(Reuters) -Jack Dorsey-led Block lifted its forecast for annual adjusted core earnings on Thursday as the payments firm bet on resilient consumer spending and its own cost-cutting measures.
Shares of the company jumped 6.3% in extended trading.
Payments firms have benefited from a tight labor market and wage growth that has allowed Americans to set aside worries of an economic slowdown and continue spending on travel, shopping and dining out.
The company now expects annual adjusted core earnings to be at least $2.76 billion, higher than its previous forecast of $2.63 billion.
Block also forecast adjusted core earnings between $670 million and $690 million in the second quarter, compared with analysts’ average expectation of $642.2 million, according to LSEG data.
Block’s estimate-topping results cap off a broadly strong quarter for the payments sector, whose fortunes are closely tied to strength in consumer spending.
Meanwhile, the firm has been focusing on cutting costs to improve profitability by trimming headcount, reducing its real estate footprint and curbing discretionary expenditure.
The company posted a 19% jump in total net revenue, to $5.96 billion in the reported quarter.
Gross profit for Block’s Cash App jumped 25% in the quarter compared to last year, while its Square business posted a 19% rise.
Earlier this week, larger rival PayPal also raised its forecast for full-year adjusted profit, signaling resilience in consumer spending.
On an adjusted basis, Block earned 85 cents per share in the three months ended March 31, beating analysts’ expectation of 72 cents per share.
The company’s shares have fallen 9.1% so far this year as of its last close, underperforming peer PayPal, which has risen 9%.
(Reporting by Arasu Kannagi Basil in Bengaluru; Editing by Pooja Desai)