Block shares fell 10% Friday after weak third-quarter earnings fell short of Wall Street expectations and showed slowing profit growth for the company’s Square service.
Here is how the company did compared with LSEG estimates:
- Earnings per share: 54 cents adjusted vs. 67 cents expected
- Revenue: $6.11 billion vs. $6.31 billion expected
Revenue for the quarter was up 2% over last year. The Jack Dorsey-founded firm’s shares have fallen 24% year to date.
Square’s gross payment volume was up 12% year over year, but gross profit growth for the point-of-sale service was only up 9% over a year ago, slowing from last quarter’s 11%.
The company attributed the slower growth to a processing partner change and lower-margin hardware sales.
“Our product and go-to-market strategies are working as we continued to gain profitable market share in our target verticals like food and beverage, with larger sellers, and outside the U.S.,” Chief Financial Officer Amrita Ahuja said on the earnings call.
Cash App’s gross profit growth fared much better at $1.62 billion, increasing 24% over a year ago with 58 million monthly transacting active users. The strength was driven by the service’s Cash App Borrow, Cash App Card, and Buy Now Pay Later.
Morgan Stanley analysts wrote that they were “encouraged by the pace of credit expansion at Cash App” and are focused on “whether credit expansion will ultimately produce better inflows” per active customer and increase direct deposit accounts.
Ahuja said gross profit was a bright spot for Block, as the company reported $2.66 billion in gross profit growth, up 18% over the prior year. FactSet expected $2.60 billion in gross profit for the quarter.
The company raised its full-year guidance to expect a $10.2 billion gross profit for 2025, increasing from last quarter’s projection of $10.2 billion.
Block reported net income of $461.54 million, or 74 cents per share, which was up significantly over a year ago when the company reported net income of $283.75 million, or 45 cents per share.
Block year-to-date stock chart.
CNBC’s MacKenzie Sigalos contributed to this report.