Bulk share price on watch amid missed first-quarter results

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the Block Inc. (ASX: SQ2) share price to watch on Friday.

This follows a market meltdown on Wall Street and the release of the payments giant’s first quarter update.

Block stock price on watch amid strong growth but big losses

  • Gross Payment Volume (GPV) up 31% YoY to $43.5 billion
  • Net income down 22% to US$3.96 billion
  • Net revenue excluding bitcoin up 44% to $2.23 billion
  • Gross profit up 34% YoY to US$1.29 billion
  • Net loss of US$204 million

What happened during the quarter?

For the three months ended March 31, Block reported a 22% drop in revenue to $3.96 billion. However, this was driven by weaker cryptocurrency demand. Excluding bitcoin revenue, total net revenue for the first quarter was $2.23 billion, up 44% year-over-year.

This was driven by a 72% increase in subscription and services revenue to US$960 million and a 28% increase in transaction revenue to US$1.23 billion. The latter reflects a 31% jump in GPV to $43.5 billion.

As for earnings, Block generated gross profit of US$1.29 billion, up 34% year-over-year. This reflects a 26% increase in Cash App’s gross profit to $624 million and a 41% increase in Square’s gross profit to $661 million.

The acquired Afterpay business generated $92 million in gross profit during the months of February and March, with $46 million in gross profit booked in Cash App and Square. Excluding Afterpay, gross profit was $1.2 billion, up 25% year-over-year.

Ultimately, Block posts a net loss of US$204 million. However, on an adjusted basis, Block reported earnings per share of 18 cents US.

How does this compare to expectations?

By consensus estimates, Block missed both earnings per share and revenue for the period. The former was 2 cents US short and the latter US$180 million less than expected.

However, the market seems to be looking beyond that. After falling 10.5% overnight on Wall Street due to the market selloff, Block’s stock price is bouncing back in after-hours trading.

As of this writing, the company’s NYSE-listed shares are up 8.5% after market. While this won’t recover all of the declines from last night, it won’t be bad as it seemed just an hour or two earlier.

Outlook

The catalyst for Block’s stock price rally appears to have been commentary on the company’s outlook. Block started the second quarter on a positive note, with Square GPV’s growth accelerating in April.

He commented, “For the month of April, in total, Square GPV is expected to be up 29% year-over-year. On a three-year CAGR basis, GPV growth is expected to be 24% in April, compared to 22% growth in the first quarter. »

“In April, we expect Cash App gross profit, excluding Afterpay, to grow year-on-year and three-year CAGR, driven by growth in active monthly transactions, engagement in our ecosystem, and inflows into Cash App. “

Richard L. Militello