Block beat earnings expectations, with strong growth largely fueled by its Cash App business. Traders sent shares up more than 12% after-hours Thursday.
Investors are closely watching Block's performance as a measure of broader consumer spending amid worries about inflation and a looming recession.
The payments giant generated adjusted earnings per share of 42 cents, handily beating analysts’ estimates of 23 cents, according to FactSet.
Gross profit came in at $1.57 billion, beating expectations of $1.5 billion, per FactSet, and up from $1.1 billion in the year-ago period. Analysts generally prefer to look at gross profit for Block rather than revenue since it excludes bitcoin gross trading volume. The company barely mentioned crypto in its earnings release, except to note that Cash App crypto trading revenue fell.
Total net revenue was $4.52 billion, beating estimates of $4.5 billion, and compared to $3.8 billion a year ago.
Cash App, a closely watched driver of Block's growth, generated $774 million in gross profit, which was up 51% from the year-ago period. More than a third of monthly active users use the Cash App Card product, which generates revenue from interchange fees and other banking services.
Cash App could face more regulatory scrutiny. Though Block said it does not tolerate illegal activity, Forbes reported that Cash App appears more frequently than other services in sex ads, and law enforcement professionals are concerned about its identity checks.