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Block’s Earnings Beat Estimates but the Stock Drops. Here’s Why.

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Jack Dorsey co-founded Block and remains its chair but is no longer CEO.

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Block said Thursday that Bitcoin revenue at its Cash App unit dropped 34% in the second quarter, but the fintech co-founded by Jack Dorsey still managed to beat Wall Street estimates by 2 cents.

In aftermarket trading, shares dropped more than 7%. 

Block reported a second-quarter loss attributable to common stockholders of $208 million, or 36 cents a diluted share, for the three months ended June 30. This compares with $204 million in profit attributable to common stockholders, or 40 cents a diluted share, for the same period in 2021.

On an adjusted basis, Block reported second-quarter net income of about $110.7 million, or 18 cents a diluted share for the quarter. This compares to $256 million, or 40 cents a diluted share, for the same period in 2021. 

Analysts polled by FactSet expected Block to post second-quarter earnings of 16 cents. 

Total revenue fell by about 6% to $4.4 billion for the quarter, slightly more than Wall Street’s expectations of $4.3 billion. Excluding Bitcoin revenue, total net revenue came to $2.62 billion, up 34% year over year, according to a statement. 

Shares of Block were down 44% this year.

Founded in 2009, Block’s two main businesses are Cash App, a finance company offering peer-to-peer payments, among other financial services, and

its merchant payments provider that sells terminals and accepts and processes payments.

Square, formerly known as “Seller,” also offers software and financial services to merchants. In February, Block closed its $29 billion acquisition of buy-now, pay-later app Afterpay. (Afterpay isn’t its own business unit, but the platform is used by Square and Cash App.)

Block said total gross profit rose 29% to $1.47 billion. This included $755 million from Square and $705 million from Cash App.

Cash App was impacted by volatility in the crypto markets. The unit generated $1.79 billion of Bitcoin revenue, down 34% year over year, while Bitcoin profit fell 24% to $41 million. The fintech said it took a $36 million Bitcoin impairment loss.

Block said the revenue and gross profit decline “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,” according to a shareholder letter. 

In June, Block said there were 47 million accounts that transacted on Cash App and more than one million monthly active users, or MAUs, for its Cash App Borrow. The 47 million was below the 48 million expected by Darrin Peller, an analyst with Wolfe Research. 

“We believed a slight miss on the Square segment was possible; however, we believe the underperformance on organic Cash App gross profit (vs. buy-side expectations) coupled with lower MAUs than expected may bring about concern on SQ’s lower income consumer exposure heading into a downturn,” Peller said in a note Thursday. He has an Outperform rating and $85 price target on the stock.

Gross payment volume—the dollar value of transactions that pass through a platform—totaled $52.5 billion in the second quarter, up from $42.8 million in Q2 2021. The $52.5 billion includes $4.2 billion for Cash App and $48.3 billion for Square. 

On a call to discuss Block’s earnings, CFO Amrita Ahuja said the fintech was reducing its planned investment for full year 2022 by $250 million. “In total, we have now reduced our non-GAAP operating expense plans by a total of $450 million since the start of the year, which is 20% of what we initially guided for the step-up in 2022,” Ahuja said. 

Block plans to increase its non-GAAP operating expenses by $1.85 billion compared with 2021, she said. 

Dan Dolev, an analyst with Mizuho Securities, said Block’s Q2 results were “somewhat of a bummer,” according to a note Thursday. Dolev said he saw “silver linings in the continued strong July trends in Seller and nice progress on Cash App Borrow / payday lending with greater than one million monthly active users.” Dolev has a Buy rating on the stock and a $135 price target. 

Write to Luisa Beltran at

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