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.
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Block reported fourth-quarter results on Thursday that fell short of Wall Street expectations. The stock dropped more than 6% 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. In 2021, the company acquired Australian buy now, pay later firm Afterpay for $29 billion, integrating the service into Cash App and Square’s ecosystem. This week, Afterpay on the Cash App card begins rolling out.
Chief Financial Officer Amrita Ahuja told CNBC the product launch aims to provide customers with more credit options and positions Cash App as a banking alternative for some customers.
CEO Jack Dorsey said on the earnings call that combining more services like Cash App and Afterpay creates increased spending and engagement.
“We have a huge base of Cash Card customers that we can deploy this to,” he said. “We can do that extremely quickly. It’s easy to roll out for us and alert people proactively of entirely new utility that they can use that day, instantly.”
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 unit recorded $1.38 billion in gross profit, a 16% year-over-year increase, exceeding the $1.36 billion average analyst estimate, according to StreetAccount.
Dorsey also articulated the long-term vision of integrating Cash App and Square into a single financial ecosystem, reducing the need for users to rely on multiple apps.
“There will be a significant reason to use Cash App and not have to go to the App Store for 10 different apps,” he said. “Everything is in one app, and that will be the Cash App.”
Under Dorsey’s leadership, Block made a big jump into bitcoin, including a years-long effort to design and build mining rigs.
Block’s open bitcoin mining system is called Proto. Ahuja said on the earnings call that the company expects the initiative to start benefitting growth in the second half of 2025.
Dorsey has long said Block’s goal is to open bitcoin mining up to the masses.
“We do think the market is large, and we do think we’re poised to take a significant percentage of it,” Dorsey said.
He added that Block is manufacturing chips that it plans to roll out this year, along with its full mining systems.
“This year is gonna be one of unexpected upside in this business, and one that we significantly change the market dynamics on because of just how well our system works and how configurable it is,” he said.
— CNBC’s Robert Hum contributed to this report.
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