(Reuters) – Payments company Block beat estimates for third-quarter revenue on Thursday, helped by resilient spending from consumers who brushed off fears of an economic downturn, sending shares up 19% in aftermarket trading.
Wage growth and savings accumulated during the pandemic have bolstered consumers’ financial health and encouraged them to continue splurging even as economic jitters persist.
With consumer spending in the U.S. treading largely positive waters, sales during the all-important holiday shopping season are expected to climb, boosted by retailers offering deep discounts on most products to lure buyers.
Online sales during the U.S. holiday season, which includes some of the biggest shopping days such as Cyber Monday, Thanksgiving, and Black Friday, are expected to rise 4.8% from a year earlier, a report from Adobe Analytics showed in October.
Earlier this week, peer PayPal Holdings also raised its forecast for full-year adjusted profit above Wall Street estimates.
However, the central bank keeping interest rates higher for longer could test consumers over the long-term, analysts have warned.
Gross profit of Block’s Cash App climbed 27% in the quarter compared with a year earlier, while its Square business reported a 15% rise.
The company’s total net revenue was $5.62 billion for the three months ended Sept. 30, compared with $4.52 billion a year earlier. Analysts on average had expected $5.44 billion, according to LSEG data.
Block’s adjusted profit per share of 55 cents sailed past Wall Street expectations of 47 cents.
(Reporting by Niket Nishant and Manya Saini in Bengaluru; Editing by Krishna Chandra Eluri)
