OAKLAND, California, May 8, 2026, 02:05 (PDT)
- Block now expects 2026 gross profit to hit $12.33 billion, bumping up its outlook after first-quarter gains from both Cash App and Square.
- Shares surged 7.7% after hours as investors digested the first significant update since Jack Dorsey’s AI-driven layoffs.
- The company posted a net loss of $308.7 million for the quarter, weighed down by a $240 million accrual related to an ongoing Justice Department probe.
Block Inc lifted its full-year guidance after first-quarter profit came in well above forecasts, thanks to brisk growth from Cash App lending and Square’s merchant payments business. Shares jumped in after-hours trading Thursday.
This update lands at a key moment, offering investors their first look at Jack Dorsey’s leaner, more AI-focused approach. According to a filing, Block slashed headcount by over 40% as part of its February restructuring plan. The company now sees annualized net cost savings between $800 million and $900 million—though it plans to funnel some of those savings back into the business.
The payments sector hasn’t slumped as much as some expected. Visa and Mastercard delivered strong earnings, Reuters noted, and Block rode solid U.S. consumer spending, wage gains, and bigger tax refunds through the March quarter.
Block has lifted its 2026 gross profit target to $12.33 billion, bumping it up from the earlier $12.20 billion projection. The company is aiming for a 19% jump in gross profit this year. Adjusted operating income stands at $3.34 billion, and adjusted diluted EPS is set at $3.85.
Net revenue for the first quarter hit $6.06 billion, up from $5.77 billion a year ago. Gross profit surged 27%, landing at $2.91 billion. Adjusted diluted EPS—excluding things like restructuring costs and bitcoin-related remeasurement—was 85 cents. That’s well above the 68-cent consensus from analysts surveyed by LSEG, according to Reuters.
Cash App did most of the heavy lifting. Gross profit for the consumer payments segment hit $1.91 billion, jumping 38%. Consumer lending origination soared 82% to $17.6 billion, pushed higher by Cash App Borrow. As of March, the number of primary banking actives reached 9.7 million, up 18% year over year.
Seaport Research’s Jeff Cantwell singled out Cash App as the clear winner this quarter. He also noted Block’s execution looks unaffected by the company’s workforce cuts.
Square, the merchant segment under Block, posted a 9% jump in gross profit, hitting $982 million. Gross payment volume climbed 13%. On the analyst call, finance chief Amrita Ahuja pointed to an acceleration in Square’s GPV growth, adding that Block anticipates Square’s gross profit will track close to GPV growth in the year’s second half.
Dorsey connected the quarter’s performance to Block’s deployment of artificial intelligence, writing in a shareholder letter: “Internally, AI is helping us move faster and improve quality.” He also noted that Moneybot is now up and running throughout Cash App, while Managerbot has rolled out to over 1 million sellers.
During the call, Dorsey acknowledged the restructuring helped accelerate decision-making, but flagged a fresh snag: AI agents are generating more code, so there’s now a heavier load to review before shipping anything. Block, he said, remains committed to keeping the organization flat—pushing workers closer to customers and decisions.
The quarter was messy. Block posted a net loss of $308.7 million, slipping from a $189.9 million profit a year ago. Restructuring charges alone came to $495.3 million. Losses tied to transactions, loans and consumer receivables piled on another $500.1 million, and a bitcoin remeasurement loss added $172.8 million. The company set aside $240 million for a possible Justice Department settlement, cautioning that the ultimate figure could top that and have a material impact.
Block is projecting $3.04 billion in gross profit for the second quarter, with adjusted operating income coming in at $740 million and adjusted diluted earnings at 86 cents per share. Now, the company faces the challenge of seeing if Cash App’s lending business, Square’s processing volume, and savings from AI can continue to counteract mounting credit losses, regulatory expenses, and the ongoing ups and downs from its bitcoin operations.
