While blockchain technology is still a mystery for most people today, many companies are taking advantage of the opportunity and are jumping on board. Bitcoin has transitioned from being used by deep web nerds and online drug dealers to being a facilitator of payments and currency that millions of people assume to be the future of a global monetary system.
Block (NASDAQ: SQ), formerly Square, released strong quarterly results on Thursday, buoyed by their Cash App’s increased demand for Bitcoin. The Company recently transitioned to peer-to-peer payments that have allowed them to virtually grow Cash App’s network and remained the primary driver of growth in the fourth quarter.
In December 2021, Block reported over 44 million monthly transactions, which increased 22% year-on-year (YoY). To enhance their product further, the App introduced a new feature that allowed customers to send fractional shares and bitcoin to family and friends – for a small transaction fee. They also included an update that allowed for the filing of tax returns.
Total net revenue from the quarter was USD $4.08 billion, up 29% YoY, which beat Susquehanna analyst, James Friedman’s, expectations of USD $3.814 billion. Gross profit for the quarter – which includes fees from Cash App’s buyer and seller business – was USD $1.18 billion, which grew 47% YoY.
Revenue from purchases of Bitcoin was USD $1.96 billion, which accounted for half of Block’s total sales for the quarter. Along with gross profit generated by Bitcoin sales being USD $46 million and net income being $140 million – which beat expectations of USD $115.1 million.
The report was the first for the Company since Jack Dorsey joined the board after stepping down as CEO of Twitter (NASDAQ: TWTR) and focused full time on the development of Block in late November last year. As part of this, the corporate name was rebranded as an attempt to differentiate its corporate entity from Square products – and a signal to its investment in blockchain technology.
The report comes just weeks after the Company announced a USD $29 billion purchase of Melbourne-based buy-now, pay-later (BNPL) market leader – AfterPay. The goal of the acquisition was to incorporate BNPL into one of Cash App’s services.
Block CFO, Amrita Ahuja, said, “Since our founding days, we have seen it as a key priority for our customers, whether merchants or consumers, to get fast access to funds.”
The move was quite strategic as other large companies are also entering the space; Apple Inc (NASDAQ: AAPL) recently teamed up with Goldman Sachs Group Inc (NYSE: GS) to develop their own BNPL service that will weave into the existing Apple Pay infrastructure.
Investors were taken back by the report, which saw shares hike 19% in aftermarket trading from $95.06 to $121.00. Hopefully, this news signals a bottom for the shares, which has chopped nearly 70% off its market cap since August last year, seeing a peak of $289.00.