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Shares Rise On Outlook; Square Earnings Report Mixed

Square’s parent company, Block (SQ), shared its fourth-quarter earnings report on Thursday, revealing a mixed outcome. While revenue slightly exceeded expectations, earnings fell short of estimates. However, the company’s guidance for the first quarter of 2024 surpassed analyst forecasts.

In the period ending December 31, Square reported adjusted earnings of 45 cents per share, a notable 109% increase from the previous year. However, analysts had anticipated earnings of 58 cents per share.

On the revenue front, Square disclosed $5.77 billion, which included transactions from its Cash App involving bitcoin. This figure edged slightly higher than the $5.69 billion forecasted by analysts.

Following the earnings release, SQ stock surged by 10.2% in after-hours trading, reaching nearly $75.

While the financial results presented a mixed picture, analysts paid close attention to gross profit, which saw a 22% increase to $2.03 billion, surpassing estimates of $1.97 billion. Additionally, earnings before interest, taxes, depreciation, and amortization (EBITDA) jumped by 28% to $562 million, exceeding analyst expectations of $447.3 million.

However, gross payment volume from merchant customer transactions only rose by 10% to $53.54 billion, falling short of the estimated $58.50 billion.

Looking forward, Square provided guidance for the first quarter of 2024, expecting EBITDA of $580 million, higher than analysts’ projections of $515 million.

In 2024, leading up to the earnings report, SQ stock had experienced a 13% decline. The company, headquartered in San Francisco, also includes the consumer lending firm Afterpay in its earnings report.

Despite the recent performance, Square stock holds a relatively weak Relative Strength Rating of 62 out of 99, according to IBD Stock Checkup.

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