01—Abstract
Summary
Summary of the 10-K filed February 23, 2023. Cited figures are marked; the original filing is the authoritative source.
Block, Inc. (filed as Block, Inc.; formerly Square, Inc., with Class A stock listed on the NYSE under "SQ") reported a 2022 net loss of $540.7 milliona attributable to common stockholders, compared with net income of $166.3 million in 2021.
Total net revenue was $17.53 billionb, down 1% from $17.66 billion, as bitcoin revenue fell $2.9 billion (29%) to $7.11 billion. Excluding bitcoin revenue, total net revenue increased $2.8 billion, or 36%, and gross profit rose to $5.99 billion from $4.42 billion. Adjusted EBITDA was $990.96 million versus $1.01 billion in 2021.
The results reflect the January 31, 2022 acquisition of Afterpay Limited, a buy now, pay later platform, for consideration of $13.8 billionc. Afterpay contributed $811.4 million of revenue from the acquisition date through December 31, 2022. Operating expenses rose 55% to $6.62 billion, driven by product development, general and administrative costs, and transaction, loan, and consumer receivable losses.
The company reported a $568.7 milliond accumulated deficit and total stockholders' equity of $17.25 billion, against $4.6 billion of principal debt outstanding. Liquidity was approximately $7.5 billion in available funds, including $600.0 million undrawn under the revolving credit facility. The two reportable segments, Square and Cash App, each received an equal allocation of Afterpay results.
Cash App segment revenue fell 14% to $10.63 billion, largely due to lower bitcoin revenue, while Square segment revenue rose 29% to $6.70 billion. Investors should weigh the Afterpay integration, sensitivity to bitcoin prices (including $46.6 million of impairment charges in 2022), and the dual-class structure, under which Class B holders controlled 52.93% of voting power at year-end.
02—Key points
Key Highlights
- Net loss attributable to common stockholders of $540.7 million in 2022, versus net income of $166.3 million in 2021.
- Total net revenue of $17.53 billion, down 1%; excluding bitcoin revenue, total net revenue increased 36%.
- Gross profit increased to $5.99 billion from $4.42 billion; total operating expenses rose 55% to $6.62 billion.
- Adjusted EBITDA of $990.96 million, compared with $1.01 billion in 2021.
- Afterpay acquisition (January 31, 2022) for $13.8 billion; Afterpay BNPL revenue of $811.4 million from acquisition through December 31, 2022.
- Bitcoin revenue fell $2.9 billion (29%) to $7.11 billion; bitcoin impairment losses of $46.6 million were recorded in 2022.
- Class B stockholders held approximately 52.93% of combined voting power as of December 31, 2022.
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2022, Block lost $0.03.
- Revenue$17.53B100.0%
- Cost of revenue−$11.54B65.8%
- Gross profit$5.99B34.2%
- Operating costs−$6.62B37.7%
- Operating income−$624.5M3.6%
- Interest, other & tax$83.8M0.5%
- Net income−$540.7M3.1%
04—Financials
Financial Highlights
Figures from 10-KFY2022filed February 23, 2023Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $17.53B$17.66B | −0.7% |
| Cost of Revenue | $11.54B$13.24B | −12.9% |
| Gross Profit | $5.99B$4.42B | +35.6% |
| R&D Expenses | $2.14B$1.38B | +54.3% |
| Operating Expenses | $6.62B$4.26B | +55.4% |
| Operating Income | -$624.53M$161.11M | −487.6% |
| Interest Expense | $0$58.10M | −100.0% |
| Net Income | -$540.75M$166.28M | −425.2% |
| EPS (Basic) | $-0.93$0.36 | −358.3% |
| EPS (Diluted) | $-0.93$0.33 | −381.8% |
| Shares Outstanding (Basic) | 578.95M458.43M | +26.3% |
| Shares Outstanding (Diluted) | 578.95M501.78M | +15.4% |
05—Questions
Frequently Asked Questions
Why did total net revenue decline in 2022 despite growth in most business lines?
Total net revenue decreased $129.6 million, or 1%, to $17.53 billion, because bitcoin revenue decreased $2.9 billion, or 29%, as the market price of bitcoin declined. Excluding bitcoin revenue, total net revenue increased $2.8 billion, or 36%.
What drove the increase in operating expenses?
Total operating expenses rose $2.36 billion, or 55%, to $6.62 billion. Product development increased 54%, general and administrative expenses increased 72% (including $66.3 million of one-time Afterpay share-based compensation acceleration), and transaction, loan, and consumer receivable losses increased 193%. Afterpay added employees and amortization of acquired intangibles.
How much debt does Block carry and when does it mature?
As of December 31, 2022, the company held $4.6 billion in aggregate principal amount of debt, including convertible notes maturing in 2023, 2025, 2026 and 2027 and senior notes due June 1, 2026 and June 1, 2031. The 2023 Convertible Notes had $460.6 million outstanding and mature May 15, 2023.
What is the company's liquidity position?
The company reported approximately $7.5 billion in available funds at December 31, 2022, including $600.0 million undrawn under its revolving credit facility and $389.4 million available under warehouse funding facilities. The filing states that available funds are sufficient to meet liquidity needs for the foreseeable future.
How much control do Class B shareholders have?
Class B common stock carries ten votes per share versus one vote for Class A. Holders of Class B stock held approximately 52.93% of combined voting power as of December 31, 2022, giving them control over matters submitted to stockholders.
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