By Senad Karaahmetovic
Block (NYSE:SQ) hosted its Investor Day yesterday, led by CEO Jack Dorsey.
The company said it estimates that the 2022 addressable market for Square Seller and Cash App sits at $120 billion and $70 billion in Gross Profit, respectively.
Here are 5 Block analysts with their comments on the Investor Day:
Bank of America’s Jason Kupferberg: “SQ’s first Investor Day in 5 years was comprehensive, including a deep dive on total addressable market (TAM), and case studies showcasing the company’s prowess at integrating hardware, software and services to promote commerce enablement and attractive cohort economics. SQ’s ethos and culture of financial inclusion and innovation was also on full display and is admirable.”
Evercore ISI’s David Togut: “Cash App gross profit growth appears poised to reaccelerate following the lapping of difficult comparisons tied to the year-earlier, one-time positive impacts from fiscal stimulus. Rapid innovation should fuel continued TAM expansion. Afterpay should help reaccelerate Cash App gross profit growth combined with the integration of SQ’s Cash App and Seller ecosystems.”
Piper Sandler’s Christopher Donat: “Our main takeaways from Block's investor day are in the category of what we did not hear. First, management opted not to provide long-term financial guidance. While we recognize the challenges of forecasting SQ's multiple businesses (Square, Cash App, Afterpay, TIDAL, and Bitcoin) in an uncertain economy, we think investors would have preferred some guidance. Second, we did not hear persuasive arguments that revenue growth should accelerate or margins should expand. Third, we would have appreciated more insight into what tailwinds from the pandemic might be changing.”
KeyBanc’s Josh Beck: ”The team showed particularly well, in our view, as we gained more insight into the management structure that is generally spearheaded by highly capable business unit leaders (e.g., Square/Henry, Cash App/Grassadonia, Afterpay/Eisen-Molnar) with oversight provided by Jack and Amrita, collectively tasked with defining the Future of FinTech (KBCM report) across a cohesive, multisegment ecosystem.”
Raymond James’ John Davis: “While we were impressed by Cash App margins and GP retention, we hoped to get more color on post COVID expectations as >125% GP retention and 11% fully burdened margins (EBITDA/net revs) are unlikely to repeat absent stimulus. Additionally, while just a fraction of Block’s value, we believe investors would have hoped for more quantitative detail around Afterpay synergy expectations in addition to credit profile.”
Block stock is up 5% today.