Block to add more bitcoin to its treasury, lifts annual forecast
Rewrites paragraph 1, adds details and background on bitcoin in paragraphs 2 to 6
May 2 (Reuters) -Block SQ.N lifted its full-year adjusted core earnings forecast on Thursday and revealed plans to add more bitcoin to its balance sheet, as the Jack Dorsey-led firm bets big on the cryptocurrency.
Shares of the company jumped 7.9% after the bell.
The once-nascent asset class has come closer to the mainstream after the approval of several bitcoin exchange-traded funds by the Securities and Exchange Commission in January.
Block will invest 10% of its gross profit from bitcoin products each month into purchasing the asset class, CEO Dorsey wrote in a shareholder letter.
"We believe the world needs an open protocol for money, one that’s not owned or controlled by any single entity," Dorsey said in the note.
The company currently dedicates less than 3% of its resources to bitcoin-related projects, he said.
Blocknow expects annual adjusted core earnings to be at least $2.76 billion, higher than its previous forecast of $2.63 billion.
Payments firms have benefited from a tight labor market and wage growth that has allowed Americans to set aside worries of an economic slowdown and continue spending on travel, shopping and dining out.
Block's estimate-topping results cap off a broadly strong quarter for the payments sector, whose fortunes are closely tied to strength in consumer spending.
The company posted a 19% jump in total net revenue, to $5.96 billion in the reported quarter.
Earlier this week, larger rival PayPal PYPL.O also raised its forecast for full-year adjusted profit, signaling resilience in consumer spending.
On an adjusted basis, Block earned 85 cents per share in the three months ended March 31, beating analysts' expectation of 72 cents per share.
The company's shares have fallen 9.1% so far this year as of its last close, underperforming peer PayPal, which has risen 9%.
Reporting by Arasu Kannagi Basil in Bengaluru; Editing by Pooja Desai
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