Block spent ~$68 million on an event for employees last quarter, as the stock gets crushed in early trading
Jack Dorsey, Block Head, is hoping that bitcoin can invigorate growth at the fintech company in two ways: selling bitcoin mining rigs, and enabling merchants to accept the OG cryptocurrency.
Fintech giant Block, Inc. — formerly known as Square — is getting crushed in early trading on Friday as investors digest the company’s latest set of results, with the stock down more than 14% as of 5:42 a.m. ET.
At the headline level, they make for tough reading. Revenue missed Bloomberg-compiled consensus estimates by 3.5%, which, coupled with higher general and administrative expenses, translated into a 19% miss on adjusted earnings per share.
The two most important businesses for Block continued to show solid trends, with Cash App — its peer-to-peer payments platform — seeing gross profit growth reaccelerate to 24%, while Square eked out a steadier 9%. But expectations into the release were likely elevated, with Block’s shares ripping 48% higher in the six months prior to the print.
The event of the year?
One particular wrinkle in the company’s shareholder letter deserves some attention. According to the filing, the company said (emphasis ours):
“General and administrative expenses were up 14% year over year on a GAAP basis, driven in part by an in-person company event. Excluding this expense, general and administrative expenses remained roughly flat year over year in the third quarter.”
Indeed, the company reported G&A costs of $543.9 million for the third quarter. That was a 14% rise on last year, as stated above. Last year’s G&A expense was $475.8 million, meaning that most of the $68 million rise in G&A expenses was because of an in-person company event.
$68 million is one hell of an event — it shakes out to about $6,000 a head (Block reported 11,372 employees at the end of last year).
Though a $68 million expense is hardly the end of the world for a company with a market cap north of $40 billion, it is potentially weighing on investor sentiment, with analysts at FT Partners, led by Zachary Gunn, writing in their post-earnings reaction note:
“There’s been significant reaction to the G&A miss, driven in part by an ‘in-person company event’, with investors commenting that it’s hard to take a company seriously regarding reaching bottom-line targets when it’s spending ~$70mm on a large-scale event for employees.”
They go on to add, however, that “if you can get over that, trends for the quarter were fairly good.”
And there are other reasons to be optimistic about Block’s future fortunes, with the company’s leadership continuing to be evangelical about bitcoin. Jack Dorsey, the founder of Twitter in his earlier career, discussed Proto, the company’s new bitcoin mining rig business:
“In Proto, our Bitcoin mining business, we generated our first revenue, seeding what has the potential to become our next major ecosystem. We monetized Proto’s innovation in hardware and software to hardware sales across ASICs, mining hashboards, and full mining rigs that provide many of the key advanced components to mine Bitcoin. In the third quarter, we sold our first rigs to our first customer, and while it’s only a modest contributor to the second half of this year, we are actively pursuing a robust pipeline for 2026 and beyond.”
Square is also about to launch bitcoin payments for its merchants, with Dorsey stating that sellers will be able to make the switch easily in settings and be able to begin accepting bitcoin as payment from next week. The challenge, per Dorsey, will be more psychological than technological — getting people “comfortable” with paying with bitcoin.
