Block stock price rises after upbeat forward guidance
Block, the parent company of Square and Cash App, had a relatively difficult first quarter as revenue and profitability growth slowed. However, the strong forward guidance provided a relief to the stock, which rose by more than 5% in the premarket.
Block had a total revenue of more than $1.3 billion in the first quarter. This was a 34% increase from the same quarter in 2021. It made a gross profit of $1.2 billion.
Cash App, its peer-to-peer money transfer solution generated a gross profit of $624 million in Q1 as user engagement in the platform grew. This user adoption happened as the number of users increased the level of activity. Its Cash App Card and Afterpay integration contributed to this growth.
Meanwhile, Square generated a gross profit of $661 million as the platform gained market share in the upmarket business segment. Mid-market sellers have also embraced additional solutions like Square Savings and Square Capital. It is also gaining traction internationally.
AfterPay, the Australian company it recently acquired, is expected to keep growing. The management expects to gross merchant value to grow by 15%. In a statement, the CEO said that AfterPay was an important part of its ecosystem growth. Jack Dorsey, the CEO said:
“Another way we are strengthening the Square ecosystem is with Afterpay’s Buy Now Pay Later service. Since introducing Buy Now Pay Later online thousands of Square sellers have used and processed sales with Afterpay.”
Other fintech companies have published mixed results recently. For example, PayPal reported that it had added over 2 million customers in the first quarter to over 429 million. It expects that it will add over 10 million users this year.
