The data: Block’s gross payment volume (GPV) increased 23% year over year (YoY) in Q2, a slowdown from 88% YoY growth during the same period last year, per its shareholder letter. However, total net revenues fell 6% YoY compared with a 143% YoY increase in Q2 2021.
Here’s what happened: The firm’s revenue drop was primarily driven by a 34% YoY decline in its Bitcoin revenues.
Block attributed these losses to widespread volatility in the cryptocurrency space and softened consumer crypto demand. As a result, it reported a $36 million Bitcoin impairment loss for the quarter. Block tried to increase crypto engagement during the quarter with new Bitcoin services in early April like Bitcoin Roundups and Paid in Bitcoin.
But expanding services helped Block drive up spending and led to healthy seller retention in Q2, CFO Amrita Ahuja noted on the company’s earnings call. These factors may have also offset some of Block’s revenue losses.
- After closing its acquisition of Afterpay, Block made it available for in-person purchases across its seller network in Australia and the US.
- And it built out Square for Restaurants by acquiring restaurant ordering and marketing platform GoParrot in May. Block also partnered with restaurant delivery software provider VROMO that month to streamline delivery for Square restaurants.
What’s next? Going into Q3, Block plans to double down on growth initiatives while keeping a pulse on macroeconomic conditions.
- Focus on large sellers and global growth. Ahuja said Block is still trying to grow upmarket with larger sellers, which tend to remain resilient through economic downturns. The firm will keep expanding its omnichannel capabilities, which can help it navigate shifts in consumer spending patterns. And Block plans to grow its global footprint by capturing more sellers outside of the US.
- Connect ecosystems. The company highlighted this initiative last quarter and will carry it into Q3, specifically with Afterpay. CEO Jack Dorsey said Block is bringing Afterpay’s discovery capabilities into Cash App, which can help drive user engagement and increase seller volume.
- Remain cautious on investments. Block reduced planned investments for 2022 by $250 million, pulling back on “experimental and less efficient go-to-market spend,” and slowed down hiring, according to Ahuja. Despite the more cautious approach, Ahuja noted that Block’s diversified ecosystems and products make it less exposed to economic volatility.
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