Block reports revenue, profits that top expectations amid bitcoin drag
Payments company Block (SQ) reported fourth quarter results after Thursday’s close that beat Wall Street expectations on the top line but missed on earnings.
Consumer spending for the company remained resilient in the face of a slowing economy, the company said.
Following earnings shares of Block, formerly known as Square, rose more than 5% in after trading hours trading.
Here are headline results for the company's quarter, against data from Bloomberg:
Revenue: $4.65 billion vs. expected $4.57 billion
Adjusted earnings per share: $0.22 vs. expected $0.28
Gross profit: vs. $1.66 billion expected $1.63 billion
"Over the last year, our ecosystem model helped drive resilience as we continued to serve a diverse base of global customers across a wide range of verticals, complementary products, and use cases," Block said.
Block's point-of-sale merchant business, Square, reported gross profits of $801 million, up 22% from the prior year but outmatched for the first time since early 2021 by Cash App.
With $848 million in gross profit, the company’s consumer-facing Cash App business topped analyst forecasts of $799, up 64% year over year.
Monthly active users for Block's Cash App rose to 51 million, meeting Wall Street expectations.
"Looking ahead to 2023 and beyond, we are focused on balancing growth and efficiency and will prioritize speed, agility, and accountability. This framework will ensure we remain customer-led while building a disciplined and durable business for the long term," Block added in the release.
In the fourth quarter, bitcoin gross profit was $35 million on $1.83 billion in revenues, a lower margin on higher revenues than Wall Street anticipated. Bitcoin revenues represent the amount of bitcoin the company sold to customers during the quarter.
For full year of 2022, Cash App generated $10.6 billion of revenue and $2.95 billion of gross profit, down 14% and up 43% year over year, respectively.
The company said the decline in revenue was driven by a decrease in the total dollar amount of bitcoin sold to customers, which it recognizes as bitcoin revenue. Bitcoin gross profit was 2% of bitcoin revenue in the quarter.
Afterpay contributed $196 million in gross profit to Block’s bottom line, up from $150 million in the third quarter. Block purchased the BNPL operator for $29 billion in the summer of 2021. For the full year, Afterpay generated $588 million in gross profit.
Following the earnings release, Block published a memo showing delinquencies for Aftrerpay rose 31% to a total amortized cost of $2 billion through the fourth quarter. Rising delinquencies suggests Afterpay may need to tighten credit to customers, narrowing the division's revenue in future quarters.
During its earnings call, Block's co-founder and CEO Jack Dorsey announced CFO Amrita Ahuja will assume the roll of chief operating officer in a broader consolidation of the company's corporate teams into a single organization.
CFO Ahuja said in the coming year, Block expects to slow hiring, increasing headcount by 10% compared to 46% growth in 2022.
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