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Block (SQ - Free Report) reported second-quarter 2024 adjusted earnings of 93 cents per share, which surged 132.5% year over year. The figure surpassed the Zacks Consensus Estimate by 22.4%.
Net revenues of $6.16 billion missed the Zacks Consensus Estimate by 1.1%. The top line, however, increased 11% from the prior-year quarter.
Year-over-year revenue growth was driven by strong momentum across the Cash App ecosystem, which contributed $4.13 billion to net revenues in the reported quarter, up 12% year over year. Strength across the BNPL platform, Cash App Card and Cash App Borrow benefited the Cash App performance.
Block witnessed solid traction across the Square ecosystem, generating $1.98 billion in revenues, up 9% year over year.
The company witnessed strong growth in subscription revenues. Increasing Bitcoin revenues was positive.
Its growing gross payment volume (GPV) drove the results.
GPV in the second quarter amounted to $61.94 billion, up 5% from the year-ago quarter. The figure lagged the Zacks Consensus Estimate of $63.3 billion.
GPV growth was driven by strength across the Square ecosystem. Square’s GPV was $58.37 billion (94.2% of the total GPV) in the second quarter, up 8% year over year.
Cash App accounted for $3.57 billion of the overall GPV (5.8%), which was a positive. The figure decreased 27% year over year.
Block continued to experience improvements in its card-present volumes in the reported quarter. The card-present GPV was up 9% from the year-ago quarter.
The company’s card-not-present GPV reflected year-over-year growth of 4% in the second quarter.
Top-Line Details
Transaction (28% of Net Revenues): The company generated transaction revenues of $1.71 billion, up 5% year over year. The figure lagged the consensus mark of $1.75 billion.
Strong Square ecosystem accounted for $1.61 billion in transaction revenues, up 7% year over year. Cash App contributed $99 million to transaction revenues, down 26% year over year.
Subscription and Services (29% of Net Revenues): The company generated $1.79 billion in revenues from this category, jumping 22% from the year-ago quarter. The figure surpassed the Zacks Consensus Estimate of $1.73 billion.
The year-over-year improvement can be attributed to the Square ecosystem’s strong performance, which contributed $323 million to subscription and service revenues, up 23% year over year. Cash App contributed $1.42 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 (1% of Net Revenues): Block generated revenues of $42.96 million from the business, which fell 5% year over year. The figure beat the consensus mark of $39.78 million.
Bitcoin (42% of Net Revenues): The company generated revenues of $2.61 billion from the category, up 9% year over year. The figure missed the consensus mark of $2.75 billion.
Operating Details
Per management, gross profit grew 20% from the year-ago quarter to $2.23 billion. The gross margin expanded 260 basis points to 36.3%.
Adjusted EBITDA was $759 million in the reported quarter, up 98% year over year.
Operating expenses were $1.93 billion, down 4% from the prior-year quarter.
Product development expenses were $713 million, up 3% year over year, primarily due to rising software and cloud computing infrastructure fees.
General and administrative expenses were $474 million, down 14% from the prior-year quarter.
Sales and marketing costs were $508 million, down 6% year over year due to a decrease in Cash App marketing expenses.
The adjusted operating income was $399.12 million in the reported quarter, which represents a significant jump from $25.5 million reported in the year-ago quarter.
Balance Sheet
As of Jun 30, 2024, the cash and cash equivalent balance was $7.8 billion, up from $5.75 billion as of Mar 31, 2024.
Short-term investments were $658 million in the reported quarter, up from $573.4 million in the previous quarter.
The long-term debt was $5.1 billion compared with $3.12 billion in the prior quarter.
Guidance
For the third quarter of 2024, Block expects gross profit of $2.22 billion, suggesting year-over-year growth of 17%.
Adjusted EBITDA for the third quarter is anticipated to be $695 million.
Adjusted operating income is expected to be $320 million.
For 2024, the company raised its guidance for gross profit from $8.78 billion to $8.89 billion, indicating growth of 18% from the 2023 actual.
The guidance for 2024 adjusted EBITDA was increased from $2.76 billion to $2.90 billion.
Management also revised the guidance for operating income from $1.30 billion to $1.44 billion.
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Block (SQ) Q2 Earnings Beat Estimates, Revenues Increase Y/Y
Block (SQ - Free Report) reported second-quarter 2024 adjusted earnings of 93 cents per share, which surged 132.5% year over year. The figure surpassed the Zacks Consensus Estimate by 22.4%.
Net revenues of $6.16 billion missed the Zacks Consensus Estimate by 1.1%. The top line, however, increased 11% from the prior-year quarter.
Year-over-year revenue growth was driven by strong momentum across the Cash App ecosystem, which contributed $4.13 billion to net revenues in the reported quarter, up 12% year over year. Strength across the BNPL platform, Cash App Card and Cash App Borrow benefited the Cash App performance.
Block witnessed solid traction across the Square ecosystem, generating $1.98 billion in revenues, up 9% year over year.
The company witnessed strong growth in subscription revenues. Increasing 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 second quarter amounted to $61.94 billion, up 5% from the year-ago quarter. The figure lagged the Zacks Consensus Estimate of $63.3 billion.
GPV growth was driven by strength across the Square ecosystem. Square’s GPV was $58.37 billion (94.2% of the total GPV) in the second quarter, up 8% year over year.
Cash App accounted for $3.57 billion of the overall GPV (5.8%), which was a positive. The figure decreased 27% year over year.
Block continued to experience improvements in its card-present volumes in the reported quarter. The card-present GPV was up 9% from the year-ago quarter.
The company’s card-not-present GPV reflected year-over-year growth of 4% in the second quarter.
Top-Line Details
Transaction (28% of Net Revenues): The company generated transaction revenues of $1.71 billion, up 5% year over year. The figure lagged the consensus mark of $1.75 billion.
Strong Square ecosystem accounted for $1.61 billion in transaction revenues, up 7% year over year. Cash App contributed $99 million to transaction revenues, down 26% year over year.
Subscription and Services (29% of Net Revenues): The company generated $1.79 billion in revenues from this category, jumping 22% from the year-ago quarter. The figure surpassed the Zacks Consensus Estimate of $1.73 billion.
The year-over-year improvement can be attributed to the Square ecosystem’s strong performance, which contributed $323 million to subscription and service revenues, up 23% year over year. Cash App contributed $1.42 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 (1% of Net Revenues): Block generated revenues of $42.96 million from the business, which fell 5% year over year. The figure beat the consensus mark of $39.78 million.
Bitcoin (42% of Net Revenues): The company generated revenues of $2.61 billion from the category, up 9% year over year. The figure missed the consensus mark of $2.75 billion.
Operating Details
Per management, gross profit grew 20% from the year-ago quarter to $2.23 billion. The gross margin expanded 260 basis points to 36.3%.
Adjusted EBITDA was $759 million in the reported quarter, up 98% year over year.
Operating expenses were $1.93 billion, down 4% from the prior-year quarter.
Product development expenses were $713 million, up 3% year over year, primarily due to rising software and cloud computing infrastructure fees.
General and administrative expenses were $474 million, down 14% from the prior-year quarter.
Sales and marketing costs were $508 million, down 6% year over year due to a decrease in Cash App marketing expenses.
The adjusted operating income was $399.12 million in the reported quarter, which represents a significant jump from $25.5 million reported in the year-ago quarter.
Balance Sheet
As of Jun 30, 2024, the cash and cash equivalent balance was $7.8 billion, up from $5.75 billion as of Mar 31, 2024.
Short-term investments were $658 million in the reported quarter, up from $573.4 million in the previous quarter.
The long-term debt was $5.1 billion compared with $3.12 billion in the prior quarter.
Guidance
For the third quarter of 2024, Block expects gross profit of $2.22 billion, suggesting year-over-year growth of 17%.
Adjusted EBITDA for the third quarter is anticipated to be $695 million.
Adjusted operating income is expected to be $320 million.
For 2024, the company raised its guidance for gross profit from $8.78 billion to $8.89 billion, indicating growth of 18% from the 2023 actual.
The guidance for 2024 adjusted EBITDA was increased from $2.76 billion to $2.90 billion.
Management also revised the guidance for operating income from $1.30 billion to $1.44 billion.
Zacks Rank & Stocks to Consider
Currently, Block has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader business services sector are HNI (HNI - Free Report) , Affirm (AFRM - Free Report) and APi Group (APG - Free Report) . HNI sports a Zacks Rank #1 (Strong Buy) at present, while Affirm and APi Group carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
HNI shares have gained 31.3% in the year-to-date period. The long-term earnings growth rate for HNI is currently projected at 12%.
Affirm shares have gained 41.5% in the year-to-date period. The long-term earnings growth rate for AFRM is currently projected at 27.36%.
APi Group shares have gained 16.4% in the year-to-date period. The long-term earnings growth rate for APG is currently projected at 18.21%.