Block Inc. is set to unify its Afterpay, Cash App, and Square units as part of a broader expansion strategy that it expects will be reflected in its earnings by early 2026.
The company’s fourth-quarter earnings results were mixed, with revenue coming in at $6.03 billion, an increase of 4.5% year-over-year but below analysts’ estimates. Gross profit hit $10.22 billion, representing a 15% year-over-year growth rate, and adjusted operating income is expected to reach $2.1 billion.
Expansion of banking services on Cash App was a key driver of success for the year, with 2.5 million paycheck deposit activities and 25 million active users on the Cash App Card. The company also launched several new products in Square’s food and beverage sector, including scan-to-pay functionality.
Despite the mixed earnings results, analysts remain optimistic about Block’s 2025 guidance. Jefferies research notes that key drivers of growth, such as Borrow and BNPL on Cash Card, have good visibility, and investors are confident that go-to-market changes in Square will work.
Block’s CEO, Jack Dorsey, stated that the company’s strategy is to bring its ecosystems together with a focus on neighborhoods. The payment company plans to collect on the fruits of its labor this year by balancing growth investments with increased efficiency across its organization.
The company expects to exit 2025 at a rule of 40 run rate and remain on track to achieve its target of rule of 40 in 2026. Analysts expect that a 20% higher marketing budget will drive faster gross profit growth, leading to a nearly 20% gross profit growth and 20% EBIT margin by 2026-and-beyond.
Source: https://finance.yahoo.com/news/blocks-neighborhood-network-draws-mixed-165236681.html