Block (NYSE: $SQ), formerly Square, Inc., is an American financial services company founded in 2009 by Jack Dorsey and Jim McKelvey. The company provides an array of services and products, including mobile payment solutions, point-of-sale devices, and software. However, a majority of its revenue comes from its Cash App product.
On Thursday, February 22, 2024, Block released better-than-expected fourth-quarter and full-year results.
Fourth and Fiscal 2023 Results
In the fourth quarter, Block reported a gross profit of $2.03 billion, a 22% increase year-over-year. Square recorded a gross profit of $828 million, an 18% increase compared to the previous year, while Cash App recorded a $1.18 billion gross profit, a 25% year-over-year increase.
Block reported an adjusted EBITDA of $562 million in the fourth quarter and $1.79 billion in FY23, surpassing its guidance of $1.66-$1.68 billion. The company’s operating expenses increased by 20% to $2.16 billion in the fourth quarter.
In FY23, total net revenue was $21.92 billion, a 25% increase compared to the previous year. Excluding Bitcoin revenue, the revenue stood at $12.42 billion, reflecting a 19% year-over-year rise. Furthermore, gross profit from Cash App soared by 33% year-over-year, totaling $4.32 billion. Square gross profit rose by 16% Y/Y, amounting to $3.13 billion.
Block Announces Workforce Cap
Block announced that it will cap its workforce to 12,000 employees. CEO Jack Dorsey said, “We’re under our 12,000 people cap“.
He added, “This constraint forces us to prioritize more impactful work, which we believe will lead to growth. We’re going to operate under this cap until we feel it’s holding us back, which is likely years out, and continue to look critically at our organization and priorities.”
Block Forecast And AI Developments
The highlight of the Q4 results was the upward revision in its guidance. It expects a full-year adjusted operating income of $1.15 billion, which is a 13% margin, and a full-year adjusted EBITDA of $2.63 billion, a 30% margin. That is a major increase from its previous forecast of $875 million in adjusted operating income and $2.4 billion in adjusted EBITDA.
Block forecasted a first-quarter adjusted EBITDA of $570 million to $590 million and an adjusted operating income of $225 million to $245 million.
The company also revealed that Square Ecosystem launched an AI model named GenAI in Q4. It is a conversational tool designed to autofill answers to common issues facing customers. The result is reduced time spent retrieving information so they can focus on serving sellers.
Stock Update: SQ
SQ stock is trading at $80 per share as of 02:46 PM EST, rising 17.71% from its previous closing of $67.96. The stock surged on impressive Q4 and full-year results. At the time of writing, the market cap is $49.094 billion, with a volume of 40,387,046.
Its current price is close to its 52-week high of $83.29 and below its 50-day and 200-day moving averages of $69.22 and $61.13, respectively. However, it is down 12.15% in the past 12 months, compared to the 28.14% gain of the S&P 500 in the same period.
Should You Add SQ Stock To Your Portfolio?
2023 was a remarkable year for the Block, with a 25% increase in the total revenue. With an upward revision in full-year guidance, it signals that SQ stock could soar in 2024. Based on this assessment, it is a lucrative stock to invest in 2024 for good profits.
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