Block shares plunge 17%, head for worst day in 5 years after earnings miss

Core Insights - Block shares experienced a significant decline of 16%, marking the steepest drop since 2020, following disappointing fourth-quarter earnings and unconvincing guidance for 2025 [1] Financial Performance - Block reported earnings of 71 cents per share, which fell short of the average analyst estimate of 87 cents [2] - The company's revenue was $6.03 billion, missing expectations of$6.29 billion [2] - Gross profit for the quarter was $2.31 billion, reflecting a 14% year-over-year increase, but slightly below consensus estimates [2] Market Competition - The payments systems market for small and medium-sized businesses is becoming increasingly competitive, with Block's Square losing market share to competitors such as Toast, Fiserv's Clover, and Shift4 [3] - Analysts expressed concerns over the stagnation in user growth at Cash App [3] Growth Outlook - Block maintained its full-year 2025 outlook, projecting at least 15% gross profit growth [3] Transaction Volume - Square's payment volume rose nearly 10% year-over-year, driven by a 13% increase in the food and beverage sector, while retail transactions grew by 8% [4] - Deutsche Bank noted Square's renewed focus on industry-specific sales teams and new distribution agreements with T-Mobile, U.S. Foods, and SalonCentric [4]