Key takeaways
- Block Inc. (SQ) shares rose 11% on Friday after the financial technology company posted a smaller-than-expected loss for the third quarter and raised its full-year guidance.
- The company posted an adjusted net loss of $29 million, nearly double the $14.7 million loss in the same quarter last year, but lower than analysts had expected.
- Block raised its full-year estimate for adjusted operating income to a range of $205 million to $225 million, substantially up from the previous $25 million, and projected next year’s figure at $875 million.
- Block’s Cash App saw solid growth last quarter, with Cash App Pay’s monthly active users in September reaching 2 million, doubling since June.
Block Inc. (SQ) shares rose 11% on Friday after the fintech company posted a narrower-than-expected loss for the third quarter and raised its full-year guidance, thanks to strong revenue and user growth of your Cash app.
The company posted an unadjusted net loss of $29 million, nearly double the $14.7 million loss in the same quarter last year, but lower than analysts had expected. The company raised its full-year guidance and now projects adjusted operating income in a range of $205 million to $225 million, substantially up from the previous estimate of $25 million. The company projects adjusted operating income of $875 million next year.
Block’s Cash App saw solid growth last quarter: Cash App Pay’s monthly active users in September hit 2 million, doubling since June, while in-app payment volumes hit a record $113 million.
Amid rising interest rates and persistently high inflation, consumers have gravitated toward alternative payment methods such as buy now, pay later, which ensure more flexible payment options with little to no interest. This benefited companies such as Klarna, Affirm (AFRM) and Afterpay, the latter of which is owned by Block, that offer BNPL services.
In a research note, analysts at Wedbush Securities assigned a “neutral” rating to the stock as they are “encouraged” by management’s focus on improving earnings, but said growth on the platform has slowed.
The block shares ended Friday’s session up 11% at $48.68. Despite the gain at the end of the week, Block shares are down 25% in 2023. Rival Affirm, which gained 6.6% on Friday, is up nearly 150% for the year.
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