A Headline Growth Number That Understates What's Actually Happening
Block's total net revenue growth decelerated for the third straight quarter - 19.4% in Q1, 11.2% in Q2, now just 6.4% in Q3 2024, to $5.98 billion. Read on its own, that's the slowest revenue growth anywhere in this backfill. But it's almost entirely a bitcoin story: bitcoin revenue was essentially flat year-over-year this quarter ($2.43 billion vs. $2.42 billion, +0.2%), down from 26.3% growth in Q1 and 9.2% in Q2, and bitcoin revenue is a low-margin pass-through that contributes only a few percent of total gross profit - so its deceleration mechanically drags down the headline revenue growth rate without meaningfully changing the business's actual economics.
Gross profit, the number that actually reflects Block's real economics, grew 18.5% year-over-year to $2.25 billion - nearly three times the headline revenue growth rate, and consistent with the mid-to-high-teens gross-profit growth this backfill has now shown for a full year running. GAAP operating income was $323.0 million, a third consecutive profitable quarter after Q1's milestone and Q2's confirmation, and Adjusted EBITDA» grew 69.1% to $807.5 million.
The Prescription
Block should keep reporting gross profit, not total net revenue, as the headline growth metric in its own external communications - the gap between 6.4% revenue growth and 18.5% gross-profit growth this quarter is exactly the kind of divergence a reader has to dig into the filing to find, and a company whose own bitcoin pass-through mechanically distorts its most-quoted top-line number has an obligation to make that distinction unmissable, not just disclosed. What it should stop doing is letting three consecutive profitable quarters go unremarked as if quarterly GAAP profitability were now the expected baseline - it's a genuine, hard-won achievement after two years of Afterpay-era losses, and understating that milestone in its own narrative undersells a real turnaround story.
Key Financial Metrics
Q3 2024 vs. Q3 2023, consolidated, reported in USD
| Metric | Q3 2024 | Q3 2023 | YoY |
|---|---|---|---|
| Total Net Revenue | $5,975.8M | $5,617.5M | ✅ +6.4% (slowed by flat bitcoin revenue) |
| Gross Profit | $2,249.7M | $1,898.4M | ✅ +18.5% |
| Operating Income (Loss) | $323.0M | $(9.9)M | ✅ third straight quarterly operating profit |
| Net Income (Loss) | $281.1M | $(93.5)M (restated, see Q1 2024) | ✅ swung to a profit |
| Adjusted EBITDA» | $807.5M | $477.5M | ✅ +69.1% |
| Free Cash Flow» (standalone quarter) | ~$628.2M | ~$453.5M | ✅ +38.5% |
| Balance sheet metric | Sep 2024 | Jun 2024 | Change |
|---|---|---|---|
| Cash and Cash Equivalents | $8,299.8M | $7,799.1M | ✅ +6.4% |
| Total Assets | $36,355.4M | $37,546.6M | ⚠️ -3.2% |
| Total Liabilities | $16,446.1M | $18,253.6M | ✅ -9.9% |
| Total Stockholders' Equity | $19,909.3M | $19,293.0M | ✅ +3.2% |
Block's headline revenue growth slowed to 6.4% this quarter, driven almost entirely by bitcoin revenue going flat - but gross profit grew 18.5%, GAAP operating income posted its third consecutive profitable quarter, and standalone Free Cash Flow reached $628.2 million, its highest level in this backfill.
Segment Comparison: Cash App vs. Square
Q3 2024 vs. Q3 2023, as presented in this quarter's segment tables
| Metric | Cash App Q3 2024 | Cash App Q3 2023 | YoY | Square Q3 2024 | Square Q3 2023 | YoY |
|---|---|---|---|---|---|---|
| Segment Gross Profit | $1,305.9M | $1,077.5M | ✅ +21.2% | $932.4M | $805.3M | ✅ +15.8% |
Cash App
Cash App's segment gross profit growth of 21.2% is essentially unaffected by the bitcoin-revenue slowdown noted above, since bitcoin gross profit sits at a low single-digit percentage of the segment's total - the segment's real growth engine (Cash Card, Borrow, direct deposit) kept compounding through the quarter regardless of what bitcoin revenue did.
Square (formerly Seller)
Square's segment gross profit growth of 15.8% held its now-typical double-digit pace, supported by GPV» growth of 4.0% - the slowest GPV growth rate in this backfill, continuing the gradual deceleration first flagged back in Q3 2023.
Key Operational Metrics
Q3 2024 vs. Q3 2023
| Metric | Q3 2024 | Q3 2023 | YoY |
|---|---|---|---|
| GPV | $62,492M | $60,076M | ✅ +4.0% |
| GPV (9M 2024 cumulative) | $178,858M | $170,205M | ✅ +5.1% |
| Bitcoin Revenue | $2,428.6M | $2,423.6M | ⚠️ +0.2%, effectively flat |
Beyond the Usual
Bitcoin Revenue Growth Has Gone From +26% to Roughly Flat in Two Quarters
Bitcoin revenue growth decelerated from 26.3% in Q1 2024, to 9.2% in Q2, to essentially flat (+0.2%) this quarter - the sharpest and most consistent deceleration of any single line item tracked across this backfill. Because bitcoin revenue carries almost no margin (gross profit from bitcoin has run in the low single-digit percent of segment gross profit in every quarter this backfill has disclosed the figure), this doesn't change the business's underlying economics - but it does mean a reader relying on the headline "total net revenue growth" number alone would materially misjudge the direction of the business this quarter, when gross profit, operating income, and Free Cash Flow all continued improving.
Target Valuation Range
~2.4x EV/TTM Revenue at quarter-end - essentially flat with Q2's ~2.2-2.4x range, a multiple that's stayed compressed for two straight quarters despite three consecutive profitable quarters and record Free Cash Flow. The multiple has stabilized rather than continuing to compress, suggesting the market has found a level it's comfortable holding the stock at pending more confirmation of durability - not a re-rating yet, but no longer actively de-rating either.
| Market cap → enterprise value | Q3 2024 (period-end) |
|---|---|
| Share price (period-end, Sep 30 2024) | $67.13 |
| Weighted-average diluted shares (Q3 2024) | ~632.8 million |
| Market capitalization | ~$42.5 billion |
| Total liabilities | $16.45 billion |
| Less: cash and cash equivalents | $8.30 billion |
| Enterprise value | ~$50.6 billion |
| Peer-multiple sanity check | TTM ending Q2 2024 | TTM ending Q3 2024 | Change |
|---|---|---|---|
| Enterprise Value | ~$51.4 billion | ~$50.6 billion | roughly flat |
| TTM Revenue | ~$23.50 billion | ~$24.33 billion | ✅ +3.5% |
| EV/Revenue | ~2.2x | ~2.1x | roughly flat |
| DCF scenario (illustrative, EV/Revenue-multiple-based) | Key assumption | Implied EV | Implied share price |
|---|---|---|---|
| Bear | Bitcoin revenue turns negative and gross-profit growth decelerates below mid-teens; multiple stays near ~2.1x forward revenue | ~$51.0 billion | ~$62 |
| Base | Gross-profit growth holds mid-to-high-teens and the operating-profit streak continues; multiple recovers toward ~2.6x forward revenue | ~$63.0 billion | ~$77 |
| Bull | Operating margin expands further and Free Cash Flow keeps setting new highs; multiple re-rates to ~3.3x forward revenue | ~$80.0 billion | ~$97 |
| Current (period-end close) | — | ~$50.6 billion | $67.13 |
Block, Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, filed with the SEC.