Square-parent Block reported June-quarter earnings and revenue that fell from a year earlier but beat estimates. SQ stock fell as two other financial metrics, operating profit and gross payment volume, missed views.
San Francisco-based Block reported second-quarter earnings after the market close on Thursday. Results included recently acquired Australia-based consumer lending startup Afterpay.
"It's the second consecutive quarter missing on gross profits as well as GPV (gross payment volume), which likely reflects SQ's end market consumer/merchant profile, which is struggling during the current high-inflation environment," Wedbush analyst Moshe Katri said in a note to clients.
Square earnings were 18 cents per share on an adjusted basis, down 72% from the year-earlier period. Analysts had projected earnings of 16 cents a share.
Also, Square said revenue dropped 6% to $4.4 billion, as Cash App transactions for digital cryptocurrency Bitcoin fell. Analysts had predicted revenue of $4.33 billion.
Square stock fell 2.2% to close at 87.55 on the stock market today. SQ stock had retreated 51% in 2022 heading into the earnings report. Even so, Block stock had gained in seven straight trading sessions prior to the earnings report as the price of Bitcoin stabilized.
SQ Stock: Payment Volume Misses Estimates
Financial analysts also view operating profit as a key metric for SQ stock. Operating profit came in at $1.47 billion, up 29%, vs. estimates of $1.495 billion.
Gross payment volume from merchant customers rose 23% to $52.5 billion, vs. estimates of $53.187 billion.
In addition, Cash App gross profit rose 29% to $705 million. Excluding Afterpay, Cash App gross profit rose 15%.
The company said earnings before interest, taxes, depreciation and amortization, or EBITDA, came in at $187 million. Analysts had estimated $140 million.
"Gross profit of $1.47 billion missed by $20 million," Jefferies analyst Trevor Williams said in his note to clients. "But EBITDA beat by $50 million, with misses in Afterpay and Seller (segments)."
Amid the Afterpay acquisition, Square's transaction and loan losses increased 225% year-over-year to $157 million. In its first full quarter since the merger, Afterpay
contributed $150M in gross profit.
At Bank of America, analyst Jason Kupferberg said in a report: "Q2 results slightly missed on gross profit, but handily beat Street EBITDA due to lower operating expenses, which will likely persist in second half and should drive 2022 adjusted EBITDA estimates higher."
Square stock holds a Relative Strength Rating of 12, according to IBD Stock Check-up.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
