01—Abstract
Summary
Summary of the 10-K filed February 22, 2024. Cited figures are marked; the original filing is the authoritative source.
Block, Inc. (filed under Block, Inc.; NYSE ticker SQ) reported total net revenue of $21.92 billiona for 2023, up 25% from $17.53 billion in 2022, with bitcoin revenue of $9.50 billion as the primary driver.
Gross profit rose to $7.50 billionb, up 25% year over year, with Cash App gross profit of $4.32 billion (up 33%) and Square gross profit of $3.13 billion (up 16%). The company swung to net income attributable to common stockholders of $9.8 million from a loss of $540.7 million in 2022, but operating loss was $278.8 million, reflecting $2.72 billion in product development, $2.21 billion in general and administrative, and $660.7 million in transaction, loan, and consumer receivable losses. Management cites Adjusted EBITDA of $1.79 billion, up 81%, and Adjusted Operating Income of $351.4 million.
The company ended 2023 with $7.7 billionc in available liquidity, including $4.2 billion of aggregate debt principal outstanding, and a $1.0 billion share repurchase program authorized in October 2023, under which $156.8 million was repurchased in the fourth quarter. Management announced an absolute cap of 12,000 employees and recorded $104.0 million of severance and other related expenses in 2023. Cash App reported 56 million monthly transacting actives as of December 2023, and the company moved its BNPL platform fully under Cash App, changing segment reporting.
The filing highlights risks including dual-class control (Class B holders held approximately 52.14% of voting power), regulatory scrutiny from the CFPB (a NORA notice in December 2023 regarding possible enforcement action), inquiries from the SEC and DOJ following a March 2023 short seller report, bitcoin price volatility, and credit ratings that are non-investment grade (BB+/Ba2). Operating cash flow was $101.0 milliond in 2023.
02—Key points
Key Highlights
- Total net revenue of $21.92 billion, up 25%, with bitcoin revenue of $9.50 billion driving most of the increase
- Gross profit of $7.50 billion, up 25%; Cash App gross profit $4.32 billion (up 33%) and Square gross profit $3.13 billion (up 16%)
- Net income attributable to common stockholders of $9.8 million, versus a net loss of $540.7 million in 2022; operating loss of $278.8 million
- Adjusted EBITDA of $1.79 billion, up 81%; Adjusted Operating Income of $351.4 million
- Available liquidity of $7.7 billion at year-end 2023, including $6.9 billion in cash, cash equivalents, restricted cash, and marketable debt securities
- $1.0 billion share repurchase program authorized October 2023; $156.8 million repurchased in Q4 2023
- CFPB issued a NORA notice in December 2023 regarding possible legal action related to Cash App customer complaint handling; SEC and DOJ made inquiries after a March 2023 short seller report
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2023, Block kept $0.00.
- Revenue$21.92B100.0%
- Cost of revenue−$14.41B65.8%
- Gross profit$7.50B34.2%
- Operating costs−$7.78B35.5%
- Operating income−$278.8M1.3%
- Interest, other & tax$288.6M1.3%
- Net income$9.8M0.0%
04—Financials
Financial Highlights
Figures from 10-KFY2023filed February 22, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $21.92B$17.53B | +25.0% |
| Cost of Revenue | $14.41B$11.54B | +24.9% |
| Gross Profit | $7.50B$5.99B | +25.3% |
| R&D Expenses | $2.72B$2.14B | +27.4% |
| Operating Expenses | $7.78B$6.62B | +17.6% |
| Operating Income | -$278.84M-$624.53M | +55.4% |
| Interest Expense | $0$0 | — |
| Net Income | $9.77M-$540.75M | +101.8% |
| EPS (Basic) | $0.02$-0.93 | +102.2% |
| EPS (Diluted) | $0.02$-0.93 | +102.2% |
| Shares Outstanding (Basic) | 608.86M578.95M | +5.2% |
| Shares Outstanding (Diluted) | 614.02M578.95M | +6.1% |
05—Questions
Frequently Asked Questions
How much did Block's revenue and profitability change in 2023?
Total net revenue rose 25% to $21.92 billion, driven primarily by bitcoin revenue, which increased $2.4 billion. Net income attributable to common stockholders was $9.8 million, compared with a loss of $540.7 million in 2022, although the company reported an operating loss of $278.8 million for 2023.
What are the main drivers of Cash App and Square performance?
Cash App segment revenue increased 33% to $14.68 billion and gross profit increased 33% to $4.32 billion, driven by bitcoin revenue, Cash App Card, Instant Deposit, and BNPL. Square segment revenue increased 12% to $7.03 billion and gross profit increased 16% to $3.13 billion, driven by growth in Square GPV.
How is the company managing costs and capital?
Block recorded $104.0 million of severance and other related expenses in 2023 and set an absolute cap of 12,000 employees. It repurchased $156.8 million of Class A stock under a $1.0 billion program and ended the year with $4.2 billion of aggregate debt principal outstanding.
What are the key regulatory and governance risks for investors?
The CFPB has issued a NORA notice regarding possible enforcement action related to Cash App complaint handling, and the company received SEC and DOJ inquiries after a March 2023 short seller report. Class B shareholders held approximately 52.14% of voting power as of December 31, 2023, giving them control over matters submitted to stockholders.
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