The Block's net loss swings to $14.7m on rising Bitcoin impairment loss

Company’s total revenue surged 17 per cent on an annual basis to $4.5bn in the third quarter

In the fourth quarter of 2020 and first quarter of 2021, The Block invested $50 million and $170m, respectively, in Bitcoin. AP

The Block, an information services company dedicated to digital assets, posted a more than $14.7 million net loss in the third quarter, from a net income of $84,000 earned in the same period last year.

However, it narrowed losses from the $208m net loss reported in the June quarter of 2022.

The third-quarter net loss was affected by $56m of amortisation of acquired intangible assets and a $2m Bitcoin impairment loss, the company said in a statement on Thursday.

In the fourth quarter of 2020 and first quarter of 2021, the company invested $50m and $170m, respectively, in Bitcoin. As of September 30, the fair value of its investment in Bitcoin stood at $156m, based on market prices.

The Block’s total revenue surged 17 per cent on an annual basis to $4.52 billion. However, excluding Bitcoin revenue, total net revenue surged 36 per cent year-on-year to $2.75bn.

The San Francisco company also owns Cash App, a consumer payments and investing product, and Square, its sales and register service used by small businesses.

“We delivered strong growth at scale … gross profit grew 38 per cent year-on-year to $1.57bn, up 46 per cent on a three-year compound annual growth rate basis,” the company said in a letter to shareholders.

“Our Cash App ecosystem delivered gross profit of $774m, an increase of 51 per cent … [and] our Square ecosystem delivered gross profit of $783m, an increase of 29 per cent,” it added.

In the third quarter of 2022, the company’s buy-now-pay-later (BNPL) platform contributed $210m of revenue and $150m of gross profit.

Its transaction-based revenue surged 17 per cent to more than $1.5bn in the third quarter, and transaction-based gross profit was up 13 per cent to $616m. In the July-September period, the company processed $54.4bn in gross payments volume, up 20 per cent year over year.

The company’s subscription and services-based revenue surged more than 70 per cent to $1.2bn in the third quarter, and the subscription and services-based gross profit was $966m, up 70 per cent year over year.

Operating expenses of the company reached $1.62bn in the third quarter, an increase of nearly 46 per cent yearly.

It ended the third quarter with $7.1bn in available liquidity. The company has $6.5bn in cash, cash equivalents, restricted cash and investments in marketable debt securities, as well as $600m available to be withdrawn from its revolving credit facility.

“Additionally, we had $1.2bn available to be withdrawn under our warehouse funding facilities, to support funding of growth in our consumer receivables related to our BNPL platform,” it added.