Block, the financial technology company, announced its fourth-quarter results, revealing a shortfall against Wall Street's expectations. The report, released on Thursday, noted adjusted earnings per share at 71 cents, failing to meet the anticipated 87 cents. Similarly, revenue fell short, reaching $6.03 billion instead of the projected $6.29 billion. This earnings miss contributed to a more than 7% drop in Block's stock during extended trading hours.
The company faces mounting pressure from competitors, including Toast and Fiserv's Clover unit, as it strives to maintain its footing in the financial services industry. Under CEO Jack Dorsey's leadership, Block has made significant investments in cryptocurrency, creating a dedicated unit for its crypto initiatives. Despite these challenges, Block managed to post a gross profit of $2.31 billion, up 14% from the previous year's $2.03 billion. Additionally, the reported adjusted earnings before interest, taxation, depreciation, and amortization (EBITDA) stood at $757 million, surpassing the $740 million average analyst estimate.
A major player in Block's lineup is the Cash App, a leading mobile payment platform that saw a gross profit increase of 16% year-over-year to $1.38 billion. The company's gross payment volume also exceeded expectations, totaling $61.95 billion against analysts' projections of $61.3 billion. Analysts have identified lending as a critical area for future monetization opportunities within Block's portfolio.
Block's strategic moves include the high-profile acquisition of Australian buy now, pay later firm Afterpay for $29 billion in 2021. Since then, the company has seamlessly integrated Afterpay into both Cash App and Square's ecosystem, aiming to expand its reach and service offerings.
Despite the earnings disappointment, Block's revenue marked an improvement of approximately 4.5% from the previous year's $5.77 billion. The company's efforts to enhance its product offerings and explore new growth avenues demonstrate its commitment to navigating competitive challenges.