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Block (XYZ)
NYSE:XYZ
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Block
(NYSE:XYZ)
73Outperform
Positive Factors
Product/Service Perception
Square's product/service combination is modestly more favorably viewed, improving the view for modest volume acceleration.
Profitability
Recent headcount reductions and high employee churn point to profitability outperformance potential.
Valuation
Valuation appears more compelling at 7x '26 EV/Ebitda, with macro risks well priced in.
Negative Factors
Guidance Concerns
A large share of investors have expressed concerns around a downward guidance revision given steep 2H ramp and weak 1Q data trends.
Investor Confidence
Investors currently lack confidence in the steep gross profit acceleration baked into XYZ's 2025 guidance.
Macro Environment
Bears are concerned about a worsening macro setup and challenges to improving Seller same store sales growth.
Block (XYZ) vs. S&P 500 (SPY)
Market Cap
$33.43B
Dividend YieldN/A
Average Volume (3M)11.58M
Price to Earnings (P/E)11.0
Beta (1Y)2.17
Revenue Growth10.06%
EPS Growth38060.98%
CountryUS
Employees11,372
SectorTechnology
Sector Strength43
IndustrySoftware - Infrastructure
Share Statistics
EPS (TTM)4.55
Shares Outstanding559,431,000
10 Day Avg. Volume9,365,452
30 Day Avg. Volume11,578,721
Financial Highlights & Ratios
PEG Ratio0.00029
Price to Book (P/B)N/A
Price to Sales (P/S)1.57
Price to Cash Flow (P/CF)685.80
P/FCF Ratio47.80
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$94.32Price Target Upside87.66% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering28
Block Business Overview & Revenue Model
Company DescriptionBlock, Inc., together with its subsidiaries, creates tools that enables sellers to accept card payments and provides reporting and analytics, and next-day settlement. It provides hardware products, including Magstripe reader, which enables swiped transactions of magnetic stripe cards; Contactless and chip reader that accepts Europay, MasterCard, and Visa (EMV) chip cards and Near Field Communication payments; Square Stand, which enables an iPad to be used as a payment terminal or full point of sale solution; Square Register that combines its hardware, point-of-sale software, and payments technology; Square Terminal, a payments device and receipt printer to replace traditional keypad terminals, which accepts tap, dip, and swipe payments. The company also offers various software products, including Square Point of Sale; Square Appointments; Square for Retail; Square for Restaurants; Square Online and Square Online Checkout; Square Invoices; Square Virtual Terminal; Square Team Management; Square Contracts; Square Loyalty, Marketing, and Gift Cards; and Square Dashboard. In addition, it offers a developer platform, which includes application programming interfaces and software development kits. Further, the company provides Cash App, which enables to send, spend, and store money; and Weebly that offers customers website hosting and domain name registration solutions. It serves in the United States, Canada, Japan, Australia, Ireland, France, Spain, and the United Kingdom. The company was formerly known as Square, Inc. and changed its name to Block, Inc. in December 2021. Block, Inc. was incorporated in 2009 and is based in San Francisco, California.
How the Company Makes MoneyBlock (XYZ) generates revenue through several key streams. The primary source is transaction fees, which are charged to businesses for using its point-of-sale systems and payment processing services. Additionally, the company earns money from its peer-to-peer payment platform by charging fees for instant transfers and certain transaction types. Block (XYZ) also derives income from its cryptocurrency services, including trading fees and asset management services. Significant partnerships with financial institutions and technology providers enhance its market reach and contribute to its financial performance.
Block Financial Statement Overview
Summary
The company has demonstrated strong financial improvements with robust revenue growth, improved profitability margins, and enhanced cash flow generation. The balance sheet strength supports long-term sustainability.Income Statement
The company has demonstrated a robust revenue growth with a stable increase over the years. Gross profit margin is healthy, indicating good cost management. The net profit margin has significantly improved from past losses, showcasing effective turnaround strategies. EBIT and EBITDA margins have also shown positive trends, aligning with the industry's growth trajectory.85
Very Positive
Balance Sheet
The balance sheet reflects a strong equity position relative to debt, with a declining debt-to-equity ratio demonstrating improved financial stability. Return on equity has turned positive, indicating efficient use of equity in generating profits. The equity ratio is solid, although there is room for optimizing asset utilization.75
Positive
Cash Flow
The company exhibits strong cash flow management, with substantial growth in free cash flow, supported by consistent operating cash flows. The operating cash flow to net income ratio reflects a healthy cash generation capability. The free cash flow to net income ratio suggests effective conversion of profits to cash, enhancing financial flexibility.80
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 24.12B | 21.92B | 17.53B | 17.66B | 9.50B | Gross Profit |
| 8.89B | 7.50B | 5.99B | 4.42B | 2.73B | EBIT |
| 892.33M | -278.84M | -577.96M | 261.71M | 272.91M | EBITDA |
| 1.35B | 390.53M | -58.76M | 408.48M | 427.38M | Net Income Common Stockholders |
| 2.90B | 9.77M | -553.00M | 166.28M | 213.10M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 12.75B | 9.42B | 8.81B | 8.14B | 5.89B | Total Assets |
| 36.78B | 33.03B | 31.36B | 13.93B | 9.87B | Total Debt |
| 7.92B | 6.07B | 6.33B | 5.52B | 3.49B | Net Debt |
| -4.34B | -2.10B | -1.39B | 1.07B | -1.70B | Total Liabilities |
| 15.54B | 14.34B | 14.11B | 10.61B | 7.19B | Stockholders Equity |
| 21.27B | 18.70B | 17.22B | 3.27B | 2.68B |
| Cash Flow | Free Cash Flow | |||
| 1.55B | -50.19M | 5.09M | 543.51M | 243.20M | Operating Cash Flow |
| 1.71B | 100.96M | 175.90M | 847.83M | 381.60M | Investing Cash Flow |
| 649.95M | 683.20M | 1.23B | -1.31B | -606.64M | Financing Cash Flow |
| 1.95B | -240.14M | 97.58M | 2.65B | 3.68B |
Block Technical Analysis
Negative
50.26
Price Trends
69.62
Negative
79.49
Negative
72.94
Negative
Market Momentum
-3.85
Negative
34.14
Neutral
17.64
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For XYZ, the sentiment is Negative. The current price of 50.26 is below the 20-day moving average (MA) of 57.30, below the 50-day MA of 69.62, and below the 200-day MA of 72.94, indicating a bearish trend. The MACD of -3.85 indicates Negative momentum. The RSI at 34.14 is Neutral, neither overbought nor oversold. The STOCH value of 17.64 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for XYZ.
Block Risk Analysis
Block disclosed 48 risk factors in its most recent earnings report. Block reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Block Peers Comparison
Overall Rating
UnderperformOutperform
Sector (57)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | $33.43B | 11.04 | 14.50% | ― | 10.06% | 38060.98% | |
72 Outperform | $36.24B | 16.26 | 16.21% | 1.65% | 1.98% | 7.16% | |
66 Neutral | $24.35B | 59.24 | 15.37% | ― | 25.63% | 118.49% | |
66 Neutral | $32.38B | 171.24 | 7.75% | ― | 26.12% | 274.50% | |
66 Neutral | $33.88B | 24.50 | 19.24% | ― | 57.26% | ― | |
57 Neutral | $20.94B | 10.43 | -13.41% | 2.52% | 4.53% | -23.34% | |
51 Neutral | $39.47B | 52.55 | 4.65% | 1.99% | -17.38% | ― |
* Technology Sector Average
Performance Comparison
XYZ
Block
50.26
-28.09
-35.85%
CTSH
Cognizant
68.74
-1.22
-1.74%
FIS
Fidelity National Info
69.90
-1.81
-2.52%
TTD
Trade Desk
46.24
-40.44
-46.65%
DDOG
Datadog
87.93
-37.83
-30.08%
HOOD
Robinhood Markets
34.51
15.95
85.94%
Block Earnings Call Summary
Earnings Call Date: Feb 20, 2025 | % Change Since: -39.47% | Next Earnings Date: May 1, 2025
Earnings Call Sentiment Positive
The earnings call highlights significant achievements in gross profit growth, profitability, and product innovation, particularly with Cash App and Square GPV. However, there are challenges such as flat Cash App monthly active users and headwinds in the banking ecosystem. Overall, Block appears well-positioned for future growth with strategic investments and clear guidance.Highlights
Robust Gross Profit Growth
Block achieved $8.89 billion in gross profit in 2024, representing an 18% year-over-year growth with Square up 15% and Cash App up 21%.
Strong Adjusted EBITDA and Operating Income
Adjusted EBITDA was $3.03 billion, up 69% year-over-year, and adjusted operating income was $1.61 billion, a more than 4.5 times increase on a year-over-year basis.
Cash App Growth and Innovation
Cash App's paycheck deposit actives reached 2.5 million in December, growing 25% year-over-year. The company also launched Afterpay on Cash App Card and plans to expand Cash App Borrow.
Square GPV and Market Strategy
Square GPV grew 10% year-over-year in the fourth quarter with improvements in same-store sales and customer retention as year-over-year growth in the U.S. increased 200 basis points to 6.9%.
Future Growth and Guidance
Block expects strong gross profit growth of at least 15% year-over-year in 2025, despite headwinds from FX rates and strategic investments in marketing and product development.
Lowlights
Flat Cash App Monthly Active Users
Cash App monthly active users remained relatively flat at 57 million, growing only 2% year-over-year in December.
Challenges in Banking Ecosystem
The banking ecosystem faced tougher year-over-year comparisons, impacting overall gross profit growth.
Q1 2025 Growth Headwinds
Anticipated headwinds in Q1 2025 include a 1-point headwind from leap year, 1-point headwind from FX for Square, and tougher comps in banking and Bitcoin pricing changes.
Company Guidance
During the fourth quarter 2024 earnings call, Block provided guidance for 2025, projecting at least a 15% year-over-year increase in gross profit, equating to a minimum of $10.22 billion. Despite a 50 basis point headwind from foreign exchange rates, the company maintained its gross profit outlook for the year. Adjusted operating income for 2025 is expected to reach $2.1 billion with a 21% margin, reflecting a 240 basis point improvement year-over-year. Block anticipates a notable acceleration in Cash App, fueled by the expansion of Cash App Borrow and the integration of Afterpay into the Cash App Card. For Square, both TPV and gross profit are projected to improve, supported by enhanced marketing investments and strengthened sales strategies. The company aims to achieve a Rule of 40 run rate by the end of 2025, with continued focus on balancing growth investments with organizational efficiency.Block Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
Block Expands Board with Anthony Eisen Appointment
Positive
Feb 6, 2025
On February 6, 2025, Block, Inc. expanded its Board of Directors by electing Anthony Eisen, Co-Founder of Afterpay and CEO of Reshop, as a Class III director. Eisen’s extensive experience in financial services and Buy Now, Pay Later solutions, particularly through Afterpay, is expected to contribute significantly to Block’s strategic growth and evolution in financial services.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.