earnings report

Block’s Q4 Bitcoin revenue down 7% on crypto price decline

Block Inc. outperformed analyst expectations and saw its share price jump in after-hours trading, but its Bitcoin revenue dipped due to price declines.

Jack Dorsey’s payment company Block Inc. reported $1.83 billion of Bitcoin (BTC) revenue from its Cash App business unit in the fourth quarter, representing a 7% fall from the same time last year.

In its Q4 and full-year results announced on Feb. 23, Block attributed the fall in Bitcoin revenue to the decline in BTC price in the year. Bitcoin fell approximately 65% throughout 2022.

This fall in revenue led to a 25% year-on-year drop in Bitcoin gross profit for Cash App, which fell to $35 million in the quarter.

Cash App is a mobile phone payment processing app created by Block, which added support for transactions via the Bitcoin Lightning Network on Oct. 25. It generates Bitcoin revenue by selling Bitcoin to customers through the app.

*Cash App gross profit graph from Q4, 2021 to Q4, 2022 Source: Block Inc Q4 shareholder letter*

For the full 2022 year, Cash App generated $7.11 billion of Bitcoin revenue and $156 million of Bitcoin gross profit, down 29% and 28% compared to 2021, respectively.

Meanwhile, Block Inc. reported a widened net loss of $114 million for the quarter compared to a loss of $77 million in 2021. Its adjusted earnings before interest, tax, depreciation and amortization (EBITDA) increased 53% to $281 million compared to the same time last year. Total revenue in the quarter was $4.65 billion.

The share price of Block jumped in after-hours trading following the earnings report.

*Block Inc. (SQ) share price action over the last day. Source:* *Barron’s*

Some analysts have attributed the jump to the firm’s gross profit growth, which was up 40% in Q4 compared to the prior year, and also beat analyst expectations.

Hodl! Tesla hangs onto all its remaining $218M in Bitcoin in Q3

The vehicle manufacturer’s latest earnings report for the third quarter shows it’s made no changes to its Bitcoin holdings since its huge sell-off in the second quarter.

Electric vehicle manufacturer Tesla has made no further changes to its remaining stash of Bitcoin (BTC) in the third quarter of 2022, despite nearly a $1 billion sell-off in the previous quarter.

The company’s Q3 report, released Oct. 19, shows $218 million worth of “digital assets” remains on its balance sheet, with no reported losses in the value of its holdings. Based on current prices, it’s estimated that Tesla still holds around 9,720 BTC.

In its Q2 earnings report, Tesla said it sold 75% of its Bitcoin during the quarter, adding $936 million in cash to its books and recording a $64 million profit from the sale.

Tesla CEO Elon Musk explained at the time that the sell-off was due to liquidity concerns from the COVID-19 lockdowns in China.

The sell-off during the quarter took a large chunk of the company’s $1.5 billion position in Bitcoin, which it had revealed in February 2021, at the time, made it one of the largest corporate holders of Bitcoin.

Overall for Q3 2022, Tesla posted $3.3 billion in profits attaining revenues of $21.45 billion, which reportedly fell short of analysts’ expectations, and saw Tesla’s stock price fall by nearly 14% in after-hours trading, according to Yahoo Finance.

Under Musk’s leadership, the vehicle company has seen its range of merchandise available for purchase using Dogecoin (DOGE) since January. His rocket-building company SpaceX soon followed suit in May.

One of Tesla’s recent products was a limited edition whistle it posted for sale in September, which could only be purchased using DOGE retailing for 1,000 DOGE, or around $60 at the time. It’s unknown exactly how many units were made available, but it reportedly sold out within hours.

Zuckerberg unfazed about $2.8B metaverse division loss in Q2

“This is obviously a very expensive undertaking over the next several years,” said Mark Zuckerberg.

Meta’s virtual reality (VR) and metaverse division Reality Labs has posted its seventh straight quarter of losses, but CEO Mark Zuckerberg remains steadfast in investing in the technology, which he calls a “massive opportunity.”

During Meta’s Q2 earnings call on Wednesday, Zuckerberg acknowledged that such losses could continue for several more years until VR applications and its metaverse platform are mature enough to tap into the “massive opportunity” worth “hundreds of billions of dollars:”

“The Metaverse is a massive opportunity for a number of reasons. I feel even more strongly now that developing these platforms will unlock hundreds of billions of dollars, if not, trillions over time.”

“This is obviously a very expensive undertaking over the next several years,” Zuckerberg added, “I’m confident that we’re going to be glad that we played an important role in building this.”

The extended stretch of operating losses for Reality Labs was revealed in Meta’s Q2 earnings report earlier in the day. Such losses are not unusual for divisions in a research and development phase.

Reality Labs builds VR and augmented reality (AR) applications to help Meta users connect over its various social platforms, including the Metaverse, with the Oculus line of VR headsets.

In addition to the losses, Reality Lab’s revenue has been trending down since 2021 and its operating margin has been trending down since 2020. The $11.1 billion in revenue and 29% margin posted in Q2 2022 are the lowest over the past seven quarters.

Reality Labs posted $2.9 billion in losses for Q1.

Zuckerberg also noted that a “challenging macro environment” could be exacerbating the losses.

He said that the economic situation now is worse than it was a quarter ago, and his opinion is corroborated by the fact that the Federal Reserve raised interest rates by 0.75 percentage points for the second time in a row on Wednesday before the Meta earnings call took place, adding:

“We seem to have entered an economic downturn that will have a broad impact on the digital advertising business. In this environment, we’re focused on making a long term investment that will position us to come out stronger.”

Despite the economic troubles, Zuckerberg is confident that his company and its subsidiaries will come out of the current economic downturn as “a stronger and more disciplined organization.”

He attributed this confidence to the investments his company is making now to ensure it is able to remain a leader in an industry that may be undergoing a shift to accommodate more metaverse platforms.

Meanwhile, the United States Federal Trade Commission (FTC) has filed a lawsuit against Meta, alleging that the firm is aiming to monopolize the entire Metaverse market. The complaint states that Meta’s moves within the space hinder innovation and “competitive rivalry” among U.S.-based companies looking to build Metaverse platforms and applications.