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Square-parent Block (XYZ) reported first-quarter earnings, revenue and key financial metrics that missed Wall Street targets. The digital payments company lowered fiscal 2025 guidance for Square stock amid weakness in the consumer Cash App business. Block stock plunged Friday on the news.
Released after the market close on Thursday, Square earnings for the period ended March 31 were 56 cents per share on an adjusted basis, up 19% from the year-earlier period.
Also, Square said net revenue came in at $5.77 billion, down 3% from a year earlier, amid slower Bitcoin-related growth.
Wall Street analysts had predicted Block earnings of 97 cents a share on revenue of $6.19 billion.
"We expect the stock to be under significant pressure," said Jefferies analyst Trevor Williams in a report. "Gross profit missed the Q1 guide (9% versus 11%) driven by weakness in Cash App and fiscal year outlook cut to 12%, now incorporating a 'more cautious stance' on the macro (economy)."
The Square Cash App helps individuals manage money, buy stocks and cryptocurrency, and more. If a U.S. recession hits, the relatively low income level of some of Square's customer base has been one concern.
"Management's talk around weaker Cash App spending (while other companies in the space are speaking to solid consumer trends through the end of April), sluggish Square volume, plus the inherent risk around getting more aggressive on lending were the primary sources of additional (selling) pressure," said Evercore ISI analyst Adam Frisch in a report.
At William Blair, analyst Andrew Jeffrey says Cash App is a work-in-progress.
"Low visibility to second-half Cash App gross profit growth acceleration makes Block a show-me story," he said in a report. "We are constructive on Cash App's long-term value proposition, and we believe it will drive better monetization as Block integrates offerings like Borrow and buy now, pay later. The company needs to demonstrate that Cash App can drive primary banking relationships and direct deposit is the best measure."
Square Stock: 2025 Guidance Lowered
Financial analysts also view gross profit as a key metric for Square stock. In Q1, gross profit rose 9% to $2.29 billion vs. estimates of $2.32 billion.
At TD Cowen, analyst Bryan Bergin said in a report: "A host of disappointments around Block's Q1 execution/forecasting and reduced 2025 outlook that still features a second half ramp — albeit with a shallower trajectory and with added conservatism — truly tests a positive thesis around the stock."
Cost-cutting boosted earnings before interest, taxes, depreciation and amortization, a key metric known as EBITDA. It came in at $813 million vs. estimates of $791 million.
In Q1, gross payment volume from the transactions of merchant customers rose 7% to $54.1 billion vs. estimates of $57.99 billion.
For fiscal 2025, Square lowered its gross profit guidance to $9.96 billion, marking 12% year-over-year growth, down from its earlier guidance of 15% growth.
In its core businesses, Square operates a two-sided digital payments ecosystem, with products designed for both merchant sellers and consumer buyers. San Francisco-based Block's earnings included consumer lending firm Afterpay.
Square Stock Ratings
Heading into the Block earnings report, Square stock was down about 30% in 2025.
Square stock holds an IBD Composite Rating of 61 out of a best-possible 99, according to IBD Stock Checkup. IBD's Composite Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.
Square stock, meanwhile, holds an Accumulation/Distribution Rating of D-. The rating runs from a best-possible A+ to a worst-possible E. The rating analyzes price and volume changes in a stock over the past 13 weeks of trading.
Further, Block changed its ticker symbol to XYZ from SQ on Jan. 21.
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