(Bloomberg) — Block Inc., the digital-payments firm run by Jack Dorsey, reported weaker-than-expected gross payment volume, a measure of the total amount of payments processed using Block’s products. Shares slid more than 7% in late trading.
Block, formerly called Square, reported $52.5 billion in transactions, missing the $53.47 billion estimate.
Gross profit for the quarter, the company’s profit before subtracting costs like marketing and product development, was $1.47 billion, in line with analysts’ estimates. Cash App, the app for sending money between individuals and buying stocks or Bitcoin, accounted for roughly 48% of that gross profit. The service now has 47 million active accounts, up from 45 million in the first quarter.
Revenue was better than expected, but still declined in the second quarter due in part to a drop in Bitcoin-related transactions on Cash App. Revenue collected through Bitcoin transactions was $1.79 billion, down 34%. Cash App revenue was also down 21% as a result, though sales would have grown if Bitcoin-related revenue was excluded, Chief Financial Officer Amrita Ahuja said.
The company has warned that Bitcoin revenue is a poor measure of its business health given the currency’s wild price fluctuations. It’s also not a big profit engine — gross profit from Bitcoin sales is only about 2% of Bitcoin revenue.
Dorsey has made Bitcoin a key priority at the company, and Block previously purchased more than $200 million in Bitcoin to keep on its balance sheet. The price of the digital currency has fallen by over 50% since the beginning of the year, leading Block to report a $36 million Bitcoin impairment loss in the second quarter.
Square slipped as much as 7.3% to $83.17, after closing at $89.70. The stock has declined 44% so far this year.
On Tuesday, another company that is betting big on Bitcoin, MicroStrategy Inc., took a $917.8 million impairment loss related to the decline in the value of the coins it holds. Bitcoin and other major cryptocurrencies lost about $2 trillion in value since the downturn in the digital currency market began.
(Updates with bitcoin impairment costs)
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