In a statement Block Inc reported a first-quarter operating profit that has topped analysts’ estimates.
With the news reaching the market, Block’s shares rose by 10% in extended trading. Block also reported a lower-than-anticipated adjusted profit after demand for bitcoin weakened due to a decline in cryptocurrency prices.
During the quarter, Block closed its $29 billion acquisition of Australian buy-now-pay-later pioneer Afterpay Ltd.
Block offers merchant payment services to consumers and has an app that aids in the trading of cryptocurrency.
Following the acquisition of Afterpay Ltd, Block has become a transaction giant that can now compete with large financial institutions such as banks and other peers in the financial sector’s fastest-growing business.
Afterpay has contributed $92 million to Block’s first quarter’s gross profit, which was recorded under the Square and Cash app units. It also helped its Cash App, a service that allows customers to send payments, including in bitcoin, post a 26% jump in gross profit.
“We expect Cash App and Square to sequentially grow gross profit each quarter throughout the year, even excluding Afterpay, assuming the macroeconomic environment remains stable,” Chief Financial Officer Amrita Ahuja.
She went on to add, “Through April, we have not yet seen a deterioration in overall consumer spending”.
Afterpay’s gross merchandise value, the total value of all goods sold, is expected to rise by15% in April.
Block posted an adjusted EBITDA of $195 million, ahead of the Wall Street average expectation of $136 million.
Block’s revenues from bitcoin has dropped by 50% to $1.73 billion, following a drop in interest from retail traders after cryptocurrency prices retreated from last year’s price levels which was on the perception that the cryptocurrency would increase its traction in the mainstream.