The block’s net loss swings to $14.7 million on increasing Bitcoin impairment losses

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

However, that narrowed the loss from the $208 million net loss reported in the June 2022 quarter.

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

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

The Block’s total revenue rose 17 percent year over year to $4.52 billion. Excluding Bitcoin revenue, however, total net income rose 36 percent year-over-year to $2.75 billion.

The San Francisco company also owns Cash App, a consumer payment and investment product, and Square, the sales and registry service used by small businesses.

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

“Our Cash App ecosystem delivered $774 million in gross profit, a 51 percent increase… [and] Our Square ecosystem delivered gross profit of $783 million, an increase of 29 percent,” it added.

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

Transaction-based revenue increased 17 percent to more than $1.5 billion in the third quarter, and transaction-based gross profit increased 13 percent to $616 million. In the period July-September, the company processed 54.4 billion dollars in gross payment volume, up 20 percent year-on-year.

The company’s subscription and services-based revenue increased more than 70 percent to $1.2 billion in the third quarter, and its subscription and services-based gross profit was $966 million, up 70 percent year over year.

Operating expenses of the company reached $1.62 billion in the third quarter, an increase of almost 46 percent annually.

It ended the third quarter with $7.1 billion in available liquidity. The Company has $6.5 billion in cash, cash equivalents, restricted cash and investments in marketable debt securities, as well as $600 million available to be drawn on its revolving credit facility.

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

Updated: November 3, 2022, 10:40 p.m