Block raises 2026 outlook after first-quarter earnings beat, accelerating gross profit growth

Shares of Block Inc. rose more than 8% in late trading today after the financial services company beat earnings expectations, accelerated gross profit growth and raised its full-year outlook on the back of a deepening artificial intelligence push inside the business.

For its fiscal 2026 first quarter that ended on March 31, Block reported adjusted earnings per share of 85 cents, up from 56 cents per share in the same quarter of the previous year, on revenue of $6.06 billion, up 4.9% year-over-year. Earnings came in ahead of the 68 cents per share expected by analysts, but revenue fell short of an expected $6.12 billion.

Gross profit climbed 27% year-over-year, to $2.91 billion, outpacing the company’s own guidance. Adjusted operating income grew 56%, to a record $728 million, lifting adjusted operating margin to an all-time high of 25%.

Cash App gross profit rose 38% year-over-year, to $1.91 billion, while Square gross profit grew 9%, to $982 million. Square gross payment volume grew 13% year-over-year, with U.S. volume up 8.2% and international volume up 35%. Cash App Commerce Enablement volume growth was up 18% year-over-year and consumer lending origination volume jumped 82%, driven by a near-tripling of Cash App Borrow originations.

Block’s bitcoin ecosystem segment was the soft spot in the report, as revenue fell to $1.80 billion from $2.33 billion a year earlier and gross profit declined 26%. Block attributed the drop to bitcoin trading dynamics and a strategic decision to lower fees on certain bitcoin transactions in Cash App.

Block raised guidance across the board for 2026. The company now expects a full-year gross profit of $12.33 billion and growth of more than 19% year-over-year, up from a prior forecast of $12.2 billion. It also expects adjusted operating income of $3.34 billion at a 27% margin, growth of 60% year-over-year and adjusted diluted earnings per share of $3.85.

For the second quarter, Block guided gross profit growth of 20%, to $3.04 billion, and adjusted operating income of $740 million.

Chief Executive Officer Jack Dorsey used Block’s shareholder letter to push the artificial intelligence-native restructuring story he outlined in February, when Block laid off roughly 40% of its workforce.

As of mid-April, production code changes per engineer were running at more than 2.5 times the January rate and incident rates after a production code change fell more than 70% year-over-year. All Block employees are now using AI tools in their work.

The company highlighted Builderbot, an internal agent that has reviewed more than 90% of production code change requests in early April and is making 15% of production code changes nearly autonomously. On the customer side, Block is rolling out what it calls “protectors,” including Moneybot for Cash App and Managerbot for Square sellers. Managerbot is available to more than 1 million sellers, with general availability in the U.S. expected in June.

“In my last letter, I shared that AI tools have changed what it means to build and run a company,” Dorsey said in the shareholder letter. “A significantly smaller team, using the tools we are building, can do more and do it better. We were early and deliberate in this strategy.”

The result extends a turnaround for Block after a rough 2025 in which the company missed revenue estimates and cut guidance in the first quarter, then disappointed again in the third quarter.

Image: Block