Javier Hernandez In the financial landscape of the third quarter, Block Inc. has manifested significant growth, with its net revenue reaching $5.62 billion. This represents a 24% increase compared to the same period last year. Excluding its bitcoin-related business, Block’s revenues were $3.19 billion, indicating a 16% year-over-year rise. A closer examination of the company’s financials, particularly in its bitcoin segment, showcases an impressive surge to $2.42 billion in revenue, emphasizing bitcoin’s growing contribution to Block’s financial health.
Block Sets Sights on Achieving ‘Rule of 40’ by 2026, Touts Cash App Growth Alongside Q3 Financials
Block Inc., under the leadership of Jack Dorsey, unveiled its Q3 earnings in a shareholder letter, pointing to a positive trajectory in its investment strategies, as evidenced by increased profitability in the third quarter. The company has optimistically updated its projections for the full year, with anticipated increases in Adjusted Operating Income and Adjusted EBITDA.
Additionally, the usage metrics of the company’s Cash App Pay feature have shown considerable growth, with active monthly users reaching over two million by September—a twofold increase since June. Further solidifying this growth narrative is the reported 37% year-over-year increase in bitcoin revenue, totaling $2.42 billion for the quarter.
Bitcoin-related earnings also depicted a healthy climb, with a gross profit of $45 million that translates to a 22% increase from the previous year. In a strategic financial maneuver, Block Inc. is initiating a share buyback program worth $1 billion, aiming to mitigate the dilutive impact of stock-based compensation. According to the shareholder letter:
Our target is to achieve the Rule of 40 by the year 2026, anticipating a mix of mid-teen levels in gross profit growth complemented by an Adjusted Operating Income margin in the mid-20% range.
Block’s third-quarter earnings have emerged after Coinbase released its own profitable third-quarter results. Additionally, Microstrategy disclosed its Q3 performance, highlighting further bitcoin acquisitions in October.
The shareholder communication also sets a cap on employee numbers, with a threshold of 12,000, as the company opts to refrain from further hiring until it has substantiated growth beyond the expansion of its workforce.
As for its bitcoin strategy, Block maintains BTC on its balance sheet and has reported investments of $50 million in Q4 of 2020 and $170 million in Q1 of 2021 into the cryptocurrency.
Despite the volatility inherent in bitcoin, classified as an indefinite-lived intangible asset, Block recorded no impairment losses in Q3 of 2023, which could suggest a maintained or increased market value relative to its recorded cost.
Your insights on Block’s Q3 financial results are welcome. Please contribute your perspectives on this topic in the comments section below.
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Frequently Asked Questions (FAQs) about Block Inc. Q3 Earnings
What was the total net revenue reported by Block Inc. for Q3?
Block Inc.’s total net revenue for the third quarter was $5.62 billion, indicating a 24% increase from the same quarter in the previous year.
How much did Block Inc.’s bitcoin revenue increase in Q3?
In Q3, Block Inc.’s bitcoin revenue increased by 37%, reaching $2.42 billion.
What is the ‘Rule of 40’ that Block Inc. is targeting?
The ‘Rule of 40’ refers to a financial goal that Block Inc. is aiming to achieve by 2026, where the sum of the company’s growth rate and profit margin should exceed 40%.
How many monthly active users does Cash App Pay have as reported in Q3?
As of September, Cash App Pay reported over two million monthly active users, doubling the number since June.
Will Block Inc. continue to expand its staff after Q3?
Block Inc. has decided to cap its staff at 12,000 members and will not hire more until the company’s growth substantively outpaces the growth of its workforce.
Has Block Inc. experienced any impairment losses on its bitcoin holdings in Q3?
No, Block Inc. reported no impairment losses on its bitcoin holdings in the third quarter of 2023.
More about Block Inc. Q3 Earnings
- Block Inc. Q3 Financial Performance
- Bitcoin Revenue Impact on Block’s Growth
- Understanding the Rule of 40
- Cash App User Expansion in Q3
- Block Inc.’s Hiring Strategy and Staff Cap
- Block Inc.’s Bitcoin Investment Strategy
5 comments
did anyone else catch that they’re not hiring past 12,000 staff That’s a pretty clear sign they’re expecting some major efficiency gains or theyre just not expecting to grow?
Wow, those are some pretty impressive numbers for Block Q3 revenue really shows how much the crypto market is impacting traditional finance
can we talk about how Block is putting all their eggs in one basket with Bitcoin Is that really wise with how volatile it is
a billion dollar share buyback is no joke, looks like Block is really trying to reward its shareholders and stabilize stock price amidst the crypto craze
i’m skeptical about the no impairment losses, with BTC’s rollercoaster prices, how’s Block managing that Must be some smart hedging or just got lucky this quarter