Block, Inc. Q4 FY2022 Earnings Call

· Earnings call transcript and AI-powered summary

  • Gross Profit Q4 2022: $1.66 billion, up 40% YoY.
  • FY 2022 Gross Profit: $5.99 billion, +36% YoY.
  • EBITDA Guidance FY2023: $1.3 billion, >30% YoY growth; at least 1pt margin expansion.
  • Cash App Gross Profit: $3.0 billion in FY2022 (+64% YoY); Q1 2023 estimated +50%+ YoY in Jan–Feb (reported basis).
  • Square Gross Profit: $2.98 billion in FY2022 (+22% YoY); Q1 2023 estimated +15% YoY in Jan–Feb (reported basis).
  • Buy Now, Pay Later (Afterpay): Q1 GMV growth est. at 19% YoY (up from 14% in Q4); losses on consumer receivables remained below 1% in Q4.
  • Rule of 40 Shift: New investment framework focusing on combined gross profit growth and adjusted operating income margin >= 40% long-term target.
  • Adjusted Operating Income Margin FY2022: 33% (or 23% excluding Afterpay), progress needed to reach target.
  • Expense Management: Slowing hiring (10% headcount growth projected in 2023 vs. 46% in 2022). Sales & marketing spend to grow only 5–10% in 2023 vs ~25% in 2022.
  • Cost of Acquisition: Cash App averaged $10 or less per user in 2022; Square’s payback periods improved after pullback from underperforming international initiatives.

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Operator: Good day, ladies and gentlemen, and welcome to the Block’s Fourth Quarter 2022 Earnings Conference Call. I would now like to turn the call over to your host, Nikhil Dixit, Head of Investor Relations. Please go ahead. Nikhil Dixit: Hi, everyone. Thanks for joining our fourth quarter 2022 earnings call. We have Jack and Amrita with us today. We will begin this call with some short remarks before opening the call directly to your questions. During Q&A, we will take questions from our customers in addition to questions from conference call participants. We would also like to remind everyone that we will be making forward-looking statements on this call. All statements, other than statements of historical fact could be deemed to be forward-looking. These forward-looking statements include discussions of our long-term targets and goals, which are subject to risks and uncertainties, and we may decide to shift our priorities or move away from these targets and goals at any time. Actual results could differ materially from those contemplated by our forward-looking statements. Reported results should not be considered as an indication of future performance. Please take a look at our filings with the SEC for a discussion of the factors that could cause our results to differ. Also note that the forward-looking statements on this call are based on information available to us as of today's date. We disclaim any obligation to update any forward-looking statements except as require

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