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Block (SQ - Free Report) delivered first-quarter 2024 adjusted earnings of 85 cents per share, which improved 112.5% year over year. The figure surpassed the Zacks Consensus Estimate by 37.1%.
Net revenues of $5.96 billion surpassed the Zacks Consensus Estimate of $5.75 billion. The top line increased 19% from the prior-year quarter.
Year-over-year revenue growth was driven by strong momentum across the Cash App ecosystem, which contributed $4.17 billion to net revenues for the reported quarter, up 23% year over year. Strength across the BNPL platform, Cash App Card and bitcoin products benefited the Cash App performance.
Block witnessed solid traction across the Square ecosystem, generating $1.73 billion in revenues, up 11% year over year.
The company witnessed strong growth in subscription revenues. Accelerating bitcoin revenues was positive.
Its growing gross payment volume (GPV) drove the results.
GPV in the first quarter amounted to $54.43 billion, up 6% from the year-ago quarter. The figure lagged the Zacks Consensus Estimate of $54.9 billion.
GPV growth was driven by strength across the Square ecosystem. Square’s GPV was $50.46 billion (92.7% of the total GPV) in the fourth quarter, up 9% year over year.
Cash App accounted for $3.96 billion of the overall GPV (7.3%), which was a positive. The figure decreased 19% year over year.
Block continued to experience improvements in its card-present volumes in the reported quarter. The card-present GPV was up 12% from the year-ago quarter.
The company’s card-not-present GPV reflected year-over-year growth of 3% in the first quarter.
Top-Line Details
Transaction (25.4% of Net Revenues): The company generated transaction revenues of $1.511 billion, up 6% year over year. The figure marginally lagged the consensus mark of $1.513 billion.
Strong Square ecosystem accounted for $1.4 billion in transaction revenues, up 9% year over year. Cash App contributed $109 million to transaction revenues, down 19% year over year.
Subscription and Services (28.2% of Net Revenues): The company generated $1.68 billion in revenues from this category, jumping 23% from the year-ago quarter. The figure surpassed the Zacks Consensus Estimate of $1.61 billion.
The year-over-year improvement can be attributed to the Square ecosystem’s strong performance, which contributed $296 million to subscription and service revenues, up 29% year over year. Cash App contributed $1.33 billion to the category’s top line. The figure was up 23% from the year-ago quarter. A well-performing BNPL platform contributed well.
Hardware (0.5% of Net Revenues): Block generated revenues of $32.5 million from the business, which fell 15% year over year. The figure missed the consensus mark of $36.7 million.
Bitcoin (45.9% of Net Revenues): The company generated revenues of $2.73 billion from the category, up 26.2% year over year. The figure beat the consensus mark of $2.61 billion.
Operating Details
Per management, gross profit grew 22% from the year-ago quarter to $2.09 billion. The gross margin expanded 80 basis points year over year to 35.2%.
Adjusted EBITDA was $705 million in the reported quarter, up 91% year over year.
Operating expenses were $1.84 billion, up 7% from the prior-year quarter.
Product development expenses were $721 million, up 15% year over year primarily due to rising personnel costs in the engineering teams.
General and administrative expenses were $471 million, up 9% from the prior-year quarter.
Sales and marketing costs were $444 million, down 11% year over year due to a decrease in Cash App marketing expenses.
The adjusted operating income was $364.3 million in the reported quarter, which represents a significant jump from the $50.9 million reported in the year-ago quarter.
Balance Sheet
As of Mar 31, 2024, the cash and cash equivalent balance was $5.75 billion, up from $4.99 billion as of Dec 31, 2023.
Short-term investments were $573.4 million for the reported quarter, down from $851.9 million in the previous quarter.
The long-term debt was $3.12 billion compared with $4.12 billion in the prior quarter.
Guidance
For the second quarter of 2024, Block expects gross profit between $2.165 billion and $2.185 billion, suggesting year-over-year growth of 16-17%.
Adjusted EBITDA for the second quarter is anticipated between $670 million and $690 million.
Adjusted operating income is expected between $305 million and $325 million.
For 2024, the company raised its guidance for gross profit from $8.65 billion to $8.78 billion, indicating growth of 17% from the 2023 actual.
The guidance for 2024 adjusted EBITDA was increased from $2.63 billion to $2.76 billion.
Management also revised the guidance for operating income from $1.15 billion to $1.30 billion.
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Block (SQ) Q1 Earnings & Revenues Beat Estimates, Rise Y/Y
Block (SQ - Free Report) delivered first-quarter 2024 adjusted earnings of 85 cents per share, which improved 112.5% year over year. The figure surpassed the Zacks Consensus Estimate by 37.1%.
Net revenues of $5.96 billion surpassed the Zacks Consensus Estimate of $5.75 billion. The top line increased 19% from the prior-year quarter.
Year-over-year revenue growth was driven by strong momentum across the Cash App ecosystem, which contributed $4.17 billion to net revenues for the reported quarter, up 23% year over year. Strength across the BNPL platform, Cash App Card and bitcoin products benefited the Cash App performance.
Block witnessed solid traction across the Square ecosystem, generating $1.73 billion in revenues, up 11% year over year.
The company witnessed strong growth in subscription revenues. Accelerating bitcoin revenues was positive.
Its growing 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 $54.43 billion, up 6% from the year-ago quarter. The figure lagged the Zacks Consensus Estimate of $54.9 billion.
GPV growth was driven by strength across the Square ecosystem. Square’s GPV was $50.46 billion (92.7% of the total GPV) in the fourth quarter, up 9% year over year.
Cash App accounted for $3.96 billion of the overall GPV (7.3%), which was a positive. The figure decreased 19% year over year.
Block continued to experience improvements in its card-present volumes in the reported quarter. The card-present GPV was up 12% from the year-ago quarter.
The company’s card-not-present GPV reflected year-over-year growth of 3% in the first quarter.
Top-Line Details
Transaction (25.4% of Net Revenues): The company generated transaction revenues of $1.511 billion, up 6% year over year. The figure marginally lagged the consensus mark of $1.513 billion.
Strong Square ecosystem accounted for $1.4 billion in transaction revenues, up 9% year over year. Cash App contributed $109 million to transaction revenues, down 19% year over year.
Subscription and Services (28.2% of Net Revenues): The company generated $1.68 billion in revenues from this category, jumping 23% from the year-ago quarter. The figure surpassed the Zacks Consensus Estimate of $1.61 billion.
The year-over-year improvement can be attributed to the Square ecosystem’s strong performance, which contributed $296 million to subscription and service revenues, up 29% year over year. Cash App contributed $1.33 billion to the category’s top line. The figure was up 23% from the year-ago quarter. A well-performing BNPL platform contributed well.
Hardware (0.5% of Net Revenues): Block generated revenues of $32.5 million from the business, which fell 15% year over year. The figure missed the consensus mark of $36.7 million.
Bitcoin (45.9% of Net Revenues): The company generated revenues of $2.73 billion from the category, up 26.2% year over year. The figure beat the consensus mark of $2.61 billion.
Operating Details
Per management, gross profit grew 22% from the year-ago quarter to $2.09 billion. The gross margin expanded 80 basis points year over year to 35.2%.
Adjusted EBITDA was $705 million in the reported quarter, up 91% year over year.
Operating expenses were $1.84 billion, up 7% from the prior-year quarter.
Product development expenses were $721 million, up 15% year over year primarily due to rising personnel costs in the engineering teams.
General and administrative expenses were $471 million, up 9% from the prior-year quarter.
Sales and marketing costs were $444 million, down 11% year over year due to a decrease in Cash App marketing expenses.
The adjusted operating income was $364.3 million in the reported quarter, which represents a significant jump from the $50.9 million reported in the year-ago quarter.
Balance Sheet
As of Mar 31, 2024, the cash and cash equivalent balance was $5.75 billion, up from $4.99 billion as of Dec 31, 2023.
Short-term investments were $573.4 million for the reported quarter, down from $851.9 million in the previous quarter.
The long-term debt was $3.12 billion compared with $4.12 billion in the prior quarter.
Guidance
For the second quarter of 2024, Block expects gross profit between $2.165 billion and $2.185 billion, suggesting year-over-year growth of 16-17%.
Adjusted EBITDA for the second quarter is anticipated between $670 million and $690 million.
Adjusted operating income is expected between $305 million and $325 million.
For 2024, the company raised its guidance for gross profit from $8.65 billion to $8.78 billion, indicating growth of 17% from the 2023 actual.
The guidance for 2024 adjusted EBITDA was increased from $2.63 billion to $2.76 billion.
Management also revised the guidance for operating income from $1.15 billion to $1.30 billion.
Zacks Rank & Stocks to Consider
Currently, Block has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector are Arista Networks (ANET - Free Report) , Applied Material (AMAT - Free Report) and Dell Technologies (DELL - 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.
Arista Networks’ shares have gained 11.6% year to date. ANET is set to report its first-quarter 2024 results on May 7.
Applied Material’s shares have gained 22.4% year to date. AMAT is set to report second-quarter fiscal 2024 results on May 16.
Dell Technologies’ shares have surged 62.1% year to date. DELL is set to report its first-quarter fiscal 2025 results on May 30.