Key Takeaways
- Block shares climbed 7.9% in extended trading to reach $75.70 following adjusted earnings of $0.85 per share that surpassed analyst expectations of $0.68 by 25.68%
- The company’s gross profit increased 27% compared to last year, reaching $2.91 billion, with Cash App segment delivering 38% growth
- A $173.8 million loss from Bitcoin remeasurement helped drive a $309 million net quarterly deficit — marking the company’s first loss in three years
- Bitcoin-related revenue declined 26% year-over-year as Block adjusted transaction fees on Cash App and faced shifting market dynamics
- Management upgraded full-year projections, now anticipating 19% gross profit expansion and 62% adjusted EPS growth for 2026
Block Inc delivered first-quarter 2026 adjusted earnings of $0.85 per share, significantly outperforming the Zacks consensus forecast of $0.68 — representing an earnings surprise of 25.68%. Following the announcement, shares rallied 7.9% during after-hours trading, reaching $75.70.
The company’s overall gross profit expanded 27% compared to the same period last year, totaling $2.91 billion. The Cash App division emerged as the primary growth driver, with gross profit surging 38% to $1.91 billion, fueled by strong performance in lending, banking services, and commerce offerings.
Adjusted operating income experienced impressive growth of 56%, climbing to $728 million. This performance elevated adjusted operating margins to an all-time high of 25% relative to gross profit.
On an adjusted earnings per share basis, Block delivered 52% year-over-year growth. Management attributed the outperformance to “strong execution” and used the momentum to revise upward its full-year financial outlook.
For the complete fiscal year 2026, Block now projects gross profit growth of 19% alongside adjusted diluted EPS expansion of 62%. These updated targets represent a substantial improvement from previous guidance.
However, the headline figures mask some underlying challenges. Block reported a net deficit of $309 million for the quarter — representing the company’s first quarterly loss since 2023.
A significant $172.8 million Bitcoin remeasurement loss associated with its corporate treasury holdings was a primary contributor to this net deficit. As of March 31, Block maintained 8,883 Bitcoin in its corporate treasury, with combined BTC holdings — including customer balances — totaling 28,355 BTC, representing approximately $2.2 billion in value.
Bitcoin-generated revenue across Block’s product portfolio declined to $1.8 billion from $2.33 billion in the prior year period, representing roughly a 26% decrease. The company explained this decline as resulting from evolving “Bitcoin trading dynamics” and a strategic choice to reduce fees on select Cash App Bitcoin transactions.
Specifically, Cash App’s Bitcoin operations experienced a 31% year-over-year decline. Square reported minimal Bitcoin activity, generating approximately $28 million in cryptocurrency revenue — which was offset by equivalent operating costs.
Bitcoin Strategy Advances Despite Revenue Headwinds
Despite the revenue challenges, Jack Dorsey remains committed to expanding Bitcoin integration. In late April, Block introduced a proof-of-reserves system for both its corporate Bitcoin treasury and for Cash App and Square user holdings.
Block also introduced an updated Bitkey hardware wallet featuring a touchscreen interface, and implemented a Cash App feature enabling select users to automatically convert incoming payments into Bitcoin.
Square merchant partners can now access 5% Bitcoin cash back rewards. Customer withdrawal thresholds were increased fivefold, now allowing $10,000 daily and $25,000 weekly limits.
According to an announcement in late April, more than 800,000 US-based merchants have activated Bitcoin transaction capabilities through Block’s payment network.
Restructuring Efforts and Rising Operational Costs
Block’s operational expenses increased 57.2% year-over-year during Q1, reaching $3.08 billion. This came after a substantial restructuring initiative in late February, when Dorsey revealed plans to eliminate approximately 4,000 positions — representing roughly 40% of the total workforce.
Since the workforce reduction announcement, Block’s stock price has appreciated approximately 25%.
Sean Emory, founder of Avory & Co., characterized Block’s performance as a “strong quarter,” highlighting that the company successfully “beat and raised” its financial guidance across multiple metrics.
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