Company Reports

We think Block’s legacy Square business model, characterized by efficient client onboarding, innovative point-of-sale devices, flat fees, and an internally developed and integrated set of software and ancillary solutions, allows the company to reach and retain micro merchants that are not viable for other acquirers. We believe Square's initial success came largely from expanding the acquiring market, rather than stealing material share from existing players.

Overall, we think Block's second-quarter results were strong, with the company maintaining the positive momentum it has shown over the past couple of quarters, particularly within the Square business.

We think Block’s legacy Square business model, characterized by efficient client onboarding, innovative point-of-sale devices, flat fees, and an internally developed and integrated set of software and ancillary solutions, allows the company to reach and retain micro merchants that are not viable for other acquirers. We believe Square's initial success came largely from expanding the acquiring market, rather than stealing material share from existing players.

Block started the year in a positive manner, with solid margin improvement and an acceleration in growth in the Cash App business in the first quarter.

We think Block’s legacy Square business model, characterized by efficient client onboarding, innovative point-of-sale devices, flat fees, and an internally developed and integrated set of software solutions, allows the company to reach and retain micro merchants that are not viable for other acquirers. We believe Square's initial success came largely from expanding the acquiring market, rather than stealing material share from existing players.

Block's growth accelerated meaningfully in the fourth quarter, and management's 2026 guidance calls for material margin improvement as the company will dramatically lower its headcount.

We think Block’s legacy Square business model, characterized by efficient client onboarding, innovative point-of-sale devices, flat fees, and an internally developed and integrated set of software solutions, allows the company to reach and retain micro merchants that are not viable for other acquirers. We believe Square's initial success came largely from expanding the acquiring market, rather than stealing material share from existing players.

While Cash App maintained strong momentum, results at Square were mixed and margins took a step back in the third quarter.

Block bounced back from a soft first quarter with a strong showing in the second quarter. Gross profit growth accelerated and margins improved.

The market has reacted positively to the news that Block will be added to the S&P 500.

We think Block’s legacy Square business model, characterized by efficient client onboarding, innovative point-of-sale devices, flat fees, and an internally developed and integrated set of software solutions, allows the company to reach and retain micro merchants that are not viable for other acquirers. We believe Square's initial success came largely from expanding the acquiring market, as opposed to stealing material share from existing players.

Block delivered a soft first quarter, with slowing growth at Cash App as the most significant issue, in our view. While management expects growth to improve in the back half of the year, we think that will likely depend on macroeconomic conditions.

While we see the direct impact of the tariffs proposed by the Trump administration on payment processors as limited, the indirect effects could be materially negative.

We think Block’s legacy Square business model, characterized by efficient client onboarding, innovative point-of-sale devices, flat fees, and an internally developed and integrated set of software solutions, allows the company to reach and retain micro merchants that are not viable for other acquirers. We believe Square's initial success came largely from expanding the acquiring market, as opposed to stealing material share from existing players.

We think Block’s legacy Square business model, characterized by efficient client onboarding, innovative point-of-sale devices, flat fees, and an internally developed and integrated set of software solutions, allows the company to reach and retain micro merchants that are not viable for other acquirers. We believe Square's initial success came largely from expanding the acquiring market, as opposed to stealing material share from existing players.

We think Block’s fourth-quarter results came in a bit soft, but we still are encouraged by the recent trajectory of the business and the increased focus on improving profitability. Year-over-year gross profit growth in the quarter was 14%, a significant sequential decline, and margins also fell a bit sequentially. However, we still think the company has made substantial progress in 2024 and that the company is now on a firmer footing. We will maintain our $92 fair value estimate for the narrow-moat company. The shares look modestly undervalued to us, although we highlight our Morningstar Uncertainty Rating of Very High.

We think Block’s legacy Square business model, characterized by efficient client onboarding, innovative point-of-sale devices, flat fees, and an internally developed and integrated set of software solutions, allows the company to reach and retain micro merchants that are not viable for other acquirers. In essence, we believe Square's initial success came largely from expanding the acquiring market, as opposed to stealing material share from existing players.

Block's third-quarter earnings largely mirrored what we saw from the company in the second quarter. Management continues to make strides in improving profitability, and we remain encouraged by this shift in focus. We will maintain our $90 fair value estimate and see shares as modestly undervalued at the moment, although we would highlight our Morningstar Uncertainty Rating of Very High for the narrow-moat company.

We think Block’s legacy Square business model, characterized by efficient client onboarding, innovative point-of-sale devices, flat fees, and an internally developed and integrated set of software solutions, allows the company to reach and retain micro merchants that are unviable for other acquirers. In essence, we believe Square's initial success came largely from expanding the acquiring market, as opposed to stealing material share from existing players.

We think Block’s second-quarter results were a bit of a mixed bag with the company seeing ongoing improvement in profitability, but growth at Square came in a little weak. Overall, we think improving profitability should be the bigger priority, but in the long run the payments industry is scale-driven and volume growth has a large impact on moats. We maintain our $90 fair value estimate for the narrow-moat company. We see shares as undervalued, but highlight our Morningstar Uncertainty Rating of Very High.