Payment services company Block, Inc missed estimates on sales and earnings per share last quarter despite major increases in Cash App and Square’s gross profits, sending shares down more than 9%.
Revenue was US$6.11 billion, rising from $5.98 billion year-over-year but below Zacks estimates of $6.3 billion. Earnings per share were $0.54, up from $0.53 and missing estimates of $0.63.
“We had another strong quarter delivering for our customers with high quality and high velocity,” wrote CEO Jack Dorsey.
“Square GPV [gross payments volume] growth accelerated to 12% and we gained profitable market share through product innovation and expanded distribution. Cash App gross profit growth accelerated to 24%, and in September we hit 58 million Cash App monthly actives.”
Total Block gross profit was $2.66 billion, increasing by 18%. Its adjusted operating income also rose by 18% to $480 million.
Cash App’s gross profit was up 24% to $1.62 billion, with inflows growing by 12% to $78.8 billion. The company credited this to growth in its Buy Now Pay Later and Cash App Borrow businesses.
Square’s gross profit climbed 9% to $1.02 billion, with gross payment volumes reaching $67.15 billion.
Proto, the company’s cryptocurrency mining segment, also generated its first revenue during the quarter, though Block did not provide further details. Proto’s Rig mining system and Fleet software was unveiled in August.
Block’s operating expenses rose from $1.93 billion to $2.25 billion, driven largely by a 14% increase in marketing expenses for Cash App and a 23% surge in marketing expenses for segments like Square. Product development expenses were flat.
Its adjusted operating income was $480 million, up from $323 million. Adjusted EBITDA was $844 million, increasing from $807 million.
The company’s full-year guidance projects gross profit of $10.243 billion and adjusted operating income of $2.056 billion.
Block’s (NYSE: XYZ) share price dropped to $64.30 in after-hours trading, following a close at $70.93. Its market capitalisation is $44.90 billion.
