RPT-UPDATE 2-Jack Dorsey’s Block beats earnings estimates, Australian stocks soar
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By Byron Kaye and Hannah Lang
SYDNEY/WASHINGTON, Feb 24 (Reuters) – Block Inc, the payments company of Twitter Inc founder Jack Dorsey, posted a better-than-expected fourth-quarter profit on the back of a highly volatile bitcoin market and retail booming online, pushing up its shares.
The company, which offers merchant payment services and an app that allows users to exchange cryptocurrency, recently took a secondary listing in Australia after buying that country’s leading payments company, Afterpay.
Although the earnings announcement came after the close of trading on the New York Stock Exchange, where Block has its primary listing, the company’s Australian stock jumped 40%, the biggest gain in a flat global market. .
The move follows months in which companies linked to internet shopping have seen their valuations decline on expectations of rising interest rates and the cancellation of government stimulus payments as related restrictions to COVID-19 are easing.
Block, formerly known as Square, disclosed plans for an August all-stock takeover of Afterpay. Its shares fell by two-thirds when the deal closed in January, driving down the value of shares that went to owners of the Australian company.
Fourth-quarter pretax earnings, which did not include Afterpay earnings, beat analysts’ forecasts at RBC Capital Markets and Jefferies, according to their research notes.
Total revenue hit $4.08 billion in the quarter, up from $3.16 billion a year earlier, while “gross profit” jumped 47% to $1.18 billion , the company said.
Its unit that sells terminals and software to businesses to process payments, Square, generated gross profit of $657 million, up 54%. Cash App, which allows individuals to send payments including bitcoins, increased its gross profit by 37% to $518 million.
Cash App generated $1.96 billion in bitcoin revenue in the quarter, up 12% from a year earlier, despite the cryptocurrency’s large swings in value at the end of the year last. Dorsey founded Block, remains a major shareholder, and is chairman of the company. (Reporting by Byron Kaye in Sydney and Hannah Lang in Washington; additional reporting by Niket Nishant; Editing by Cynthia Osterman)