Block it NYSE: XYZthe company behind Square and Cash App, delivered a stronger-than-expected quarter, raised full-year guidance, and indicated that its aggressive restructuring may already be helping.
In the most visible metrics, the company performed very well in the first three months of the year, and its growth and profit both jumped in line.
In fact, it’s now solidly beating the Rule of 40, the most-watched benchmark for top tech companies.
However, investors still have reason to be cautious. The stock is priced in its near-term success.
The question is how much room is left to operate if the company’s pivots continue to pay off.
Block Delivers Strong Growth and Profitability
By most measures, Block’s first quarter was good. The company’s net profit rose 27% year-over-year (YOY) to $2.91 billion. During the same period, it generated $728 million in adjusted operating income, representing a 25% gross profit margin. The total of those two percent increases is over 40, which puts it beyond the industry “norm”. In other words, growth in savings and the rate at which that is converted into income are both increasing in tandem at appreciable rates.
Overall, revenue for the quarter came in at $6.06 billion, up 5% YOY. And as the numbers have shown, those revenues flow to the bottom line. Diluted adjusted earnings per share rose 52% to 85 cents, before the company’s internal guidance. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) came in at a record $1 billion for the quarter. On the face of it, these numbers were solid.
Cash App Leads While Square Offers Stability
The Block is powered by two separate but complementary businesses. On the other hand is Cash App, a consumer-facing mobile platform that allows millions of Americans to send money, invest in stocks, buy Bitcoin, and access basic banking services. The other side is Square, a merchant services platform that helps small and medium-sized businesses accept payments, manage inventory, and process payments.
In the first three months, the Cash App became a star. Its net profit jumped 38% YOY to $1.91 billion, or nearly two-thirds of the total, driven by deeper engagement with financial services products such as the Cash Function Card and banking features.
Square was strong but grew steadily at a 9% pace to a profit of $982 million. The combination of a growing buyer arm and its strong merchant arm is what gives Block its long-term appeal.
Given the results, the company raised its full-year 2026 goals to 19% gross profit growth, $12.33 billion in net profit, $3.34 billion in adjusted operating income, and 62% adjusted earnings. Embedded in that guidance is Block’s strategic bet on artificial intelligence, which it says will improve personalization, sharpen risk management, and open up new revenue opportunities.
Reengineering and AI Bring New Risks
However, there is a footnote you should know. On a consolidated basis, Block reported a GAAP net loss attributable to shareholders of $309 million, and a GAAP operating loss of $172 million. Its net unadjusted loss came to 52 cents per share.
That gap between the glowing adjusted numbers and the unadjusted loss came mainly from $852 million in restructuring charges and other one-time charges. More than half of the cases came after a surprising announcement in February from Jack Dorsey, chairman of Block, founder and Block Head, as the company calls him. Dorsey said Block will be laying off 40% of its workforce as it shifts work to artificial intelligence. The company explained in early April that 100% of Block’s employees were now using AI tools to do their jobs.
But as part of that quarterly payment, the company also disclosed that it was setting aside $240 million due to the Justice Department’s ongoing investigation into Cash App’s compliance and management practices.
Wall Street Loves Story But Has Concerns
All of these issues have had material jumps. Block’s shares are up nearly 20% over the past year, which was before it joined the S&P 500, but are up about 7% year to date. Positive quarterly earnings results led to a 10% drop in the stock price, but investors expressed concern in other areas.
Block, Inc. price chart. (XYZ) for Wednesday, May, 20, 2026
Revenue was $6.06 billion, although it was up 5%. The unadjusted GAAP loss angered some investors, and the share of potential DOJ money also weighed on sentiment.
Analysts covering Block are optimistic but cautious. The consensus rating is Neutral Buy, 30 analysts recommend the stock as Buy, six call it Hold, and only one recommends Sell. The 12-month price average remains at $84.94, which represents a 20% increase from the recent trading price near $70. The most bullish target among the forecasts is reaching $100.
Competition and Standardization Still Matter
Given its performance, Block shows good reason for enthusiasm. But it also shows danger. The company operates in a highly competitive environment. Cash App faces well-funded competitors, including Venmo via PayPal NASDAQ: PYPLand Chime NASDAQ: CHYMand SoFi NASDAQ: SOFI on the neobank side. Square competes with traditional bank managed merchant services and other merchant platforms, including Clover by Fiserv NASDAQ: FISVBread NYSE: TOSTand the point of sale offered by Shopify NASDAQ: SHOP.
There is also the question of regulatory exposure. Bitcoin Cash App trading and its new financial services features are in an area that can change unexpectedly. And a company’s GAAP loss, however unexplained, leaves it vulnerable if investors change their focus.
The measurement itself is not cheap. Block trades at a real premium to common payment processors. That premium is secure as long as net profit continues to rise but may leave little margin for error if it slows.
For now, though, Block deserves a spot penciled in on the buy list of growth-oriented investors. Just be aware of the risks, watch the numbers, and don’t send all your money.
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