XYZ · Q1 2026 Earnings

Bullish

Block, Inc.

Reported May 7, 2026

30-second summary

Block delivered a clean Q1 beat against every guided metric: gross profit $2.91B (+27% YoY) vs. the $2.80B / +22% guide, adjusted operating income $728M vs. the $600M guide, 25.0% adjusted operating margin vs. the 21% guide, and $0.85 non-GAAP EPS vs. the $0.67 guide. Management raised FY2026 across the board — gross profit to $12.33B (+19%), adjusted operating income to $3.34B, adjusted operating margin to 27%, and non-GAAP EPS to $3.85 (+62% YoY, up from +54%). The headline story for the next leg: management is now framing Block as an "intelligence company," with internal production code changes per engineer up 2.5x January-to-April, and Q2 guidance carrying the acceleration with $3.04B gross profit (+20% YoY) and a 24% margin built on a step-up in go-to-market spend.

Headline numbers

EPS

Q1 FY2026

$0.85

Revenue

Q1 FY2026

$6.06B

+4.9% YoY

Gross margin

Q1 FY2026

48.0%

Free cash flow

Q1 FY2026

$0.94B

Operating margin

Q1 FY2026

-2.8%

Key financials

Q1 FY2026

Metric	Q1 FY2026	YoY	Q4 FY2025	QoQ
Revenue	$6.06B	+4.9%	$6.25B	-3.1%
EPS	$0.85	—	$0.65	+30.8%
Gross margin	48.0%	—	46.0%	+204bps
Operating margin	-2.8%	—	7.8%	-1056bps
Free cash flow	$0.94B	—	$0.58B	+61.2%

Guidance

Guidance is issued for the full year only, refreshed each quarter. Prior and new below are the same FY updated this quarter.

Actuals vs prior guidance

Metric	Period	Prior guide	Actual	Δ	Result
Adjusted Diluted EPS	Q1 FY2026	$0.67	$0.85	+$0.18 above guide	Beat
Gross Profit	Q1 FY2026	$2.80 billion	$2.90 billion	+$0.10 billion above guide	Beat
Gross Profit YoY Growth	Q1 FY2026	22%	~24%	+2 points above guide	Beat
Adjusted Operating Income	Q1 FY2026	$600 million	$677 million	+$77 million above guide	Beat
Adjusted Operating Income Margin	Q1 FY2026	21%	25.0%	+4.0 points above guide	Beat

New guidance

Metric	Period	Guide	YoY
Adjusted Diluted EPS	Q2 FY2026	$0.86	+42% YoY
Gross Profit	Q2 FY2026	$3.04 billion	+20% YoY

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
Adjusted Diluted EPS	FY2026	$3.66	$3.85	+$0.19	Raised
Adjusted Diluted EPS YoY Growth	FY2026	54%	62%	+8 points	Raised
Gross Profit	FY2026	$12.20 billion	$12.33 billion	+$0.13 billion	Raised
Gross Profit YoY Growth	FY2026	18%	19%	+1 point	Raised
Adjusted Operating Income	FY2026	$3.20 billion	$3.34 billion	+$0.14 billion	Raised
Adjusted Operating Income Margin	FY2026	26%	27%	+1 point	Raised
Adjusted Operating Income YoY Growth	FY2026	54%	—	—	Raised

Segment performance

Q1 FY2026

Segment	Q1 FY2026	YoY
Cash App Gross Profit	$1.908B	+38.0%
Square Gross Profit	$0.982B	+9.0%
Commerce Enablement Gross Profit	$1.608B	+15.0%
Financial Solutions Gross Profit	$1.233B	+55.0%
Bitcoin Ecosystem Gross Profit	$0.068B	-26.0%

Other KPIs

Q1 FY2026

Segment	Q1 FY2026	YoY
Square U.S. GPV	$47.74B	+8.2%
Square International GPV	$13.47B	+35.0%
Adjusted Operating Income Margin	25.0%	—
Cash App Monthly Transacting Actives	59M	—
Cash App Primary Banking Actives	9.7M	—
Cash App Commerce Enablement Volume Growth	18% YoY	—
Cash App Consumer Lending Origination Volume Growth	82% YoY	—
Square GPV Growth	13% YoY	—
Adjusted EBITDA	$1.01B	—
Free Cash Flow	$0.935B	—

Management tone

Customer-optimization hangover → "back to growth mode" → "approaching Rule of 40" → "intelligence-native company" → "intelligence company"

The Q4 "intelligence-native company" framing has hardened into a categorical identity claim this quarter, with internal productivity metrics replacing the prior qualitative AI commentary. Anchor: "Production code changes per engineer increased more than two and a half times from January to April, and production code changes made by non-engineers at Block were up nearly 60% in April compared to January." Block has not previously translated AI tooling into a hard productivity multiple on a public release. The signal: the FY2026 27% margin guide is being underwritten by a cost-base argument the company is now willing to quantify.

The AI narrative has shifted from internal productivity to action-oriented customer-facing agents at scale. Three quarters ago AI was described as a coding tool (Goose); last quarter it was a strategic identity (the RIF was justified by AI-enabled organizational redesign); this quarter MoneyBot is generally available across Cash App and ManagerBot is live with 1M+ sellers and on track for all Square sellers in June. Anchor: "when AI helps the customer take an action, they come back at much higher rates than when it only provides them with information." The shift from informational to action-oriented AI is being framed as a behavioral inflection — and management is implicitly claiming credit for the Q1 gross-profit acceleration.

Square's narrative reversed. For three quarters Square was the deceleration story (+11% Q2 → +9% Q3 → +7% Q4); this quarter management framed Q1 as the strongest GPV growth in food & beverage and mid-market "since Q1 2023." Anchor (from Q&A with Wolf Research): "Square GPV +20% across all three focus areas." The +13% reported / +11.5% constant-currency GPV print and the +9% gross-profit re-acceleration validate the call. The watch is whether the +35% international GPV growth — the largest single contributor to the Square reacceleration — is sustainable as comps tighten.

ISO partnerships have moved from a forward channel opportunity to a quantified contributor. Last quarter Block disclosed the sales-led NVA target of +40%; this quarter management cited "more than 140 active ISO partners ramping quickly" as a meaningful contributor to seller acquisition. This is the second consecutive quarter Block has quantified a Square go-to-market channel by partner count and growth rate — the framing is consistent with the broader shift from defending Square to asserting it.

The closing language was unusually confident for Block. Anchor: "We delivered a strong first quarter and have conviction in the path ahead. Most importantly, we are moving faster, focused on building with high quality and delivering more for our customers." The "conviction in the path ahead" framing pairs with the +62% FY non-GAAP EPS growth guide and the 400bps Q1 margin beat — Block is signaling that the FY2026 setup is not a stretch case but a base case.

Recurring themes management leaned on this quarter:

AI-driven operational transformation accelerating production velocity and code changesAction-oriented AI systems (MoneyBot, ManagerBot) driving higher customer engagement and retentionSquare GPV acceleration with strongest mid-market and food & beverage growth since Q1 2023Cash App growth acceleration across commerce enablement and financial solutionsISO partnerships scaling quickly as new channel for seller acquisitionMargin expansion and all-time highs in adjusted operating income and EBITDA

Risks management surfaced:

Changes in macroeconomic conditionsTougher comparisons for GPV growth effects starting in Q2Seasonal sequential decline in primary banking assets Q2 vs Q1Interest expense expectations of $200-$210 million for full year

Q&A highlights

Darren Peller · Wolf

Asked for specifics on Q1 strength and guidance raise, including key KPIs, drivers, and segment breakdown informing full-year outlook.

Management highlighted broad-based strength across Cash App and Square ecosystems. Cash App showed 4% active growth, 10% inflows per active growth, 82% lending origination growth, 18% commerce volumes, 18% primary banking active growth. Square saw accelerated GPV growth with +20% in all three focus areas (food/beverage, mid-market, international), improved net volume retention, strong NVA growth. Full-year guidance raised to 19% gross profit growth and 27% margin expansion, with expectation of mid-teens gross profit growth exit and expanding margins in Q3-Q4.

Cash App actives +4% YoYInflows per active +10%Consumer lending originations +82%Commerce enablement volumes +18%

Xinxin Wang · J.P. Morgan

Asked for postmortem on company reorganization, what worked better than expected, challenges faced, and near-term proof points beyond cost savings.

Jack Dorsey stated expectations were extremely high and all were met. Company maintained reliability, regulatory/trust commitments, and business growth throughout reorganization. Challenges addressed included code review burden from increased AI-assisted PR volume; resolved through focused prioritization. Near-term expectations include further org flattening, increased employee proximity to customers/decisions, accelerated decision-making through AI tools, maintained product velocity, shift toward proactive AI-driven intelligence delivery via MoneyBot and ManagerBot.

All organizational expectations met during reorgMaintained regulatory and trust commitmentsAccelerated decision-making speed achievedMoneyBot and ManagerBot positioned as intelligence delivery vehicles

Tim Chiodo · UBS

Asked to expand on cash-out borrow growth drivers for 2027-2028 beyond state expansion, including loan sizing, post-purchase BNPL, pre-purchase BNPL, and other factors.

Management emphasized multivariable Cash App platform with network virality and engagement as core long-term drivers. Highlighted lending integration across peer-to-peer, commerce, and banking products. For borrow: continued scale through Cash App Green integration, higher limits for mature customers, and product innovation. For BNPL: post-purchase product growing faster than borrow at similar stage; pre-purchase early stage with promising momentum; core Afterpay network growth opportunity. New opportunities like Cash App Score mentioned for expanded access and monetization.

Post-purchase BNPL growing faster than borrow at similar lifecycle stageEach lending product grows faster than predecessor at similar point in lifePre-purchase BNPL launched with momentum in early weeksBorrow and lending products integrated across multiple Cash App verticals

Ramsey LSL · Cantor Fitzgerald

Asked for overview of AI strategy and whether Block will evolve primarily into an AI company.

Jack Dorsey stated Block evolves into an intelligence company, not necessarily defined by traditional app navigation but by delivering intelligence to customers at the right moment. Strategy built on Goose foundation (model-agnostic agent harness started in 2024). Internal manifestations include MoneyBot, ManagerBot, and BuilderBot. External vision includes agentic commerce (vendor purchasing automation) and enabling sellers to directly build customizations via Builder Bot. Goal is intelligence-first delivery model where roadmap is no longer the limiting factor.

Goose is foundational model-agnostic agent harness used at scaleMoneyBot and ManagerBot as intelligence delivery vehiclesBuilderBot enables employees to build/fix features via SlackAgentic commerce for vendor purchasing automation identified as near-term opportunity

Dan Dolove · Mizuho

Asked what is driving increased product velocity and what is supporting it, given visible acceleration in shipping.

Owen (executive) attributed velocity increases to two main drivers: (1) AI tools and organizational changes creating smaller, flatter teams with more autonomy and less red tape; (2) AI tooling improvements driving production code changes per engineer up 2.5X since start of year. Cited specific example of BNPL for Cash App Pay built by two ML engineers in 3-4 weeks (originally scoped at 5-6 engineers over 3 months). Noted tools like Goose continue improving foundational models enabling further acceleration.

Production code changes per engineer up 2.5X since start of yearBNPL feature for Cash App Pay: 2 engineers, 3-4 weeks vs. original scope of 5-6 engineers, 3 monthsAI tooling (Goose) as foundational enablerSmaller, flatter team structure enabling autonomy

Answers to last quarter's watch list

Q1 FY2026 gross profit landing at $2.80B (+22% YoY): Q1 gross profit came in at $2.91B (+27% YoY), beating the dollar guide by $110M and the growth-rate guide by 500bps. The AI-enabled growth thesis carried through the RIF cleanly — no execution drag.

Resolved positively

Q1 adjusted operating income hitting $600M (29% YoY growth, 21% margin): Q1 AOI came in at $728M (vs. $600M guide / +21% beat) with a 25.0% margin (vs. 21% guide / +400bps beat). The cost base supports the FY2026 27% margin guide with significant cushion — even with most RIF severance still to flow through Q2.

Resolved positively

Square gross-profit reacceleration versus the +12% Q1-to-date GPV: Square gross profit reaccelerated from +7% to +9% YoY, and total GPV grew +13% YoY (~+11.5% constant currency). The three-quarter deceleration arc broke, though the gross-profit-to-GPV gap remains (9% vs 13%). The reacceleration is real but the gap still warrants monitoring.

Resolved positively

Cash App gross profit per PBA and post-Green attach-rate sustainability: Primary Banking Actives stepped to 9.7M (+18% YoY, +0.4M QoQ from 9.3M), confirming the post-Green cohort engagement is not a launch-only effect. Block did not separately refresh the 14% attach rate or 10x gross-profit-per-PBA disclosures this quarter, but the +38% Cash App gross-profit acceleration is consistent with the unit economics holding.

Resolved positively

Headcount, S&M, and reinvestment cadence: Management explicitly committed to a "meaningful" Q2 go-to-market spend step-up — the Q2 margin guide of 24% vs Q1's 25.0% print is the visible evidence that savings are being recycled. The 400bps Q1 margin beat suggests both reinvestment and margin expansion are happening simultaneously.

Resolved positively

Borrow loss rates at >$25B annualized run-rate: Consumer lending originations grew +82% YoY (Q4 was +69%), and Financial Solutions gross profit grew +55%. Block refreshed cohort-level loss rate disclosures this quarter: 3.16% for the 0-6 month cohort, 3.01% for the 7-12 month cohort, and 2.67% for the 13+ month cohort — confirming the mature-cohort step-down pattern from Investor Day.

Resolved positively

What to watch into next quarter

Q2 FY2026 gross profit landing at $3.04B (+20% YoY): the falsifiable test of whether the Q1 +27% print holds through a tougher comparison quarter. Anything below +18% would suggest Q1 outperformance was front-loaded rather than sustainable.

Q2 adjusted operating margin landing at 24% with the go-to-market step-up: Q1's 25.0% margin was the high-water mark. The Q2 guide implicitly says some of the Q1 beat was timing-related (RIF severance flowing through Q2). Watch whether Q2 margin lands at or above 24% — a miss here would suggest the FY 27% margin guide has less cushion than the Q1 beat implied.

Square gross-profit-to-GPV convergence: Square GPV grew +13% / gross profit grew +9% in Q1 — the gap narrowed from Q4 but did not close. Watch whether Q2 gross-profit growth steps toward double digits, validating the food & beverage and mid-market reacceleration as durable.

Square International GPV sustainability at +35%: International accelerated from +24% in Q4 to +35% in Q1 — this is the single largest contributor to the Square reacceleration. The comp gets harder in Q2; a step-down to +25-30% is consistent with the underlying trend, anything below +20% would suggest Q1 was an outlier.

Bitcoin Ecosystem gross profit: the -26% YoY print is small in dollars ($68M) but management has previously framed Proto as an H2 2025 / 2026 gross-profit contributor. Watch whether Q2 shows stabilization or whether the segment continues to drag, and whether Proto revenue is called out separately.

MoneyBot and ManagerBot engagement disclosure: management cited MoneyBot at 1M actives in week one and ManagerBot reaching all Square sellers by June. Watch the Q2 print for any quantified link between AI-agent usage and Cash App per-active monetization or Square attach rates — without this, the "intelligence company" framing remains a strategic narrative rather than a measurable contributor.

Sources

Block, Inc. Q1 2026 Shareholder Letter / Press Release, SEC EDGAR filing: https://www.sec.gov/Archives/edgar/data/1512673/000119312526212032/d132441dex991.htm
Block Q4 2025 prior-period guidance reference (Tapebrief Q4 2025 brief: Q1 FY2026 guide of $2.80B gross profit / $600M AOI / 21% margin / $0.67 EPS; FY2026 guide of $12.20B / $3.20B / 26% / $3.66)

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