Latest news with #AppBorrow
Yahoo
6 days ago
- Business
- Yahoo
Evercore upgrades Block on lower lending risk and steady consumer trends
-- Evercore ISI upgraded shares of Block Inc to Outperform from In Line citing reduced risk in Cash App lending, solid low-end consumer trends, and promising product and sales also raised its price target to $75 from $58, implying about 21% upside. The firm said initial concerns over aggressive lending following Block's first-quarter earnings have eased. Evercore believes Block's lending strategy is more balanced than feared, with a diversified risk profile and controlled expansion, especially within Cash App Borrow. Evercore also noted that low-end consumer spending remains stable, supported by steady unemployment deposits and consistent payment activity. This follows management commentary in May that Cash App gross profit growth improved to 13% year-over-year in April, up from 7% in March. The analysts highlighted recent product launches at Square, including new hardware and a consolidated app, as positive signs of improved development efficiency following an internal reorganization. Additionally, Evercore pointed to early success in revamping sales efforts under Nick Molnar, noting progress in tele-sales and field sales teams. These go-to-market changes, combined with product improvements, are seen as setting up Square for stronger growth. Despite a recent bounce in shares, Block shares are still down 27% year-to-date, and Evercore views the stock as attractively valued relative to peers and historical multiples. Related articles Evercore upgrades Block on lower lending risk and steady consumer trends RBC on Reddit: Sees early stages of a shift to the 'World Wide Website' JP Morgan upgrades Pinterest on engagement gains, attractive valuation
Yahoo
02-05-2025
- Business
- Yahoo
Block Inc (XYZ) Q1 2025 Earnings Call Highlights: Strong Growth Amidst Macroeconomic Challenges
Total Block Gross Profit: $2.29 billion, up 9% year-over-year. Square Gross Profit Growth: 9% year-over-year, driven by GPV growth of 7.2%. Cash App Gross Profit: Up 10% year-over-year. Gross Profit Per Monthly Transacting Active: $81 in the quarter. Adjusted EBITDA: $813 million, up 15% year-over-year. Adjusted Operating Income: $466 million, up 28% year-over-year. Adjusted Free Cash Flow: $1.53 billion for the trailing 12 months ending in March. Stock Repurchase: Approximately $600 million repurchased through the end of April. 2025 Gross Profit Growth Expectation: 12% or $9.96 billion. Second Quarter Gross Profit Growth Expectation: 9.5%. April Global GPV Growth Expectation: 9.6% year-over-year. Adjusted Operating Income Expectation for 2025: $1.9 billion or approximately 19% margin. Warning! GuruFocus has detected 8 Warning Sign with XYZ. Release Date: May 01, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Block Inc (NYSE:XYZ) reported a total gross profit of $2.29 billion for the first quarter, marking a 9% year-over-year increase. Square demonstrated strong performance with a 9% year-over-year gross profit growth, driven by a 7.2% GPV growth. The company achieved its highest adjusted operating income and adjusted EBITDA ever, with adjusted EBITDA up 15% year-over-year. Block Inc (NYSE:XYZ) received FDIC approval to use Square Financial Services for issuing consumer loans, which is expected to significantly enhance unit economics and expand the Cash App Borrow offering. The company is actively investing in AI and product innovation, with plans to showcase over 100 new products and features, which are expected to drive future growth. Cash App's gross profit came in below expectations, attributed to changes in consumer spending behavior, particularly during the tax refund season. The company has embedded a more cautious macroeconomic outlook into its guidance, reflecting potential softening in consumer spending. Despite strong performance in Square, Cash App's growth was impacted by lower-than-expected inflows and discretionary spending. Block Inc (NYSE:XYZ) lowered its full-year adjusted operating income guidance, reflecting a more conservative approach due to macroeconomic uncertainties. The company did not provide specific numbers for Cash App's direct deposit users, indicating potential challenges in expanding this user base. Q: Jack, can you elaborate on your confidence in growth acceleration despite macro uncertainties? A: Jack Dorsey, Executive Chairman of the Board, Block Head: We've made significant internal changes and improvements to our systems, particularly with Square gaining market share. Our focus is on product velocity, network expansion, and AI integration, which are showing positive results. We're also enhancing Cash App's network density and product controls to drive growth. Q: Amrita, what changes have you observed in consumer behavior, and how does it affect your outlook? A: Amrita Ahuja, Chief Financial Officer, Chief Operating Officer: We noticed a shift in consumer behavior during the tax refund season, impacting Cash App inflows. Our guidance now reflects a more cautious macro outlook, embedding potential softening beyond current observations. We're maintaining investment flexibility to adapt to evolving conditions. Q: Can you discuss the early results of Cash Card Afterpay functionality and its future potential? A: Jack Dorsey: We're excited about integrating Afterpay with Cash App, offering post-transaction payment splitting. This feature is strategic for driving payroll direct deposits and enhancing cash flow management for users. Early results show strong adoption, and we plan to expand this functionality further. Q: How resilient is the Borrow model in a potentially deteriorating macro environment? A: Amrita Ahuja: Our Borrow model is robust, leveraging real-time machine learning for underwriting. We've maintained consistent repayment rates and can quickly adjust if needed. The short loan durations and dynamic scoring provide early visibility into performance, ensuring adaptability to changing conditions. Q: What are the key drivers behind Square's expected gross profit acceleration? A: Amrita Ahuja: Square's growth is driven by product innovation and enhanced go-to-market strategies. We're seeing strong returns from field sales and partnerships, with significant product releases planned. Our focus on core verticals and upmarket sellers is yielding positive results, contributing to gross profit acceleration. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus. Sign in to access your portfolio
