Block Inc Shares Up 8% Following Q1 Earnings Beat

TLDR

• Block Inc shares rose nearly 8% in after-hours trading after the company beat Q1 earnings estimates.
• The company reported earnings of $0.85 per share, exceeding the $0.68 consensus forecast.
• Block Inc posted a net loss of $309 million, marking its first quarterly loss since 2023.
• A 23.8% drop in Bitcoin prices led to a $172.8 million remeasurement loss on its holdings.
• Bitcoin revenue fell to $1.8 billion from $2.33 billion a year earlier.

Block Inc shares jumped nearly 8% in after-hours trading after the company beat Wall Street earnings estimates. The fintech firm reported $0.85 earnings per share, topping the $0.68 Zacks consensus estimate. However, the company still posted its first quarterly loss in three years due to a Bitcoin price decline.

Block Inc Posts Earnings Surprise Despite Quarterly Loss

Block Inc reported $0.85 in earnings per share for the first quarter, exceeding analyst expectations. Zacks Equity Research said the result represented an “earnings surprise of +25.68%.” It added that the company surpassed consensus EPS estimates two times over the last four quarters.

Investors reacted quickly, and shares climbed to $75.70 in after-hours trading, according to Google Finance data. Despite the earnings beat, Block Inc recorded a net loss of $309 million for the quarter. The loss marked its first quarterly deficit since 2023.

The company linked the loss to a 23.8% drop in Bitcoin prices during the quarter. Block Inc reported a $172.8 million bitcoin remeasurement loss on 8,883 Bitcoin held as of March 31. As a result, total bitcoin-related revenue declined year over year.

Bitcoin revenue from Cash App and other products fell to $1.8 billion from $2.33 billion a year earlier. Block Inc said “Bitcoin trading dynamics” affected performance during the period. It also cited a “strategic decision to reduce the fee” on certain Cash App Bitcoin transactions.

Bitcoin Operations Lift Gross Profit 27% in Q1

Block Inc posted $2.9 billion in gross profit for the first quarter, up 27% from last year. The figure reflects net sales minus the cost of goods sold. Bitcoin transactions on Cash App contributed $63 million to gross profit.

Square had no meaningful impact on the company’s Bitcoin business during the quarter. Meanwhile, operating expenses rose 57.2% year over year to $3.08 billion. The company implemented a restructuring plan in late February.

Chief Executive Officer Jack Dorsey announced about 4,000 job cuts, representing roughly 40% of the workforce. The company said it aims to rely more on artificial intelligence tools to improve efficiency. Avory & Co. founder Sean Emory said, “Block had a strong quarter,” and described the company as having “beat and raised” guidance.

Block Inc also expanded its Bitcoin services during the quarter. In late April, the company launched proof-of-reserves for its corporate Bitcoin treasury. It also enabled users to verify Bitcoin balances on Cash App and Square.

The company introduced a Bitkey hardware wallet with a touchscreen for transaction verification. It also launched a feature that allows certain Cash App users to convert payments into Bitcoin automatically. At the same time, Block Inc began offering 5% Bitcoin cash back rewards for Square merchants.

Block Inc increased withdrawal limits to $10,000 per day and $25,000 per week. The company reported that more than 800,000 US-based merchants enabled Bitcoin transactions for purchases. These updates reflect ongoing efforts to expand Bitcoin’s use in payments.

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