This story has been updated with commentary from analysts and Block's leadership.
Block will navigate its plan for 2025 without knowing what the rules will look like, but believes its focus on shortening development cycles will improve its ability to be nimble.
"There was just an election and we have no idea about how the regulations are going to change," said Block CEO Jack Dorsey during Thursday's earnings call. The change in the U.S. presidency will create new regulations and a different environment for all industries. And much like other routine financial business on Thursday, such as the
Crypto clarity?
"We functionalized the company to where we see opportunities to make sure we're ahead. That will only increase based on [regulations] and how we react to that," Dorsey said. "We're focusing on what we can control."
During the campaign, Trump and his surrogates expressed support for cryptocurrency. The
Under analyst questions about cryptocurrency policy under a Trump administration, Dorsey said he hoped for more clarity around cryptocurrency law. Dorsey on Thursday also said the company will refocus its cryptocurrency investments, rotating funding out of TBD, its decentralized finance unit, and instead pour more money into its Bitkey bitcoin wallet and bitcoin mining initiative. Block develops blockchain and cryptocurrency products, and Dorsey himself has been an advocate for bitcoin, saying it could support a broad Internet-based financial system. Block also gets a
"We want to make bitcoin more accessible," Dorsey said. "And that will be better with more transparency."
Mixed results
Block's earnings disappointed investors. The company's shares fell nearly 10% in after hours trading on Thursday after reporting third quarter revenue of $5.98 billion, lower than analysts' projections of $6.24 billion.
The payment company also reported $2.25 billion in gross profit for the quarter ending September 30, up 19% from the prior year. Net income was $283 billion, up from a loss of $88.7 billion the prior year, and earnings per share of $0.88, compared to analysts' projections of $0.87.
Block's Cash App transfer app, which supports payments for Block's consumer and merchant customers, reported $1.31 billion in gross profit, up 21% over the prior year. The company said active monthly users of Cash App's card passed 24 million, up 11% from 2023.
Block's stock was trading at about $68 per share Thursday evening. Last year, Block's stock increased from about $55 per share to its current level. That followed a decline from about $247 per share in 2021 to as low as $43 per share in October 2023.
Block reorganized its business to spur growth after a
The company earlier this year dumped an organizational structure that focused on business lines such as the Cash App transfer service, the business-focused Square, the Tidal music streaming company, and others. In its place is a structure that organizes functions such as engineering, product development, sales, customer service, marketing and additional tasks. The change determines reporting structure and project management strategy.
Dorsey earlier this year named BNPL lender Afterpay co-founder Nick Molnar as sales head. Block has owned Afterpay since 2021, and the business has been a solid performer for Block. The BNPL lender's gross merchandise revenue, or the value of the business, grew more than 20% over the past year.
Since
While missing revenue expectations, Block projected earnings growth in the mid-teens per share for 2025, with stronger growth in the second half of the year. It also said it plans to hire "field sales people" to connect with merchants in local markets.
"We have a number of initiatives that have launched or will be launching soon," said Amrita Ahuja, Block's CFO, during the earnings call, adding that will boost Block's gross payment volume, a metric it has been trying to improve for the past two years.
In a research note, Jeffries analysts said Block's gross payment volume should accelerate, which could push its stock higher, though a GPV acceleration in the U.S. won't likely happen until 2025. "We remain optimistic that the initiatives within Square to close key product gaps with [rival payment firm] Toast and improve go-to-market will eventually drive an acceleration," Jeffries said, noting the outlook for Block is "encouraging."
Block faces stiff competition from legacy payment companies such as FIS and Fiserv, which sell payment processing and bank technology; and other payment fintechs such as Stripe and PayPal. PayPal is in the midst of its own restructuring, as new
In a research note Seeking Alpha analysts suggested headwinds for Block, saying the company "lacks clear leadership" in the fintech sector and has limited synergy between Cash App and Square, the business-oriented unit of Block that retains the company's original brand.
