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Block's (SQ) Q3 Earnings & Revenues Beat Estimates, Up Y/Y
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Block (SQ - Free Report) reported third-quarter 2023 adjusted earnings of 55 cents per share, beating the Zacks Consensus Estimate of 44 cents. The figure improved 31% year over year.
Net revenues of $5.62 billion surpassed the Zacks Consensus Estimate by 3.89%. The top line increased 24.4% year over year.
Year-over-year revenue growth was driven by strong momentum across the Cash App ecosystem, which contributed $3.59 billion to net revenues for the reported quarter, up 33.5% year over year.
Block witnessed solid traction across the Square ecosystem, generating $1.98 billion in net revenues, up 11.7% year over year.
The company’s Corporate & Other — comprising the global music and entertainment platform TIDAL — generated $50.2 million in net revenues for the third quarter.
Block witnessed strong growth in transaction and subscription revenues. Accelerating Bitcoin revenues was positive. Its growing gross payment volume (GPV) drove results.
GPV Details
GPV in the third quarter amounted to $60.1 billion, up 10.5% year over year. The figure lagged the Zacks Consensus Estimate of $61.2 billion.
GPV growth was driven by strength across the Square ecosystem. Square’s GPV was $55.7 billion (92.7% of the total GPV) in the third quarter, up 11.3% year over year.
Cash App, which accounted for $4.4 billion of the overall GPV (7.3%), remained a positive. The figure increased 1.1% year over year.
Cash App Pay volumes have experienced rapid growth over the past quarter. As of September, there were more than 2 million Cash App Pay monthly actives, doubling since June. Cash App Card reached 22 million monthly actives as of September, with approximately 30% of those transacting on any given day.
Block continued to experience improvement in its card-present volumes in the reported quarter. Card-present GPV was up 15% from the year-ago quarter. The company’s card-not-present GPV reflected year-over-year growth of 4% in the third quarter.
Top Line Details
Transaction (29.5% of net revenues): The company generated transaction revenues of $1.66 billion, up 9.3% year over year. The figure lagged the consensus mark of $1.68 billion.
Strong Square ecosystem accounted for $1.54 billion in transaction revenues, up 10% year over year.
Subscription and Services (26.6% of net revenues): The company generated $1.49 billion in revenues from this category, jumping 25.3% year over year. The figure surpassed the Zacks Consensus Estimate of $1.46 billion. The year-over-year improvement can be attributed to the Square ecosystem’s strong performance, which contributed $402 million to subscription and service revenues, up 21% year over year.
Hardware (0.8% of net revenues): Block generated revenues of $42.3 million from the business, which fell 2.4% year over year. The figure missed the consensus mark of $45.9 million.
Bitcoin (43.1% of net revenues): The company generated revenues of $2.42 billion from the category, up 37.5% year over year. The figure beat the consensus mark of $2.18 billion.
Operating Details
In third-quarter 2023, gross profit grew 21.1% year over year to $1.898 billion. The gross margin contracted 90 basis points year over year to 33.8%.
Cash App generated a gross profit of $984 million, up 27% year over year. Square generated a gross profit of $899 million, up 15% year over year.
Adjusted EBITDA was $477.5 million in the reported quarter, up 45.9% year over year.
Non-GAAP operating expenses were $1.44 billion, up 14.4% year over year.
The adjusted operating income was $89.8 million in the reported quarter compared with an operating income of $32.2 million reported in the year-ago quarter.
Balance Sheet
As of Sep 30, 2023, the cash and cash equivalent balance was $5.1 billion, up from $4.7 billion on Jun 30, 2023.
Short-term investments were $1.16 billion for the reported quarter, up from $1.12 billion in the previous quarter.
Long-term debt was $4.118 billion compared with $4.114 billion in the prior quarter.
Guidance
For the fourth quarter of 2023, Block expects gross profit between $1.96 billion and $1.98 billion, suggesting year-over-year growth between 18% and 19%.
Adjusted EBITDA for the fourth quarter is expected between $430 million and $450 million.
Adjusted operating income for the fourth quarter is expected between $40 million and $60 million.
For 2023, Block expects gross profit between $7.439 billion and $7.459 billion, indicating year-over-year growth of 24%.
Adjusted EBITDA is expected between $1.66 billion and $1.68 billion.
Adjusted operating income is expected between $205 million and $225 million.
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Block's (SQ) Q3 Earnings & Revenues Beat Estimates, Up Y/Y
Block (SQ - Free Report) reported third-quarter 2023 adjusted earnings of 55 cents per share, beating the Zacks Consensus Estimate of 44 cents. The figure improved 31% year over year.
Net revenues of $5.62 billion surpassed the Zacks Consensus Estimate by 3.89%. The top line increased 24.4% year over year.
Year-over-year revenue growth was driven by strong momentum across the Cash App ecosystem, which contributed $3.59 billion to net revenues for the reported quarter, up 33.5% year over year.
Block witnessed solid traction across the Square ecosystem, generating $1.98 billion in net revenues, up 11.7% year over year.
The company’s Corporate & Other — comprising the global music and entertainment platform TIDAL — generated $50.2 million in net revenues for the third quarter.
Block, Inc. Price, Consensus and EPS Surprise
Block, Inc. price-consensus-eps-surprise-chart | Block, Inc. Quote
Block witnessed strong growth in transaction and subscription revenues. Accelerating Bitcoin revenues was positive. Its growing gross payment volume (GPV) drove results.
GPV Details
GPV in the third quarter amounted to $60.1 billion, up 10.5% year over year. The figure lagged the Zacks Consensus Estimate of $61.2 billion.
GPV growth was driven by strength across the Square ecosystem. Square’s GPV was $55.7 billion (92.7% of the total GPV) in the third quarter, up 11.3% year over year.
Cash App, which accounted for $4.4 billion of the overall GPV (7.3%), remained a positive. The figure increased 1.1% year over year.
Cash App Pay volumes have experienced rapid growth over the past quarter. As of September, there were more than 2 million Cash App Pay monthly actives, doubling since June. Cash App Card reached 22 million monthly actives as of September, with approximately 30% of those transacting on any given day.
Block continued to experience improvement in its card-present volumes in the reported quarter. Card-present GPV was up 15% from the year-ago quarter. The company’s card-not-present GPV reflected year-over-year growth of 4% in the third quarter.
Top Line Details
Transaction (29.5% of net revenues): The company generated transaction revenues of $1.66 billion, up 9.3% year over year. The figure lagged the consensus mark of $1.68 billion.
Strong Square ecosystem accounted for $1.54 billion in transaction revenues, up 10% year over year.
Subscription and Services (26.6% of net revenues): The company generated $1.49 billion in revenues from this category, jumping 25.3% year over year. The figure surpassed the Zacks Consensus Estimate of $1.46 billion. The year-over-year improvement can be attributed to the Square ecosystem’s strong performance, which contributed $402 million to subscription and service revenues, up 21% year over year.
Hardware (0.8% of net revenues): Block generated revenues of $42.3 million from the business, which fell 2.4% year over year. The figure missed the consensus mark of $45.9 million.
Bitcoin (43.1% of net revenues): The company generated revenues of $2.42 billion from the category, up 37.5% year over year. The figure beat the consensus mark of $2.18 billion.
Operating Details
In third-quarter 2023, gross profit grew 21.1% year over year to $1.898 billion. The gross margin contracted 90 basis points year over year to 33.8%.
Cash App generated a gross profit of $984 million, up 27% year over year. Square generated a gross profit of $899 million, up 15% year over year.
Adjusted EBITDA was $477.5 million in the reported quarter, up 45.9% year over year.
Non-GAAP operating expenses were $1.44 billion, up 14.4% year over year.
The adjusted operating income was $89.8 million in the reported quarter compared with an operating income of $32.2 million reported in the year-ago quarter.
Balance Sheet
As of Sep 30, 2023, the cash and cash equivalent balance was $5.1 billion, up from $4.7 billion on Jun 30, 2023.
Short-term investments were $1.16 billion for the reported quarter, up from $1.12 billion in the previous quarter.
Long-term debt was $4.118 billion compared with $4.114 billion in the prior quarter.
Guidance
For the fourth quarter of 2023, Block expects gross profit between $1.96 billion and $1.98 billion, suggesting year-over-year growth between 18% and 19%.
Adjusted EBITDA for the fourth quarter is expected between $430 million and $450 million.
Adjusted operating income for the fourth quarter is expected between $40 million and $60 million.
For 2023, Block expects gross profit between $7.439 billion and $7.459 billion, indicating year-over-year growth of 24%.
Adjusted EBITDA is expected between $1.66 billion and $1.68 billion.
Adjusted operating income is expected between $205 million and $225 million.
Zacks Rank & Other Stocks to Consider
Block currently carries a Zacks Rank #2 (Buy).
Fidelity (FIS - Free Report) , Grab (GRAB - Free Report) and Vimeo (VMEO - Free Report) are some other top-ranked stocks that investors can consider in the broader Zacks Business Services sector, each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Fidelity shares have declined 23.1% year to date. FIS is set to report its third-quarter 2023 results on Nov 7.
Grab shares have declined 1.2% year to date. GRAB is set to report its third-quarter 2023 results on Nov 9.
Vimeo shares have declined 4.7% year to date. VMEO is set to report its third-quarter 2023 results on Nov 6.