01—Abstract
Summary
Summary of the 10-K filed February 24, 2022. Cited figures are marked; the original filing is the authoritative source.
Block, Inc. (filed under the name Square, Inc. at the time of filing, and now known as Block) reported fiscal 2021 total net revenue of $17.66 billiona, up 86% from $9.50 billion in 2020, with net income attributable to common stockholders of $166.3 million compared with $213.1 million in 2020.
Bitcoin revenue was the dominant driver, rising to $10.01 billionb from $4.57 billion and accounting for 67% of the increase in total net revenue; the filing states bitcoin contributed 57% of total 2021 revenue but only 4.9% of total gross profit. Excluding bitcoin, total net revenue increased by $2.7 billion, or 55%. Gross profit rose to $4.42 billion from $2.73 billion, and operating income was $161.1 million versus an operating loss of $18.8 million in 2020.
By segment, Cash App net revenue was $12.32 billionc (gross profit $2.07 billion) and Square net revenue was $5.19 billion (gross profit $2.32 billion). Adjusted EBITDA was $1.01 billion versus $474.1 million in 2020. Gross Payment Volume reached $167.72 billion, and Square GPV was $152.8 billion.
The company held approximately $9.4 billiond of cash, restricted cash, customer funds and marketable debt securities at year end, with $6.9 billion of liquidity excluding customer funds. Total debt principal was about $4.6 billion, including $2.0 billion of senior unsecured notes issued in May 2021.
The filing also describes the pending acquisition of Afterpay, a buy-now-pay-later platform, completed on January 31, 2022 for 113,387,895 Class A shares with an aggregate fair value of $13.9 billion. Investors should weigh the heavy dependence on bitcoin price for revenue, the dual-class structure in which Class B holders control 60.48% of voting power, and integration and regulatory risks from Afterpay and Square Financial Services.
02—Key points
Key Highlights
- Total net revenue rose 86% to $17.66 billion in 2021, but bitcoin revenue ($10.01 billion) accounted for 67% of the increase and only 4.9% of total gross profit.
- Gross profit increased to $4.42 billion from $2.73 billion; operating income swung to $161.1 million from an operating loss of $18.8 million in 2020.
- Cash App segment revenue reached $12.32 billion (up 106%), with gross profit of $2.07 billion; Square segment revenue reached $5.19 billion (up 47%), with gross profit of $2.32 billion.
- Net income attributable to common stockholders declined to $166.3 million from $213.1 million, and diluted EPS was $0.33 versus $0.44 in 2020.
- Adjusted EBITDA more than doubled to $1.01 billion from $474.1 million, and Gross Payment Volume grew to $167.72 billion from $112.30 billion.
- Afterpay acquisition was completed January 31, 2022, for 113,387,895 Class A shares with an aggregate fair value of $13.9 billion.
- Class B shareholders held approximately 60.48% of combined voting power as of December 31, 2021, concentrating control despite a dual-class structure.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2021, Block kept $0.01.
- Revenue$17.66B100.0%
- Cost of revenue−$13.24B75.0%
- Gross profit$4.42B25.0%
- Operating costs−$4.26B24.1%
- Operating income$161.1M0.9%
- Interest, other & tax$5.2M0.0%
- Net income$166.3M0.9%
Where FY2021 revenue went
$17.66B- Cost of revenue: $13.24B, 75% of revenue
- Other operating costs: $2.87B, 16% of revenue
- Operating income: $161.1M, 0.9% of revenue
- R&D: $1.38B, 7.8% of revenue
Kept 0.9% as operating incomeOperating income $161.1M · 0.9%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2021filed February 24, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $17.66B$9.50B | +86.0% |
| Cost of Revenue | $13.24B$6.76B | +95.8% |
| Gross Profit | $4.42B$2.73B | +61.7% |
| R&D Expenses | $1.38B$881.83M | +56.9% |
| Operating Expenses | $4.26B$2.75B | +54.7% |
| Operating Income | $161.11M-$18.82M | +956.3% |
| Interest Expense | $58.10M$75.20M | −22.7% |
| Net Income | $166.28M$213.10M | −22.0% |
| EPS (Basic) | $0.36$0.48 | −25.0% |
| EPS (Diluted) | $0.33$0.44 | −25.0% |
| Shares Outstanding (Basic) | 458.43M443.13M | +3.5% |
| Shares Outstanding (Diluted) | 501.78M482.17M | +4.1% |
05—Questions
Frequently Asked Questions
How much of the revenue growth came from bitcoin?
Bitcoin revenue increased by $5.4 billion, or 119%, to $10.01 billion and represented 67% of the $8.2 billion increase in total net revenue. The filing notes that bitcoin contributed 57% of total 2021 revenue but only 4.9% of total gross profit.
Did the company become profitable on a GAAP basis in 2021?
Yes. Operating income was $161.1 million compared with an operating loss of $18.8 million in 2020, and net income attributable to common stockholders was $166.3 million. However, net income was lower than the $213.1 million reported in 2020, which benefited from a $291.7 million other income line that included gains on equity investments.
What is the status of the Afterpay acquisition?
The acquisition of Afterpay Limited, a global buy-now-pay-later platform, was completed on January 31, 2022 (February 1, 2022 Australian time). Consideration consisted of 113,387,895 shares of Class A common stock with an aggregate fair value of $13.9 billion, and the company said it would integrate Afterpay into the Square and Cash App ecosystems.
What are the main risks to shareholders noted in the filing?
Key risks include dependence on bitcoin prices, the dual-class structure that concentrates voting control with Class B holders (60.48% of voting power), the need to integrate Afterpay and manage its liabilities, extensive regulation of money transmission, broker-dealer and banking activities, and convertible note obligations that may require substantial cash settlement.
How strong is the company's liquidity position?
As of December 31, 2021, the company had $9.4 billion of cash and cash equivalents, restricted cash, customer funds and marketable debt securities, and $6.9 billion of total liquidity excluding customer funds. It also had a $500 million undrawn revolving credit facility, which was increased to $600 million on February 23, 2022.
06—Continue