Block (SQ): Impressive Fourth-Quarter Earnings Beat Estimates

Block (formerly known as Square) reported its fourth-quarter earnings that exceeded analysts’ expectations, driving its stock up by 16%. The payments company showcased robust growth in its Square and Cash App revenue, along with a significant increase in gross profit.

Strong Financial Performance

Block posted $2.03 billion in gross profit, representing a 22% year-over-year increase. This emphasizes the company’s core transactional businesses and provides a more accurate measure of its performance. Additionally, the company raised its adjusted EBITDA forecast to at least $2.63 billion, reflecting its confidence in continued growth.

Cash App Success

Block’s Cash App business reported a 25% year-over-year rise, generating $1.18 billion in gross profit. The Cash App Card, which experienced a 20% growth in monthly actives, played a pivotal role in driving this success. With 23 million monthly actives in December, the Cash App Card is becoming increasingly popular as a primary banking solution.

Streamlining Operations

Focusing on slimming down operations, Block has made significant strides in recent months. The company has reduced its employee count below the previously set cap of 12,000. According to Jack Dorsey, Block’s CEO, this operational adjustment will positively impact the company’s long-term growth potential.

Strategic Acquisitions

Block’s acquisition of Afterpay in 2021, its largest ever, for $29 billion demonstrates the company’s commitment to expanding its reach. Though Afterpay has faced challenges since the deal announcement, Dorsey remains optimistic. Integrating Afterpay into Cash App and utilizing its buy-now, pay-later technology are key priorities for Block in 2024.

Positive Outlook

Block’s exceptional fourth-quarter results and promising full-year outlook have prompted Wall Street analysts to reassess their ratings. Wells Fargo upgraded Block to overweight and raised its price target from $65 to $95, while Seaport Research Partners upgraded the stock to a buy and increased its price target to $95. The analysts at Seaport Research Partners commend Block’s strategic focus and believe there is still room for growth.

For more information on Block’s impressive performance and financial insights, visit Business Today.

Note: Information from CNBC’s Michael Bloom, Rohan Goswami, Alex Koller, and Kate Rooney contributed to this report.