American digital payments company Block Inc.’s second-quarter (Q2) revenue dropped by 6% year-over-year (YOY) to $4.4 billion. Although the numbers still topped Wall Street’s expectations of $4.35 billion, it suffered a loss of $208 million during the quarter, the Associated Press reported.
Following the Q2 results, Block shares slipped 5.35% to $84.90 in after-hours trading on Thursday.
Block closed 2021 with an impressive 62% increase in revenue YOY to $4.42 billion, with bitcoin purchases contributing $.96 billion.
BTC Price Drives Down Revenue
However, what drove the Jack Dorsey-led company to a decline in Q2 revenue was the fall in bitcoin prices as well as in consumer demand for the asset, the company said in its latest quarterly report.
“Cash App generated $1.79 billion of bitcoin revenue and $41 million of bitcoin gross profit during the second quarter of 2022, down 34% and 24% year over year, respectively,” Block said in its Shareholder Letter.
BTC revenue and gross profit, in fact, increased 143% and 168% on a 3-year CAGR basis, the company said. Block expects bitcoin revenue and gross profit to witness fluctuation in upcoming quarters depending on movements in consumer demand or BTC prices.
“The year over year decrease in bitcoin revenue and gross profit was driven primarily by a decline in consumer demand and the price of bitcoin, related in part to broader uncertainty around crypto assets, which more than offset the benefit of volatility in the price of bitcoin during the quarter,” it said.
Excluding BTC, Revenues Up
Excluding bitcoin, Block’s Q2 revenue rose 34% to $2.62 billion. Its earnings per share stood at 18 cents beating Wall Street’s expectations of 17 cents. Block’s Q2 gross profit was up 29% year-over-year to $1.47 billion, with both Square and Cash App registering a 29% rise in gross profits at $755 million and $705 million, respectively.
“Bitcoin revenue and gross profit were relatively consistent compared to the first quarter of 2022,” it said.
The food and drink business saw the fastest gross profit among all its verticals.
Block Bullish on Bitcoin
Jack Dorsey-led Block has always been bullish on bitcoin. In a new move to tap the bitcoin network, The Block Head (TBD), one of Block’s bitcoin business units, in June, revealed plans to develop what it called Web5 – an extra decentralized web platform. It aims to allow developers to create an enhanced user experience as they will continue to own and retain their data and digital identities.