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Block's (SQ) Q1 Earnings Beat Estimates, Revenues Up Y/Y
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Block (SQ - Free Report) reported first-quarter 2023 adjusted earnings of 40 cents per share, beating the Zacks Consensus Estimate by 29%. The figure improved by 122.2% year over year.
Net revenues of $4.99 billion surpassed the Zacks Consensus Estimate of $4.58 billion. The top line increased by 26% from the prior-year quarter.
Year-over-year revenue growth was driven by strong momentum across the Cash App ecosystem, which contributed $3.27 billion to net revenues for the reported quarter, up 33% year over year.
Block witnessed solid traction across the Square ecosystem, generating $1.67 billion in net revenues, up 15% year over year.
The company’s Corporate & Other — comprising the global music and entertainment platform TIDAL — generated $51 million in net revenues for the first quarter.
Further, Block witnessed strong growth in transaction and subscription revenues.
Additionally, accelerating gross payment volume (GPV) drove the results.
GPV in the first quarter amounted to $51.12 billion, up 17% from the year-ago quarter. This was driven by strength across the Square ecosystem. Notably, Square’s GPV was $46.2 billion (90.4% of the total GPV) in the first quarter, up 17% year over year.
Cash App, which accounted for $4.9 billion of the overall GPV (9.6%), remained a positive. The figure increased by 24% year over year.
Block continued to experience improvement in its card-present volumes in the reported quarter. Card-present GPV was up 21% from the year-ago quarter.
The company’s card-not-present GPV reflected year-over-year growth of 10% in the first quarter.
Top Line Details
Transaction (28.5% of net revenues): The company generated transaction revenues of $1.42 billion, up 15% year over year. Strong Square ecosystem accounted for $1.29 billion in transaction revenues, up 15% year over year. Further, Cash App contributed $135 million to transaction revenues, up 23% year over year, owing to the rising number of transactions and business accounts.
Subscription and Services (27.4% of net revenues): The company generated $1.37 billion in revenues from this category, jumping 42% from the year-ago quarter. The improvement can be attributed to a strong performance by the Square ecosystem, which contributed $342 million to subscription and service revenues, up 21% year over year. Further, Cash App contributed $974 million to the category’s top line. The figure was up 56% from the year-ago quarter. Moreover, a well-performing BNPL platform contributed well.
Hardware (0.7% of net revenues): Block generated revenues of $37 million from the business, which grew 0.3% year over year.
Bitcoin (43.4% of net revenues): The company generated revenues of $2.2 billion from the category, up 25% year over year.
Operating Details
Per management, gross profit grew 32% from the year-ago quarter to $1.7 billion. The gross margin expanded by 170 basis points (bps) year over year to 34.4%.
Adjusted EBITDA was $368 million in the reported quarter, up 89% year over year.
Operating expenses were $1.7 billion, up 13% from the prior-year quarter.
Product development expenses were $627 million, up 37% year over year, primarily due to rising headcount and personnel costs in the engineering, data science and design teams.
General and administrative expenses were $433 million, down 3% from the prior-year quarter.
Sales and marketing costs were $496 million, up 11% year over year due to an increase in Cash App peer-to-peer processing costs.
The adjusted operating income was $51 million in the reported quarter compared with an operating loss of $42 million reported in the year-ago quarter.
Balance Sheet & Cash Flow
As of Mar 31, 2023, the cash and cash equivalent balance was $5.1 billion, up from $4.54 billion on Dec 31, 2022.
Short-term investments were $1.02 billion for the reported quarter, down from $1.08 billion in the previous quarter.
Long-term debt was $4.1112 billion compared with $4.109 billion in the prior quarter.
The company generated $294.4 million in cash from operations in the reported quarter.
Agilent Technologies is set to report second-quarter fiscal 2023 results on May 23. The Zacks Consensus Estimate for A’s earnings is pegged at $1.27 per share, implying growth of 12.4% from the year-ago quarter’s reported figure. A has lost 11.6% in the year-to-date period.
DigitalOcean is scheduled to release first-quarter 2023 results on May 9. The Zacks Consensus Estimate for DOCN’s earnings is pegged at 29 cents per share, suggesting a jump from 7 cents per share reported in the prior-year quarter. DOCN has gained 25.5% in the year-to-date period.
Paycor HCM is scheduled to report third-quarter fiscal 2023 results on May 10. The Zacks Consensus Estimate for PYCR’s earnings is pegged at 15 cents per share, suggesting an increase of 36.4% from the prior-year quarter’s reported figure. PYCR has gained 26% in the year-to-date period.
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Block's (SQ) Q1 Earnings Beat Estimates, Revenues Up Y/Y
Block (SQ - Free Report) reported first-quarter 2023 adjusted earnings of 40 cents per share, beating the Zacks Consensus Estimate by 29%. The figure improved by 122.2% year over year.
Net revenues of $4.99 billion surpassed the Zacks Consensus Estimate of $4.58 billion. The top line increased by 26% from the prior-year quarter.
Year-over-year revenue growth was driven by strong momentum across the Cash App ecosystem, which contributed $3.27 billion to net revenues for the reported quarter, up 33% year over year.
Block witnessed solid traction across the Square ecosystem, generating $1.67 billion in net revenues, up 15% year over year.
The company’s Corporate & Other — comprising the global music and entertainment platform TIDAL — generated $51 million in net revenues for the first quarter.
Further, Block witnessed strong growth in transaction and subscription revenues.
Additionally, accelerating gross payment volume (GPV) drove the results.
Block, Inc. Price, Consensus and EPS Surprise
Block, Inc. price-consensus-eps-surprise-chart | Block, Inc. Quote
GPV
GPV in the first quarter amounted to $51.12 billion, up 17% from the year-ago quarter. This was driven by strength across the Square ecosystem. Notably, Square’s GPV was $46.2 billion (90.4% of the total GPV) in the first quarter, up 17% year over year.
Cash App, which accounted for $4.9 billion of the overall GPV (9.6%), remained a positive. The figure increased by 24% year over year.
Block continued to experience improvement in its card-present volumes in the reported quarter. Card-present GPV was up 21% from the year-ago quarter.
The company’s card-not-present GPV reflected year-over-year growth of 10% in the first quarter.
Top Line Details
Transaction (28.5% of net revenues): The company generated transaction revenues of $1.42 billion, up 15% year over year. Strong Square ecosystem accounted for $1.29 billion in transaction revenues, up 15% year over year. Further, Cash App contributed $135 million to transaction revenues, up 23% year over year, owing to the rising number of transactions and business accounts.
Subscription and Services (27.4% of net revenues): The company generated $1.37 billion in revenues from this category, jumping 42% from the year-ago quarter. The improvement can be attributed to a strong performance by the Square ecosystem, which contributed $342 million to subscription and service revenues, up 21% year over year. Further, Cash App contributed $974 million to the category’s top line. The figure was up 56% from the year-ago quarter. Moreover, a well-performing BNPL platform contributed well.
Hardware (0.7% of net revenues): Block generated revenues of $37 million from the business, which grew 0.3% year over year.
Bitcoin (43.4% of net revenues): The company generated revenues of $2.2 billion from the category, up 25% year over year.
Operating Details
Per management, gross profit grew 32% from the year-ago quarter to $1.7 billion. The gross margin expanded by 170 basis points (bps) year over year to 34.4%.
Adjusted EBITDA was $368 million in the reported quarter, up 89% year over year.
Operating expenses were $1.7 billion, up 13% from the prior-year quarter.
Product development expenses were $627 million, up 37% year over year, primarily due to rising headcount and personnel costs in the engineering, data science and design teams.
General and administrative expenses were $433 million, down 3% from the prior-year quarter.
Sales and marketing costs were $496 million, up 11% year over year due to an increase in Cash App peer-to-peer processing costs.
The adjusted operating income was $51 million in the reported quarter compared with an operating loss of $42 million reported in the year-ago quarter.
Balance Sheet & Cash Flow
As of Mar 31, 2023, the cash and cash equivalent balance was $5.1 billion, up from $4.54 billion on Dec 31, 2022.
Short-term investments were $1.02 billion for the reported quarter, down from $1.08 billion in the previous quarter.
Long-term debt was $4.1112 billion compared with $4.109 billion in the prior quarter.
The company generated $294.4 million in cash from operations in the reported quarter.
Zacks Rank & Stocks to Consider
Currently, Block has a Zacks Rank #3 (Hold).
Investors interested in the broader technology sector can consider some better-ranked stocks like Agilent Technologies (A - Free Report) , DigitalOcean (DOCN - Free Report) and Paycor HCM (PYCR - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Agilent Technologies is set to report second-quarter fiscal 2023 results on May 23. The Zacks Consensus Estimate for A’s earnings is pegged at $1.27 per share, implying growth of 12.4% from the year-ago quarter’s reported figure. A has lost 11.6% in the year-to-date period.
DigitalOcean is scheduled to release first-quarter 2023 results on May 9. The Zacks Consensus Estimate for DOCN’s earnings is pegged at 29 cents per share, suggesting a jump from 7 cents per share reported in the prior-year quarter. DOCN has gained 25.5% in the year-to-date period.
Paycor HCM is scheduled to report third-quarter fiscal 2023 results on May 10. The Zacks Consensus Estimate for PYCR’s earnings is pegged at 15 cents per share, suggesting an increase of 36.4% from the prior-year quarter’s reported figure. PYCR has gained 26% in the year-to-date period.