Latest news with #CashAppBorrow
Yahoo
13-05-2025
- Business
- Yahoo
Cash App profits disappoint
This story was originally published on Payments Dive. To receive daily news and insights, subscribe to our free daily Payments Dive newsletter. Digital payments company Block acknowledged that its signature digital wallet, Cash App, didn't bring in the profits it expected for the first quarter. 'We saw a pronounced shift in customer behavior during the time period that we typically see the largest disbursement,' Block Chief Financial Officer Amrita Ahuja said in a May 1 earnings call. She cited the time period as late February into March. 'This coincided with [Cash App] inflows coming in below our expectations during the quarter,' she added. The disappointing numbers came even after the company integrated the buy now, pay later service Afterpay onto Cash App debit cards in the first quarter. The payments firm has singled out Afterpay as a driver of growth. Block saw gross profit for Cash App grow just 10% for the quarter — to $1.38 billion — compared to the same time period in 2024. Cash App's gross profit nearly doubled from the first quarter of 2023 to the first quarter of 2024. Oakland, California-based Block 'saw a more pronounced impact to discretionary spending in areas like travel and media,' Ahuja said during the earnings call. Ahuja also noted that Cash App had about 57 million monthly active users for the quarter, which analysts said was roughly flat compared to previous quarters. 'Users were seemingly flat or flatish for the fourth quarter in a row,' Macquarie Equity Research analyst Paul Golding said. The relatively anemic growth, combined with a stagnant user base, 'could spell difficulty in our view in achieving some of this flywheel momentum that Cash App was positioned for,' Golding said. The softness in Cash App earnings are a possible warning sign for Block, William Blair analyst Andrew Jeffrey said. 'The company needs a greater sense of product innovation urgency,' he said in an interview. Part of the problem was that Block focused on engaging with current users rather than adding new ones, TD Cowen analyst Bryan Bergin said. 'If you go back to a year ago, there was not really a focus on growing the network,' he said. Instead, Block wanted Cash App users to utilize other products such as direct deposit, Bergin said.'Now they've realized it can't be one or the other,' he said. 'They need to be driving network [growth] and engagement.' When reached for comment, a Block spokesperson referred to the company's first-quarter shareholder letter, which said that the payments firm is improving Cash App in a number of ways. Those steps include rolling out short-term loans, called Cash App Borrow, to millions more users and increasing the borrowing limit for some eligible customers, but the letter says that's happening now, in the second quarter. 'We expect these enhancements to Cash App Borrow will drive gross profit growth,' the letter said. The spokesperson declined to say what Block had expected Cash App's profit to be in the first quarter. Block's reported net income was more than cut in half, to $189.9 million for the first quarter, a drop from the $472 million for the year-ago quarter, according to the company's quarterly filing with the Securities and Exchange Commission. That happened as the company's total revenue fell 3% to $5.77 billion for the quarter and operating expenses climbed 6% to $1.96 billion. Recommended Reading Afterpay to drive Cash App growth, executive says Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Business Mayor
04-05-2025
- Business
- Business Mayor
Block shares plunge 18% as company takes 'cautious stance,' issues weak guidance for year
Block reported first-quarter results that missed Wall Street expectations on Thursday and issued a disappointing outlook. The stock tumbled 15% in extended trading. Here is how the company did, compared to analysts' consensus estimates from LSEG. Earnings per share: 56 cents adjusted. That figure may not be comparable to estimates. 56 cents adjusted. That figure may not be comparable to estimates. Revenue: $5.77 billion vs. $6.2 billion expected Revenue decreased about 3% from $5.96 billion a year earlier. Gross profit rose 9% to $2.29 billion from $2.09 billion a year earlier. That missed analysts' forecasts of $2.32 billion for the quarter. Block provided weaker-than-expected profit guidance for the second quarter and full year, reflecting challenging economic conditions. A growing number of tech companies are warning investors about the rest of the year following President Donald Trump's announcement of sweeping tariffs on imported goods last month. 'We recognize we are operating in a more dynamic macro environment, so we have reflected a more cautious stance on the macro outlook into our guidance for the rest of the year,' the company wrote in its quarterly report. The company expects gross profit in the second quarter of $2.45 billion and $9.96 billion for the full year. Analysts were expecting $2.54 billion and $10.2 billion, respectively, according to StreetAccount. In the first quarter, gross payment volume, or a measure of money moving through Square and Cash App, came in light at $56.8 billion, versus expectations of $58 billion, according to StreetAccount. Despite Cash App's broader push into financial services and lending, the segment's gross profit was a bit softer than expected. CFO Amrita Ahuja cited lower inflows and muted tax-season spending, but said the company expect a pickup later this year, in part because of the nationwide expansion of the Cash App Borrow program following approval by the Federal Deposit Insurance Corporation. While Wall Street is selling on the results, Ahuja said Block delivered its most profitable quarter ever, which she said is 'a reflection of the continued discipline across our business and the efficiency with which we operate.' Square faces the same risks as many others in the payments space due to its reliance on consumer spending. But international markets, now nearly 18% of its volume, remain a bright spot, and a recent survey of small and medium-sized businesses showed strong adoption and satisfaction, even as price sensitivity grows and tariff risks linger. Block, an early leader in point-of-sale systems for small businesses, faces growing competition from rivals like Toast and Fiserv 's Clover — though Square still gained share during the quarter in its target verticals including retail, as well as food and beverage. Cash App continues to push deeper into banking. This quarter marked the debut of Afterpay's buy now, pay later integration on the Cash App Card, part of Block's broader effort to expand credit access. With regulatory approval for Borrow, the company can effectively double the number of users eligible for the product, Ahuja said, while also improving unit economics by bringing loan servicing and origination fully in-house. Cash App gross profit was up 10% from a year earlier to $1.38 billion. Competition in peer-to-peer payments is heating up, after Venmo reported a 20% jump in revenue. Block CEO Jack Dorsey said Cash App is focused on offering more products, while at the same time still targeting additional users. 'We, of course, want to deepen engagement with our customers through banking services and Borrow — and I have no doubt we will,' Dorsey said on the earnings call. 'But at the same time, we need to make sure that we continuously grow our network, and that starts with peer-to-peer.' Analysts view lending as a key piece of monetization, alongside growing opportunities in merchant services and advertising. Morgan Stanley noted that about half of surveyed Square merchants now use Block's banking products. Block recorded bitcoin holdings of $2.3 billion at the end of the quarter. The company expects to deliver its first bitcoin mining chips with Proto in the second half of the year. Block shares are down 31% this year as of Thursday's close. — CNBC's Robert Hum contributed to this report. READ SOURCE
Business Mayor
03-05-2025
- Business
- Business Mayor
Venmo gaining ground in payments as Cash App struggles
In the increasingly crowded market for peer-to-peer payments, Venmo is showing momentum while Cash App has hit a rough patch. The parents of both businesses reported quarterly results this week. PayPal , which owns Venmo, reported an earnings beat and kept its forecast for the year. Block , meanwhile, plummeted in extended trading on Thursday after the Cash App parent missed on revenue and issued disappointing guidance. Venmo and Cash App are simultaneously competing to gobble up more consumers for their peer-to-peer offerings while also adding services like debit, credit and transfer services so they can actually make money from those users. For PayPal CEO Alex Chriss, who took over the struggling payments company in 2023, monetizing Venmo is a key piece to his turnaround plan. Venmo revenue jumped 20% in the first quarter from a year earlier, though PayPal didn't provide a dollar figure. PayPal pointed to growing adoption of features like the Venmo debit card, instant transfers, and integration into online checkout. The company said monetization per user is improving and that Venmo continues to play a role in its broader e-commerce push. Revenue at Venmo increased at twice the rate of total payment volume, which rose 10%, reflecting progress in turning engagement into profit. During the quarter, PayPal added nearly two million first-time debit card users across PayPal and Venmo, and said Venmo debit card payment volume rose more than 60%. Monthly actives on the card grew about 40%, while Pay with Venmo volume surged 50%. 'We've leaned into Venmo and the investment is starting to pay off,' Chriss said on the company's earnings call. Read More Japan issues rare warning over fake X account Block CEO Jack Dorsey struck a different tone on his company's call. Cash App posted 10% gross profit growth from a year earlier to $1.38 billion in the first quarter. PayPal's gross payment volume, or a measure of money moving through Square and Cash App, came in at $56.8 billion, missing the average analyst estimate of $58 billion, according to StreetAccount. Dorsey acknowledged Cash App's recent underperformance. 'I just don't think we were focused enough and had enough attention on the network and the network density, and that is our foundation,' he said. Dorsey noted that some users still don't view Cash App as a true banking platform, in part because their experience with the app can feel limited or restrictive when trying to move or access funds. The company is promoting its lending program, Cash App Borrow, which has received approval from the Federal Deposit Insurance Corporation and can now bring origination and servicing in-house. 'We of course want to deepen engagement with our customers through banking services and Borrow, and I have no doubt we will,' Dorsey said. 'But at the same time, we need to make sure that we continuously grow our network, and that starts with peer to peer.' READ SOURCE
Yahoo
02-05-2025
- Business
- Yahoo
Block Shares Nosedive 20% After Q1 Miss, Cuts Full?Year Outlook
Block (NYSE:XYZ) shares plunged 20% on Friday morning trading after its Q1 results fell short of forecasts, driven by weaker?than?anticipated Cash App Card spending. Warning! GuruFocus has detected 8 Warning Sign with XYZ. The merchant?services and payments firm posted adjusted EPS of $0.56, below the $0.94 analysts' consensus and down from $0.71 in Q4 2024. Gross payment volume slid to $56.8 billion, missing the $57.9 billion street view and down from $62.0 billion in the prior quarter. Gross profit dipped to $2.29 billion versus expectations of $2.32 billion, though year?on?year it rose from $2.09 billion in Q1 2024. Cash App contributed $1.38 billion (up 10% Y/Y) and Square's segment added $898 million (up 9% Y/Y). Non?GAAP operating expenses climbed to $1.84 billion from $1.57 billion in Q4. Adjusted EBITDA reached $812.8 million, topping the $783.4 million estimate. Looking ahead, Block now sees Q2 gross profit of $2.45 billion versus a $2.54 billion consensus, and full?year 2025 gross profit of $9.96 billion (prior guidance: $10.22 billion; consensus: $10.18 billion). The company plans to broaden Cash App Borrow loans, refine product controls and boost high?ROI marketing to drive a rebound in the back half of the year. This article first appeared on GuruFocus. Sign in to access your portfolio
Business Mayor
02-05-2025
- Business
- Business Mayor
Block plunges 20% as Cash App miss triggers downgrades
Block shares were on track for their second-worst day Friday, plunging more than 20% as investors digested a brutal quarterly report and a wave of analyst downgrades centered on one issue: Cash App. The first-quarter earnings miss rattled Wall Street, prompting multiple firms — including Wells Fargo, Seaport, BMO, and Benchmark — to downgrade the stock overnight. Many flagged fresh concerns around stagnant Cash App user growth, muted consumer demand, and a soft macro environment that may weigh on monetization. 'Stagnation in the number of active users of the app is even more concerning than users' reduced spending,' Benchmark wrote in its note, downgrading Block to Hold. The financial services company missed across the board — on revenue, gross profit, and payment volume — and slashed its full-year guidance, citing macro uncertainty, weaker consumer spending, and lower-than-expected inflows during what's typically a strong tax refund season. 'I just don't think we were focused enough and had enough attention on the network and the network density, and that is our foundation,' CEO Jack Dorsey said on the earnings call. 'We of course want to deepen engagement with our customers through banking services and Borrow, and I have no doubt we will … but at the same time, we need to make sure that we continuously grow our network, and that starts with peer to peer.' Cash App generated $1.38 billion in gross profit in the first quarter, up 10% from a year earlier, but shy of the $1.42 billion StreetAccount consensus. Monthly actives remained flat at 57 million — and inflows rose just 8%, despite new features like Afterpay on the Cash Card and broader efforts to position Cash App as a full-fledged banking alternative. Read More Adobe launches AI assistant that can search and summarize PDFs Stock chart icon Block 5 day stock chart Wells Fargo called out 'numerous Cash App monetization red flags,' while Seaport pointed to several consecutive quarters of negative GPV growth. Even Morgan Stanley, which reiterated its Overweight rating, called the Cash App miss 'surprising' — though it highlighted better-than-expected momentum in the Square seller business, particularly in international markets. BMO downgraded the stock to Market Perform. Wells Fargo said it's unwilling to 'lay out for the second half Hail Mary,' moving to Equal Weight. Seaport downgraded to Neutral, writing: 'Will the real Jack Dorsey please stand up?' Still, some maintained optimism, with Bank of America reiterating its Buy rating, calling the stock undervalued, and Morgan Stanley saying it was an attractive near-term entry point. Block's turnaround plan hinges on lending. The company says Cash App Borrow — now approved by the FDIC to originate loans through its bank subsidiary — will double the number of eligible users and improve margins by bringing servicing in-house. Marketing spend is also expected to jump 50% in Q2 as Block looks to reaccelerate growth in the back half of the year. 'We are not sufficiently confident in the likelihood of such a rebound to recommend buying the stock on weakness,' Benchmark wrote. Meanwhile, rival Venmo is showing signs of momentum. Parent company PayPal reported a 20% revenue jump for the app in Q1, driven by increased adoption of Venmo's debit card, instant transfers, and growing volume at checkout. While PayPal didn't disclose an exact revenue figure for Venmo, it said monetization per user is improving — the result of a clear push to embed Venmo deeper into e-commerce flows. Two very different strategies are now unfolding: Cash App is leaning deeper into lending and banking, while Venmo is chasing spend at checkout. But the goal, however, is the same: Owning the consumer's wallet. Right now, Venmo appears to be gaining ground, while Cash App is regrouping. READ SOURCE
