Square-parent Block reported September-quarter earnings and revenue that topped analyst estimates. SQ stock jumped on the news as other financial metrics also topped views.
San Francisco-based Block's third-quarter earnings included recently acquired Australia-based consumer lending startup Afterpay. The fintech company released third-quarter earnings after the market close on Thursday.
"SQ reported an unusual combination of rapid growth plus meaningful margin expansion," Susquehanna Financial analyst James Friedman said in a note to clients. "Growth was balanced across the ecosystem, with Cash App (gross profit) rising 51% and Square Seller rising 29%."
He added: "Margins landed nearly 10% ahead of estimate at 21%, reflecting improved expense management and increasing scale."
Square earnings for the quarter ending Sept. 30 were 42 cents per share on an adjusted basis, up 13% from the year-earlier period. Analysts had projected earnings of 23 cents a share.
Also, Square said net revenue rose 17% to $4.52 billion, including Cash App transactions for digital cryptocurrency Bitcoin. SQ stock analysts had predicted revenue of $4.49 billion.
SQ Stock: Key Financial Metrics Beat
Shares jumped 11.5% to close at 60.11 on the stock market today. SQ stock had retreated 66% in 2022 heading into the earnings report.
Financial analysts also view gross profit as a key metric for SQ stock. Gross profit came in at $1.57 billion, up 38%, vs. estimates of $1.53 billion. Block said Afterpay contributed $150 million in gross profit in the quarter.
Gross payment volume from merchant customers rose 20% to $54.4 billion, slightly below estimates of $55.222 billion.
The company said earnings before interest, taxes, depreciation and amortization, or EBITDA, rose 40% to $327 million. Analysts had estimated $193 million.
However, SQ stock holds a weak Relative Strength Rating of 11 out of a best-possible 99, according to IBD Stock Checkup.
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