Block, Inc. (XYZ) Earnings & Analysis

Latest quarter

Block reported Q2 FY2026 revenue of $6.6 billion, compared with the consensus of $6.5 billion, or 1.25% above the consensus. The company reported adjusted EPS of $1.02 against the consensus of $0.86, or 18.6% above the consensus, while diluted EPS was $0.15, down 82.8% from $0.87 a year earlier.

The filing shows revenue increased 9.30% from $6.1 billion in Q2 FY2025. Block said gross profit was $3.2 billion, up 25% year over year, as Cash App gross profit increased 31% to $2.0 billion and Square gross profit increased 13% to $1.2 billion. The filing attributed Cash App’s growth to Cash App Borrow and Cash App Card, and Square’s growth to processing, software and loans.

Block reported a gross margin of 47.8%, compared with 41.9% a year earlier, while operating margin was 6.75%, compared with 8.00%. The company reported free cash flow of $966.6 million, compared with $343.0 million in the prior-year quarter. The filing said net income included an $88.5 million loss from remeasuring its bitcoin investment, compared with a $212.2 million gain a year earlier.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

On the earnings call, Chief Financial Officer Amrita Ahuja said Block saw growth across Cash App and Square in Q2. She said Cash App active users and inflows per active grew 9% year over year, with activity across commerce, banking and lending. Ahuja said Square accelerated global and U.S. gross payment volume growth, while U.S. food-and-beverage payment volume and broader U.S. payment volume recorded their highest growth rates since the first half of 2023.

Addressing the outlook for the second half, Ahuja said Block expects 18% gross-profit growth in Q3, continued margin expansion and Q4 gross-profit growth in the mid-teens. She said Square’s gross-profit growth is expected to accelerate in the second half, supported by payment-volume growth, product releases, expanded distribution and pricing and packaging initiatives introduced late last year. Ahuja said Block expects Square gross profit and gross payment volume to grow roughly in line in the second half.

Ahuja said Cash App active-user growth is expected in the low-single-digit percentage range in the second half. She said consumer-lending origination volumes are expected to normalize, while Block expects its lending infrastructure to support growth beyond Cash App Borrow. She also said year-over-year growth in transaction, loan and consumer-receivable losses should moderate through the rest of 2026 based on its origination outlook, cohort maturation and the expected normalization in growth rates.

Analysts asked about Square payment-volume momentum, and Ahuja attributed it to product strategy, faster product delivery and expanding distribution channels. She said a tariff reimbursement benefit of about two points roughly offset a network-remediation comparison from Q2 2025, and she did not quantify further pricing or packaging effects.

Chief Executive Officer Jack Dorsey said Block intends to monetize Buzz but would not set a monetization model or timetable, saying the company wants more information before choosing one. Hardware Lead Thomas Templeton said Block had worked for more than a year to mitigate memory and hardware supply constraints, while adding that hardware costs are expected to rise over time.

Guidance

Block raised its FY2026 gross-profit outlook to $12.51 billion from $12.33 billion, according to the company’s results release. The company also lifted its FY2026 adjusted operating-income outlook to $3.47 billion, representing a 28% margin. On the call, Ahuja said Block expects Q3 gross-profit growth of 18% and Q4 gross-profit growth in the mid-teens.