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Block, Inc. (SQ)·Q3 2024 Earnings Summary

Executive Summary

  • Gross profit rose 19% year-over-year to $2.25B; Adjusted EBITDA hit a record $807M with a 36% margin, and Adjusted Operating Income reached $444M (20% margin), reflecting disciplined OpEx and strong Cash App/Square execution .
  • Cash App gross profit grew 21% YoY to $1.31B on higher inflows per active and monetization; Square gross profit grew 16% YoY to $932M, with Square GPV up ~7.5% YoY and improving momentum into October .
  • Q4 2024 guidance: gross profit $2.31B (+14% YoY), Adjusted EBITDA $725M (31%), Adjusted Operating Income $355M (15%); 2024 profitability guidance raised (Adj. EBITDA to $3.00B; Adj. OI to $1.56B), implying Rule of 36; preliminary 2025 outlook calls for ≥15% gross profit growth and margin expansion toward Rule of 40 in 2026 .
  • Management highlighted catalysts: Afterpay on Cash App Card (transforming 24M cards into an alternative to credit), field sales ramp, single POS app, Square orders migration unlocking pre-auth/bar tabs; discrete timing shifts reduce Q4 gross profit growth by ~3 points, with benefits now expected in 2025 .

What Went Well and What Went Wrong

What Went Well

  • Record profitability: Adjusted EBITDA $807M (+69% YoY) and Adjusted OI $444M, with margin expansion under disciplined OpEx (“our highest quarterly profitability ever”) .
  • Cash App momentum: Gross profit +21% YoY; inflows per active +9% YoY to $1,233; monetization rate 1.52%; strong adoption across Card, Borrow, BNPL, and Cash App Pay partnerships (e.g., Lyft) .
  • Square operations and product: Orders migration completed, unlocking pre-auth/bar tabs; consolidated Dashboard; improving Square GPV growth trends into October; partnerships (T-Mobile, SalonCentric, JCB/JMS, MerPay) broaden distribution .

What Went Wrong

  • Q4 timing impacts: Shift of Cash App Borrow expansion and a partner transaction cost benefit to 2025, trimming Q4 gross profit growth by ~3 percentage points .
  • Cash App MAUs growth moderated (57M, +3% YoY), with deliberate onboarding/limit controls and bank-the-base focus; unit economics strong via ARPU growth ($75 gross profit per active, +16% YoY) .
  • Square U.S. GPV growth slowed to 4.9% in Q3 (weather late September; discretionary softness), though trends improved a “couple percentage points” into October and international GPV remained strong at ~20% YoY .

Financial Results

MetricQ1 2024Q2 2024Q3 2024
Total Net Revenue ($USD Billions)$5.96B $6.16B $5.98B
Gross Profit ($USD Billions)$2.09B $2.23B $2.25B
Operating Income ($USD Millions)$250M $307M $323M
Net Income Attrib. to Common ($USD Millions)$472M $195M $284M
Diluted EPS ($USD)$0.74 $0.31 $0.45
Adjusted Operating Income ($USD Millions)$364M $399M $444M
Adjusted EBITDA ($USD Millions)$705M $759M $807M
Margin MetricQ1 2024Q2 2024Q3 2024
Operating Income Margin (% of Gross Profit)12% 14% 14%
Adjusted Operating Income Margin (% of Gross Profit)17% 18% 20%
Adjusted EBITDA Margin (% of Gross Profit)34% 34% 36%

Segment Gross Profit

Segment Gross Profit ($USD Millions)Q1 2024Q2 2024Q3 2024
Cash App$1,259M $1,299M $1,306M
Square$820M $923M $932M
Corporate & Other$16M $12M $11M
Total$2,094M $2,233M $2,250M

Key KPIs and Volume

KPI / VolumeQ1 2024Q2 2024Q3 2024
Cash App Monthly Actives (M)57M (Mar) 57M (Jun) 57M (Sep)
Cash App Inflows ($USD Billions)$71B $71B $70B
Inflows per Active ($USD)$1,255 $1,243 $1,233
Cash App Monetization Rate (%)1.48% 1.53% 1.52%
BNPL GMV ($USD Billions)$6.98B $7.75B $8.24B
Square GPV ($USD Billions)$50.47B $58.37B $59.87B

Notes:

  • Q3 net income included a $5M bitcoin remeasurement gain; Q2 included a $70M bitcoin remeasurement loss; Q1 included a $233M bitcoin remeasurement gain, impacting GAAP EPS .
  • Reporting change: BNPL results fully consolidated into Cash App beginning Q4’23; prior periods revised accordingly .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Gross Profit ($)Q4 2024N/A$2.31B (+14% YoY) N/A
Adjusted EBITDA ($)Q4 2024N/A$725M (31% margin) N/A
Adjusted Operating Income ($)Q4 2024N/A$355M (15% margin) N/A
Gross Profit ($)FY 2024$8.89B (Q2 guide) $8.89B (maintained) Maintained
Adjusted EBITDA ($)FY 2024$2.90B (Q2 guide) $3.00B Raised
Adjusted Operating Income ($)FY 2024$1.44B (Q2 guide) $1.56B Raised
Rule of 40 proxyFY 202435% (Q2 guide) 36% Raised
Gross Profit Growth (%)FY 2025 (prelim)N/A≥15% with margin expansion toward Rule of 40 in 2026 New prelim

Management also noted that Q4’24 growth reflects ~3 percentage points headwind from shifting (i) a Square partner transaction-cost benefit and (ii) Cash App Borrow expansion into 2025, with underlying business trends “stable to improving” .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2024)Current Period (Q3 2024)Trend
Square product velocity (orders migration, single app, pre-auth)Orders migration near-complete; onboarding steps reduced; single app targeted by year-end Migration completed; pre-auth/bar tabs rolling; Dashboard consolidation; single app scaling in 2025 Accelerating
Go-to-market (field sales, partnerships, marketing ramp)Centralized sales under Afterpay CEO; US Foods; marketing ROI improving; pipeline building Field sales hiring ramp; partnerships with T-Mobile, SalonCentric, JMS/JCB, MerPay; more marketing into 2025 Scaling
Cash App “bank the base” (direct deposit, Borrow, Card)Benefits (4.5% savings, overdraft); testing incentives; Borrow originations scaling Strong ARPU ($75 per active); MAUs ~flat; Borrow expansion deferred to 2025 to pair with paycheck incentives Mixed: ARPU up, MAUs moderated
BNPL & Cash App PayBNPL GMV +25% YoY (Q1); +21% (Q2); Cash App Pay up 7x YoY (Q2) BNPL GMV +23% YoY; integrating Afterpay on Cash App Card; Cash App Pay partnerships (Lyft) Improving
Regulatory/compliance postureBitcoin strategy; compliance focus; DOJ/OFAC context Strong compliance discipline; redundancy via partners; Square Financial Services optionality Stable vigilance
Bitcoin initiatives (treasury, mining, Bitkey)Treasury blueprint; 3nm ASIC mining; Bitkey launch Mining pipeline demand; 8,300 BTC on balance sheet ($530M quarter-end) Advancing

Management Commentary

  • “Gross profit was $2.25 billion, up 19% year-over-year… our highest quarterly profitability ever for both adjusted operating income and adjusted EBITDA on a dollar and margin basis.” – Amrita Ahuja .
  • “We’re about to transform 24 million Cash App Cards into a better alternative to credit cards when we launch Afterpay on Cash App Card.” – Shareholder Letter .
  • “We’re currently testing a new and enhanced Square for Restaurants point-of-sale… and will make this available to all sellers in 2025… [and] rolling out our single app experience.” – Amrita Ahuja .
  • “We grew our Square brand and performance marketing investments more than 20% year-over-year in the third quarter and began ramping sales hiring, including field sales.” – Amrita Ahuja .

Q&A Highlights

  • Square GPV acceleration: Q3 growth was 7.5% overall, 4.9% U.S.; improved by “a couple percentage points” in October; international +20% YoY in Q3 .
  • Field sales and partnerships: Initial local field reps deployed; 10–20% improvement in per-rep productivity YTD; partnerships broaden lead-gen and upmarket deal sizes .
  • Q4 timing effects: Shifts in Square partner transaction cost benefit and Cash App Borrow expansion to 2025; Q4 bottom-line guidance raised despite go-to-market spend ramp .
  • Cash App engagement vs actives: MAUs ~57M, +3% YoY; ARPU/gross profit per active $75 (+16% YoY); onboarding/limit controls deliberate to promote a healthy ecosystem .
  • Afterpay on Cash App Card: Early tests showing encouraging attach; phased rollout from retroactive offers to pre-purchase enablement; millions of Cash App Card MAUs expected eligible in 2025 .

Estimates Context

  • S&P Global consensus estimates could not be retrieved due to a CIQ mapping issue. As a result, this report does not include Wall Street consensus comparisons for Q3 2024. Values were intended to be sourced from S&P Global but were unavailable at time of analysis.

Key Takeaways for Investors

  • Profitability inflecting: Continued margin expansion with record Adjusted EBITDA and OI; FY24 profitability guide raised, implying Rule of 36, supporting a re-rating case on sustained profitable growth .
  • Cash App durability: Even with moderated MAUs growth, ARPU and monetization continue to rise; Borrow, BNPL, and Card deepen engagement; 2025 marketing ramp likely accelerates direct deposit actives .
  • Square execution: Orders migration unlocks feature parity and new capabilities; single app/Dashboard simplify onboarding/usage; field sales and partnerships should drive upmarket penetration and GPV .
  • Near-term growth optics: Q4 growth dampened by ~3pts due to timing shifts, but underlying trends stable/improving; watch January/1H’25 as deferred benefits and go-to-market spend ramp flow in .
  • 2025/2026 trajectory: Preliminary ≥15% gross profit growth in 2025 with margin expansion; management reaffirmed Rule of 40 target in 2026 (mid-teens growth, mid-20% adjusted OI margin) .
  • Strategic catalysts: Afterpay on Cash App Card, Cash App Pay enterprise wins (e.g., Lyft), Square Restaurant POS enhancements, QR wallets in Japan, and broader partnerships pipeline add multi-year growth drivers .

Citations: Q3 2024 earnings call transcript ; Q3 2024 8‑K and Shareholder Letter ; Q2 2024 earnings materials ; Q1 2024 earnings materials .