Shares of fintech firm Block surged as much as 19 per cent in after-hours trading in the US overnight Thursday, after the company reported third-quarter earnings that beat analyst estimates on the top and bottom line and showed strong growth in both Cash App and Square revenue.
Here’s how the company did, compared to an analyst consensus from LSEG, formerly Refinitiv:
- Earnings per share: US55¢, adjusted, vs. US47¢ expected
- Revenue: $US5.62 billion, vs. $US5.44b expected
The company also hiked its guidance.
The company had previously guided to $US1.5b in full-year adjusted EBITDA but now expects adjusted EBITDA to come in between $US1.66b and $US1.68b.
The company is guiding to adjusted full-year operating income of $US205 million to $US225m, a sharp increase from prior guidance of $US25m. Analysts surveyed by LSEG had expected full-year revenue guidance to come in at $US21.54b. The company didn’t provide full-year revenue guidance but did guide to $US875m in adjusted operating income for 2024.
Additionally, Block now expects 2023 gross profit ranging from $US7.44b to $US7.46b.
“In 2024 we expect a significant improvement in adjusted operating income margin on a year-over-year basis in 2024 compared to 2023. Our outlook does not assume any additional macroeconomic deterioration, which could impact our results,” the company said in its shareholder letter.
During Q3, net revenue grew 24 per cent year-over-year, from $US4.52b to $US5.62b. Bitcoin revenue climbed from $US1.76b to $US2.42b year-over-year. Gross profit climbed 21 per cent compared to the year-ago period, from $US1.57b to $US1.9b.
Adjusted EBITDA came in at $US477m, compared to $US327m in the year-ago period. There was particularly strong growth in Block’s payment platform, Cash App, and its point-of-sale suite, Square. Cash App revenue was $US3.58b, growing 34 per cent year-over-year, while Square revenue grew 12 per cent year-over-year to $US1.98b.
“We’ve been quiet lately because we’ve been focused,” Block co-founder Jack Dorsey said in a letter to shareholders.
Block was the target of a short-seller attack earlier this year which alleged its Cash App product facilitated fraud.
“We want to thank all of you for your trust and continued belief in our work. We will work to balance that trust with accountability, some of which I hope this letter provides,” Dorsey’s letter concluded.
Dorsey said the company would focus on its go-to-market strategy, targeting local restaurants and services businesses to grow, and would refocus engineering talent using AI technology.
CNBC