Dorsey-led Block’s profit disappoints as bitcoin boost fades By Reuters

(Reuters) -Block Inc, the fintech firm led by Twitter (NYSE:) co-founder Jack Dorsey, missed market estimates for first-quarter profit on Thursday as demand for bitcoin weakened due to a decline in cryptocurrency prices.

The company’s bitcoin revenue halved in the quarter to $1.73 billion, hit by a drop in interest from retail traders as prices of the cryptocurrency retreated after a sharp rally last year that was fueled by its rising acceptance in the mainstream.

– the largest cryptocurrency – has dropped 21% so far this year because of the risk-off mood sparked by the Russia-Ukraine conflict and a more hawkish outlook for Federal Reserve policy tightening.

During the quarter, Block closed its $29 billion purchase of Australian buy now, pay later pioneer Afterpay Ltd, creating a transactions giant that competes with banks and tech firms in the financial sector’s fastest-growing business.

Afterpay contributed $92 million of gross profit in the period, which was recorded under the Square and Cash app units. That helped Cash App – a service that lets individuals send payments including in bitcoin – post a 26% jump in gross profit.

“We’ve been focused on bringing the demand generation capabilities of Afterpay to Cash App and are in the early days of building out a broader commerce platform,” Chief Financial Officer Amrita Ahuja said.

She added that Afterpay’s gross merchandise value – the value of all goods sold – was expected to rise 15% in April.

Shares of Block, formerly known as Square, were 10% higher in extended trading.

In the three months ended March 31, Block’s revenue fell 22% to $3.96 billion. The company earned an adjusted profit of 18 cents per share, falling short of analysts’ estimates of 21 cents, according to IBES data from Refinitiv.