Block Q1 Earnings Lag Estimates, Revenues Down Y/Y, Shares Drop

Block XYZ reported first-quarter 2025 adjusted earnings of 56 cents per share, which missed the Zacks Consensus Estimate by 36.36%. The figure increased 19.1% year over year. 

Net revenues of $5.77 billion missed the consensus mark by 6.65%. The top line decreased 3.1% year over year. XYZ saw a change in consumer spending that negatively impacted top-line growth.

XYZ shares dropped 21.29% in pre-market trading.

XYZ’s Top-Line Details

Transaction (26.9% of net revenues) revenues were $1.55 billion, up 2.6% year over year. 

Strong Square ecosystem accounted for $1.48 billion in transaction revenues, up 5.9% year over year. Cash App contributed $66.2 million to transaction revenues, down 39.4% year over year.
 

Block, Inc. Price, Consensus and EPS Surprise

Block, Inc. price-consensus-eps-surprise-chart | Block, Inc. Quote

Subscription and Services (32.8% of net revenues) revenues were $1.89 billion, up 12.4% year over year.

Hardware (0.5% of net revenues) revenues fell 11.7% year over year to $28.7 million.

Bitcoin (39.9% of net revenues) revenues declined 15.7% year over year to $2.30 billion.

Gross Payment Volume (GPV) was $56.8 billion, up 4.4% year over year. Square’s GPV was $54.1 billion, up 7.2% year over year. U.S. GPV grew 5.6% while international GPV increased 15% (21% on constant currency).

Cash App’s GPV was $2.7 billion, down 32% year over year.

BNPL platform’s Gross Merchandise Value grew 13% year over year to $10.3 billion in the reported quarter.

Block’s Operating Details

Gross profit grew 9.3% year over year to $2.29 billion. Square generated a gross profit of $897.9 million, up 9.5% year over year. Cash App generated a gross profit of $1.38 billion, up 9.6% year over year.

Cash App’s gross profit per monthly transacting active grew 9% year over year to $81. 

Gross profit for the BNPL platform increased 14% year over year to $237 million.

Adjusted EBITDA was $812.8 million, up 15.3% year over year.

Operating expenses were $1.84 billion, up 5.1% year over year.

The adjusted operating income was $466.3 million in the reported quarter, with an operating margin of 8.1%, expanding 200 basis points on a year-over-year basis.

Block’s Balance Sheet Details

As of March 31, 2024, the cash and cash equivalent balance was $7.09 billion, up from $8.1 billion as of Dec. 31, 2024.

The long-term debt was $5.1 billion as of March 31, 2024, unchanged sequentially.

In the first quarter of 2025, Block repurchased 6.8 million shares of its Class A common stock for an aggregate amount of $445 million. As of March 31, 2025, $4 billion remained available under the current authorization.

XYZ Offers Positive Guidance

For the second quarter of 2025, Block expects gross profit of $2.45 billion, suggesting year-over-year growth of 9.5%. Adjusted operating income is expected to be $450 million with an operating margin of 18%.

The Zacks Consensus Estimate for second-quarter 2025 revenues is pegged at $6.59 billion, suggesting 7.07% growth over the figure reported in the year-ago quarter. The consensus mark for second-quarter 2025 earnings is pegged at $1 per share, indicating 7.53% year-over-year growth. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

For 2025, XYZ expects a gross profit of $9.96 billion, indicating growth of 12% from the 2024 reported figure. Unfavorable forex is expected to hurt gross profit by 50 bps. 

Adjusted operating income is now expected to be $1.9 billion, with an operating margin of 19%.

Zacks Rank & Stocks to Consider

Currently, Block has a Zacks Rank #3 (Hold).

Affirm AFRM, Compass COMP and Dayforce DAY are some better-ranked stocks in the broader Zacks Computer & Technology sector. While Affirm sports a Zacks Rank #1 (Strong Buy), Compass and Dayforce carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Affirm and Compass are scheduled to report their respective first-quarter 2025 results on May 8. Dayforce is scheduled to report its first-quarter 2025 results on May 7.

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This article originally published on Zacks Investment Research (zacks.com).

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