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Block shares plunged 16% on Friday and headed for their steepest drop since 2020 after the company reported fourth-quarter earnings that missed estimates and issued guidance for 2025 that failed to reassure investors.
In its financial report late Thursday, Block reported earnings of 71 cents per share, falling short of the average analyst estimate of 87 cents, according to LSEG. Revenue of $6.03 billion also missed expectations of $6.29 billion. The company posted $2.31 billion in gross profit for the quarter, a 14% increase year-over-year, but slightly below consensus estimates.
Competition is stiffening in the market for payments systems to small and medium-sized businesses. Analysts at Morgan Stanley noted that Square continues to lose market share to Toast, Fiserv’s Clover and Shift4. Analysts also pointed to the flattening user growth at Cash App as a concern.
Block reiterated its full-year 2025 outlook of at least 15% gross profit growth.
Square’s payment volume increased nearly 10% from a year ago, boosted by a 13% increase in the food and beverage sector. Retail transactions climbed 8%. Deutsche Bank highlighted Square’s renewed focus on industry-specific sales teams, particularly in those two areas, along with new distribution deals with T-Mobile, U.S. Foods, and SalonCentric.
Cash App remains a primary growth driver, with gross profit rising 16% year-over-year in the quarter to $1.38 billion, topping estimates. However, monthly transacting users remained at 57 million for the fourth consecutive quarter.
The company has been gradually expanding Cash App Borrow, a short-term credit offering, and integrating buy now, pay later functionality into the Cash App Card through its Afterpay acquisition.
Barclays analysts wrote in a report that while Block has a “constructive setup” for long-term growth, the turnaround has been messier than expected, with 2025 improvements not likely until the back half of the year.
CEO Jack Dorsey sought to reassure investors on the earnings call, emphasizing that Block is positioned for long-term success through continued integration of its financial services products, including Cash App, Square and its Bitcoin initiatives.
“This year is going to be one of unexpected upside,” Dorsey said, pointing to the company’s new Bitcoin mining system, Proto, which is set to launch in the second half of 2025.
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