Block stock slips after Q1 beat, Cash App Card, inflows discussed on call
Block (NYSE:SQ) stock dipped 1.9% in Friday trading even after the fintech raised its 2023 guidance and posted better than expected Q1 results.
While improved gross profit contributed to the Q1 earnings beat, the company also deferred ~$60M of operating expenses to later in the year, said Oppenheimer analyst Dominick Gabriele in a note to clients.
He also observed: "Block (SQ) is seeing some underlying consumer pressure and expects average spend per active to slow within Cash App."
In March, the company had 20M monthly Cash App Card actives, up 34% Y/Y, and its spend per Cash App Card active also grew, "underpinning the overall inflows that we see growing in the overall Cash App ecosystem," Chief Financial Officer Amrita Ahuja said on the company's earnings call.
The adoption of products on the Cash App Card is leading to greater activity, stronger engagement, and ultimately inflows per active, she added.
However, as Block (SQ) targets a younger audience, "there could actually be some pressure on inflows per active over time, as those customers are likely to have lower inflows per active earlier in their financial journey," Ahuja said. "But we'd expect to see that grow over time as they become the earners and spenders of the future."
Even with the shift in mix, Block (SQ) said it expects to see strong growth on inflows per active.
More on Block:
Strong Q1 Operating Income Increased My Estimated Value
Better than Expected, But There Are Still Concerns
Q1 Earnings Suggest Sizable Upside
Square, Cash App parent slips after KBW downgrades
Source: Seeking Alpha
