Block, the fintech business founded by Twitter founder Jack Dorsey, recorded a stunning $2.16 billion in Bitcoin $29,265 revenue in Q1 on its bellwether product Cash App.
Block (NYSE:SQ) said in a shareholder letter presenting its Q1 2023 profits that its Bitcoin revenue — defined as total sales of the cryptocurrency to consumers — was up 18% from $1.83 billion in Q4 and 25% from Q1 2022.
Cash App’s overall earnings exceeded $931 million in the first quarter of 2023, representing a 49% year-over-year gain. Notably, Cash App’s profit paled in comparison to the company’s gross profit of $1.71 billion. Block also owns Square, a prominent commercial payment service that reported a minor (3.8%) drop in income in the fourth quarter of 2022.
The multibillion-dollar Bitcoin revenues, according to the shareholder letter, were driven by “an increase in the quantity of Bitcoin sold to customers,” and were “partially offset” by a fall in the market price of Bitcoin, compared to the same period in 2022.
The fintech startup also posted earnings per share of 40 cents, 14% higher than analyst projections of 35 cents per share, with first-quarter sales up 26% year on year. During the earnings conference call, Block CEO Jack Dorsey mentioned artificial intelligence and “open protocols” as technologies that would help the company respond proactively to “significant shifts” in the global financial system. He blamed continuing bank failures in the United States and de-dollarization.
The stock market reacted positively to Block’s earnings reports. The share price of the fintech startup temporarily rose 5% to $63.50 in after-hours trading before settling down to a 2.5% gain at the time of publishing.
This rise was the first evidence of relief from Block’s share price, which had dropped by 25% after the publication of a damning study by notorious short sellers Hindenburg Research.
On March 23, Hindenburg blasted Block for “systematically taking advantage of the demographics it claims to be helping,” claiming that Block’s success with Cash App was based only on his “willingness to facilitate fraud against consumers and the government.”
In response to Hindenburg’s charges, Block stated, “Hindenburg is known for these types of attacks, which are designed solely to allow short sellers to profit from a declining stock price.” “We reviewed the entire report in light of our own data and believe it is intended to deceive and confuse investors.”
