Shares of Block (XYZ) are up 8% after the payments firm reported strong gross profit growth in the year’s second quarter.
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The financial technology firm posted earnings per share of $0.62, which missed Wall Street’s consensus estimate of $0.67. However, the company’s gross profit rose 14% year-over-year to $2.54 billion, with Cash App contributing $1.5 billion, up 16% from a year earlier.
Block doesn’t report a revenue figure, but it said its gross payment volume increased 10% to $64.25 billion in the quarter. “We’re back on offense,” CEO Jack Dorsey wrote in the company’s shareholder letter. “Our shipping velocity has accelerated and I’m confident in our ability to sustain strong growth at scale.”
Block’s net income. Source: Main Street Data.
Cash App Growth
The strong growth in the company’s Cash App led investors to look past the earnings per share miss and bid XYZ stock higher in after-hours trading. Management at Block also raised their full-year outlook, saying they expect a Fiscal 2025 gross profit of $10.17 billion, up 14% from a year ago, with a 20% margin.
Block’s strategy largely hinges on the Cash App ecosystem, which saw gross profit per transaction rise 15% to $87 amid a steady 57 million monthly active users. The Square payment app reported 10% growth in gross payment volume to $64.2 billion. Additionally, buy-now, pay-later (BNPL) gross merchandise volume increased 17% to $9.11 billion in Q2. XYZ stock is down 10% this year.
Is XYZ Stock a Buy?
The stock of Block has a consensus Strong Buy rating among 29 Wall Street analysts. That rating is based on 24 Buy, three Hold, and two Sell recommendations issued in the last three months. The average XYZ price target of $78.33 implies 4.04% upside from current levels. These ratings are likely to change after the company’s financial results.
