Block Raises 2026 Outlook After Q3 Gross Profit Rises 22%

Block Inc. (NYSE: XYZ) raised its full-year 2026 guidance after third-quarter gross profit increased 22% year over year and adjusted operating margin reached an all-time high, supported by growth across both Cash App and Square.

The company now expects 2026 gross profit of $12.626 billion, up 22% from the prior year, and adjusted operating income of $3.519 billion, representing a 28% margin and 69% annual growth. Adjusted diluted earnings per share are projected to rise 75% to $4.15.

For the fourth quarter, Block expects gross profit of $3.315 billion, up 15% year over year, adjusted operating income of $1.005 billion at a 30% margin, and adjusted diluted EPS of $1.15, an increase of 77%.

Profitability expands in the third quarter

Third-quarter gross profit rose to $3.235 billion from $2.662 billion a year earlier. Financial Solutions gross profit increased 32% and Commerce Enablement gross profit grew 19%, more than offsetting a 50% decline in Bitcoin Ecosystem gross profit.

Adjusted operating income climbed 92% to $922.7 million, while the corresponding margin expanded to 29% of gross profit from 18%. Adjusted EBITDA increased 47% to $1.228 billion, with its margin rising to 38% from 31%.

Net income attributable to common stockholders was $565.6 million, compared with $461.5 million in the prior-year quarter. GAAP diluted earnings per share increased to $0.92 from $0.74. Adjusted diluted EPS more than doubled to a record $1.13 from $0.54.

GAAP operating income was $428.5 million, up from $409.4 million. The reconciliation to adjusted operating income included $435.0 million of contingencies, restructuring and other charges, as well as smaller adjustments for intangible-asset amortization and restructuring-related share-based compensation.

Cash App growth led by financial services

Cash App generated gross profit of $2.070 billion, up 27% year over year. Financial Solutions gross profit advanced 36% to $1.022 billion, while Commerce Enablement gross profit rose 27% to $990 million. Bitcoin Ecosystem gross profit declined 40% to $57 million.

Cash App reached 60 million monthly transacting actives in September. Block said its Neighborhoods initiative brought more Square seller customers into Cash App, supporting its effort to connect the two ecosystems.

Consumer lending origination volume, including Cash App Borrow and buy-now-pay-later products, grew 40% year over year, driven by Cash App Borrow and Afterpay Post-Purchase. The presentation indicated that Cash App Borrow continued to produce strong returns across 2025 and 2026 origination cohorts. Block’s portfolio targets vary by product, with targeted risk losses ranging from 1.0% for Afterpay Pay-in-4 to 5.0% for Afterpay Pay Monthly.

The company also said Cash App users are adopting more monetized products over time, with newer customer cohorts attaching products at a faster rate. Monetized products include Cash App Card, Instant Deposit, Cash App Pay, Borrow, ATM withdrawals, paper-money deposits, bitcoin and business accounts.

Square volume rises across geographies

Square gross profit increased 14% to $1.157 billion, reflecting payment-volume growth and greater adoption of software and Financial Solutions products. Financial Solutions gross profit rose 21% to $310 million, while Commerce Enablement gross profit increased 11% to $846 million.

Square gross payment volume rose 14% year over year to $76.4 billion, the strongest growth rate reported since the first quarter of 2023. U.S. GPV growth reached 10.4%, while international GPV increased 26% on a reported basis. International markets accounted for 23% of total Square GPV, up from 21% a year earlier. Block attributed the volume growth to new seller acquisition.

Management’s Square strategy remains focused on expanding the seller base, increasing product adoption and automation, and improving retention. The company is also seeking to connect sellers with Cash App’s consumer network.

Preliminary 2027 outlook

For 2027, Block expects gross profit to grow at least 15% to $14.519 billion. Adjusted operating income is projected to rise 30% to $4.575 billion, implying a 32% margin. Management said it plans to expand margins while continuing to invest meaningfully in long-term growth.

Block continues to use the Rule of 40—the sum of gross-profit growth and adjusted operating margin—as its guiding financial framework. Its 2026 outlook implies a Rule of 50 result, while the preliminary 2027 outlook implies Rule of 47.

The guidance is based on management’s current assumptions and remains subject to macroeconomic conditions and other uncertainties. Block did not provide forward-looking GAAP equivalents for adjusted operating income because contingencies, restructuring charges and other reconciling items are uncertain and potentially variable. The company cautioned that material changes in those items could significantly affect future GAAP results.