After-Hours Trading Sees Block Shares Surge

Block shares experienced a significant jump in after-hours trading following an impressive earnings report by Square, the parent company of the popular payments platform. The financial forecasts provided by Square exceeded expectations and contributed to the surge in the fintech's stock.

Impressive Third-Quarter Performance

In the third quarter, Square reported adjusted earnings of 55 cents per share, accompanied by revenue totaling $5.6 billion. This represents a notable increase of 24.4% compared to the same period last year. Analysts had initially predicted adjusted earnings of 47 cents per share and revenue of $5.4 billion.

Strong Growth in Gross Profit

Square's gross profit, a critical metric analyzed by industry experts, demonstrated a significant growth of 21% year-on-year, reaching $1.9 billion.

Block Shares Embrace the Advance

As a result of these positive developments, Block shares (ticker: SQ) soared by more than 19% in after-hours trading. This was a welcome improvement, considering that prior to the earnings report, the stock had experienced a decline of 30% throughout the year.

Optimistic Fourth-Quarter Forecasts

Block's forecast for the fourth quarter presents an optimistic outlook. The company expects gross profit to range between $1.96 billion and $1.98 billion, slightly lower than analysts' projections of $1.98 billion. Furthermore, management anticipates adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to fall within the $430 million to $450 million range, surpassing expectations.

Promising 2024 Forecast

In addition to the positive fourth-quarter projections, Block's preliminary forecast for adjusted EBITDA in 2024 is an impressive $2.4 billion. This figure significantly exceeds the consensus expectation of $1.94 billion and signals a very promising future for the fintech company.

High Growth and Ambitious Goals for the Future

Square, a prominent fintech company, has expressed its confidence in achieving impressive growth milestones in the coming years. In a letter addressed to the shareholders, the company outlined its vision for 2026, stating its belief in achieving mid-teens gross profit growth and a mid-20% adjusted operating income margin.

Remarkable Performance of Square Seller Business

Notably, Square's seller business recorded a substantial gross profit increase of 15% as it reached $899 million, compared to the previous year. Moreover, the Cash App, a popular mobile-wallet platform, witnessed a significant surge in gross profit with a remarkable 27% rise to reach a total of $984 million.

Cash App Empowering Borrowers

During the third quarter, the Cash App allowed users to access $900 million in short-term loans. Additionally, Cash App Borrow boasted an impressive user base with two million active customers as of September.

Jack Dorsey's New Priorities

CEO Jack Dorsey, who recently returned to the company he founded in 2009, outlined his exciting new priorities for Square's seller division. These include emphasizing a more localized product focus, amplifying efforts in artificial intelligence, and advancing the development of the company's banking products.

Raising Shareholder Value Through Buyback Program

To enhance shareholder value and offset the dilution caused by share-based compensation, Square announced a share repurchase program worth $1 billion.

Sustainable Growth and Employee Management

Recognizing the importance of sustainable growth, Square has decided to limit its employee count to 12,000 until it deems that the business's expansion has surpassed the company's growth rate. At present, Square has approximately 13,000 dedicated employees.

In conclusion, Square is poised for impressive growth and has established ambitious goals for the future. Despite the challenges and competitive landscape in the fintech industry, the company remains committed to delivering exceptional results.