Block (ASX:SQ2) share price rockets 39% today as profits soar

With a new name and the newly acquired Afterpay, Block will be on investors’ radars in the year ahead.

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Key points

  • Block share price lifts off 
  • Profits were well up year-on-year 
  • Afterpay results will be included in the next quarterly report 

The Block Inc CDI (ASX: SQ2) share price is heading skywards, up 39% in early trade.

Block closed yesterday trading for $116.05 per share and is currently trading for $161.67.

Below we look at the highlights from the global payment services company’s Q4 and full year financial results for the period ending 31 December (FY21).

Block share price rockets on soaring profits

What else happened during the year?

The strong full year results propelling the Block share price skywards today were helped by a 47% year-on-year boost in Q4 profits, which reached $1.18 billion.

That came despite a 63% year-on-year lift in operating expenses in Q4, which climbed to $1.24 billion.

Block also reported that its transaction-based revenue in Q4 came in at $1.31 billion, up 41% from the prior corresponding period. Subscription and services-based revenue leapt to $772 million in Q4, up 72% year-on-year.

Block is also an active investor in Bitcoin. In Q4 of 2020 and Q1 of 2021, the company invested $220 million into the cryptocurrency. As at 31 December it said the fair value of that investment was $371 million.

As at 31 December, Block had $7.4 billion in available liquidity.

What did management say?

Authoring the report, Block CEO Jack Dorsey noted:

On January 31, we completed our acquisition of Afterpay, a global buy now, pay later (BNPL) platform. We believe this acquisition will further Block’s strategic priorities for Square and Cash App by strengthening the connections between our ecosystems as we deliver compelling financial products and services for consumers and merchants.

What’s next?

Looking ahead to what could impact the Block share price next, the company said it remains focused on its international strategy of “achieving product parity globally, investing further into brand awareness, and launching in new markets”. In January, Block entered into Spain, its fourth European country.

Afterpay will be included in Block’s Q1 results for February and March 2022.

Block share price snapshot

Block began trading on the ASX in January following its acquisition of Afterpay.

Since 20 January, the Block share price is down 9%. By comparison, the S&P/ASX 200 Index (ASX: XJO) has lost 8% over that same time.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and has recommended Bitcoin and Block, Inc. The Motley Fool Australia owns and has recommended Bitcoin and Block, Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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