Block, Inc. — FY2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023; comparisons are with FY2022 unless noted. Block operates the Square seller-commerce and Cash App consumer-finance ecosystems, alongside smaller TIDAL and bitcoin businesses. In Q4 2023, it moved BNPL activities fully into Cash App and recast prior segment comparisons accordingly.
Financial and operating performance
| Metric | FY2023 | FY2022 | Change |
|---|---|---|---|
| Total net revenue | $21.92 billion | $17.53 billion | +25% |
| Gross profit | $7.50 billion | $5.99 billion | +25% |
| Gross margin | 34.3% | 34.2% | +0.1 percentage point |
| Operating loss | $278.8 million | $624.5 million | Loss narrowed |
| Net income (loss), consolidated | $(21.1) million | $(553.0) million | Improved |
| Net income (loss) attributable to common stockholders | $9.8 million | $(540.7) million | Improved |
| Operating cash flow | $101.0 million | $175.9 million | Lower |
| Adjusted EBITDA (non-GAAP) | $1.79 billion | $991.0 million | +81% |
| Gross payment volume | $227.7 billion | $203.5 billion | +12% |
Revenue growth excluding bitcoin revenue was 19%. Bitcoin sales were $9.50 billion, or 43% of revenue, but generated only 3% of gross profit; bitcoin revenue and its associated costs are reported gross. Subscription and services revenue rose 31%, primarily from Cash App financial services, BNPL and interest earned on customer funds.
- Square: Revenue of $7.03 billion (+12%); gross profit of $3.13 billion (+16%). Management cited higher card-present and card-not-present volume, international growth and progress with larger sellers.
- Cash App: Revenue of $14.68 billion (+33%); gross profit of $4.32 billion (+33%). Growth reflected bitcoin sales, financial services adoption and BNPL. Excluding bitcoin revenue, Cash App revenue grew 32%.
- Profitability: Operating expenses rose 18% to $7.78 billion, including higher product development and general and administrative expense. GAAP operating results included $239.6 million of restructuring and other charges and a $132.3 million TIDAL goodwill impairment. Share-based compensation was $1.28 billion.
Liquidity, cash flow and debt
- Year-end available liquidity was $7.72 billion: $6.9 billion in cash, cash equivalents, restricted cash and marketable debt securities, plus $775 million available on the revolving credit facility and $99.4 million available under warehouse facilities. Customer funds are not available for corporate purposes; some liquidity is restricted or otherwise subject to facility terms.
- Cash and cash equivalents were $5.00 billion, up from $4.54 billion. Operating cash flow was $101.0 million; investing activities provided $683.2 million and financing activities used $240.1 million. Operating cash flow was affected in part by working-capital timing and a $350 million processor deposit.
- Notes had $4.15 billion of principal outstanding at year-end, including $1.0 billion of 2025 convertible notes, $1.15 billion of 2026 notes, and $1.0 billion each of 2026 and 2031 senior notes. In addition, $1.61 billion was drawn on warehouse facilities, secured by consumer receivables; $99.4 million remained available. The company reported compliance with applicable credit facility and senior note financial covenants.
- Consumer receivables had $2.63 billion amortized cost and a $185.3 million credit-loss allowance; the balance-sheet net amount was $2.44 billion. The provision for consumer credit losses was $261.3 million in 2023.
Material changes, outlook and notable items
- Management said it would continue expense discipline and cost-efficiency efforts in 2024. Block announced an absolute employee cap of 12,000; year-end 2023 headcount was 12,985. It expects to operate below the cap through performance management, centralization and prioritization, while noting near-term restructuring costs and anticipated future benefits.
- The board authorized up to $1 billion of Class A share repurchases to offset some stock-based compensation dilution. Block repurchased $156.8 million in Q4 2023; $843.2 million remained authorized at year-end. No specific earnings or revenue guidance is provided in the supplied filing text.
- Adoption of crypto accounting standard ASU 2023-08 led to fair-value remeasurement of Block’s bitcoin investment, including a $207.1 million 2023 gain in other income and a $30.5 million opening-equity adjustment. The company held about 8,038 investment bitcoins valued at $339.9 million at year-end.
- The CFPB notified Block that its Office of Enforcement was considering recommending legal action concerning Cash App complaint and dispute handling; state attorneys general also made inquiries. Block is cooperating, has accrued an immaterial amount, and says the outcome and potential exposure beyond that accrual cannot be reliably estimated. The company also received SEC and DOJ inquiries following a March 2023 short-seller report; the filing does not provide a clear estimate of potential exposure.
- Key risks include consumer and seller credit losses, fraud and chargebacks, cybersecurity and service interruptions, regulatory requirements for payments, lending, BNPL and bitcoin, competition, macroeconomic weakness, and reliance on payment processors and bank partners. The company’s dual-class shares concentrate voting control. Auditors issued unqualified opinions on the financial statements and internal control over financial reporting.
Important facts for investors to verify
- Whether growth in gross profit and Cash App financial services is sustained, separating bitcoin transaction volume and price effects from underlying activity.
- Consumer receivables delinquencies, charge-offs, allowance adequacy and the $261.3 million credit-loss provision, as well as Square loan performance and funding availability.
- Corporate liquidity available after excluding customer funds and restricted cash, and the maturity, refinancing and repayment profile of notes and warehouse facilities.
- Progress toward the 12,000 employee cap, realized savings versus restructuring costs, and continued stock-based compensation and dilution.
- Developments in CFPB, state attorney general, SEC and DOJ matters, including any enforcement action, settlement, or change in potential financial exposure.