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Square-parent Block comes up ‘strong’ on this metric of efficiency — but Visa leads the way

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It’s no secret that payments lions Visa Inc. and Mastercard Inc. track well on metrics of efficiency. But it’s perhaps surprising that Square-parent Block Inc. measures up pretty well too.

Baird analyst David Koning took a look at the payment-technology companies in his coverage and how they stack up in terms of revenue and earnings before interest and taxes (EBIT), both on a per-employee basis.

Unsurprisingly, Visa
topped each list, with $1.1 million in revenue per employee during its latest fiscal year, as well as $752,000 in EBIT per employee. Mastercard
was second with about $787,000 in revenue per employee and $427,000 in EBIT per employee.

Koning notes that Block
“comes in a strong third” with $519,000 in gross profit per employee, making use of the metric that analysts look at instead of revenue for Block since its true top-line is skewed by bitcoin revenue and other elements that carry very little margin.

The per-employee gross-profit performance “seems to reflect strong ability to sell via online sign ups,” Koning wrote. “We think this implies strong long-term potential margins, as the company is currently in heavy investment mode.” (Notably, the company is not third, but rather more middle of the pack, when it comes to EBIT.)

Koning’s analysis doesn’t include PayPal Holdings Inc.
which isn’t in his coverage universe. By MarketWatch’s math, PayPal raked in 821,000 in revenue per employee last year, along with $138,000 in operating income, or EBIT, per employee.

Behind those four in terms of revenue per employee are Verra Mobility Corp.
($384,000), Fiserv Inc.
($350,000), Wex Inc.
($330,000), Global Payments Inc.
($310,000), FleetCor Technologies Inc.
($292,000), Jack Henry & Associates Inc.
($284,000), Fidelity National Information Services Inc.
($213,000), Toast Inc.
($183,000), AvidXchange Holdings Inc.
($155,000), and Paymentus Holdings Inc.

Koning used gross profit for Toast to exclude the cost of fintech revenue and contribution profit for Paymentus to exclude network fees.

The performance of the bottom three rankers “reflects the early stages of growth” of those companies, he commented.

The numbers aren’t totally apples-to-apples as Koning used numbers for the latest fiscal year for all the companies he looked at, so numbers for Visa and Jack Henry are based on more recent year-ends.


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