Sina Science and Technology News reported on the morning of May 3, Beijing time, that mobile payment company Block (formerly Square) today announced the company's financial report for the first quarter of fiscal year 2023. According to the report, Block's total net revenue in the first quarter was $5.957 billion, an increase of 19% compared with $4.990 billion in the same period last year, and excluding the revenue from Bitcoin, Block's total net revenue in the first quarter was $3.23 billion, an increase of 14% compared with the same period last year. Block's net income for the first quarter was $471 million, compared to a significant increase of $95.8 million in the year-ago quarter, and net income attributable to common shareholders was $472 million, compared to a net profit attributable to common shareholders of $98.3 million in the year-ago quarter, a significant increase of 380% year-over-year.
Block's first-quarter revenue and adjusted earnings per share both beat Wall Street analysts' expectations. At the same time, the company also raised its outlook for the full fiscal year 2023. Block shares rose sharply more than 7% after the earnings release.
Main achievements:
In the quarter ended March 31, Block's net income was $471 million, compared to $95.8 million in the same period last year, a significant increase from the same period last year, and net income attributable to common shareholders was $472 million, compared to $98.3 million in the same period last year, a significant increase of 380% year-over-year. Diluted net income per share attributable to common shareholders was $0.74, compared to net income per diluted share attributable to common shareholders of $0.03 in the year-ago quarter, a significant year-over-year increase.
Excluding certain one-time items (non-GAAP), Block's adjusted diluted net income for the first quarter was $543 million, a significant increase from $271 million in the year-ago quarter, and adjusted earnings per diluted share were $0.85, compared to $0.40 in the year-ago quarter, a significant year-over-year increase and exceeding analysts' expectations. According to data provided by Yahoo Finance, 29 analysts had expected Block to earn $0.72 per share in the first quarter, on average.
Block's total net revenue for the first quarter was $5.957 billion, up 19% from $4.990 billion in the year-ago quarter, which also exceeded analysts' expectations. According to data provided by Yahoo Finance, 27 analysts had expected Block to report $5.82 billion in first-quarter revenue on average. Excluding revenue from Bitcoin, Block's total net revenue in the first quarter was $3.23 billion, up 14% compared to the same period last year.
By source of revenue, Block's transaction-based revenue in the first quarter was $1.511 billion, up from $1.423 billion in the year-ago quarter, subscription and service-based revenue was $1.682 billion, up from $1.366 billion in the year-ago quarter, hardware revenue was $32.5 million, down from $37.5 million in the year-ago quarter, and Bitcoin revenue was $2.731 billion, up from $2.164 billion in the year-ago quarter.
By business segment: (1) Block's revenue from Cash App in the first quarter was $4.173 billion, an increase of 23% compared with $3.384 billion in the same period last year. Excluding revenue from Bitcoin, Block's revenue from Cash App in the first quarter was $1.442 billion, up from $1.220 billion in the year-ago quarter. (2) Block's first-quarter revenue from Square was $1.73 billion, up 11% from the year-ago quarter, and revenue from the Enterprise and Other business units was $54 million.
The total payment volume (GPV) processed by Block in the first quarter was $54.432 billion, an increase of 6% compared to the same period last year.
Block's gross profit in the first quarter was $2.094 billion, up 22% from $1.715 billion in the same period last year. Among them, the gross profit of the Cash App business was US$1.26 billion, an increase of 25% compared with the same period last year; Square gross profit was $820 million, up 19% from the same period last year, and corporate and other gross profit was $16 million.
Block's first-quarter adjusted EBITDA, or earnings before interest, taxes, depreciation and amortization, was $705 million, up 91% from $368 million in the year-ago quarter.
Block's operating profit for the first quarter was $250 million, compared to an operating loss of $6.2 million in the year-ago quarter.
Block's total cost of revenue in the first quarter was $3,863 million, up from $3,276 million in the year-ago quarter. Transaction-based costs were $873 million, up from $821 million, subscriptions and services-based costs of $270 million, up from $264 million, hardware $50.8 million, down from $58.8 million, Bitcoin costs of $2,651 million, up from $2,134 million, and amortization expense on acquired technology assets of $18.0 million, down from $18.5 million in the year-ago quarter.
Block's total operating expenses in the first quarter were $1,845 million, up from $1,726 million in the year-ago quarter. Product development expenses were $721 million, up from $627 million, sales and marketing expenses, $444 million, down from $496 million, general and administrative expenses, $472 million, up from $433 million, trading and loan losses of $166 million, up from $128 million, and customer and other acquired intangible assets amortization expense of $42.3 million, up from $37.1 million in the year-ago quarter.
Balance Sheet/Cash Flow Information:
As of the end of the first quarter of 2023, Block held $8.0 billion in available liquidity, including $7.2 billion in cash, cash equivalents, restricted cash and tradable debt portfolio investments, and $775 million in funds available for withdrawal from revolving credit facilities. In addition, $600 million is available for withdrawal under the company's warehouse financing facility to support the growth of consumer receivables related to the BNPL platform.
In the first quarter of 2023, Adjusted EBITDA made a positive contribution to Block's cash balance. In addition, the company's overall liquidity was positively impacted by a processor's return of a $350 million deposit it held, which had previously been used to meet processing volume-related requirements for the fourth quarter of 2023.
Business outlook:
Outlook for the second quarter of fiscal 2024:
For the second quarter of fiscal 2023, Block expects gross profit for the quarter to be in the range of $2,165 million to $2,185 million, an increase of 16% to 17% compared to the year-ago quarter, adjusted EBITDA to be in the range of $670 million to $690 million, adjusted EBITDA margin to be between 31% and 32%, and adjusted operating profit to be in the range of $305 million to $325 million, with an adjusted operating margin of 14% to between 15%.
In addition, Block also expects the company's equity award payouts to remain stable in the second quarter of fiscal 2024 compared to the same period last year.
Outlook for the full year 2024:
For the full fiscal year 2023, Block expects gross profit to be $8.78 billion, an upward revision from its previous guidance of $8.65 billion, with the updated outlook representing a year-over-year growth rate of 17% compared to the previous expectation of 15% year-over-year growth, and an expected adjusted EBITDA of $2.76 billion and an adjusted EBITDA margin of 31% , compared to the previous estimate of $2.63 billion in adjusted EBITDA and an adjusted EBITDA margin of 30%, and an increase in adjusted operating profit of $1.30 billion and an adjusted operating margin of 15%, compared to an expected adjusted operating margin of $1.15 billion and an adjusted operating margin of 13%.
Stock Price Movement:
On the day, Block shares rose $3.46, or 5.18%, to close at $70.30 during regular trading on the New York Stock Exchange. In the subsequent trading as of 6:44 p.m. EST on the 2nd (6:44 a.m. Beijing time on the 3rd), Block's stock price rose sharply by $5.18 again, or 7.37%, to $75.48. Over the past 52 weeks, Block has traded at a high of $87.52 and a low of $38.85.