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Block stock sinks after third quarter results miss estimates

To obstruct shares fell 10% on Friday after a weak third quarter earning It fell short of Wall Street’s expectations and showed profit growth for the company’s Square service was slowing.

Here’s how the company performed compared to LSEG forecasts:

Earnings per share: 54 cents adjusted, 67 cents expected
Revenues: 6.11 billion dollars, while the expectation was 6.31 billion dollars

Shares of the firm founded by Jack Dorsey are down 24% year to date.

Square’s gross payment volume increased 12% year-over-year, but its point-of-sale service’s gross profit growth slowed from last quarter, rising just 9% year-over-year.

The company attributed the slow growth to a processor partner change and lower-margin hardware sales.

“Our product and go-to-market strategies are working as we continue to gain profitable market share in our target industries such as food and beverage, with larger sellers, and outside the U.S.,” Chief Financial Officer Amrita Ahuja said on the earnings call.

Cash App’s gross profit growth fared much better at $1.62 billion, up 24% from a year ago, with 58 million monthly transacting active users. Its strength was provided by the service’s Cash App Borrow, Cash App Card and Buy Now Pay Later features.

Morgan Stanley analysts wrote that they were “encouraged by the pace of credit expansion on Cash App” and were focusing on “whether credit expansion will ultimately produce better inflows per active customer” and increase direct deposit accounts.

Ahuja said gross profit was a bright spot for Block, as the company reported gross profit growth of $2.66 billion, up 18% from the previous year. FactSet expected gross profit of $2.60 billion for the quarter.

The company raised its full-year forecast to $10.2 billion, exceeding last quarter’s $10.2 billion estimate for gross profit for 2025.

Block reported net income of $461.54 million, or 74 cents per share; That’s up significantly from a year ago, when the company reported net income of $283.75 million, or 45 cents per share.