Block shares surge on ASX after hiking full-year guidance
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More news: Block shares gained at market open on the ASX, after the dual-listed fintech company raised its full-year earnings forecast and saw its shares lift in after-hours trading on the Nasdaq.
Shares in Block were up 5.2% to $100.15 by 11:00am AEST, having pared losses on the Nasdaq after the earnings announcement.
E&P Capital analyst Paul Mason noted that Block's Q2 result beat expectations across several metrics, but were more in-line or slightly behind estimates on revenue. The company's full-year guidance upgrade is ahead of analysts' average forecasts, he said, while Q3 guidance is "roughly in line" with consensus.
What they said: "Upgrades are always good, but we suspect this won’t particularly help the stock as the concerns about top-line GPV [gross payment volume] won’t be fully alleviated, with the company coming in marginally below consensus on GPV again," Mason said.
"Hopefully the market is more forgiving on this dynamic than last result and we will see a stable to marginally up stock. If history repeats though it is likely the stock won’t be rewarded for the beat given composition."
Block shares gain after raising full-year earnings forecast
The news: Dual-listed fintech firm Block, which owns Afterpay, raised its full-year earnings forecast and boosted its share buyback program, sending shares soaring in after-hours trading on the Nasdaq.
The numbers: Block said it expects annual adjusted core earnings of at least USD2.9 billion ($4.5 billion), higher than its prior forecast of USD2.76 billion.
Block shares were up 5% in extended trading on the Nasdaq by 8:30am AEST, having lost 3.22% during the day.
The California-based company projected Q3 adjusted core earnings of USD695 million, above analysts' expectations of USD679.7 million, according to LSEG data.
The company also approved the repurchase of up to USD3 billion of its shares, in addition to its completed USD1 billion buyback program.
During the June quarter, Block earned 93 US cents per share on an adjusted basis, beating estimates of 84 US cents, according to Reuters. However, the company recorded total net revenue of USD6.16 billion, below average expectations of USD6.28 billion.
The context: In a letter to shareholders, Block CEO Jack Dorsey also announced that Afterpay CEO and co-founder Nick Molnar would be expanding his role at Block and will lead a "centralized sales function across Block, inclusive of Square," reporting directly to Dorsey.
What they said: "We’re currently on track to reach Rule of 40 by 2026, with adjusted operating income margins expanding significantly year over year for both Square and Cash App," Dorsey said.
"We’re continuing to build a strong foundation to improve our growth into 2025, and today we want to discuss our plans for improving Square’s go to market approach.
"[...] This was the final piece of Square we wanted to fix cohesively, and I’m happy to finally say…it’s well on the way."
The sources: Reuters, Block earnings release, E&P Capital research
