Block had a strong start to 2026, and Wall Street took notice — at least for a day.
The company posted Q1 gross profit of $2.91 billion, up 27% year-over-year. Adjusted diluted EPS came in at $0.85, up 52%, well ahead of its own guidance. Adjusted EBITDA hit a record $1 billion for the quarter.
Overall revenue came in at $6.06 billion, up 5% year-over-year. That figure beat most internal targets but fell short of some of the more bullish external estimates.
The earnings beat sent XYZ stock up about 10% on the day. The stock is now up roughly 20% compared to a year ago, and about 40% off its February lows. Year to date, it’s up around 7%.
Cash App was the standout performer. Its gross profit jumped 38% YOY to $1.91 billion, making up roughly two-thirds of Block’s total. Primary banking users rose 18% to 9.7 million, inflows climbed 14% to $88 billion, and consumer lending originations grew 82%.
That lending growth tells a bigger story. Cash App is steadily moving away from peer-to-peer payments and toward a fuller banking platform. Products like Cash App Borrow are pulling in more users and driving deeper financial engagement per account.
The risk? As lending volumes grow, so do losses. Transaction, loan, and consumer receivable losses rose in the quarter. Management says credit performance is within expectations, but it’s a line item worth watching.
Square, meanwhile, posted 9% gross profit growth to $982 million. Gross payment volume grew 13% YOY, with strong international momentum — 26% constant-currency growth outside the US. Block now has roughly 140 ISO partners, with those partnerships contributing around 200% quarter-over-quarter growth in new seller adds.
The AI story at Block is becoming harder to dismiss. Management says code output is up 2.5 times since January. New AI tools — Moneybot and Managerbot — have each crossed one million users. The company said 100% of employees are now using AI tools in their day-to-day work.
That pivot came with a cost. Block announced in February that it would cut 40% of its workforce, shifting work to AI. The restructuring generated $852 million in charges, which is the main driver behind the GAAP net loss of $309 million and operating loss of $172 million for the quarter.
Block also disclosed it is reserving $240 million related to a DOJ investigation into Cash App’s compliance and governance practices. That disclosure weighed on sentiment even as the headline numbers impressed.
Following the beat, Block raised its full-year 2026 outlook. Gross profit guidance moved up to $12.33 billion from $12.20 billion. Adjusted operating income guidance increased to $3.34 billion, with adjusted EPS now expected at $3.85, up from $3.77 previously.
The company ended the quarter with roughly $9.1 billion in liquidity, including $8.2 billion in cash. Block also repurchased 10.7 million shares in Q1 for $636 million, with up to $5 billion in additional buyback authorization remaining.
Wall Street consensus sits at a Strong Buy, with 26 buy ratings, three holds, and one sell. The average 12-month price target across 30 analysts is $88.79, implying roughly 25% upside from the current price of around $70.89.
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