Block’s Subscription Related Revenue was Up 71.5% in 2022 Q3 Results

Block (NYSE: SQ) announced 2022 Q3 financial results on November 3, 2022. According to the announcement, total revenue was up 17.4% (3 months, YoY). In addition, adjusted EBITDA was up 40.3%. On the other hand, Block has recorded negative operating loss and net loss of 48,789 thousand USD and 18,744 thousand USD, respectively (3 months). 

Net cash provided by operating activities was down 80.8% (9 months, YoY). In addition, free cash flow recorded 1,518,784 thousand USD (9 months). In 2021 Q3, it was -603,143 thousand USD. Thus, free cash flow was up significantly year-over-year. 

photo of a shopping mall in the Christmas season
Photo by Heidi Fin on Unsplash  

Block’s net loss was primarily due to recording share-based compensation (SBC) expense. In this regard, the SBC expense is non-cash expense. This is the background why free cash flow is growing steadily year-on-year basis while recording the net loss. 

As for segment revenues, Cash App revenue was up 12.2% while Square revenue was up 27.3% (3 months, YoY). In addition, Cash App segment’s gross margin was 28.8% while Square segment’s gross margin was 44.1% (3 months). The higher growth rate in the higher margin segment indicates the potential for increased future profitability of this company.

Among the Blocks revenues, subscription and service-based revenue grew the highest of up 71.5% (3 months, YoY). It was followed by transaction-based revenue of up 17.0%. Looking at breakdown of the subscription and service-based revenue by segments, those were up 104.3% and 69.3% in Square segment and Cash App segment, respectively. The growth in Square’s paid membership would make the amount of transaction fees be increased, as well as those of subscription fees. Thus, the growth of the paid membership would give the synergetic effects on the Block’s business.  

Block, Inc. (NYSE: SQ) stock chart

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  1. Watanabe & Brothers’ Investment is holding shares of Block, Inc. 
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