Block Q2 Earnings Call Highlights: Earnings beat, guidance upgrade and upsized buyback

Block (ASX: SQ2) shares are trading around 5% higher on Friday after beating second quarter earnings expectations as well as raisings its full-year guidance and boosting its share buyback program.

Q2 Earnings Highlights

• Revenue up 11.2% to US$6.16bn vs. US$6.23bn consensus

• Earnings per share up 138.4% to 93 US cents vs. 76 US cents consensus

• Adjusted EBITDA almost doubled to US$759m

• Operating expenses fell 4% to US$1.93bn

• Free cash flow of $1.43bn for the 12 months ended 30 June

Earnings Call Highlights

Trends and business performance: "We saw strength across Cash App Card, Cash App Borrow and Buy Now, Pay Later. Inflows per active saw healthy growth, up 10% year-over-year in the quarter ... Our strong profitable growth shows that our ecosystems continue to serve our customers with differentiated value and our teams are operating with purpose and efficiency."

Full-year guidance upgrade: "We are raising our full-year 2024 guidance for both gross profit and profitability, reflecting not only outperformance in the second quarter, but also increased expectations for the remainder of the year ... For full-year 2024, we are now expecting gross profit of at least US$8.89 billion, or 18% growth year-over-year."

A bigger buyback: "We very recently completed our inaugural $1 billion share repurchase authorization. And today, we're excited to announce an incremental $3 billion share repurchase program. "

Analyst Q&A Highlights

Gross payment value trends: "For the second quarter, GPV was up 8% year-over-year, which is a slight moderation from the 9% year-over-year growth rate that we saw in the first quarter ... We're seeing relatively consistent trends from a churn and customer acquisition standpoint with more of the moderation coming from same-store growth or GPV per seller, which continue to moderate a bit on a year-over-year basis."

New distribution partnerships: "We signed US Foods and that means we're serving to our partners up to 40% of the restaurants in the United States, which is a pretty sizable chunk ... International, we're doing a lot more, especially around bank partnerships. So outside of the US, the bank partnership angle is working quite well, and we're working to sign more."

Driving deposit growth: "There's three main ways that we believe we will drive direct deposit, and this is all captured in our bank the base strategy... The first is packaging, the second is around marketing, and the third is products."

Large merchant onboarding: "What's driving the growth is our sales team, Afterpay's enterprise sales team ... We're signing many large merchants ... We're finding that merchants value Cash App Pay because they can access all Cash App customers, our Cash App Pay actives are highly engaged, and we offer competitive pricing."

This article was generated with the support of AI and reviewed by an editor.