How much of Block's first-quarter profit came from the bitcoin remeasurement gain?

Net income included a remeasurement gain on the bitcoin investment of $233 million. Operating income of $250 million excludes this gain, which is recorded in other income, net. The letter states that Adjusted Operating Income, a non-GAAP measure, was $364 million.

What is driving growth at Cash App and Square?

The letter attributes Cash App's 25% gross profit growth primarily to inflows per active and monetization rate, with strength in Cash App Card, the BNPL platform, bitcoin products, and Cash App Borrow. Square's 19% gross profit growth was driven primarily by banking products and international markets. BNPL GMV was $6.98 billion, up 25% year over year.

What does the updated 2024 guidance imply for profitability?

The company expects full-year 2024 gross profit of at least $8.78 billion, Adjusted EBITDA of $2.76 billion at a 31% margin, and Adjusted Operating Income of $1.30 billion at a 15% margin. The company describes its updated outlook as equating to a Rule of 32, compared with at least Rule of 29 previously. It states that the outlook does not assume additional macroeconomic deterioration.

How is Block managing its bitcoin exposure?

Block states that it held approximately 8,038 bitcoins for investment with a fair value of $573 million as of March 31, 2024, against a $220 million investment. Going forward, it will invest 10% of monthly gross profit from bitcoin products into bitcoin purchases. The company notes that bitcoin's price volatility affects its results and that bitcoin revenue and gross profit may fluctuate.

What capital return and liquidity did Block report?

Block repurchased 3.6 million Class A shares for $252 million in the first quarter, leaving $591 million available under its $1 billion repurchase authorization. The company ended the quarter with $8.0 billion in available liquidity, including $7.2 billion in cash, cash equivalents, restricted cash, and marketable debt securities.

XYZ/BSQKZ 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed May 2, 2024. Cited figures are marked; the original filing is the authoritative source.

Block, Inc. reported first-quarter 2024 results in a Shareholder Letter furnished as Exhibit 99.1 to this Form 8-K.

Gross profit grew 22% year over year to $2.09 billion^a, with Cash App gross profit up 25% to $1.26 billion and Square gross profit up 19% to $820 million. Operating income was $250 million, Adjusted Operating Income was $364 million, and net income attributable to common stockholders was $472 million. Adjusted EBITDA rose 91% year over year to $705 million.

The company states that net income included a $233 million^b remeasurement gain on its bitcoin investment, and that total net revenue of $5.96 billion rose 19%, or 14% excluding bitcoin revenue of $2.73 billion. Management raised its full-year 2024 outlook to gross profit of at least $8.78 billion (17% growth), Adjusted EBITDA of $2.76 billion, and Adjusted Operating Income of $1.30 billion (15% margin). The prior gross profit outlook was $8.65 billion.

For the second quarter, the company expects gross profit of $2.165 billion to $2.185 billion^c, growth of 16% to 17%, and Adjusted Operating Income of $305 million to $325 million. The company reiterated a Rule of 40 target for 2026 and reported a Rule of 32 for its updated full-year outlook, up from at least Rule of 29 previously. The letter also covers the company's bitcoin strategy.

Block states that it holds approximately 8,038 bitcoins with a fair value of $573 million^d, compared with a $220 million investment, and that it will invest 10% of monthly gross profit from bitcoin products into bitcoin purchases. Q1 capital return included $252 million of Class A share repurchases, leaving $591 million authorized. Liquidity was $8.0 billion at quarter end.

02—Key points

Key Highlights

Gross profit rose 22% year over year to $2.09 billion, led by Cash App (up 25% to $1.26 billion) and Square (up 19% to $820 million).
Operating income was $250 million and Adjusted Operating Income was $364 million, with Adjusted Operating Income margin of 17% of gross profit.
Net income attributable to common stockholders was $472 million, or $0.74 per diluted share, and includes a $233 million bitcoin remeasurement gain. Adjusted EPS was $0.85 on a diluted basis.
Full-year 2024 gross profit outlook was raised to at least $8.78 billion from $8.65 billion, with Adjusted Operating Income of $1.30 billion.
Second-quarter 2024 outlook calls for gross profit of $2.165 billion to $2.185 billion and Adjusted Operating Income of $305 million to $325 million.
Cash App Card monthly actives reached 24 million, up 16% year over year, and Cash App Card transaction fees surpassed Instant Deposit as the largest contributor to Cash App gross profit.
The company holds bitcoin valued at $573 million and will invest 10% of monthly bitcoin product gross profit in bitcoin purchases going forward.

03—Questions

Frequently Asked Questions

How much of Block's first-quarter profit came from the bitcoin remeasurement gain?
Net income included a remeasurement gain on the bitcoin investment of $233 million. Operating income of $250 million excludes this gain, which is recorded in other income, net. The letter states that Adjusted Operating Income, a non-GAAP measure, was $364 million.
What is driving growth at Cash App and Square?
The letter attributes Cash App's 25% gross profit growth primarily to inflows per active and monetization rate, with strength in Cash App Card, the BNPL platform, bitcoin products, and Cash App Borrow. Square's 19% gross profit growth was driven primarily by banking products and international markets. BNPL GMV was $6.98 billion, up 25% year over year.
What does the updated 2024 guidance imply for profitability?
The company expects full-year 2024 gross profit of at least $8.78 billion, Adjusted EBITDA of $2.76 billion at a 31% margin, and Adjusted Operating Income of $1.30 billion at a 15% margin. The company describes its updated outlook as equating to a Rule of 32, compared with at least Rule of 29 previously. It states that the outlook does not assume additional macroeconomic deterioration.
How is Block managing its bitcoin exposure?
Block states that it held approximately 8,038 bitcoins for investment with a fair value of $573 million as of March 31, 2024, against a $220 million investment. Going forward, it will invest 10% of monthly gross profit from bitcoin products into bitcoin purchases. The company notes that bitcoin's price volatility affects its results and that bitcoin revenue and gross profit may fluctuate.
What capital return and liquidity did Block report?
Block repurchased 3.6 million Class A shares for $252 million in the first quarter, leaving $591 million available under its $1 billion repurchase authorization. The company ended the quarter with $8.0 billion in available liquidity, including $7.2 billion in cash, cash equivalents, restricted cash, and marketable debt securities.

04—Continue

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