This tech share could be heading south on Friday…
The post Block share price in danger of sinking following Q2 update appeared first on The Motley Fool Australia. –
The Block Inc (ASX: SQ2) share price looks likely to drop into the red on Thursday.
This follows the release of the payments companyâs second quarter update this morning.
Block share price expected to tumble amid soft guidance
Total quarterly revenue down 6% year over year to US$4.4 billion
Quarterly gross profit up 29% year over year to US$1.47 billion
Adjusted EBITDA down 48% to US$197 million
Net loss of US$208 million
Growth expected to moderate early in Q3
What happened during the quarter?
For the three months ended 30 June, Block reported a 6% reduction in revenue to US$4.4 billion. This reflects a decrease in bitcoin revenue, which offset a 34% in revenue excluding the cryptocurrency.
Blockâs gross profit came in at US$1.47 billion for the quarter. This was a 29% increase year over year and up 47% on a three-year compound annual growth rate (CAGR) basis.
Excluding its Afterpay buy now pay later (BNPL) platform, gross profit was US$1.32 billion. This was up 16% year over year and 42% on a three-year CAGR basis.
Blockâs growth was driven by solid performances from its Square ecosystem and Cash App business. Both reported gross profit growth of 29% to US$755 million and US$705 million, respectively.
The food and drink channel was the highlight for the company. It has achieved the fastest gross profit growth of any Square vertical on a five-year CAGR basis. Through the first six months of 2022, gross payment volume (GPV) from Square for Restaurants more than doubled year over year.
How does this compare to expectations?
The good news is that Blockâs gross profit was in line with the marketâs expectations and its revenue was a touch ahead.
That was despite Block’s gross payment volume of US$52.5 billion missing the market consensus estimate of US$53.47 billion.
However, it may not be enough to stop the Block share price from being sold off today. Thatâs because of the companyâs disappointing outlook commentary.
Management is expecting its growth to moderate during the early part of the third quarter of FY 2022.
It advised that Square GPV is expected to be up 18% year on year in July. This compares to 25% growth during the second quarter.
And worryingly, the company didnât commit to a percentage growth figure for the Cash App business. It only expects âto grow on a year-over-yearâ basis.
Finally, management warned that it operating expenses are expected to increase by US$75 million in the third quarter compared to the second quarter.
In after-hours trade on Wall Street, the Block share price is down 7%.
The post Block share price in danger of sinking following Q2 update appeared first on The Motley Fool Australia.
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.* Scott just revealed what he believes could be the “five best ASX stocks” for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now
See The 5 Stocks
*Returns as of July 7 2022
setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
5 things to watch on the ASX 200 on Friday
Here are the top 10 ASX 200 shares today
Why is the Block share price charging 10% higher on Thursday?
Why are ASX 200 tech shares having such a stellar run today?
Why is the Block share price leaping 5% on Wednesday?
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Block, Inc. The Motley Fool Australia has positions in and has recommended Block, Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.