Block shares tumble on revenue miss
Make us a preferred source
Make us a preferred source on Google
More news: ASX-listed shares of Block have tumbled nearly 7% to $111.07, tracking an after-market decline in New York, after the US payments giant missed third quarter revenue estimates.
Despite the blip, analysts remained positive on the stock.
Morningstar analysts said the company continues to make strides in improving profitability, with Cash App its strongest engine and Square delivering growth in gross payment value. The Morningstar US analysts retained their US$90 ($134.91) fair value estimate on the stock.
E&P analyst Paul Mason said the company's upgraded full year guidance and initial FY25 outlook was in line with consensus for gross profit growth but also implied further margin expansion.
E&P has a 'positive' recommendation on the company with a $296 valuation on the stock.
What they said: "We note that Square GPV — which has been the key determining line — has come in roughly in-line with consensus as well at US$59.9 billion, and the company is calling for re-acceleration in FY25 — which should over time please the market as that has been the prime determinant of share price moves for a while," he said in a note.
Block lifts Q3 revenue, earnings but shares slide
The news: US-listed fintech Block, which owns Afterpay, has reported weaker-than-expected increase in third quarter revenue, sending its shares lower in extended US trading.
The numbers: The company said total net revenue rose 6% to USD5.98 billion ($8.95 billion) in the September quarter, but fell short of market expectations of USD6.24 billion. Gross profit rose 19% from a year ago to USD2.25 billion, while net income was up at USD283.7 million, compared to a $88.7 million loss a year ago. It expects gross profit to increase 14% for the fourth quarter to USD2.31 billion.
Block shares slumped as much as 11% in after-market trade in New York before recovering some of the losses.
The context: Block said Square payments business generated gross profit of USD932 million for the quarter, up 16% on year, while the Cash App mobile payment platform delivered gross profit of USD1.31 billion, up 21% on year.
Block acquired Australian buy now, pay later pioneer Afterpay in August 2021 in an all-scrip deal but the business has posted big losses since the deal.
The group flagged a positive outlook for FY25 with gross profit growth of at least 15%. Block also said it is in discussions with several regulators regarding its compliance program, including its anti-money laundering program.
The sources: ASX announcement, ASX announcement
