Key Takeaways
- Block shares climbed 7.9% in extended trading to $75.70 following adjusted Q1 earnings of $0.85 per share, demolishing analyst expectations of $0.68—a surprise of 25.68%
- Total gross profit surged 27% from the prior year to $2.91 billion, powered by Cash App’s impressive 38% expansion
- The company reported a $309 million net loss for the quarter, marking its first deficit in three years, largely due to a $173.8 million Bitcoin remeasurement charge
- Bitcoin-related revenue declined 26% year-over-year amid shifting market conditions and reduced transaction fees on Cash App
- Management upgraded full-year 2026 projections, now anticipating 19% gross profit expansion and 62% adjusted earnings per share growth
Block Inc delivered first-quarter 2026 adjusted earnings of $0.85 per share, soundly beating the Zacks consensus forecast of $0.68—representing an earnings surprise of 25.68%. Following the announcement, shares rallied 7.9% in after-hours activity, reaching $75.70.
Gross profit expanded 27% on a year-over-year basis to $2.91 billion. The Cash App ecosystem emerged as the primary growth engine, delivering 38% gross profit acceleration to $1.91 billion, fueled by robust performance in lending, banking services, and commerce initiatives.
Adjusted operating income skyrocketed 56% to reach $728 million. This performance drove adjusted operating margins to an unprecedented 25% of total gross profit.
On an adjusted earnings per share basis, Block registered 52% year-over-year expansion. Management credited “strong execution” across business units for the decision to elevate its full-year projections.
Block now forecasts 19% gross profit growth for fiscal year 2026, alongside adjusted diluted earnings per share growth of 62%. This represents a substantial upgrade from previous guidance.
However, beneath the strong topline performance lies a more complex picture. Block registered a $309 million net loss during the three-month period—the company’s first quarterly deficit since 2023.
A significant $172.8 million Bitcoin remeasurement charge on corporate treasury holdings served as the primary contributor to the net loss. As of March 31, Block maintained 8,883 Bitcoin in its corporate treasury, with total BTC holdings—including customer funds—reaching 28,355 BTC, representing approximately $2.2 billion in market value.
Bitcoin-generated revenue across Block’s product portfolio contracted to $1.8 billion from $2.33 billion in the year-ago quarter, representing a roughly 26% decline. Management attributed this contraction to evolving “Bitcoin trading dynamics” and a strategic decision to reduce fees on select Cash App Bitcoin transactions.
Cash App’s Bitcoin segment specifically experienced a 31% year-over-year decline. Square reported minimal Bitcoin activity, with cryptocurrency contributing approximately $28 million in revenue—completely offset by equivalent expenses.
Bitcoin Strategy Advances Despite Revenue Headwinds
Notwithstanding the revenue contraction, Jack Dorsey remains committed to expanding Bitcoin integration. In late April, Block introduced proof-of-reserves transparency for both its corporate Bitcoin treasury and customer holdings across Cash App and Square platforms.
Block also introduced an enhanced Bitkey hardware wallet featuring touchscreen functionality, while adding a Cash App capability enabling select users to automatically convert incoming payments into Bitcoin.
Square merchants gained access to a 5% Bitcoin cashback rewards program. Customer withdrawal thresholds were increased fivefold to $10,000 daily and $25,000 weekly.
More than 800,000 US-based merchants have activated Bitcoin transaction capabilities through Block’s infrastructure, according to a late April company disclosure.
Operational Restructuring and Rising Expenses
Block’s operational expenditures jumped 57.2% year-over-year to $3.08 billion during Q1. This followed a comprehensive restructuring initiative announced in late February, when Dorsey revealed plans to eliminate approximately 4,000 positions—representing roughly 40% of the total workforce.
Since the restructuring announcement, Block’s equity value has appreciated approximately 25%.
Avory & Co. founder Sean Emory characterized Block’s quarterly performance as “strong,” highlighting that the company successfully “beat and raised” guidance metrics across all major categories.
