Block shares surge after company announces surprise profit

There was particularly strong growth in Block's payment platform, Cash App, and its point-of-sale suite, Square.

FrankLin FrankLin
Feb 23, 2024 - 21:05
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Block shares surge after company announces surprise profit

Jack Dorsey, co-founder and chief executive officer of Twitter Inc. and Square Inc., listens during the Bitcoin 2021 conference in Miami, Florida, on Friday, June 4, 2021.

Eva Marie Uzcategui | Bloomberg | Getty Images

Block stock rose 20% in Friday morning trading after the payments company reported fourth-quarter earnings that beat analyst estimates on gross profit and showed strong growth in its Square and Cash App revenue.

Here's how the company did, compared to an analyst consensus from LSEG, formerly 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 year ago. Analysts tend to focus on gross profit as a more accurate measurement of the company's core transactional businesses.

The company raised its adjusted EBITDA forecast to at least $2.63 billion from $2.40 billion.

Block, formerly known as Square, ended the year with 56 million monthly transacting actives for Cash App in December, with most of those customers using it for either peer-to-peer payments or the Cash App Card.

Its Cash App business reported $1.18 billion in gross profit, a 25% year-over-year rise.

The company, which is run by Jack Dorsey, said its Cash App Card has 23 million monthly actives in December, up 20%. That is more than two times the growth rate of total monthly actives.

"We believe this strategy will enable us to build the largest network in the long run, with a highly engaged customer base using Cash 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 company had laid off a "large number" of workers. This followed another round of layoffs in December.