Block Inc (NYSE:SQ) shares skyrocketed more than 18% in after-hours trade as the Fintech firm reported third quarter sales and profits that topped estimates.
The Square and Cash App parent company posted revenue of $5.62 billion, up 24% year-over-year ahead of estimates of $5.41 billion.
Square revenue rose 12% to $899 million and Cash App revenue rose 34% to $984 million, with monthly users reaching 55 million in September.
Transaction-based revenue rose 9% year-over-year to $1.66 billion and subscription and services-based revenue rose 25% over the year-ago quarter at $1.49 billion.
Block's adjusted earnings per share (EPS) of $0.55 were ahead of the expected $0.44.
In a letter to shareholders, Block CEO Jack Dorsey said the company expects to achieve the Rule of 40, being when a company’s revenue growth when added to its profit margin the total exceeds 40%, by 2026.
He said this would have an initial composition of at least mid-teens gross profit growth and a mid-20% adjusted operating income margin.
He also announced that the company has authorized the repurchase of $1 billion in shares to offset a portion of dilution from share-based compensation.
Further, Dorsey said the company was creating a cap on the company’s number of employees which he said would be held firm at 12,000 until such time management feels “the growth of the business has outpaced the growth of the company.”
Block shares gained 18.2% at about US$52 shortly following the release of its 3Q earnings report.
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