SQ Stocks: Squared Earnings Miss Estimates, Stocks Rise on 2024 Forecast

Square parent roadblock (Field) reported fourth-quarter earnings that beat estimates while revenue slightly beat as other financial metrics were mixed. Guidance for SQ stock came in above expectations, sending shares higher on Friday.




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For 2024, Square expects gross profit to be at least $8.65 billion versus consensus of $8.55 billion. Square said it expects adjusted EBITDA to reach at least $2.65 billion versus consensus of $2.4 billion.

“Guidance indicates an expansion of adjusted operating income margin of approximately 9% (about 3% better than the company's previous 2024 forecast) and an expansion of adjusted EBITDA margin on a basis,” Dominique Gabriel, an analyst at Oppenheimer, said in a report. annual”. “This significant margin expansion will likely be the main driver of (the rally in Square shares).”

Block told analysts that it would cap the size of its workforce at 12,000.

SQ Stock: Q4 financial results

Released after the market closed on Thursday, Square's earnings for the period ending Dec. 31 were 45 cents per share on an adjusted basis, up 109% from the same period a year earlier. Analysts had expected earnings of 58 cents per share.

Square also said net revenue was $5.77 billion, including Cash App bitcoin transactions. SQ stock analysts expected revenue of $5.69 billion.

On the stock market today, SQ stock rose 17% to 79.53 in morning trading.

“Overall performance is trending toward balanced growth coupled with rising profitability,” James Friedman, an analyst at Susquehanna, said in a report.

Block Stock: EBITDA growth

Financial analysts also look at gross profit as a key measure for SQ stock. Gross profit rose 22% to $2.03 billion, beating estimates of $1.97 billion.

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The cost cuts boosted earnings before interest, taxes, depreciation and amortization, a key measure known as EBITDA. It jumped 28% to $562 million versus estimates of $447.3 million.

In the fourth quarter, total payment volume from merchant customer transactions rose 10% to $57.8 billion, below estimates of $58.50 billion.

For the first quarter of 2024, Square said it expects EBITDA to be $580 million. Analysts had expected earnings before interest, taxes, depreciation and amortization for the quarter ending in March to reach $515 million.

Square arrows: business

“Despite its commitment to a leaner cost structure, we believe the headline story is set to improve over the course of 2024 as product velocity increases and a refocused go-to-market strategy pays off,” said Trevor Williams, Jefferies analyst. He said in a report.

SQ stock is down 13% in 2024 ahead of the bloc's earnings report. San Francisco-based Block's earnings included consumer lending company Afterpay.

Furthermore, in 2023, Block replaced the head of its Square business, Alyssa Henry, with Block and Twitter founder Jack Dorsey.

In its core business, Square Stock aims to build a two-sided digital payments ecosystem, with products designed for both merchant sellers and consumer buyers.

The Square Cash app helps people manage money, buy stocks, cryptocurrencies, and more. Block aims to connect the Cash App and commerce ecosystems with Afterpay's consumer finance services.

“Payments are becoming a smaller portion of Cash App's revenue, and banking revenue has been cited as a key driver of Cash App's long-term growth, and is expected to rise as a percentage of Cash App's total revenue over time,” Oppenheimer's Gabriel said. .

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Meanwhile, Square stock carries a poor relative strength rating of 62 out of a top 99, according to IBD inventory check.

Follow Reinhart Krauss on X, formerly known as Twitter, @reinhardtk_tech For updates on artificial intelligence, cybersecurity, and cloud computing.

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