Block Inc. (SQ), whose Cash App is among the world's top 10 payment apps, will probably report a seventh consecutive quarter of net losses as revenue growth settles at a rate below its pre-pandemic norm.
- Block will likely report a first-quarter loss of -$0.18 per share vs. -$0.38 per share a year earlier.
- Revenue is predicted to climb more than 16% to $4.6 billion.
- Block's gross payment volume is expected to climb 17% to nearly $51 billion.
Block is forecast to post net losses of $111.8 million, or 18 cents a share, narrower than losses of over $207 million a year earlier, according to analyst estimates compiled by Visible Alpha. Analysts also predict revenue increased 16.5% year-over-year to $4.6 billion. Block reports earnings results after markets close Thursday.
Block's transaction volumes surged in the second half of 2020 as e-commerce business swelled, but inflation and fears of a recession have quelled this rapid growth. Block's gross payment volume hasn't shrunk since 2020, but year-over-year growth has slowed from a peak of 88% in the second quarter of 2021 to 15% last quarter.
Block's Cash App is one of its primary growth drivers, and analysts expect revenue to top $2.8 billion, up from $2.5 billion a year ago.
CEO Jack Dorsey will likely face questions about a March 2023 report from short seller Hindenberg Research accusing Block of inflating Cash App user counts. Block pushed back after the report was published, calling it "factually inaccurate and misleading."
Dorsey could also report on efforts to expand Cash App's banking products, including the savings accounts it launched in January. The company and competitors like Apple (AAPL) are adding traditional banking services to their platforms in an effort to retain users and become their primary banks. Big banks have responded in kind, with Bank of America (BAC), JPMorgan (JPM), and Wells Fargo (WFC) reportedly developing a digital wallet of their own.
Shares of Block are down almost 43% in the last year, while the benchmark S&P 500 Information Technology Index is up 5%.
The Key Metric: Gross Payment Volume
Block's gross payment volume (GPV) is a key metric tracking 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. Because Block charges transaction fees on those payments, the greater the GPV, the more transaction-based revenue the company is able to generate.
Block's GPV is expected to climb by more than 17% to $50.9 billion for the first quarter of the year.
|Block Key Stats|
|Estimate for Q1 FY 2023||Actual for Q1 FY 2022||Actual for Q1 FY 2021|
|Earnings Per Share ($)||-0.18||-0.38||0.08|
|Gross Payment Volume ($B)||50.9||43.5||33.1|
Visible Alpha. "Financial Data."
Block Inc. "Block to Announce First Quarter 2023 Results."
Hindenburg Research. "Block: How Inflated User Metrics and “Frictionless” Fraud Facilitation Enabled Insiders To Cash Out Over $1 Billion."
Block Inc. "Block's Response to Inaccurate Short Seller Report."
Block, Inc. "Q4 2022 Shareholder Letter." Pg. 7-8.
Block Inc. "Annual report for the fiscal year ended December 31, 2022," Page 5.