block The payments company’s stock price rose 19% on Friday, the next day. report In the fourth quarter, gross profit exceeded analyst expectations, and Square and Cash App revenue also showed strong growth.
Here’s how the company performed compared to the LSEG (formerly Refinitiv) analyst consensus:
- Earnings per share: 45 cents, adjusted. Estimates cannot be compared.
- Revenue: $5.77 billion vs. $5.70 billion expected
Block’s gross profit increased 22% year over year to $2.03 billion. Analysts tend to focus on gross profit as a more accurate measure of a company’s core trading business.
The company raised its adjusted EBITDA forecast to at least $2.63 billion from $2.4 billion.
Block, formerly known as Square, ended the year with 56 million monthly active Cash App transactions in December, with most of its customers using it for either peer-to-peer payments or the Cash App Card. Ta.
The company reported gross profit for its Cash App business of $1.18 billion, an increase of 25% year over year.
The company, run by Jack Dorsey, said monthly active users of its Cash App card rose 20% to 23 million in December. This is more than double his total monthly active growth rate.
“We believe this strategy will allow us to build the largest network over the long term of a highly engaged customer base that uses Cash App as their primary banking solution,” Dorsey said in a note to shareholders. .
Payment companies have focused on streamlining their operations in recent months. In January, Block CEO reportedly said in a memo to employees that the company had laid off “a number” of employees. This follows further layoffs in December.
Dorsey said in a memo to shareholders that the company’s workforce has fallen below a previously set cap of 12,000 employees.
“We intend to operate under this cap until we feel it is holding us back, which will likely take many years,” Dorsey wrote. The company recorded $70 million in severance benefits.
The company also recorded a $132 million impairment charge on its investment in music streaming service Tidal. Bullock and Dorsey’s trading history is mixed. The company sold delivery service Caviar to DoorDash in 2019 in a $410 million cash and stock deal. In 2021, it acquired Afterpay for $29 billion, making it the company’s largest acquisition in its history.
Afterpay has struggled since the deal was announced. consecutive quarters of loss Dorsey said in a note to shareholders that two of his focuses in 2024 are integrating Afterpay more tightly into Cash App and using it to power Cash App’s buy now, pay later technology. said.
Wall Street analysts upgraded their ratings on the company on Friday after Block’s strong quarterly results and full-year outlook.
Wells Fargo upgraded Block to overweight and raised its price target from $65 to $95, while Seaport Research Partners upgraded the stock to buy and raised its price target to $95.
Analysts at Seaport Research Partners said: “We are focused on organically streamlining and focusing on our two core businesses, Square and Cash App, and driving profitable growth. “SQ’s progress over the past few months has been remarkable.” “I think there is still work to be done.”
CNBC’s Michael Bloom, Rohan Goswami, Alex Kohler and Kate Rooney contributed to this report.
Watch: Block stocks soar as they outperform profits