Square-parent Block reported first-quarter earnings and revenue that topped estimates while guidance for Square stock came in above expectations. SQ stock initially popped but closed down on Friday as the fintech company unveiled new plans for cryptocurrency Bitcoin.
Released after the market close on Thursday, Square earnings for the period ended March 31 were 74 cents per share on an adjusted basis, up 85% from the year-earlier period. Analysts had projected earnings of 72 cents a share.
Also, Square said net revenue came in at $5.96 billion, up 19% from a year earlier, including Cash App transactions for bitcoin. Square stock analysts had predicted revenue of $5.83 billion.
SQ Stock: Bitcoin Is Back
In a letter to shareholders, Chief executive Jack Dorsey reiterated the company's commitment to cryptocurrency Bitcoin, noted TD Cowen analyst Bryan Bergin in a report.
"Dorsey's Q1 letter detailed a renewed focus on Bitcoin, both from a new product perspective and in terms of balance sheet investment. To be sure, this is a long-term focus and minor in the grander scheme of its current financial picture, but still holds long-term promise," said Bergin. "(It) is demonstrative of Square's differentiated product potential in the market. Square intends to develop and market a new Bitcoin mining chip and other mining hardware while 10% of Bitcoin gross profit, or $20 million per year will be allocated to Bitcoin purchases."
At Mizuho Securities, analyst Dan Dolev said in a report: "After a one-year pause, Bitcoin is again taking center stage at Square. The shareholder letter featured a lengthy manifesto regarding the myriad of benefits of Bitcoin to society, including quotes from its inventor Satoshi and a promise to spend less than 3% of Square's resources on Bitcoin-related projects."
Square Stock: Gross Profit Beats
Financial analysts also view gross profit as a key metric for SQ stock. In Q1, gross profit rose 22% to $2.09 billion vs. estimates of $2.02 billion.
On the stock market today, Square stock initially popped but closed down 1.2% to 69.47.
Cost-cutting boosted earnings before interest, taxes, depreciation and amortization, a key metric known as EBITDA. It came in at $705 million vs. estimates of $591 million.
In Q1, gross payment volume from the transactions of merchant customers rose 9% to $50.5 billion, below estimates of $55.81 billion.
For the first quarter of 2024, Square said it expects EBITDA of $680 million. Analysts had projected June-quarter EBITDA of $648 million.
In Q2, Square forecast gross profit of $2.175 billion, roughly in line with estimates.
SQ stock had retreated 8% in 2024 heading into the Block earnings report. San Francisco-based Block's earnings included consumer lending firm Afterpay.
In its core businesses, Square operates a two-sided digital payments ecosystem, with products designed for both merchant sellers and consumer buyers.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
