Block (Square) Profit Seen Sliding for Fourth Straight Quarter

Focus on SQ gross payment volume

Square payment terminal
Getty Images / Smith Collection/ Gado.

Key Takeaways

  • Analysts estimate adjusted EPS of $0.28 for Q3 FY 2022 vs. $0.37 in Q3 FY 2021.
  • Gross payment volume (GPV) is expected to rise to an all-time high but at a slower pace than recent quarters.
  • GPV measures the total business transacted through the company's payment systems.

Block Inc. (SQ), whose Cash App is among the world's 10 top payments services, will probably say profit fell for a fourth straight quarter as consumers curtailed spending amid accelerating inflation and rising concern of an impending recession.

Block will probably say that adjusted earnings per share (EPS), excluding certain items, fell by almost 25% to $0.28, even as revenue rose by 16% to $4.5 billion, according to average estimates from Visible Alpha.

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.

Block's gross payment volume (GPV), the firm's main gauge of total dollars transacted through its payment ecosystems, probably grew at less than half the rate it did in the same quarter a year earlier, analysts say.

Block shares have dropped by 78% in the past year, compared with a 17% decline in the S&P 500 Index.

One Year Total Return for S&P 500 and Block
Source: TradingView.

Block (Square) Earnings History

Block posted significant profit growth in late 2020 and early 2021 before reversing course. Analysts expect profit to decline more slowly in the quarter than the past two periods.

The company's revenue accelerated through 2020 and early 2021 before slowing in the third quarter of last year. Analysts say revenue improved in the third quarter of this year, although at a modest pace.

Block (Square) Key Stats
  Estimate for Q3 FY 2022 Q3 FY 2021 Q3 FY 2020
Adjusted Earnings Per Share ($) 0.28 0.37 0.36
Revenue ($B) 4.5 3.8 3.0
Gross Payment Volume ($B) 54.3 45.4 31.7

Source: Visible Alpha

The Key Metric

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.

GPV growth accelerated from late 2020 through Q2 2021 but has slowed in recent quarters. Analysts predict that Block's GPV will grow by 20% to $54.3 billion for Q3, the slowest pace of improvement in eight quarters.

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

  2. Yahoo. "Can Block (SQ) Stock Finally Turn Things Around?"

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

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

  5. Block Inc. "Form 10-K for the Fiscal Year Ended December 31, 2021," Page 52.

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