Square Stock Falls as These Key Metrics Miss Estimates in Earnings Report

Square parent Block (sq) reported profits and revenue for the June quarter that fell from a year earlier but beat estimates. Shares of SQ fell as two other financial metrics, operating profit and gross payment volume, missed showings.


San Francisco-based Block reported a second-quarter profit after the market closed Thursday. Results include the recently acquired Australian-based consumer lending startup Afterpay.

“This is the second quarter in a row that gross profits have missed as well as GPV (gross payment volume), likely reflecting the consumer/trade profile of SQ’s end market which is struggling during the current high inflation environment,” said Wedbush analyst Moshe Katri 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 forecast earnings of 16 cents per share.

Square also said revenue fell 6% to $4.4 billion as transactions on its Cash App for digital cryptocurrency Bitcoin declined. Analysts had forecast revenue of $4.33 billion.

Square shares fell 5.8% to 84.45 in extended trading on the stock market today. Shares of SQ rose for seven straight trading sessions heading into Square’s earnings report.

SQ Stock: Payment volume misses forecasts

Financial analysts are also looking at Operating Profit as a key indicator for SQ shares. Operating profit came in at $1.47 billion, up 29% from estimates of $1.495 billion.

Gross payments from merchant customers rose 23% to $52.5 billion, compared with estimates of $53.187 billion.

In addition, Cash App’s gross profit rose 29% to $705 million. Excluding Afterpay, Cash App’s gross profit rose 15%.

The company said earnings before interest, taxes, depreciation and amortization, or EBITDA, came in at $187 million. Analysts estimated $140 million.

“Gross profit of $1.47 billion missed by $20 million,” Jefferies analyst Trevor Williams said in a note to clients. “But EBITDA exceeded $50 million, with gaps in the Afterpay and Seller (segments).”

Amid the Afterpay acquisition, Square’s transaction and loan losses rose 225% year over year to $157 million.

SQ shares has retreated 51% in 2022 heading into the earnings report. Square shares have a relative strength rating of 12, according to IBD Stock Check.

Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.


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