The second quarter (Q2) sales for American digital payments provider Block Inc., previously Square, fell by 6% year over year (YOY) to $4.4 billion. Despite exceeding Wall Street’s forecast of $4.35 billion, the results nonetheless showed a $208 million loss for the quarter, according to the Associated Press.
Block shares dropped 5.35 percent to $84.90 in after-hours trading on Thursday on the Q2 2022 results. The company ended 2021 with a strong YOY sales growth of 62 percent to $4.42 billion, with bitcoin purchases accounting for $.96 billion of that growth.
However, the collapse in bitcoin prices and waning consumer demand for the commodity, according to the Jack Dorsey-led company’s most recent quarterly report, was what caused a decline in Q2 revenue.
According to Block’s shareholder letter, Cash App earned $41 million in bitcoin gross profit and $1.79 billion in bitcoin sales in Q2 2022, down 34% and 24%, year over year, respectively.
What does Block expect for the future?
The company reveals that the 3-year CAGR for BTC revenue and gross profit climbed by 143 percent and 168 percent, respectively. In the following quarters, Block expects that bitcoin revenue and gross profit may fluctuate in response to changes in customer demand or BTC prices.
“The year over year decrease in bitcoin revenue and gross profit was driven primarily by a drop in consumer demand and the price of BTC, related in part to broader uncertainty around crypto assets, which more than offset the benefit of volatility in BTC price during the quarter,” the report reads.
Not everything is down
Notably, if we remove bitcoin from the equation, Block’s Q2 revenue increased by 34% to $2.62 billion. Its earnings per share were 18 cents, exceeding the 17 cents predicted by Wall Street. Block’s Q2 gross profit increased by 29% year over year to $1.47 billion, while Square and Cash App also saw a 29% increase in their respective gross profits of $755 million and $705 million.
In March, Block invested Japan-based digital wallet company Kyash, as TheCoinRise reported, in an effort to boost its presence in the region.