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Shares of Block Inc (NYSE:SQ) are up nearly 11% in pre-market trading after the company reported better-than-expected results.
Block posted an EPS of $0.42 per share on revenue of $4.52 billion, beating estimates for an EPS of $0.24 on in-line revenue. Subscription & services-based revenue surged 71% year-over-year to offset a 2.9% drop in Bitcoin revenue.
Most importantly, Cash App saw its revenue increase by 12% to $2.68 billion.
“Cash App Card has significant momentum and has scaled to more than 35% of our monthly actives: In September, there were nearly 18 million Cash App Card actives, up more than 40% year over year with weekly and daily actives increasing at an even more rapid rate during the same period,” according to the statement.
Deutsche Bank analysts took note of the strong Cash App outperformance.
“We continue to believe Block’s proven business model will be able to weather the economic storm and demonstrate strong top and bottom line growth rates well above peers in the short and long term,” they wrote to clients.
Morgan Stanley cut the price target to $67 from the prior $85 per share to reflect the updated SOTP valuation. It remains Equal Weight-rated on SQ shares.
“We liked Cash App’s improving monetization/durable deposit flows, and appreciate the banking opp that mgmt is pursuing —we like the demographic opportunities. Falling competitive spend makes rising profitability more compelling; we have preferences elsewhere for now,” analysts there said in a note.
