Block
The company is seeing a big rebound due to increased economic activity in the use of its in-person payment devices. In addition, the company's growth in terms of digital wallets is also intact, unlike many other high-multiple, growth stocks that have seen a sharp deceleration in the post-pandemic economy.
This is one reason that Block has outperformed many of its peers despite some very heavy losses. Overall, the stock is 56% below its all-time highs from its August 2021 highs and has given back about ⅔ of its gains from the market bottom in March 2020. Still, it's up nearly 40% from its recent lows, and the recent earnings report is a positive development.
Inside the Numbers
In Q4, Block reported earnings per share of $0.27, beating expectations of $0.22 per share. Revenue met expectations at $4.1 billion, while gross payment volume (GPV) beat expectations at $46.3 billion vs $46 billion. Overall, GPV increased by 44.7%, an acceleration from the previous quarter, while revenue was 29% higher and earnings were down by 30%.
Block's transaction-based revenue in Q4 was $1.3 billion, a 41% increase. This is the second-largest source of revenue following cryptocurrency revenue which is 49% of total revenue.
Block is also digesting its acquisition of Afterpay, an Australian fintech company that offers 'buy now, pay later' (BNPL) services. The company is planning to integrate Afterpay into its Square ecosystem and Cash App platform. One challenge may be increased regulatory scrutiny about BNPL.
Next quarter, the company warned that GPV will likely be lower than the current quarter. However, it sees gross profits increasing for the Cash app and Square sellers. Such slowing is already discounted in the stock price, however, its surprise acceleration and better than expected gross profits may not be which explains the stock's recent gains
