Block Delivers Strong Q3 Earnings with 19% Gross Profit Growth
Block, the company behind Square and Cash App, has reported a strong set of third-quarter earnings, delivering on its promise to increase access to lending products through better technology, transparency, and simplicity.
The company's gross profit rose by 19% year-over-year, with Square and Cash App experiencing growth of 16% and 21%, respectively. This significant increase in profitability was driven by meaningful margin improvement, resulting in the highest quarterly profitability ever for both adjusted operating income and adjusted EBITDA on a dollar and margin basis.
Adjusted free cash flow for the 12 months ending in September stood at $1.5 billion, compared to $945 million in the prior 12 months. For full year 2024, Block has raised its guidance on adjusted operating income and adjusted EBITDA, maintaining its gross profit guidance outlined in August.
Looking ahead to the fourth quarter of 2024, the company expects gross profit of $2.31 billion, representing a 14% growth year-over-year. While underlying trends in the business are stable to improving, there are a few discrete items that impact gross profit growth by about 3 points.
Block's adjusted operating income guide for the fourth quarter reflects plans for a step-up in sales and marketing for both Square and Cash App as it invests behind attractive unit economics in each business to drive growth into 2025. This updated guidance implies Rule of 36, a significant improvement of 6 points compared to 2023 and 7 points compared to the initial 2024 guide.
"We delivered strong results across the company during the third quarter," said Amrita Ahuja in her opening remarks. "Our focus on increasing access with Square loans after pay by now pay later and cash up borrow through better technology, transparency, and simplicity has paid off."
Jack Dorsey added that the company's ecosystem of lending products is focused on addressing risks and offering a competitive advantage. He emphasized the importance of reading the shareholder letter for more details on their methodology and approach.
The company's strong performance is underpinned by its commitment to investing behind attractive unit economics in both Square and Cash App, as it looks to drive growth into 2025. With a focus on simplicity, transparency, and better technology, Block is well-positioned to continue delivering strong results in the quarters ahead.
