Block raises annual forecast on resilient consumer spending

JACK Dorsey-led Block lifted its forecast for annual adjusted core earnings on Thursday as the payments firm bet on resilient consumer spending and its own cost-cutting measures.

Shares of the company jumped 6.3 per cent in extended trading.

Payments firms have benefited from a tight labour market and wage growth that has allowed Americans to set aside worries of an economic slowdown and continue spending on travel, shopping and dining out.

The company now expects annual adjusted core earnings to be at least US$2.76 billion, higher than its previous forecast of US$2.63 billion.

Block also forecast adjusted core earnings between US$670 million and US$690 million in the second quarter, compared with analysts’ average expectation of US$642.2 million, according to LSEG data.

Block’s estimate-topping results cap off a broadly strong quarter for the payments sector, whose fortunes are closely tied to strength in consumer spending.

Meanwhile, the firm has been focusing on cutting costs to improve profitability by trimming headcount, reducing its real estate footprint and curbing discretionary expenditure.

The company posted a 19 per cent jump in total net revenue, to US$5.96 billion in the reported quarter.

Gross profit for Block’s Cash App jumped 25 per cent in the quarter compared to last year, while its Square business posted a 19 per cent rise.

SEE ALSO

Stablecoin Tether steps up monitoring in bid to combat illicit finance

Asia’s retail investors hunt for fabled crypto riches

Mastercard’s profit beats as consumer spending defies inflation worries

PayPal lifts 2024 profit forecast as spending stays resilient, margins improve

China firms go ‘underground’ on Russia payments as banks pull back

More

Earlier this week, larger rival PayPal also raised its forecast for full-year adjusted profit, signalling resilience in consumer spending. On an adjusted basis, Block earned 85 cents per share in the three months ended March 31, beating analysts’ expectation of 72 cents per share.

The company’s shares have fallen 9.1 per cent so far this year as of its last close, underperforming peer PayPal, which has risen 9 per cent. REUTERS