Jack Dorsey’s payments firm Block rose 7.9% in after-hours trading as its Q1 earnings surpassed analyst estimates, despite posting its first loss in three years.
Block came out with quarterly earnings of 85 cents per share, beating the Zacks consensus estimate of 68 cents per share. Investors responded positively, driving Block shares to $75.70 after hours, Google Finance data shows.
“This quarterly report represents an earnings surprise of +25.68%,” said Zacks Equity Research on Thursday. “Over the last four quarters, the company has surpassed consensus EPS estimates two times.”
Expanding Bitcoin’s use into the payments space has been a key area of focus for Dorsey, who previously argued that widespread payment adoption is needed to fulfil Satoshi Nakamoto’s original vision of Bitcoin as a peer-to-peer electronic cash system. In late April, Block noted that over 800,000 US-based merchants have enabled Bitcoin transactions for everyday purchases.
The earnings beat came despite Block reporting its first quarterly loss since 2023, driven by a 23.8% drop in the price of Bitcoin over the three-month period.
Q1 net loss was $309 million, which included a $172.8 million Bitcoin remeasurement loss on the 8,883 Bitcoin it held as of March 31.
Bitcoin revenue from Cash App and other Block products fell to $1.8 billion from $2.33 billion a year ago.
Block attributed the fall to “Bitcoin trading dynamics” and a “strategic decision to reduce the fee” charged on certain Bitcoin transactions on Cash App.
Company’s Q1 gross profit — net sales minus cost of goods sold — reached $2.9 billion, up 27% from a year earlier.
Bitcoin payments in Cash App contributed $63 million to Block’s gross profit, while Square had no meaningful impact on Block’s Bitcoin business.
Avory & Co. founder and chief investment officer Sean Emory said “Block had a strong quarter,” having “beat and raised” its guidance.
The quarter also included a restructuring overhaul in late February, when Dorsey announced about 4,000 staff cuts, representing roughly 40% of the company’s workforce, as part of a plan to rely more on AI in search of greater operational efficiency. Block’s operational expenses rose 57.2% year-on-year to $3.08 billion in Q1.
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