Jack Dorsey, co-founder and chief executive officer of Twitter Inc. and Square Inc., listens throughout the Bitcoin 2021 conference in Miami, Florida, on Friday, June 4, 2021.
Eva Marie Uzcategui | Bloomberg | Getty Images
Block stock closed up 16% Friday, a day after the payments company reported fourth-quarter earnings that beat analysts’ estimates on gross profit and showed strong growth in its Square and Money App revenue.
Here’s how the corporate did, in comparison with analysts’ consensus from LSEG, formerly often called Refinitiv:
- Earnings per share: 45 cents adjusted, not comparable to estimates
- Revenue: $5.77 billion vs. $5.70 billion expected
Block posted $2.03 billion in gross profit, up 22% from a 12 months ago. Analysts are inclined to give attention to gross profit as a more accurate measurement of the corporate’s core transactional businesses.
The corporate raised its adjusted EBITDA forecast to at the very least $2.63 billion from $2.40 billion.
Block, formerly often called Square, ended the 12 months with 56 million monthly transacting actives for Money App in December, with most of those customers using it for either peer-to-peer payments or the Money App Card.
Its Money App business reported $1.18 billion in gross profit, a 25% year-over-year rise.
The corporate, which is run by Jack Dorsey, said its Money App Card has 23 million monthly actives in December, up 20%. That’s greater than two times the expansion rate of total monthly actives.
“We consider this strategy will enable us to construct the biggest network in the long term, with a highly engaged customer base using Money App as their primary banking solution,” Dorsey said in a note to shareholders.
The payments firm has focused on slimming down operations in recent months. In January, the Block CEO reportedly said in a note to staffers that the corporate had laid off a “large number” of employees. This followed one other round of layoffs in December.
Dorsey said in his note to shareholders that the corporate was now below a previously set cap of 12,000 employees.
“We’ll operate under this cover until we feel it’s holding us back, which is probably going years out,” Dorsey wrote. The corporate recorded a $70 million charge for severance costs.
The corporate also took an $132 million impairment on its investment in music streaming service Tidal. Block and Dorsey have had a mixed dealmaking record. The corporate sold delivery service Caviar to DoorDash in 2019 in a $410 million cash-and-stock deal. It also acquired Afterpay in 2021 for $29 billion, its largest acquisition ever.
Afterpay has struggled because the deal announcement, posting successive quarters of losses throughout 2022. Dorsey said in his note to shareholders that integrating Afterpay more tightly into Money App and using it to power Money App’s buy-now, pay-later technology were two focuses for 2024.
Block’s strong quarterly results and full-year outlook prompted Wall Street analysts to upgrade their rating of the stock on Friday.
Wells Fargo upgraded Block to obese and raised its price goal from $65 to $95, while Seaport Research Partners upgraded the stock to a buy and in addition hiked its price goal to $95.
“SQ’s progress over the past several months when it comes to streamlining itself organizationally, sharpening its focus inside its two key businesses Square and Money App, and becoming hyper-focused on driving profitable growth has been impressive,” the Seaport Research Partners analysts wrote. “We predict there’s more to go.”
— CNBC’s Michael Bloom, Rohan Goswami, Alex Koller and Kate Rooney contributed to this report.
WATCH: Block shares pop on earnings beat