XYZ has updated its financial outlook, acknowledging the challenges posed by a fluctuating macroeconomic landscape. The company now anticipates a gross profit of $9.96 billion in 2025, reflecting a 12% increase compared to the previous year. For the current year's second quarter, XYZ projects a 9.5% year-over-year rise in gross profit, amounting to $2.45 billion.
Looking further into the year, the company plans to significantly boost gross profit growth by enhancing customer engagement through its Cash App, expanding the Borrow feature, and widening the reach of the retroactive Buy Now, Pay Later (BNPL) service. This strategy aims to achieve low-double-digit gross profit growth in the third quarter and mid-teens growth in the fourth quarter. XYZ's guidance now incorporates a more cautious approach to the macroeconomic outlook, reflecting the evolving market dynamics.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 40 analysts, the average target price for Block Inc (XYZ, Financial) is $100.64 with a high estimate of $125.00 and a low estimate of $57.00. The average target implies an upside of 72.09% from the current price of $58.48. More detailed estimate data can be found on the Block Inc (XYZ) Forecast page.
Based on the consensus recommendation from 45 brokerage firms, Block Inc's (XYZ, Financial) average brokerage recommendation is currently 2.0, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Block Inc (XYZ, Financial) in one year is $91.72, suggesting a upside of 56.84% from the current price of $58.48. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Block Inc (XYZ) Summary page.
XYZ Key Business Developments
Release Date: February 20, 2025
- Gross Profit: $8.89 billion in 2024, 18% year-over-year growth.
- Square Gross Profit: 15% year-over-year growth.
- Cash App Gross Profit: 21% year-over-year growth.
- Square GPV Growth: 10% year-over-year in Q4 2024.
- Cash App Paycheck Deposit Actives: 2.5 million in December, 25% year-over-year growth.
- Adjusted EBITDA: $3.03 billion, 69% year-over-year increase.
- Adjusted Operating Income: $1.61 billion, more than 4.5x year-over-year increase.
- Adjusted Free Cash Flow: $2.07 billion for 2024, up from $515 million in 2023.
- Rule of 40: Achieved 36.5% in 2024, up 7 points from the previous year.
- Cash App Borrow Monthly Actives: 5 million at the end of 2024.
- 2025 Gross Profit Guidance: At least 15% year-over-year growth, targeting $10.22 billion.
- 2025 Adjusted Operating Income Guidance: $2.1 billion, approximately 21% margin.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Block Inc (XYZ, Financial) reported a significant gross profit growth of 18% year-over-year, reaching $8.89 billion in 2024.
- Cash App's financial services offerings were enhanced, with paycheck deposit actives growing 25% year-over-year to 2.5 million in December.
- The company achieved a substantial increase in profitability, with adjusted EBITDA rising 69% year-over-year to $3.03 billion.
- Block Inc (XYZ) maintained a strong gross profit retention of over 100% for both Square and Cash App.
- The company is investing in AI automation, open source innovation, and Bitcoin infrastructure to expand financial access globally.
Negative Points
- Cash App monthly active users have been relatively flat at around 57 million, with only a 2% year-over-year growth.
- The company faces headwinds from foreign exchange rates, impacting gross profit growth by 50 basis points.
- Square GPV growth is expected to be in the high single digits in Q1 2025, with some noise due to FX and leap year effects.
- There are tougher comparisons for Square Banking and Bitcoin pricing changes, affecting growth dynamics in early 2025.
- The company is absorbing incremental costs from increased marketing and acquisition spend, which may impact short-term profitability.
