Eugene Ng
Eugene Ng 5 minutes reading from Bitcoin

Final Takeaways for Block $SQ22 Earnings

Block SQ 3Q22 Earnings 💪🏻 - Rev 4.5b +17% ↗️ - Gross Profit 1.6b +38% ↗️ margin 35% +523 bps ✅

BTC Rev and Gross Profit - Rev 1.8b -3% ↘️ - Gross Profit 37m -12% ↘️ margin 2% -21 bps ↘️❌

Excluding BTC (preferred):

- Rev (ex-BTC) Rev 2.8b +36% ↗️ - Gross Profit (ex-BTC) 1.5b +40% ↗️ margin 56% +180 bps ✅ - Adj EBITDA 327m +40% ↗️ margin 12% +39 bps ✅

- NG Net Income 263m +103% 🚀 margin 10% +319 bps ✅

Business Metrics - Gross Profit 1.6b +38% ↗️ - Cash App Gross Profit 774m +51% ↗️🟢 - Square Gross Profit 783m +29% ↗️

Ex-BNPL - Gross Profit 1.4b +25% ↗️ - Cash App Gross Profit 700m +37% ↗️🟢 - Square Gross Profit 708m +17% ↗️ - Cash App Card Attach Rates 36% 📶

Square GPV Seller Mix keeps growing with faster growth from mid-market sellers

- Total 50b +20% ↗️ - >500K 20b +28% ↗️🟢 - 125-500K 14b +18% ↗️🟢 - <125K 16b +13% ↗️

Management Guide

- Q4 GP similar ~+38% - Q4 Cash App GP to improve ↗️ - Q4 Square GP to moderate ↘️

1 | Building multiple ecosystems

“…we are building multiple ecosystems to serve different audiences: Square for sellers, Cash App for consumers, TIDAL for musicians and TBD for developers. What makes Block unique is our ability to connect all of these together.”

2 | 3 Priorities for SellerS

“…giving sellers simple and intuitive tools to remove complexity from running their business is critical….focused on 3 priorities… enabling omnichannel capabilities, growing upmarket and expanding internationally.”

3 | Cash App still early..

“…still early in our journey to transform Cash App into a commerce destination that bridges our seller & consumer ecosystems.

“…like Cash App Borrow, which we're still in the early days of ramping…seen strong growth with profitable unit economics.”

4 | Still early in Gen Z ~20% penetration

“…still only penetrated into 20% of Gen Z…of the U.S. population…This is the fastest growing demographic for us in monthly actives…still much more we can do here to bring the other 80% into Cash App over time, too.”

5 | Healthy Retention in Square

“Looking at our cohort economics, we continue to see healthy retention trends across our existing seller base. In the third quarter, we achieved positive GPV and gross profit retention for our Square business.”

6 | Profitable Square Business

“…our Square business is a fairly high structural margin business,…69% structural margin in 2021.

We can think of a significant portion of every dollar of top line growth drops down to profitability.”

7 | Interest income from Cash App Customer Funds

“Cash App customer funds does generate interest income as well.

Majority of these funds are invested in very short-term accounts or money market accounts, and they flow through Cash App revenue and gross profit line.”

8 | GMV Growth Deceleration

“GMV for our BNPL - 5.4bn, up 10% YoY or 60% on a 3-year CAGR basis…impact from spend shifts from online to in-person, competitive dynamics as well as foreign currency, which slowed year-over-year GMV growth by 5 points in the third quarter.”

9 | Moderating Investments & Hiring to balance growth & profitability

“plan to reduce our investments for the FY22 by an additional 140mil.

In 2023..expect to significantly moderate our pace of hiring…”

remain focused on balancing growth & profitability in this environment.”

➡️ Final Takeaways for Block SQ:

Continued strong traction and growth at scale with very profitable Square and faster growing Cash App combined. Still significant growth runway with lots of optionality to keep growing.

This post is based on this twitter thread.

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