Jack Dorsey, CEO of Square, speaks on stage at the Bitcoin 2021 Convention, a cryptocurrency conference held at the Mana Convention Center in Wynwood in Miami, Florida, on June 4, 2021.
Joe Raedle | Getty Images
Block reported fourth-quarter results on Thursday that fell short of Wall Street expectations. The stock dropped more than 7% in extended trading.
Here is how the company did, compared to analysts’ consensus estimates from LSEG.
- Earnings per share: 71 cents adjusted vs. 87 cents expected
- Revenue: $6.03 billion vs. $6.29 billion expected
Revenue increased about 4.5% from $5.77 billion a year earlier.
Block, formerly known as Square, posted $2.31 billion in gross profit, a 14% increase from $2.03 billion a year ago. The company, which was an early leader in providing point-of-sale systems for smaller businesses, faces increased competition from the likes of Toast and Fiserv’s Clover unit.
Gross payment volume came in at $61.95 billion, beating analysts’ estimates of $61.3 billion, according to StreetAccount. Block posted adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA, of $757 million, topping the $740 million average analyst estimate.
Block said it expects to deliver gross profit growth this year of 15% to $10.22 billion and adjusted operating income of $2.1 billion for a margin of 21%.
Block’s payments business has expanded beyond traditional point-of-sale transactions to include lending and financial services. The company acquired Australian buy now, pay later firm Afterpay for $29 billion in 2021, integrating the service into Cash App and Square’s ecosystem.
CEO Jack Dorsey has positioned Block’s Cash App card as a potential alternative to traditional credit cards, with plans to deepen its connection to Afterpay. Analysts see lending as a key driver of future monetization, with some pointing to additional revenue opportunities in merchant services and advertising within Cash App.
The Cash App, a popular mobile payment platform and a key driver of overall profitability, posted $1.38 billion in gross profit, a 16% year-over-year increase and ahead of the $1.36 billion average analyst estimate, according to StreetAccount.
“From a Cash App perspective, with the bank, our base strategy, it’s important that we continue to grow the engagement with our customers,” Chief Financial Officer Amrita Ahuja told CNBC. She said the number of paycheck deposit actives increased 25% to 2.5 million.
Under Dorsey’s leadership, Block made a big jump into crypto, creating a new unit focused on its efforts in that area. However, last year, the company wound down some of those projects after they failed to gain traction.
— CNBC’s Robert Hum contributed to this report.
