Block Q1 beats by $0.17, raises FY26 gross profit outlook to $12.33B

Block (XYZ) reported first-quarter adjusted earnings of $0.85 per share, beating the Zacks consensus of $0.68 by $0.17. The parent of Square and Cash App posted gross profit of $2.91 billion, a 26 per cent jump year over year that cleared both internal guidance and Street expectations.

The stock surged 9.8 per cent in after-hours trading on Thursday. Block raised its full-year 2026 gross profit outlook to $12.33 billion, above its prior $12.20 billion guidance and ahead of the Visible Alpha consensus of $12.22 billion.

“Strong start to the year,” Chief Executive Jack Dorsey said. “Both Square and Cash App delivered. The product velocity is the best it’s been since the pandemic.”

Block investors had been waiting for a quarter like this after a choppy 2025. Revenue hit $6.56 billion, up 10 per cent year over year. Adjusted EBITDA of $815 million exceeded the high end of the company’s own guidance.

The segment split

Cash App generated $1.61 billion in gross profit, up 31 per cent year over year. Active users grew and the company got better at making money from them. The app now has 57 million monthly transacting actives, up from 52 million a year ago. Average revenue per user rose to $28.25 from $24.10.

Square posted $1.04 billion in gross profit, up 20 per cent. Merchant payment volumes got a lift from steady consumer spending and the addition of larger mid-market sellers. Square Loans, the company’s lending business, booked its highest quarterly volume ever at $1.35 billion.

Afterpay, the buy-now-pay-later unit, contributed $260 million in gross profit, up 15 per cent. Loss rates on the receivables book stayed within Block’s target band of 1.0 to 1.2 per cent.

The bitcoin line

Cash App’s bitcoin business was a drag again. Revenue from bitcoin sales to consumers fell 31 per cent year over year to $2.48 billion. Bitcoin gross profit was $61 million, a margin of roughly 2.5 per cent on the product. The company also recorded a $173 million remeasurement loss on its own bitcoin holdings. That is four straight quarters of bitcoin mark-to-market weighing on net income.

Block holds roughly 8,300 bitcoin on its balance sheet with an average cost basis near $54,000 per coin. At bitcoin’s current price around $81,500, the position is comfortably in the money. But the accounting treatment requires marking the position to market each quarter, which keeps injecting volatility into GAAP net income.

Dorsey has never hidden his conviction that bitcoin is foundational to Block’s long-term strategy. The company is building bitcoin mining hardware, a self-custody wallet called Bitkey, and a developer platform for Lightning Network payments. None of these businesses are material to gross profit yet.

Guidance and margins

The guidance raise was the headline. Full-year 2026 gross profit is now guided to $12.33 billion, up from $12.20 billion. Q2 gross profit is guided to $3.04 billion, ahead of the $3.02 billion consensus.

Adjusted operating income for 2026 is projected at $2.1 billion at the midpoint, reflecting the flow-through of gross profit upside and what CFO Amrita Ahuja called “disciplined opex growth.” Operating expenses rose 8 per cent, less than half the rate of gross profit growth. That is operating leverage.

The company bought back $500 million of its own stock during the quarter and authorised another $1 billion buyback. Block ended Q1 with $8.3 billion in cash and marketable securities.

How analysts read it

Two questions dominated the earnings call: can Cash App keep growing monetisation at this pace, and when will the bitcoin bets start paying off.

On Cash App, Dorsey pointed to expanded payroll and tax features coming in the second half of 2026. The goal is to get more users on direct deposit, the single biggest driver of per-user monetisation. “The more of someone’s financial life lives inside Cash App, the more valuable the relationship becomes for both them and us,” Dorsey said.

On bitcoin, the tone was patient. “We’re building for a 10-year time horizon on bitcoin infrastructure,” Ahuja said. “The mining ASIC, Bitkey, Lightning. These are not 2026 revenue stories. But we wouldn’t trade the strategic position for short-term earnings optics.”

At least three sell-side analysts raised their price targets after the print. The 9.8 per cent after-hours move pushed Block shares above $74 for the first time since January. The stock is still a long way from its 2021 pandemic highs above $270.

What’s next

Block reports Q2 in early August. The company didn’t give a specific bitcoin revenue forecast but indicated that Cash App bitcoin gross profit is likely to stay in the $55 million to $65 million range per quarter barring a sharp move in price or volumes. Square’s push into larger sellers, the “upmarket” strategy that has been running for three years, is the margin story to watch through the rest of 2026.