Block (SQ) Stock: Why Investors Ignored the Earnings Miss and Bought the Dip

TLDR

Table of Contents

Block missed Q2 earnings expectations with $0.62 per share vs $0.69 expected, but gross profit beat estimates at $2.54 billion
Stock jumped 6-8% after hours following raised full-year gross profit guidance to $10.17 billion (14% growth)
Cash App gross profit grew 16% to $1.5 billion with 57 million monthly active users
Square payment volume increased 10% to $64.25 billion in the quarter
Company expects Q3 gross profit growth of 16% to $2.6 billion with 18% operating margin

Block delivered mixed second-quarter results that initially disappointed investors but ultimately sent shares soaring in after-hours trading. The fintech company missed earnings expectations but more than made up for it with strong profit growth and an upbeat outlook.

The company reported adjusted earnings per share of $0.62, falling short of the $0.69 analysts expected. Revenue also came in light at $6.05 billion versus the $6.31 billion consensus estimate.

But Block’s gross profit told a different story. The metric jumped 14% year-over-year to $2.54 billion, beating analyst estimates of $2.46 billion for the quarter.

Block Inc., $XYZ, Q2-25. Results:
📊 Adj. EPS: $0.62 🔴
💰 Revenue: $6.05B 🔴
📈 Net Income: $538M
🔎 Cash App gross profit hit $1.5B, driven by growth in Borrow, Cash App Card, and BNPL. pic.twitter.com/ZpmHmBzKwn
— EarningsTime (@Earnings_Time) August 7, 2025

The real catalyst for the stock surge came from management’s decision to raise full-year guidance. Block now expects gross profit of $10.17 billion for fiscal 2025, representing 14% growth from the previous year.

This marks an increase from the company’s prior forecast of $9.96 billion. The revised outlook suggests management sees stronger momentum in the business than previously anticipated.

Cash App Powers Growth

Cash App emerged as the standout performer in the quarter. The digital payments platform generated gross profit of $1.5 billion, up 16% from a year earlier.

The app maintained its user base at a steady 57 million monthly active users. More importantly, gross profit per transaction climbed 15% to $87, showing the platform is extracting more value from each customer interaction.

Buy-now, pay-later services within Cash App also showed strength. Gross merchandise volume for BNPL jumped 17% to $9.11 billion in the second quarter.

Square Business Holds Steady

Block’s original Square payment processing business continued its steady growth trajectory. Gross payment volume increased 10% to $64.25 billion in the quarter.

The Square segment faces increasing competition from rivals like Toast and Fiserv’s Clover. Despite this pressure, Square managed to gain market share in key verticals including retail and food and beverage.

Net income more than doubled to $538.5 million, or 87 cents per share, compared to $195.3 million, or 31 cents per share, in the same period last year. This strong bottom-line performance reflects the company’s improving operational efficiency.

CEO Jack Dorsey struck an optimistic tone in the company’s shareholder letter. “We’re back on offense,” he wrote. “Our shipping velocity has accelerated and I’m confident in our ability to sustain strong growth at scale.”

For the third quarter, Block expects gross profit to grow 16% year-over-year to $2.6 billion. The company also projects an operating margin of 18% for the period.

Block shares have struggled this year, falling 10% through Thursday’s close while the Nasdaq gained 10%. The company was recently added to the S&P 500 index last month.

Wall Street analysts maintain a Strong Buy consensus rating on Block stock. The average price target of $78.33 implies about 4% upside from current levels based on 24 Buy, three Hold, and two Sell recommendations.

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