Block Beats Q2 Estimates but Bitcoin Revenues Fall

Fintech and digital payments giant Block (SQ), formerly Square, reported second-quarter results that beat analyst consensus estimates, but experienced a decline in bitcoin-related revenue and posted $36 million in impairment losses on its bitcoin holdings.

Total revenue for the quarter was $4.4 billion, compared with the $4.3 billion that analysts were expecting on average according to FactSet, but down 6.6% year over year, driven by a decrease in bitcoin revenue, the company said.

Excluding bitcoin, total net revenue was $2.62 billion. Adjusted earnings per share were 18 cents, compared with analysts’ average estimate of 16 cents.

Cash App, a peer-to-peer payments service that allows users to directly buy and sell bitcoin, generated $1.79 billion in bitcoin transactions and $41 million of gross profit in the first quarter, down 34% and 24% year over year, respectively.

The company said the decrease 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.”

Electric car maker Tesla (TSLA) opted to sell roughly 75% of its bitcoin holdings in the second quarter, but Square elected to hold on to its bitcoin holdings. The company recognized $36 million in impairment losses in the quarter on bitcoin and said that as of June 30, the fair value of its investment in bitcoin was $160 million, versus the carrying value of the investment of $113 million.

Shares of Block fell about 6.5% to $83.83 in after-hours trading on Thursday. Shares are down almost 45% year to date.

The company will be holding an earnings call with analysts at 5 p.m. ET.

Read More: Block Sees Bitcoin Disrupting Payments Networks