Cash App generated more than $2 billion in revenue from Bitcoin transactions
Jack Dorsey, the creator of Twitter, owns the fintech company Block, which in Q1 reported astonishing $2.16 billion in Bitcoin income from its key product Cash App.
In a letter addressed to shareholders disclosing the Q1 2023 earnings, financial services company Block (NYSE:SQ) has reported that their Bitcoin revenue, which includes cryptocurrency sales to customers, rose by 18% from the previous quarter to reach $1.83 billion, and by 25% when compared to Q1 2022.
During the first quarter of 2023, Cash App, a subsidiary of Block (NYSE:SQ), made a remarkable 49% year-over-year profit surge, with a total profit of more than $931 million. However, it was overshadowed by Block’s gross profit of $1.71 billion. It’s important to note that Block also owns Square, a popular business payment service that saw a slight decrease (3.8%) in profits from Q4 2022.
The shareholder letter claims that Block’s substantial Bitcoin revenues were primarily fueled by an escalation in the quantity of Bitcoin vending to customers. Nonetheless, this remarkable growth was partially negated by the decreased market price of Bitcoin as compared to the same period in 2022.
In addition, the financial technology company exceeded analyst predictions by 14%, reporting an earnings per share of 40 cents, while its revenue for the first quarter of the year grew by 26% compared to the same period last year.
Block CEO Jack Dorsey mentioned open protocols and artificial intelligence in his remarks to investors during the results conference call as technology that would help the business respond proactively to the big changes in the world financial system. He identified de-dollarization and ongoing bank failures in the US as the main offenders.
Block’s latest earnings reports were positively received by the equities market. Its share price experienced a brief surge of 5% to $63.50 during after-hours trading, but ultimately settled for a 2.5% increase at the time the article was published.
Block’s share price had been experiencing a continuous decline until it saw a rise after the release of its earnings report. The decrease in the share price had started after the publication of a critical report authored by well-known short sellers Hindenburg Research, which had caused it to drop by 25%.
Hindenburg Research published a report on March 23 accusing Block of exploiting the very demographics it purports to support. The report also claimed that Cash App’s success was only possible due to its alleged facilitation of fraud against consumers and the government.
Block responded to Hindenburg’s allegations by stating that the company is aware of the firm’s history of attacks designed to profit from a decline in stock prices. Block also reviewed the report and concluded that it is designed to mislead and confuse investors with false information.