Key Highlights
- Block’s after-hours trading saw shares climb 7.9% to $75.70 following Q1 earnings of $0.85 per share versus analyst expectations of $0.68
- Year-over-year gross profit increased 27% to reach $2.91 billion, with Cash App contributing 38% growth
- A $173.8 million Bitcoin remeasurement loss resulted in the company reporting a $309 million net loss for the quarter
- Bitcoin-related revenue declined 26% compared to the prior year period, influenced by altered trading patterns and reduced transaction fees
- Management elevated full-year projections, anticipating 19% gross profit expansion and 62% adjusted EPS growth through 2026
Block Inc announced first-quarter 2026 earnings results that surpassed Wall Street forecasts, reporting adjusted earnings of $0.85 per share compared to the Zacks consensus projection of $0.68. This represented a 25.68% positive earnings surprise. Following the announcement, the company’s shares gained 7.9% during extended trading hours, reaching $75.70.
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Gross profit for the quarter expanded 27% compared to the same period last year, totaling $2.91 billion. Cash App emerged as the primary growth driver, delivering 38% gross profit expansion to $1.91 billion through strength in lending products, banking services, and commerce activities.
Adjusted operating income jumped 56% to reach $728 million during the quarter. This performance drove adjusted operating margins to an unprecedented 25% of gross profit.
On an adjusted earnings per share basis, Block achieved 52% year-over-year growth. Management attributed the performance to effective operational execution, leading to enhanced full-year projections.
The company now forecasts 19% gross profit growth for fiscal 2026, accompanied by adjusted diluted EPS expansion of 62%. These targets represent a substantial upgrade from previous guidance.
Beneath the surface-level metrics, Block recorded a net loss of $309 million during the three-month period, marking the company’s first quarterly deficit since 2023.
The primary contributor to this net loss was a $172.8 million Bitcoin remeasurement charge on corporate treasury holdings. As of March 31, Block maintained 8,883 Bitcoin in corporate reserves, with combined holdings across all divisions totaling 28,355 BTC, representing approximately $2.2 billion in value.
Bitcoin-related revenue across Block’s product portfolio decreased to $1.8 billion from $2.33 billion in the comparable year-ago quarter, representing approximately 26% decline. Management cited evolving Bitcoin trading dynamics and strategic fee reductions on select Cash App Bitcoin transactions as contributing factors.
Cash App’s Bitcoin segment specifically experienced a 31% year-over-year decline. Square reported minimal cryptocurrency activity, generating roughly $28 million in revenue while incurring equivalent operational costs.
Strategic Bitcoin Initiatives Accelerate Amid Revenue Challenges
Despite revenue headwinds, CEO Jack Dorsey continues advancing Block’s Bitcoin strategy. During late April, the company introduced proof-of-reserves functionality for both corporate Bitcoin treasury holdings and Cash App and Square user balances.
Block introduced an enhanced Bitkey hardware wallet featuring touchscreen capabilities, alongside launching a Cash App feature enabling eligible users to automatically convert incoming payments into Bitcoin.
Square merchants gained access to 5% Bitcoin cash back rewards programs. Customer withdrawal thresholds increased significantly to $10,000 daily and $25,000 weekly limits.
According to late April company announcements, more than 800,000 US-based merchants have activated Bitcoin payment acceptance through Block’s infrastructure.
Operational Restructuring and Expense Management
Block’s operational expenses increased 57.2% year-over-year to $3.08 billion during Q1. This followed a significant organizational restructuring announced in late February, when Dorsey revealed plans to eliminate roughly 4,000 positions, representing approximately 40% of the total workforce.
Following the restructuring announcement, Block’s stock price has appreciated approximately 25%.
Avory & Co. founder Sean Emory characterized Block’s quarterly performance as strong, highlighting how the company exceeded expectations while simultaneously raising forward guidance across multiple metrics.
