Block inventory rises on strong growth in treasury apps

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The Cash application on a mobile phone.

Tiffany Hagler-Geard/Bloomberg

To block

Shares rose on Friday after the payments company said gross profit for its Cash app rose 26% from a year earlier.

Block (ticker: SQ) posted adjusted earnings of 18 cents per share in the first quarter, missing analysts’ forecasts by 2 cents. Revenue for the quarter was nearly $4 billion, down from $5.1 billion a year earlier and below analyst forecasts of $4.1 billion. The company cited a decrease in Bitcoin revenue for the shortfall. Excluding Bitcoin, total Q1 net income would have increased 44% to $2.23 billion.

Total gross profit for the quarter was about $1.29 billion, up 34% from a year earlier and roughly in line with Wall Street forecasts. Gross profit for Cash App, Block’s consumer mobile payment service, was $624 million and revenue was $2.46 billion. Square reported gross profit of $661 million, up 41% year-over-year, and revenue of $1.44 billion.

BTIG analysts said Block’s Q1 report “helped demonstrate that its Cash App and Square seller ecosystems remain relevant to their users and that international markets could provide the pathway through which it could drive sustained growth. in the quarters and years to come”.

BTIG reiterated its buy rating on Block but cut its price target to $175 from $230, saying “investor willingness to pay higher multiples for growth stories has waned.”

Evercore ISI analysts said Cash App’s gross profit growth “appears poised to accelerate following difficult comparisons related to one-time positive impacts from the prior year’s fiscal stimulus.”

Analysts maintained their outperform rating on the stock, saying Block, which changed its corporate name from Square in late 2021, “continues to be the most disruptive company in payments and banking, in our view. Rapid innovation should fuel pursuit [total addressable market] expansion.”

Bulk shares rose 1.8% on Friday to $97.25, rebounding slightly from a 10.5% slump in Thursday’s strong Wall Street selloff, particularly in tech stocks. The block has fallen nearly 41% since the start of the year.

Write to Joe Woelfel at [email protected]

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