In the third quarter, Jack Dorsey’s company Block generated $5.62 billion in revenue, with a significant portion of that coming from its Bitcoin-related operations.
Block, the financial technology company led by former Twitter CEO Jack Dorsey, experienced a significant increase in its stock price, jumping over 20% to surpass $52 in after-hours trading on Thursday. This surge came after the company reported better-than-expected earnings for the third quarter.
Block, previously known as Square, disclosed a net revenue of $5.62 billion, marking a 24% increase compared to the previous year. The adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) reached $477 million, a 32% increase over the same period.
The outstanding performance was primarily due to a 37.5% annual growth in Bitcoin-related revenue, which was generated through Block’s main product, Cash App. In Q3, Cash App contributed over half of Block’s total revenue, amounting to $2.42 billion, up from $1.76 billion in the previous year.
Cash App, which celebrated its 10th anniversary last month, is a mobile payment service enabling users to send and receive traditional currency, purchase and sell Bitcoin, and invest in stocks.
Block’s Strong Q3 Performance Driven by Bitcoin Revenue
In its Q3 earnings report, Block, formerly Square, attributed its robust year-over-year growth in Bitcoin revenue and gross profit to higher Bitcoin prices and increased sales to customers. Cash App, Block’s primary product, generated $3.58 billion in revenue and $984 million in gross profit, marking a 34% and 27% year-over-year increase, respectively. Excluding Bitcoin revenue, Cash App’s revenue was $1.16 billion, up by 26% year over year.
Square, the company’s other payment platform, reported revenues of $1.98 billion, an 8% year-over-year increase. Square provides a point-of-sale system that allows merchants to accept card payments and manage their businesses.
Bitcoin Gross Profit and Impairment
Block’s Bitcoin gross profit increased by 22%, reaching $45 million in Q3 compared to $36 million in the previous year. Despite a $114 million gap between the market and book values of Block’s Bitcoin holdings, no impairment loss was recorded. This is due to the company’s accounting method, which recognizes losses only when the market value falls below the cost basis, not gains when the market value rises above the cost basis.
Revised Guidance for 2023 and 2024
Block updated its full-year guidance for 2023, raising its adjusted EBITDA from $1.5 billion to a range between $1.66 and $1.68 billion, and its operating income from $25 million to a range between $205 and $225 million. The company also provided a projected adjusted operating income of $875 million for 2024 and anticipated a gross profit for 2023 in the range of $7.44 to $7.46 billion.
Block’s Vision for the Future
In a letter to shareholders, Jack Dorsey expressed Block’s commitment to developing straightforward, equitable, and accessible financial services for all, with the goal of empowering individuals with economic freedom. He acknowledged that the company has been relatively quiet recently because they’ve been concentrating on their mission.
Dorsey highlighted that several factors have impeded the company’s progress, and as they plan for future growth, they are placing a greater emphasis on artificial intelligence. The company believes that artificial intelligence can serve as a valuable tool to help businesses expand by enhancing creativity, efficiency, and productivity.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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