Block, Formerly Square, Sees Its Shares Surge After Beating Wall Street’s Estimates

Jack Dorsey’s Block saw its stock surge more than 11 percent in extended trading after the payments company reported impressive third-quarter earnings that surpassed the estimates that Wall Street had for profit.

For the third quarter, the company reported adjusted earnings per share of $0.42, surpassing analysts’ estimate of $0.23, according to Refinitiv. Third-quarter revenue came in at $4.52 billion, beating analysts’ estimate of $4.49 billion, according to Refinitiv. 

Block reported a gross profit of $1.57 billion, up 38 percent from the $1.13 billion reported a year earlier. It also surpassed Wall Street expectations of $1.53 billion. 

In a letter to its shareholders, the company which was formerly known as Square said that the company showed strong growth compared to other payments companies that have warned about imminent slowdowns due to macroeconomic challenges. Square changed its name to Block last December to reflect the expansion of its business beyond its original credit card reader business to include a focus on technologies such as blockchain.

The company said that its CashApp business generated $774 million in gross profit, up 51 percent year over year. It also added that there were more than 18 million people using its Cash debit card actively in September. This is up 40 percent year over year. The company’s point-of-sale (POS) business Square, generated a gross profit of $783 million, up 29 percent year on year. 

Analysts tend to focus on Block’s gross profit instead of its top-line results because it has bitcoin and buy-now-pay-later businesses that have small margins. Block reported that it generated $37 million from the sale of Bitcoin during the quarter on $1.76 billion in gross sales.

It also added that it registered a Bitcoin impairment loss of $2 million during the third quarter related to Bitcoin it purchased in late 2020 and early 2021. As of the end of September, the company still holds Bitcoin worth $156 million, based on the price the cryptocurrency was trading.