Block shares rose 15% in after-hours trading after reporting better-than-expected results and raising its full year adjusted ebitda guidance.
Block revenue for the third quarter came in at $5.6 billion, slightly above analyst estimates of $5.5 billion and up from $4.5 billion from the same quarter last year. Net loss for the quarter was $29 million, beating the $67 million loss analysts predicted but higher than the $15 million loss in the third quarter last year. Adjusted EPS came in at $0.55, beating analyst estimates of $0.45.
The widening net loss was likely due to a 32% increase in share based compensation to $346 million, up from $263 million for the same period last year. Block announced a $1 billion share repurchase plan, in part to offset share dilution from steepening share based compensation tied to hiring employees with vested equity packages through 2022.
The company raised its adjusted ebitda guidance to between $1.66 billion and $1.68 billion, up from the previous guidance of $1.50 billion. In order to boost cash flow, Block announced they are capping the absolute number of employees to 12,000 compared with their current headcount of 13,000. Translation: layoffs are likely.
“I believe we were getting in our own way throughout the company,” said Block CEO and co-founder Jack Dorsey, whose net worth is $3.1 billion. “As I’ve dug in through both the lens of Square and also our investment framework, I found a lot of silos, a lot of redundancy, a lack of desire for teams to work together.”
Square gross payment volume for the quarter was $55.7 billion, up from $50 billion in the third quarter of 2022. In September, a 15 hour outage across both Square and CashApp limited sellers’ abilities to accept payments. Block CFO Amrita Ahuja said the company is working to expand its offline capabilities in the event of another disruption. The company estimates the outage impacted gross profit by less than 1%, she added.
At the time of writing, Block shares are trading at $50.70. The price at close was $43.98.
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