Feb 24 (Reuters) - Payments platform Block Inc beat profit estimates on Thursday, as busier trading in bitcoin softened the blow from declining growth in digital commerce. Block shares soared 22.91% in the after hour trading.
Block, which changed its name from Square in December, posted net revenue of $4.08 billion in the fourth quarter, up from $3.16 billion last year, as several of the firm’s business lines continued to grow. The company reported a profit of $1.18 billion, up from the $804 million a year earlier.
Square, the company’s business for sellers, generated a profit of $657 million, while Cash App reported a profit of $518 million. Square’s profit from markets outside the United States grew 60% year-over-year in the fourth quarter, faster than the business overall.
Block reported earnings per share of $0.27, beating analysts' average estimates of $0.22. Despite the report, shares of Block fell as much as 4.5% in after-hours trade to $91.44 following results.
Block's Cash App generated $1.96 billion of bitcoin revenue during the fourth quarter, up 12% year over year despite the cryptocurrency’s sharp swings in value through the end of the year.
Because bitcoin was more volatile in the fourth quarter compared to the third quarter, Block saw an increase in trading volume as investors traded in and out of the asset, said chief financial officer Amrita Ahujaon a call with reporters. “We continue to see that a primary driver of customer demand and overall bitcoin volume is price volatility,” she said.
In a letter to shareholders, Block said it intends to prioritize investments in Cash App and Square, which it said should “drive long-term profitable growth.”
The company expects operating expenses to increase by $180 million in the first quarter over the fourth quarter.
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