SQ Stock Falls As Operating Profit, Payment Volume Of Square Stock Miss Estimates

Square-parent Block (SQ) 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.

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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 5.8% to 84.45 in extended trading on the stock market today. SQ stock had gained in seven straight trading sessions heading into the Square earnings report.

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.

SQ stock had retreated 51% in 2022 heading into the earnings report. 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.

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