Bitcoin ecosystem gross profit at Jack Dorsey’s company Block fell 50% in the third quarter, while stronger overall results and a higher year-end outlook sent shares up 6.2% in after-hours trading.
The earnings report dated November 3, cited by The Block, showed that Block, the company behind Cash App and Square, saw its Bitcoin operations and overall performance move in different directions. Bitcoin ecosystem gross profit was halved from the same period last year to $52 million; the company attributed the decline to reducing fees on some Bitcoin transactions in Cash App.
By contrast, Block’s total revenue rose from $6.12 billion to $6.72 billion in the third quarter, while net income increased from $462 million to $566 million. The company’s total gross profit also rose 22% year over year to $3.24 billion.
Lower fees on Bitcoin transactions weighed on profit
Block’s Bitcoin ecosystem primarily includes customer Bitcoin purchases made through Cash App, Proto operations, and Bitcoin withdrawal fees. The company’s decision to lower fees on some transactions reduced the gross profit generated by these activities.
Bitcoin ecosystem revenue came in at $1.77 billion in the third quarter. Cash App’s total revenue, which includes this amount, reached $4.07 billion, while the app’s gross profit rose 27% year over year to $2.07 billion. Thus, Cash App continued to grow overall despite the decline in its Bitcoin business.
Year-end outlook raised, shares reversed course
Following the results, Block raised its year-end gross profit forecast to $12.63 billion. This outlook implies 22% growth from last year. The company said momentum across its operations supported the higher forecast, and projected gross profit growth of at least 15% in 2027 as well.
Block shares, which trade under the ticker XYZ, closed Tuesday down 1.4% at $76. After the earnings report was released, the shares rose 6.2% in after-hours trading, with the company’s stronger overall results and forward-looking outlook taking precedence over the decline in profit from its Bitcoin operations.
Not investment advice.