Block, the Jack Dorsey–led digital payments giant, announced on Thursday a 25% year-over-year increase in Bitcoin sales on Cash App, one of its flagship products.
In the first quarter of 2022, as Bitcoin’s price was decreasing from an all-time high just months earlier, customers bought approximately $1.73 billion worth of the cryptocurrency. A year later, as Bitcoin recovered from its most recent low, sales were almost $2.16 billion.
However, what Block brought in through Bitcoin sales was minuscule compared with the total gross profit of the company, which also owns the popular business platform Square. In the first quarter of 2023, Block’s gross profit was $1.71 billion, while it only made $50 million from Bitcoin sales in the same period, still a 16% year-over-year increase.
The rise was driven by an “increase in the quantity of Bitcoin sold to customers, partially offset by a decrease in the market price of Bitcoin,” Block wrote in its shareholder letter. In the prior quarter, it reported $1.83 billion in Bitcoin sales, a year-over-year decrease of 7%.
The rise in Bitcoin sales in the first quarter accompanied a rosy earnings release. Analysts, according to the Wall Street Journal, predicted Block would report an earnings per share of 35 cents. Instead, the payments firm reported an earnings per share of 40 cents, and its first-quarter revenue rose 26% year over year.
In after-hours trading, shares rose approximately 5% to about $63.
The positive earnings release for Block, formerly known as Square, is a breath of fresh air for its executives as the company has been vying to escape the shadow of a damning report from short-seller Hindenburg Research published in late March. Among other allegations, the activist investment firm, famous for felling the valuation of India’s largest company, claimed Block misled investors on key metrics and turned a blind eye to criminals who were using Cash App. The company’s shares tumbled more than 20% after the report’s release.
“We intend to work with the SEC and explore legal action against Hindenburg Research for the factually inaccurate and misleading report they shared about our Cash App business today,” Block wrote in response to Hindenburg’s allegations at the time. “We will not be distracted by typical short-seller tactics.”