01—Abstract
Summary
Summary of the 8-K filed August 1, 2024. Cited figures are marked; the original filing is the authoritative source.
Block, Inc. reported second-quarter 2024 results with gross profit of $2.23 billiona, up 20% year over year, and total net revenue of $6.16 billion, up 11%.
Cash App generated gross profit of $1.30 billionb, up 23%, and Square generated $923 million, up 15%. Operating income was $307 million compared with a loss of $132 million in the second quarter of 2023. Net income attributable to common stockholders was $195 million, or $0.31 per diluted share, and Adjusted EBITDA was $759 million, compared with $384 million a year earlier.
The company also reported a $70 millionc remeasurement loss on its bitcoin investment in the quarter. The company raised its full-year 2024 outlook, now expecting gross profit of at least $8.89 billion, or 18% growth, up from a prior $8.78 billion, and Adjusted Operating Income of at least $1.44 billion, up from a prior $1.30 billion. The shareholder letter attributes the raise to second-quarter outperformance and improved expectations for the rest of the year.
For the third quarter, the company expects gross profit of $2.22 billiond, or 17% growth. In Item 8.01, the board approved an increase to the company's previously announced $1.0 billion share repurchase program, which has been completed, by authorizing up to an additional $3.0 billion of Class A common stock.
The filing states that repurchases are not obligated and may be suspended at any time. The shareholder letter also announces that Nick Molnar, CEO and co-founder of Afterpay, will lead a centralized sales function across Block, including Square, reporting to Jack Dorsey.
02—Key points
Key Highlights
- Gross profit of $2.23 billion rose 20% year over year, with Cash App gross profit of $1.30 billion (up 23%) and Square gross profit of $923 million (up 15%).
- Operating income of $307 million compared with a loss of $132 million a year earlier; Adjusted Operating Income was $399 million versus $25 million in the second quarter of 2023.
- Net income attributable to common stockholders was $195 million, or $0.32 basic and $0.31 diluted per share; diluted Adjusted EPS was $0.93.
- Full-year 2024 guidance was raised to gross profit of at least $8.89 billion (18% growth) and Adjusted Operating Income of at least $1.44 billion, with the company citing a Rule of 35, versus a prior Rule of 32.
- The board authorized up to an additional $3.0 billion in share repurchases after completing the previous $1.0 billion program.
- Cash App Card monthly actives rose 13% year over year to more than 24 million, and Cash App Borrow originations exceeded $2 billion in the quarter, up nearly 3x.
- A $70 million remeasurement loss on the bitcoin investment weighed on net income in the quarter.
03—Questions
Frequently Asked Questions
What drove the year-over-year improvement in profitability?
The letter attributes the improvement to gross profit growth across the Cash App and Square ecosystems, along with lower operating expenses year over year. Cash App gross profit growth was driven by Cash App Card, Cash App Borrow, and the BNPL platform, while Square growth was driven primarily by banking products and software and integrated payments.
Why did the company raise its 2024 outlook?
The company said it is raising full-year guidance to reflect outperformance in the second quarter and improved expectations for the remainder of the year. Full-year gross profit guidance moved to at least $8.89 billion from $8.78 billion, and Adjusted EBITDA guidance moved to $2.90 billion from $2.76 billion.
What does the new $3.0 billion repurchase authorization mean for shareholders?
The board authorized up to an additional $3.0 billion of Class A common stock repurchases. The filing states the program does not obligate the company to buy any particular amount, may be suspended at any time, and that repurchases will depend on factors including stock price and market conditions. In the second quarter, the company repurchased 5.7 million shares for $390 million under its earlier program.
Are there leadership changes highlighted in the letter?
The shareholder letter announces that Nick Molnar, CEO and co-founder of Afterpay, will lead a centralized sales function across Block, including Square, reporting to Jack Dorsey. The letter says the move is intended to raise sales performance at Square and connect Square with Cash App.
How did bitcoin affect the quarter?
Bitcoin gross profit was $67 million on bitcoin revenue of $2.61 billion. Net income also included a $70 million remeasurement loss on the company's bitcoin investment, which the company notes is recognized in net income under ASU 2023-08.
04—Continue