Block Raises Adjusted Profit Outlook as Use of Cash App Soars

Block Inc., the payments giant run by Jack Dorsey, boosted its forecast for adjusted profits for the year as customers increasingly turn to its popular Cash App.

(Bloomberg) — Block Inc., the payments giant run by Jack Dorsey, boosted its forecast for adjusted profits for the year as customers increasingly turn to its popular Cash App.  

The company forecast that earnings before interest, taxes, depreciation and amortization for the year will rise to $1.5 billion, up from previous guidance of $1.36 billion. That’s also higher than the $1.38 billion analysts in a Bloomberg survey are expecting. 

The improved outlook comes as the company’s two core businesses — Cash App and Square — both generated earnings that topped analysts’ expectations in the quarter. Firmwide gross profits soared 27% to $1.87 billion, topping the $1.8 billion average of analyst estimates compiled by Bloomberg. 

Under Dorsey, Block has built out Cash App, which started as a person-to-person payments app and now offers access to a variety of financial products. The company also continues to invest in the core Square payment-processing business it’s long been known for.

Within Cash App, which is now Block’s biggest business, the company has 54 million monthly transacting active customers. Each of those active users has inflows of about $1,134 on the app, an 8% increase from a year ago.

The company’s results have also been buoyed by recent efforts to cut costs, Chief Financial Officer Amrita Ahuja said in an interview. That work has included ditching a portion of its offices in the San Francisco Bay Area as well as moderating its hiring pace and cutting back on sales and marketing expenses. 

“We’re looking to find efficiencies and optimize our spend,” Ahuja said. 

Earlier this year, Block said it would explore taking legal action against short-seller Hindenburg Research after the firm issued a report alleging the payments company facilitated fraudsters. In its report, Hindenburg said it found that Block’s wildly popular Cash App was likely facilitating scam artists taking advantage of government-stimulus programs during the pandemic.

Read More: Hindenburg Aims Short Report at Block, Which Vows to Fight

While the firm’s shares plummeted 15% the day the report was released, the stock had fully recovered by the start of this week.

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