What happened
Shares of Block (SQ -2.91%) surged more than 26% today after the company reported earnings results for the fourth quarter and full year of 2021, while also providing guidance for the year ahead.
So what
Block reported adjusted earnings per share of $0.27 in the quarter on revenue of $4.08 billion, both of which beat analyst estimates. Gross payment volume in Q4 hit a high for the year at $46.3 billion, up slightly from Q3. Gross profit on Cash App came in at $518 million, while gross profit at the rest of Square came in at $657.3 million.
Image source: Getty Images.
Management also suggested that the company had gotten off to a solid start this year and is expecting a solid year of growth ahead. CFO Amrita Ahuja said to expect gross profit to have risen by 33% through February of this year on a year-over-year basis, not including the impact of acquiring Afterpay.
Looking at the rest of the year, management is guiding for the company's gross profit to continue to grow in every quarter this year for both Square and Cash App, so long as the economy doesn't take a turn.
Now what
Block stock has gotten creamed over the past six months and is down nearly 55%. The company has suffered along with the rest of the tech sector as the Federal Reserve has shifted its monetary outlook amid surging inflation. The Fed now expects to raise its benchmark overnight lending rate multiple times this year beginning in March.
The guidance seemed to come in much better than analysts and investors had expected, so I think everyone is feeling a lot better about the state of the company right now.
