Block shares were rising early Friday after the payments company said gross profit for its Cash App rose 26% from a year earlier.
Block (ticker: SQ) posted first-quarter adjusted earnings of 18 cents a share, missing analysts’ forecasts by 2 cents. Revenue in the quarter was nearly $4 billion, down from $5.1 billion a year earlier and below analysts’ forecasts of $4.1 billion. The company cited a decrease in Bitcoin revenue for the shortfall. Excluding Bitcoin, total net revenue in the first quarter would have risen 44% to $2.23 billion.
Total gross profit in the quarter was about $1.29 billion, up 34% from a year earlier and roughly in line with Wall Street forecasts. Gross profit for Cash App, Block’s consumer mobile payment service, was $624 million and revenue was $2.46 billion. Square had gross profit of $661 million, up 41% year over year, and revenue of $1.44 billion.
Analysts at BTIG said Block’s first-quarter report “helped to demonstrate that its Cash App and Square seller ecosystems remain relevant to their users and that international markets could provide the avenue through which it could generate sustained growth in the quarters and years ahead.”
BTIG reiterated its Buy rating on Block but reduced its price target to $175 from $230, saying that “investors’ willingness to pay fuller multiples for growth stories has waned.”
Evercore ISI analysts said Cash App’s gross profit growth “appears poised to reaccelerate following the lapping of difficult comparisons tied to the year-earlier, one-time positive impacts from fiscal stimulus.”
The analysts maintained their Outperform rating on the stock, saying that Block, which changed its corporate name from Square in late 2021, “continues to be the most disruptive company in payments and banking, in our view. Rapid innovation should fuel continued [total addressable market] expansion.”
Block shares rose 6.7% in premarket trading Friday to $101.93, rebounding from a swoon of 10.5% during Thursday’s sharp Wall Street selloff, particularly in tech stocks.
Write to Joe Woelfel at [email protected]
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