BLOCK(US:SQ)2023-11-01 16:00Financial Performance - Gross profit for Q3 2023 was $1.9 billion, representing a 21% year-over-year increase, driven by Cash App and Square ecosystems [164]. - Cash App generated gross profit of $983.9 million in Q3 2023, up 27% year-over-year, attributed to growth in transacting actives and adoption of financial services products [164]. - Square generated gross profit of $899.0 million in Q3 2023, up 15% year-over-year, as the company focused on growing upmarket with larger sellers [164]. - Adjusted Operating Income for Q3 2023 was $89.7 million, an increase of 179% year-over-year, while operating loss was $9.9 million [165]. - Net loss for Q3 2023 was $29.0 million, a 97% increase year-over-year, with Adjusted EBITDA rising 46% to $477.5 million [165]. - Adjusted Net Income Per Share for Q3 2023 was $0.55, compared to $0.42 in Q3 2022, indicating improved profitability [170]. - Total net revenue for the three months ended September 30, 2023 increased by $1.1 billion, or 24%, to $5,617,493 thousand, compared to $4,515,541 thousand in the same period of 2022 [187]. - Total net revenue for the nine months ended September 30, 2023 increased by $3.3 billion, or 25%, to $16,142,581 thousand, compared to $12,880,685 thousand in the same period of 2022 [188]. Revenue Breakdown - Bitcoin revenue for the three months ended September 30, 2023 increased by $660.8 million, or 37%, contributing 43% of total net revenue [190]. - Subscription and services-based revenue for the three months ended September 30, 2023 increased by $301.4 million, or 25%, driven by growth in Cash App's financial service-related products [189]. - Transaction-based revenue for the three months ended September 30, 2023 increased by $140.8 million, or 9%, driven by growth in Gross Payment Volume (GPV) [189]. - Cash App segment revenue for the three months ended September 30, 2023, increased by $900.1 million, or 34%, compared to the same period in 2022 [211]. - Cash App's bitcoin revenue contributed 68% of total revenue for the three months ended September 30, 2023 [211]. Costs and Expenses - Total cost of revenue for the three months ended September 30, 2023 increased by $770.6 million, or 26%, compared to the same period in 2022, driven primarily by a $652.9 million increase in Bitcoin costs [192]. - Transaction-based costs for the three months ended September 30, 2023 rose by $82.7 million, or 9%, while Gross Payment Volume (GPV) grew by 10% in the same period [193]. - Subscription and services-based costs increased by $33.4 million, or 15%, for the three months ended September 30, 2023, largely due to growth in Cash App's financial service-related products [193]. - Bitcoin costs for the three months ended September 30, 2023 increased by $652.9 million, or 38%, compared to the same period in 2022 [194]. - Product development expenses for the three months ended September 30, 2023 increased by $165.8 million, or 30%, primarily due to higher personnel costs related to engineering teams [198]. - General and administrative expenses for the three months ended September 30, 2023 increased by $85.4 million, or 22%, mainly due to increased personnel costs in customer support and compliance [201]. - Share-based compensation expense for the three months ended September 30, 2023 was $345,690 thousand, up from $262,733 thousand in the same period of 2022 [185]. Cash Flow and Liquidity - Available liquidity at the end of Q3 2023 was $8.1 billion, including $7.3 billion in cash and cash equivalents, an increase of $608.5 million from the end of 2022 [166]. - Total liquidity as of September 30, 2023, was approximately $10.3 billion, including cash, cash equivalents, and investments in marketable debt securities [217]. - Cash provided by operating activities for the nine months ended September 30, 2023, was $898.9 million, compared to $130.5 million for the same period in 2022, reflecting a significant increase [232][233]. - Cash provided by investing activities for the nine months ended September 30, 2023, was $405.0 million, down from $1.5 billion in the same period in 2022 [234][235]. - Cash used in financing activities for the nine months ended September 30, 2023, was $1.0 billion, primarily due to the settlement of 2023 Convertible Notes and net repayments from Warehouse Facilities borrowings [236]. - The company has $775.0 million available under its revolving credit facility as of September 30, 2023 [215]. Stock and Shareholder Actions - The board authorized a stock repurchase program of up to $1 billion to offset dilution from stock-based compensation [167]. - The company intends to continue focusing on long-term business initiatives and has a proposed share repurchase plan of $1.0 billion [215]. - As of September 30, 2023, the company has purchased a cumulative $220.0 million in bitcoin for investment purposes [218]. Risk and Liabilities - The safeguarding obligation liability related to bitcoin held for other parties was $676.4 million as of September 30, 2023, with measures in place to mitigate potential risks [229]. - The company does not expect potential future cash flows associated with the bitcoin safeguarding obligation liability [229]. - The net loss for the nine months ended September 30, 2023, was $178.9 million, adjusted for non-cash expenses totaling $1.4 billion [232]. Segment Information - The company has two reportable segments, Square and Cash App, with Afterpay's results allocated equally to both segments [206]. - Square segment revenue for the three months ended September 30, 2023, increased by $207.8 million, or 12%, compared to the same period in 2022 [208]. - Cost of revenue for the Square segment increased by $91.8 million, or 9%, for the three months ended September 30, 2023, compared to the same period in 2022 [209]. - Cash App's cost of revenue for the three months ended September 30, 2023, increased by $690.7 million, or 36%, compared to the same period in 2022 [213].