Block results: Jack Dorsey-led block beats operating profit estimates

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Block Inc, the fintech company run by Twitter co-founder Jack Dorsey, said on Thursday it hadn’t seen a decline in overall consumer spending until April, after reporting a profit of Q1 operating above Wall Street targets.

Shares of Block rose 10% in extended trading, even though the company, formerly known as Square, posted lower-than-expected adjusted profit as demand for bitcoins weakened due to of a decline in cryptocurrency prices.

The company, which offers merchant payment services and an app that lets people trade cryptocurrency, has completed its $29 billion acquisition of Australian buy-it-now, pay-later pioneer Afterpay Ltd. during the quarter.

The deal has created a trading giant that competes with banks and tech companies in the fastest growing business in the financial sector.

Afterpay contributed $92 million to first-quarter gross profit, which was recorded in Square and Cash application units. This helped Cash App – a service that allows individuals to send payments including bitcoin – to post a 26% increase in gross profit.

“We expect Cash App and Square to sequentially increase gross profit in each quarter throughout the year, even excluding Afterpay, assuming the macroeconomic environment remains stable,” Chief Financial Officer Amrita Ahuja said.

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“Until April, we have yet to see any deterioration in overall consumer spending,” she said, adding that Afterpay’s gross merchandise value – the value of all goods sold – is expected to increase. 15% in April.

Block posted operating profit, known as adjusted EBITDA, of $195 million, above Wall Street’s average expectation of $136 million, according to IBES data from Refinitiv.

In the three months ended March 31, revenue fell 22% to $3.96 billion. The company posted adjusted earnings of 18 cents per share, below analysts’ estimates of 21 cents.

The company’s bitcoin revenue halved to $1.73 billion, hit by lower interest from retail traders as cryptocurrency prices retreated after surging the year latest, fueled by its growing acceptance in the mainstream.

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