Block, the payments company behind Square and Cash App, has raised its financial guidance for 2023. However, its shares fell following PayPal's earnings report.
Revised Outlook
Block has increased its outlook for adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for 2023. The new guidance sets the figure at $1.5 billion, up from the previous estimate of $1.36 billion. Similarly, the company's adjusted operating income outlook has improved, flipping from a projected loss of $115 million to a gain of $25 million.
Stock Reaction
Despite the positive news, Block's shares experienced a brief surge of over 5% before declining by 3.8% around 4:45 p.m. Eastern time. This decline compounded the 1.3% drop already witnessed in Thursday's trading, which had been influenced by PayPal's profit report indicating a decrease in margins and other contributing factors.
Financial Results
Block (ticker: SQ) reported a net loss of $123 million on total revenue of $5.53 billion. Non-GAAP earnings per share stood at 39 cents. This surpassed analysts' expectations of 36 cents per share and sales of $5.1 billion, as predicted by FactSet. Notably, the reported revenue excludes revenue generated from Bitcoin transactions.
Strong Performance in Key Areas
Gross profit within the Square ecosystem reached $888 million, demonstrating an impressive 18% increase year over year. Meanwhile, the Cash App experienced a remarkable surge of 37%, with gross profit amounting to $968 million. Additionally, gross payment volume rose by 12% to a total of $59.01 billion.
In conclusion, Block's improved financial guidance provides an optimistic outlook for the future. Despite a temporary decline in shares influenced by PayPal's earnings report, the company's strong performance in key areas showcases its potential for growth.
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