Coinbase and Block Shares Rise in Late Trading as They Both Impress Investors and Block Announces New Sales Strategy

For its second quarter that ended June 30, Coinbase reported adjusted earnings per share of 14 cents, up from a loss of 42 cents in the same quarter of the previous year

Coinbase Global Inc. (NASDAQ:COIN) and Block Inc. (NYSE:SQ) shares both rose in late trading on Tuesday as the companies impressed investors with their latest earnings reports. Block also announced a new sales strategy.

Here’s a closer look at each report.

Coinbase earnings: The cryptocurrency exchange reported adjusted earnings per share of 14 cents for its second quarter that ended June 30, up from a loss of 42 cents in the same quarter of the previous year. Revenue was $1.45 billion, up 105% year-over-year.

Analysts were expecting earnings of 95 cents per share on revenue of $1.398 billion.

Coinbase’s strong revenue figure was driven by a 146% increase in cryptocurrency trading volume, to $226 billion in the quarter, in line with estimates. Institution trading volume grew 142%, to $189 billion, and retail trading volume jumped 164%, to $37 billion.

Subscription and services revenue came in at $599 million in the quarter, custodial fee revenue rose to $34.5 million, up from $17 million a year prior, and total transaction revenue grew 138% year-over-year, to $780.9 million.

“In addition to solid financial results and continuing to build trusted products to help drive crypto adoption, Coinbase and the crypto industry made great strides towards achieving regulatory clarity in the U.S., which we believe will be a major unlock for innovation in the industry,” the company said in a letter to shareholders.

Coinbase said it expects subscription and services revenue of $530 million and $600 million for its fiscal third quarter, up from $334 million in the same quarter of fiscal 2023.

Coinbase shares rose just over 3% in late trading.

Block earnings: Block reported adjusted earnings per share of 93 cents, ahead of a forecast 84 cents, on revenue of $6.16 billion, shy of an expected $6.26 billion.

Block reported a gross profit of $2.23 billion, up 20% year-over-year, and net income of $195.3 million, up 91%.

The company’s Cash App business saw a gross profit of $1.3 billion in the quarter, up 23% year-over-year, with the number of Cash App Card monthly active users growing 13%, to 24 million as of the end of June.

The company’s subscription and services-based revenue came in at $1.79 billion, up 22% year-over-year, and subscription and services saw a gross profit of $1.5 billion, up 27%.

Of particular interest to investors was a plan by Block, detailed in a letter to shareholders, to position its Cash App as the primary financial services partner of choice for families earning up to $150,000.

Referred to the letter as “bank the base,” the strategy is focused on driving engagement through increased adoption of Block’s financial services products. Already in testing, the strategy includes incentivizing new and existing customers to drive new paycheck deposit activities and hence, drive future growth.

“It is about making Cash App our base’s primary financial tool,” said Amrita Ahuja, chief financial officer of Block. “Which ultimately leads to stronger engagement and stronger inflows.”

In addition, Block also appointed Afterpay co-founder Nick Monlar as its head of sales as part of its new strategy. Afterpay is a buy-now, pay-later service acquired by Block, then known as Square Inc, for $29 billion in 2021.

“It will result in much better technology, much better design and much better products,” Chief Executive Officer Jack Dorsey is reported to have said on an earnings call.

Block expects to see a gross profit of $2.22 billion on 17% year-over-year growth and adjusted earnings of $695 million for its fiscal third quarter. For the full year, the company expects gross profit of $8.89 billion — revised up from a previous outlook of $8.78 billion and adjusted earnings of $2.9 billion, also revised up from $2.76 billion previously.

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