Digital payments facilitator Block (NYSE:SQ) is having an amazing day. The company released its third-quarter 2022 financial results yesterday. And while Block is comprised of two segments, Square and Cash App, it’s mainly the Cash App-related results that are propelling SQ stock higher.
Block, like practically every other U.S. tech business, has had to contend with high inflation. It’s fair to say that Block, as a payments business, was particularly vulnerable as elevated inflation meant that people would dial back their spending.
Yet, somehow Block defeated the inflation monster in Q3. Apparently, the users flocked to the Cash App, as this segment posted $774 million in quarterly gross profit, up 51% year-over-year (YOY).
This isn’t to suggest that Block’s point-of-sale business, Square, didn’t benefit Block in the third quarter. As it turned out, gross profit from Square increased 29% YOY to $783 million.
But clearly, Cash App was the standout segment. On a related note, more than 18 million people actively used the Cash debit card in September. This result indicates an impressive 40% YOY improvement.
What’s Happening With SQ Stock?
Block cashed in on the Cash App and the Cash debit card in Q3, and SQ stock traders were quite pleased with the results. They pushed the share price 15% higher within the first half-hour of today’s trading session.
It’s hard to blame Block’s investors for being in a positive mood today. The company reported $4.52 billion in third-quarter revenue, compared to Wall Street’s estimate of $4.49 billion. Not only that, but Block’s adjusted earnings per share or EPS of 42 cents easily beat the analysts’ forecast of 23 cents.
On top of all that, Block’s $1.57 billion in quarterly gross profit showed a 38% YOY increase. Again, Block managed to achieve these feats despite high consumer prices in the U.S.
Whether Block will be able to maintain this pace of growth is a different story entirely. For now, though, SQ stock is flying higher. Plus, we can say that inflation’s impact wasn’t as bad as expected, at least in Block’s case.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.