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Block, Inc. (XYZ)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 missed Street on revenue and adjusted EPS; revenue was $6.03B vs ~$6.29B consensus and adjusted EPS $0.71 vs ~$0.87, driving an 18% next-day selloff to $68.35 as investors digested a miss and back‑half weighted 2025 setup .
  • Gross profit grew 14% YoY to $2.31B with Cash App +16% and Square +12%; GAAP EPS spiked to $3.05 on a $1.9B one‑time tax benefit, while adjusted EPS rose 51% YoY to $0.71 .
  • FY25 guidance maintained: ≥15% gross profit growth (~$10.22B) and $2.10B Adjusted Operating Income (~21% margin), with acceleration toward exiting 2025 at or above Rule of 40; Q1 2025 guide: $2.32B gross profit and $430M AOI (19% margin) .
  • Catalysts/narrative: Square GPV re‑accelerated to 10% YoY in Q4 (U.S. +6.9%, International +25%); Cash App banking monetization continues (25M Cash Card MTAs; paycheck-deposit actives +25% YoY), and Afterpay on Cash App Card began rolling out in Feb-2025; mgmt reiterated investment ramp in S&M and applied AI to drive faster product velocity .

What Went Well and What Went Wrong

  • What Went Well

    • Cash App and Square both expanded gross profit at scale; Q4 gross profit +14% YoY to $2.31B; Cash App +16% to $1.376B and Square +12% to $924M .
    • Square GPV growth improved to 10% YoY (U.S. +6.9%, International +25%), with better same‑store growth and retention; mid‑market segments accelerated .
    • Strategic product and go‑to‑market momentum: new unified Square POS app, marketing +60% YoY in Q4 with strong ROIs, and Cash App Pay volumes >4x YoY to $4B; mgmt: “we’re investing heavily in applied AI tools… already increased our productivity and efficiency” .

  • What Went Wrong

    • Headline miss vs consensus on revenue and adjusted EPS (estimates from LSEG reported by CNBC), triggering severe drawdown; adjusted EPS $0.71 vs ~$0.87 and revenue $6.03B vs ~$6.29B .
    • Cash App user growth flat sequentially (57M MTAs for fourth straight quarter), an investor concern highlighted by media/analysts despite growing monetization per user .
    • Elevated operating items: Q4 included contingencies/restructuring/other charges ($203M) and a goodwill/intangible impairment ($134M); GAAP net was boosted by a non‑recurring $1.9B tax benefit (optics risk for GAAP vs non‑GAAP) .

Financial Results

Revenue vs YoY and Estimates (Q4)

MetricQ4 2023Q4 2024 (Actual)Street ConsensusNotes
Total Revenue ($USD Billions)$5.77 $6.03 ~$6.29 Consensus from LSEG via CNBC (S&P Global unavailable this session)

Profitability Trend (Sequential)

MetricQ2 2024Q3 2024Q4 2024
Gross Profit ($USD Billions)$2.233 $2.250 $2.311
Operating Income (Loss) ($USD Millions)$307 $323 $13
Adjusted Operating Income ($USD Millions)$399 $444 $402
Diluted EPS (GAAP) ($)$0.31 $0.45 $3.05 (tax benefit)
Adjusted EPS ($)$0.93 $0.88 $0.71

EPS vs YoY and Estimates (Q4)

MetricQ4 2023Q4 2024 (Actual)Street Consensus
Adjusted EPS ($)$0.47 $0.71 ~$0.87
Diluted EPS (GAAP) ($)$0.16 $3.05 (one‑time tax) n/a

Margins

MetricQ2 2024Q3 2024Q4 2024
Adjusted Operating Income Margin (% of GP)18% 20% 17%

Segment Breakdown (Gross Profit, Q4)

SegmentQ4 2023 ($USD Billions)Q4 2024 ($USD Billions)YoY
Cash App$1.184 $1.376 +16%
Square$0.828 $0.924 +12%
Corporate & Other$0.014 $0.012 n/a
Total Gross Profit$2.026 $2.311 +14%

Select KPIs

KPIQ3 2024Q4 2024
Square GPV ($USD Billions)$59.873 $58.898
Square GPV YoY Growth (%)7.5% 10%
Cash App Monthly Transacting Actives (M)57 57
Cash App Card MTAs (M)24 25
Inflows per Transacting Active ($)$1,233 $1,255
Monetization Rate (%)1.52% 1.51%
Gross Profit per MTA ($)$75 $76
BNPL GMV ($USD Billions, Q4 only)—$10.3

Cash Flow and Balance Sheet (FY 2024 snapshot)

  • Adjusted Free Cash Flow TTM: $2.07B; Net cash from ops TTM: $1.71B; Total liquidity: $10.7B (including $9.9B cash & equivalents and $775M revolver availability) .
  • Share repurchase: 2.3M shares for $183M in Q4; $2.7B remaining on $4B authorization at 12/31/24 .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Gross ProfitFY 2025≥15% YoY (as initially shared in Q3 letter) ≥15% YoY (~$10.22B) Maintained (noting +50 bps incremental FX headwind vs initial)
Adjusted Operating IncomeFY 2025$2.10B (as initially shared in Q3 letter) $2.10B (~21% margin) Maintained
Rule of X (GP growth + AOI margin)FY 2025n/a~35.5% New framing/explicit
Sales & Marketing InvestmentFY 2025n/a>20% YoY increase across Square and Cash App Increased
Non-GAAP Effective Tax RateFY 2025n/aMid‑20% range (consistent with 2024) Maintained vs FY24 level
Gross ProfitQ1 2025n/a$2.32B (+11% YoY) New
Adjusted Operating IncomeQ1 2025n/a$430M (~19% margin) New
Rule of XQ1 2025n/a~29.3% New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2–Q3 2024)Current Period (Q4 2024)Trend
AI/AutomationBuilding applied AI tools; early “goose” agent productivity gains noted in shareholder communications Continued focus on applied AI to remove toil and speed product delivery; mgmt positioning AI as a talent magnet Intensifying execution on applied AI
Square go‑to‑marketRamp of marketing and field sales through 2H24; channel partnerships expanding Q4 marketing +60% YoY with strong ROI; new field cohort hired; partner pipeline robust GTM investments scaling
Cash App banking monetizationPaycheck deposit actives and Cash Card engagement growing; monetization per user rising 2.5M paycheck‑deposit actives (+25% YoY); GP per active $76 (+13% YoY); Afterpay on Cash App Card rolling out Feb‑2025 Monetization broadening, user base flat sequentially
Competition (SMB POS)Competitive intensity noted in prior discussions (industry context)Analysts/media flagged share pressure vs Toast, Clover, Shift4; mgmt emphasizing vertical focus and partnerships Competitive scrutiny elevated
Regulatory/legalAccrued litigation/regulatory costs impacted prior periodsResolutions with CFPB and nearly all state MTL regulators; ongoing NYDFS discussions De‑risking but NYDFS outstanding
Bitcoin/ProtoOngoing development of mining system and openness strategyProto mining chips and systems targeted in 2025; CEO framed “unexpected upside” potential Execution milestones in 2H25

Management Commentary

  • “Our number one initiative… is to invest heavily in building applied AI tools to remove the toil of mechanical tasks… ‘codename goose’… has already increased our own productivity and efficiency” — Jack Dorsey .
  • “We expect to exit 2025 at a Rule of 40 run rate, ahead of schedule, and… deliver Rule of 40 in 2026” .
  • “We grew our Square marketing spend over 60% year over year in the fourth quarter… continued to see strong returns” .
  • On 2025 posture and product cadence: “We’ll… share more product roadmaps and introduce… seasonal launches” .
  • On Proto/Bitcoin initiatives and 2025 upside: “This year is going to be one of unexpected upside” (call) .

Q&A Highlights

  • Estimates miss and 2025 cadence: Street pressed on the Q4 miss and back‑half weighted 2025 acceleration; management reiterated ≥15% GP growth and $2.1B AOI, with acceleration driven by Afterpay on Cash App Card, Borrow eligibility expansion, and scaled GTM .
  • Competition in SMB POS: Analysts focused on Square’s share vs Toast/Clover/Shift4; mgmt highlighted improving GPV growth, vertical focus (F&B), field sales buildout, and partnerships .
  • Cash App users vs monetization: Questions around flat MTAs; mgmt emphasized rising GP per active, paycheck‑deposit growth, and Afterpay on Card rollout to drive engagement .
  • Cost discipline: Commentary included staying below a 12,000 headcount cap and maintaining efficiency while investing (per transcript report) .

Estimates Context

  • S&P Global consensus data could not be retrieved in-session due to API limits. As an alternative, we cite LSEG/StreetAccount consensus reported by CNBC: adjusted EPS $0.71 vs ~$0.87; revenue $6.03B vs ~$6.29B; GP $2.31B was “slightly below consensus”; Cash App GP $1.38B topped ~$1.36B .
  • Implication: Street models likely to lower near‑term EPS/revenue but may maintain FY25 AOI given reiterated $2.1B guide; attention shifts to execution on back‑half drivers (Afterpay/Card, Borrow expansion, GTM ROI) .

Key Takeaways for Investors

  • Q4 headline miss vs consensus drove a sharp de‑rating; however, underlying GP grew double‑digits with Cash App and Square both contributing, and FY25 AOI guidance was maintained at $2.1B with margin expansion, suggesting durability in profitability plans .
  • Watch the back‑half setup: Management expects acceleration through 2025; early execution signals to monitor are Afterpay on Cash App Card adoption, Borrow eligibility expansion, and Square sales/marketing productivity .
  • Square’s GPV re‑acceleration and international strength are positives, but competitive intensity remains a key debate—sustained seller retention and upmarket wins will be critical to multiple support .
  • Cash App monetization continues to rise (GP per active +13% YoY) despite flat user counts; sustained paycheck‑deposit growth and Card engagement are the levers to re‑accelerate topline user metrics .
  • Adjusted vs GAAP optics: Q4 GAAP EPS was flattered by a one‑time $1.9B tax benefit; focus on adjusted metrics (AOI, Adj. EPS, Adj. EBITDA) for run‑rate profitability .
  • Regulatory overhang improved (CFPB/most states resolved) but NYDFS remains in progress; monitor any settlement costs or program changes .
  • Near‑term trading: sentiment likely hinges on early 2025 KPIs and Q1 print relative to $2.32B GP and $430M AOI guide; upside if early Afterpay/Card and Borrow traction shows up ahead of schedule .

Additional Data Details and Cross‑References

  • Block Financial Metrics (quarterly series for GP, operating income, AOI, EPS): see .
  • Segment revenue and gross profit (quarterly, Q4 2024 and Q4 2023): see .
  • Operating expense detail and non‑GAAP opex bridge: see .
  • Cash flow and liquidity: see .
  • Guidance detail and rationale (FY25/Q1’25, Rule of X): see .
  • Earnings call timing and IR links: see press release and webcast note .