Shares of Block (SQ 2.32%), formerly known as Square, jumped 22% in February according to data provided by S&P Global Market Intelligence. Investors were pleased with its progress, reported in its fourth-quarter results, as well as its 2024 guidance.

Is Block finally back?

Block became a symbol of the opportunities available in digital payments when its Cash App came onto the scene several years ago. It was a new field to conquer for the company, which previously had its Square sellers business and was veering into something completely different. It built up these two "ecosystems," and they have both become very popular. Block is known in both cases to focus on design and innovation, meeting customer needs and reducing pain points. These are what set it apart from traditional players and even from newer companies that are entering the ring.

But it might have gone too far from these roots, and performance as well as investor confidence began to sour after management became heavily involved in blockchain and Bitcoin. It has also developed several open-source developer projects and an artist's hub. Revenue continues to increase at a robust pace, but Block has been struggling with profitability.

Management committed to getting back to its core activities and refocusing its efforts on its two main businesses, along with what it does best, innovation and design. It's also doubling down on efficiency.

In the 2023 fourth quarter, revenue increased 24% year over year. Without Bitcoin trading, which it counts as revenue, it increased 15%. Gross profit increased 22%, and gross margin improved year over year as well to 35.09%. However, operating loss was $131 million, marginally better than $135 million last year.

CEO Jack Dorsey reiterated that the company cut its head count to below 12,000, where it's committed to keeping it, and said it's learning how to use its resources more effectively.

There's still work ahead

Sure, there's still tons of potential here. Block's core strengths remain, and customers love its sellers and Cash App products. Management is working to capitalize on these strengths to build a viable long-term business. However, it's going to take a lot of work to get there.

There's been progress, but investors should wait to see sustained improvements as well as a clear direction from management about how it plans to achieve long-term success, with actionable goals and follow-through. In the meantime, I recommend waiting before buying Block stock.