryptocurrency, closed the $ 29 billion acquisition of Australian pioneer Afterpay Ltd during the quarter.
The deal created a transaction giant that competes with banks and technology companies in the fastest growing sector of the financial sector.
Afterpay contributed $ 92 million to first quarter gross profit, which was recorded in the Square and Cash app units. This helped Cash App, a service that allows people to send payments in bitcoin as well, to record a 26% increase in gross profit.
“We expect Cash App and Square to grow gross profit sequentially every quarter throughout the year, even excluding Afterpay, assuming the macroeconomic environment remains stable,” said Amrita Ahuja, Chief Financial Officer.
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“In April, we have not yet seen a deterioration in overall consumer spending,” he said, adding that Afterpay’s gross merchandise value – the value of all goods sold – is expected to rise 15% in April.
Block reported operating income, known as Adjusted EBITDA, of $ 195 million, ahead of Wall Street’s average expectation of $ 136 million, according to Refinitiv’s IBES data.
In the three months ended March 31, revenue fell 22% to $ 3.96 billion. The company achieved an adjusted profit of 18 cents per share, below analysts’ estimates of 21 cents.
The company’s bitcoin revenue halved to $ 1.73 billion, impacted by a decline in interest from retail traders as cryptocurrency prices retreated after a sharp rise last year fueled by its escalating mainstream acceptance.