Block (Square) Q1 2022 Earnings Report Recap

^{Source: Predictions based on analysts’ consensus from Visible Alpha}

Block (SQ) Financial Results: Analysis

Block, Inc. (SQ), which changed its name from Square in December 2021, reported Q1 FY 2022 earnings that missed analyst expectations on multiple fronts. Adjusted earnings per share (EPS)came in at $0.18, one cent behind analyst predictions for the quarter. Revenue also missed analyst estimates. Quarterly revenue was $4.0 billion, down about 22% YOY and behind the predicted $4.2 billion analysts had called for. Square said that revenue declines were largely driven by a decrease in Bitcoin revenue. Excluding Bitcoin, total net revenue for the quarter increased by 44% YOY.

SQ Gross Payment Volume

Block's gross payment volume (GPV) was $43.5 billion, also short of analyst expectations. Consensus estimates had predicted $44.6 billion in gross payment volume for the quarter. GPV is a key metric that tracks the total dollar amount, net of refunds, of all card payments processed by sellers using the company's payments ecosystem. It includes peer-to-peer payments as well as transactions with merchants that use Block's mobile payments app. Block charges transaction fees on these gross payments, and those fees constitute a major source of revenue. The transaction fees are generally calculated on a percentage of the total transaction amount processed.

GPV also provides an indication of how many users the company has on its platform. If Block can attract more users to its main payments ecosystem, then it will be able to direct more traffic to its other businesses. This helps fuel more revenue because Block takes a cut of the transactions. In addition, Block's GPV has been fueled by acquisitions that provide business services to different clients, and this additional business helps spur people to use their other services beyond the company's well-known Cash App brand.

SQ Outlook and Stock Performance

Block did not provide financial guidance for upcoming quarters in its shareholder letter.

SQ shares moved up about 2.6% in after-hours trading immediately following the release of the earnings results, as of this writing. Block shares have significantly underperformed the broader market in the past year, providing one-year trailing total returns of -58.8% compared with -0.5% for the S&P 500.

Block's next earnings report (for Q2 FY 2022) is expected to be released on Aug. 3, 2022.