Investing.com - Block Inc (NYSE:SQ), a leading payment-transfer company venturing into bitcoin mining and music, exceeded analysts' expectations for its Q1 results. The strong performance was driven by the Cash App digital wallet, which contributed to a remarkable 26% increase in revenue.
The company's revenue surged to $4.99 billion from $3.961 billion during the same period last year, reducing its net loss to just $19.3 million from the previous figure of $207.4 million, while adjusted earnings per share settled at an impressive 40 cents.
Focusing on future growth prospects, Block has set a full-year target for earnings before interest, taxes, depreciation and amortization (EBITDA) at $1.36 billion after achieving an adjusted EBITDA of $991 million in 2022.
In recent months, Block has been actively diversifying beyond its core payments business with significant investments in bitcoin-related ventures and other industries such as music streaming services like Tidal – acquired from rapper Jay-Z earlier this year.
CEO Jack Dorsey emphasized that "Our real value comes from our multiple ecosystems working to positively reinforce one another and provide resiliency through challenging times." However, he acknowledged that balancing long-term ambitions with short-term shareholder interests is crucial for success.
Cash App enjoyed considerable success during this quarter; gross profit rose by an astounding 49% compared to last year, reaching $931 million. Square, Block's merchant terminal and payment processing arm, also experienced a 17% increase in gross payment volume to $48.6 billion.
While the revenue generated from selling flagship terminals remained steady at $37 million compared to last year, it resulted in a gross loss of $21 million. The company maintains that these terminals primarily serve as customer acquisition tools rather than direct sources of profitability.
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Block is currently focusing on developing specialized software solutions within its Square platform catering specifically to restaurant, retail and beauty sectors.
When questioned about an earlier short seller report accusing Block’s Cash App of inflated user numbers and criminal activity published by Hindenburg Research back in March, Dorsey confidently dismissed the allegations stating: “We stand by our response to the short report... We will not be distracted from our strategy and we have a compelling
roadmap ahead of us in every one of our ecosystems.”
Investors responded positively to Block's Q1 performance with shares rising by 2% during Thursday trading before results were announced; they further increased another 2% after-hours closing at $61.64. On the S&P/ASX 200, Block Inc (ASX:SQ2) was trading 1.7% higher.