Block (Square) Shares Rise on Strong Q3 Cash App Growth

SQ beat adjusted EPS estimates and matched on revenue

Image of Square credit card payment system

Key Takeaways

  • Block's stock surged by 14% in after-hours trading following its Q3 fiscal report.
  • Gross payment volume (GPV) climbed 20% and came in above analysts' predictions.
  • GPV measures the total dollar amount of card payments processed by sellers on the company's payment ecosystem.
Block (Square) Earnings Results
Metric Beat/Miss/Match Reported Value Analysts' Prediction
Adjusted Earnings Per Share Beat $0.42 $0.28
Revenue Match $4.5B $4.5B
Gross Payment Volume Beat $54.4B $54.3B

Source: Predictions based on analysts’ consensus from Visible Alpha

Block (SQ) Financial Results: Analysis

Block Inc. (SQ), whose Cash App is among the world's 10 top payments services, jumped 13% in New York trading after it beat analyst predictions for profit and matched on revenue for the third quarter, reflecting growth across its Cash App ecosystem and in subscription and services-based offerings.

Block’s adjusted earnings per share (EPS), excluding certain items, rose to $0.42, compared with a consensus estimate of $0.37. Revenue increased 17% to $4.5 billion, matching predictions.

Block said its Cash App revenue climbed by 51% to $774 million as the company streamlined banking services through the app and had growth in its Cash App Card. Still, economic headwinds have hampered growth for payment service companies even as apps and services focused on the industry proliferate, raising the potential for a shift in market share. Apple Inc. (AAPL) and Alphabet Inc. (GOOGL) are entering the market alongside startups.

SQ Gross Payment Volume

Block's gross payment volume (GPV), the firm's main gauge of total dollars transacted through its payment ecosystems, climbed by 20% to $54.4 billion, topping analyst predictions. Because Block charges transaction fees on those payments, the greater the GPV, the more transaction-based revenue the company is able to generate.

SQ Outlook and Stock Performance

Block didn't provide forward guidance in its fiscal release.

Block shares were up 13% as of 4:28 p.m. New York time. The company's stock has fallen by 79% in the past year, compared with a 20% drop in the S&P 500 Index.

Block's next earnings report (for Q4 FY 2022) is expected to be released on Feb. 22, 2023.

Article Sources
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  2. Visible Alpha. "Financial Data."

  3. "Mobile Payments App Revenue and Usage Statistics (2022)."

  4. Block Inc. "Block Shareholder Letter Q3 2022," Pages 4-5.

  5. McKinsey. "The Chessboard Rearranged: Rethinking the Next Moves in Global Payments."

  6. Yahoo! Finance. "Block, Inc. (SQ)."

  7. TradingView. "Price Chart: SQ and S&P 500."

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