Block shares tumble over 7% as Q4 result misses estimates
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The news: Financial services and digital payments company Block was among the worst-performing ASX 200 stocks in morning trade after its fourth-quarter earnings and revenue fell short of market expectations.
The numbers: Block shares were down 7.5% to $121.95 at 11:15am AEDT, having advanced more than 20% over the last 12 months.
Q4 earnings were 71 US cents per share on an adjusted basis, up 51% year on year but missing average estimates of 88 US cents per share.
Revenue totalled USD6.03 billion ($9.42 billion), up 4% year on year, but lower than forecasts of $6.30 billion. Gross profit rose 14% to USD2.31 billion versus estimates of USD2.33 billion.
However, E&P analyst Paul Mason said that the result was "solid" overall. Importantly, he noted, gross payment volume (GPV) at its point-of-sale platform Square grew 10% compared to consensus estimates of an 8.9% rise, with Block citing improved same-store-sales growth and seller retention.
Mason noted that Square's GPV growth "is the figure that has moved the stock the most in recent periods".
The context: Block, which also owns Afterpay, Cash App, Spiral and TIDAL, said it expects gross profit growth of at least 15% year on year, with growth for Cash App and Square expected to improve "meaningfully" in the back half of the year.
What they said: Following Block's investor call, Mason said: "Overall call was OK, but tone wasn’t as full of high-fives as one would have hoped given finally they delivered a beat for Square GPV!"
"There are so many initiatives turning on this year that something good should happen somewhere in the business vs expectations. Hopefully Afterpay on Cash App Card and ramping Cash App Borrow start delivering very soon."
The source: Block earnings release
