By Manya Saini and Niket Nishant
(Reuters) -Block shares surged 16% in extended trade on Thursday after the payments firm raised its annual forecast for adjusted profit, joining rivals in brushing off worries of an uncertain economy weighing on consumer spending.
Market-beating results from the Jack Dorsey-led digital payments giant capped a broadly strong quarter for a sector tied closely with consumer strength and purchasing power.
Block now expects adjusted core earnings of $1.66 billion to $1.68 billion for the full year, compared with its earlier forecast of $1.50 billion. It also expects to be profitable on an operating income basis in 2024.
The company also expects to reduce the size of its overall workforce by the end of next year, finance chief Amrita Ahuja said in a call with analysts, adding Block is embarking on a broader cost savings program.
"We have identified a number of areas where we expect to find savings such as real estate, process improvements using automation and discretionary spend," Ahuja said.
With consumer spending in the U.S. continuing to tread largely positive waters, analysts expect sales during the all-important holiday shopping season to climb, boosted by retailers offering deep discounts on most products to lure buyers.
Earlier this week, peer PayPal (NASDAQ:PYPL) Holdings also raised its forecast for full-year adjusted profit above Wall Street estimates.
Gross profit of Block's Cash App climbed 27% in the quarter compared with a year earlier, while its Square business reported a 15% rise.
Block posted total net revenue of $5.62 billion for the three months ended Sept. 30, compared with expectations of $5.44 billion, according to LSEG data.
Alongside the results, Block also initiated a $1 billion share repurchase program and said the move will offset a portion of dilution from share-based compensation.
Block's adjusted profit per share of 55 cents beat expectations of 47 cents.