BLOCK PARTY: Shares in the Afterpay-Square merger co. jump 32% on earnings beat

Shares in Block, the ASX-listed company formed out the A$39 million merger of Afterpay with Jack Dorsey’s payments platform Square, surged up to 40% in Friday trade after the US parent company released a Q4 trading update that beat expectations.

Block (ASX:SQ2) shares hit $165 during Friday trade, having closed at $116.05 on Thursday. The jump halted a week-long slide amid concerns over Russia’s invasion of Ukraine. Block shares finished the day up 32.5% at $153.75.

The dual-listed payments firm reported beats on market predictions for its earning EBITDA and gross profit. The business now has 44 million monthly average users.

Earnings per share of US$1.71 for Q4, exceeding consensus forecast of $1.66.

Gross profit was up 47% year-over-year to US$1.18 billion beating estimates by $200 million, thanks to strong performances by  both the Cash App and Seller, or merchant, segments. Adjusted Ebitda sat at US$184 million, beating predictions of $143 million.

Cryptocurrency, specifically Bitcoin, has been a cornerstone, with Cash App generating US$1.96 billion in Bitcoin revenue, up 12 YoY, while Q4 Bitcoin gross profit was US$46 million, up 14%. Block ended 2021 with US$371 million worth of Bitcoin on its balance sheet.

In its letter to shareholders, Block said they believe January’s acquisition of Afterpay will strengthen the company’s strategic priorities for Square and Cash App “by strengthening the connections between our ecosystems” for financial products and services for consumers and merchants.

“Together, we intend to enable Square sellers of all sizes to offer BNPL at checkout, offer Afterpay consumers the ability to manage their installment payments directly in Cash App, and give Cash App customers the ability to discover sellers and BNPL offers directly within the app,” the company said.

“United by our shared purpose of economic empowerment, we are excited to welcome the Afterpay team to Block and help make the financial system more fair and inclusive as we build together.”