Block, the payment company founded by Jack Dorsey, reported its first quarterly loss in three years for Q1 2024 despite surpassing analysts’ expectations. After the announcement, Block shares climbed 7.9 percent in after-hours trading, reaching $75.70.
Quarterly results beat forecasts
For the first quarter, Block delivered earnings per share of 85 cents, surpassing market consensus, which analysts at Zacks pegged at 68 cents. Over the past year, Block has outperformed expectations in two out of four quarters.
This quarterly report represents a surprise profit margin of 25.68 percent.
Nonetheless, Block logged a quarterly net loss of $309 million. Of this, $172.8 million was attributed to an impairment charge related to the company’s 8,883 BTC holdings. The 23.8 percent decline in Bitcoin’s value over the quarter played a decisive role in this financial outcome.
Bitcoin-centric payment strategy
Jack Dorsey has reinforced Block’s strategy to drive greater use of Bitcoin in everyday payments. By late April, Block announced that more than 800,000 US-based businesses could accept Bitcoin payments. However, the company reported that revenue from Bitcoin transactions fell year-over-year from $2.33 billion to $1.8 billion. This decline was linked to Bitcoin price volatility and lower transaction fees on the Cash App platform.
Over the past year, Block’s gross profit rose by 27 percent to reach $2.9 billion. Bitcoin-related gross profit—primarily from Cash App—stood at $63 million, while Block’s other financial service, Square, had little impact in this segment.
Block had a strong quarter and revised its forecasts upward.
Innovation and rising costs
The company saw a significant spike in operating expenses this quarter. Spending increased by 57.2 percent year-over-year, amounting to $3.08 billion. Much of this rise can be traced to a workforce reduction of around 4,000 employees announced in February and a shift toward artificial intelligence-driven operations. Dorsey’s revised strategy aims for increased automation in business processes.
In April, Block introduced a verifiable reserves system to boost customer trust, covering both company assets and client balances. The company also unveiled Bitkey, a new hardware wallet with a touchscreen, and rolled out an automated conversion feature allowing Cash App users to instantly switch payments into Bitcoin.
Other innovations included offering 5 percent Bitcoin cashback rewards to merchants processing sales through Square and raising daily and weekly customer withdrawal limits to $10,000 and $25,000, respectively. These steps underscore Block’s focus on transparency, customer safety, and cutting-edge fintech solutions in its crypto payments division.
