Key Takeaways
- Block’s Q2 gross profit rose 25% to $3.17 billion, with a record 27% adjusted operating margin after its AI-led restructuring.
- Management raised 2026 guidance to $12.51 billion in gross profit and $3.47 billion in adjusted operating income.
- GAAP EPS was only $0.15, as a bitcoin loss and restructuring costs offset the adjusted gains.
- Q3 results on November 3 must show 18% gross profit growth and a 28% margin.
Block (XYZ) cut about 4,000 jobs in February, nearly 40% of its staff, and bet that AI could pick up the slack. Six months later, the bet looks like it is paying off.
Q2 gross profit rose 25% to $3.17 billion, and adjusted operating margin hit a record 27%. Management then raised its full-year outlook.
Shares closed at $78 on October 20, up 19.9% this year, with Q3 results due November 3.
Record profit after the cuts
Block runs two engines: Square for sellers and Cash App for consumers. Both delivered in Q2:
- Cash App gross profit grew 31%, helped by consumer lending
- Square gross profit grew 13%, matching its payment volume growth
- Adjusted EPS of $1.02 rose 65% and beat the $0.87 estimate
CFO Amrita Ahuja said on the earnings call, “Our increased guidance reflects the strength of our first-half execution.”
Gross profit is the cleanest way to see the growth…
Q2’s $3.17 billion was 25% above a year earlier, with Cash App lending doing much of the lifting.
Guidance now bakes in leverage
Block now expects $12.51 billion in 2026 gross profit, up 21%, versus $12.33 billion before. It also lifted adjusted operating income guidance to $3.47 billion, a 28% margin and 67% growth.
That is the AI story in plain numbers. Revenue keeps growing, but costs no longer grow as fast.
Analysts have pushed earnings forecasts higher as a result…
Consensus calls for EPS to grow about 48% a year over the next two years. Meanwhile, Square keeps landing chains like Whit’s Frozen Custard, and Afterpay became Fanatics’ preferred buy now, pay later partner.
TIKR tracks 47 analysts on Block. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Block, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Block’s Analyst Ratings
GAAP profit is the catch
Adjusted figures flatter the picture. GAAP EPS was only $0.15 in Q2 after an $88.5 million unrealized bitcoin loss and restructuring costs.
Investors are paying up for the adjusted version anyway…
Block trades at 17.1x forward earnings versus 10.3x for PayPal (PYPL), the rival Block once helped bid for. The average analyst target of $98 implies about 25% upside.
My take: The cost reset is real, and a 28% margin guide is a big change for a company that once spent freely. But bitcoin swings will keep GAAP results noisy, so I’d judge Block on gross profit growth.
November 3 is the next checkpoint. Q3 guidance calls for 18% gross profit growth and a 28% margin, so any Cash App slowdown will show up fast.
So what is Block stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
