American multinational payment platforms and financial services group Block [ASX:SQ2] has put its Q1 market activities update out to the public today.
Overall, the group revealed a strong quarter, bucking the wider market’s downward trend in the aftermath of a down-selling spree after the FED raised rates by another 0.25%.
The fintech was moving up by 2% at midday, trading for around $91.97 per SQ2 share.
SQ2 has been trending down 9% in the last month. Though its flat in the year so far, the last 12 months has shown it’s been underperforming the wider market by about 35%, far below fintech peers Smartpay [ASX:SMP] and Tyro Payments [ASX:TYR]:
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Block shares rise for positive Q1
Today, the fintech was receiving a boost of acknowledgement from its investors after posting some sound results for the first quarter of FY23.
The group said that it has achieved gross payments volume of US$51.1 billion with gross profit rising 32% to the total of $1.71 billion.
Gross profit improvement was said to have been driven by a 49% increase in the group’s Cash App segment as gross profit here had moved up by 16% to US$931 million.
This was backed by increasing Cash App monthly transactional activities, which had gone up by 15% to 53 million, and included an active inflow activity boost of 8%.
The Bitcoin [BTC] segment, as part of the Cash App network, also churned US$50 million in gross profit over the quarter.
Speaking of the gross profit back-end support, it wasn’t just the Cash App and sub-divisions bringing in the high figures as a further uplift was posted in Square’s gross profit, which had also been a solid US$770 million.
On a combined company basis, gross profit grew by 27% year over year.
Adjusted operating income came to US$51 million, a much better result and an increase on last year’s loss of US$42 million.
Block said that its net loss had improved and shared that it had achieved the figure of US$17 million, a much better result compared with the whopping US$201 million loss posted the same time last year.
As for tracking so far in 2023, the group said that its gross profit in April is already up by 24%.
Source: SQ2
Strong results point towards a strong outlook
These results posted this morning were no doubt a sight for sore eyes for Block investors with much better figures compared with those posted in the last group report in FY2022.
It is clear business is picking up for the fintech, and a pathway of stronger growth has certainly buoyed management’s attitude.
The fintech said it now expects to downgrade its adjusted operating losses from US$115 million to US$150 million.
What furthered the good news could have been the added disclosure of an expectation for adjusted EBITDA (earnings before interest, tax, depreciation and amortization) delivery of US$1.36 billion for the rest of FY2023.
The best part is that this is a solid upgrade to the last guidance speculation when the group said it expected to achieve closer to US$1.30 billion.
This is also above the floated US$1.32 billion put forth as the market consensus estimate for the year.
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For Money Morning
