Block beats profit estimates as Square, Cash App record growth

[WASHINGTON] Payments platform Block beat profit estimates on Thursday (Feb 24), as busier trading in bitcoin softened the blow from declining growth in digital commerce.

Block, which changed its name from Square in December, posted net revenue of US$4.1 billion in the fourth quarter, up from US$3.2 billion last year, as several of the firm's business lines continued to grow. The company reported a profit of US$1.2 billion, up from the US$804 million a year earlier.

Square, the company's business for sellers, generated a profit of US$657 million, while Cash App reported a profit of US$518 million. Square's profit from markets outside the United States grew 60 per cent year over year in the fourth quarter, faster than the business overall.

Block reported earnings per share of US$0.27, beating analysts' average estimates of US$0.22. Despite the report, shares of Block fell as much as 4.5 per cent in after-hours trade to US$91.44 following results.

Block's Cash App generated US$2 billion of bitcoin revenue during the fourth quarter, up 12 per cent year over year despite the cryptocurrency's sharp swings in value through the end of the year.

Because bitcoin was more volatile in the fourth quarter compared to the third quarter, Block saw an increase in trading volume as investors traded in and out of the asset, said chief financial officer Amrita Ahujaon a call with reporters.

"We continue to see that a primary driver of customer demand and overall bitcoin volume is price volatility," she said.

In a letter to shareholders, Block said it intends to prioritise investments in Cash App and Square, which it said should "drive long-term profitable growth". The company expects operating expenses to increase by US$180 million in the first quarter over the fourth quarter. REUTERS