Key Takeaways
- Shares of Block climbed 7.9% in extended trading to $75.70 following first-quarter adjusted earnings of $0.85 per share, surpassing analyst expectations of $0.68 by more than 25%
- Year-over-year gross profit increased 27% to reach $2.91 billion, with Cash App segment contributing 38% growth
- The company reported its first quarterly net loss in three years at $309 million, largely attributed to a $173.8 million Bitcoin remeasurement charge
- Revenue from Bitcoin-related services declined 26% amid shifting market conditions and lower transaction fees
- Management upgraded full-year projections, forecasting 19% gross profit expansion and 62% adjusted earnings per share growth for 2026
Jack Dorsey’s Block Inc delivered first-quarter 2026 adjusted earnings of $0.85 per share, significantly exceeding the Zacks consensus forecast of $0.68 — representing a substantial 25.68% upside surprise. The financial technology company’s shares surged 7.9% during after-hours trading, reaching $75.70.
Gross profit for the period jumped 27% compared to the same quarter last year, totaling $2.91 billion. The Cash App ecosystem powered much of this growth, posting a 38% increase in gross profit to $1.91 billion, fueled by expansion in lending services, banking products, and commerce activities.
Adjusted operating income experienced remarkable growth of 56%, reaching $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 achieved 52% year-over-year expansion. Company executives cited “strong execution” as justification for upgrading their full-year financial projections.
The revised outlook now anticipates 19% gross profit growth throughout fiscal 2026, alongside adjusted diluted earnings per share growth of 62%. This represents a considerable improvement over previous guidance.
However, the positive adjusted metrics mask underlying challenges. Block recorded a net loss of $309 million during the quarter — marking its first quarterly deficit since 2023.
A significant $172.8 million Bitcoin remeasurement loss on corporate treasury holdings was the primary contributor to this net loss. As of March 31, Block maintained a corporate position of 8,883 Bitcoin, with total BTC holdings — encompassing customer balances — standing at 28,355 BTC, worth approximately $2.2 billion at current valuations.
Bitcoin-related revenue across Block’s product suite decreased to $1.8 billion from $2.33 billion in the prior-year period, representing approximately a 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 generating approximately $28 million in revenue — fully offset by corresponding costs.
Bitcoin Expansion Continues Despite Revenue Drop
Notwithstanding the revenue headwinds, Jack Dorsey remains committed to 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 released an updated Bitkey hardware wallet featuring a touchscreen interface, and implemented a Cash App functionality enabling select users to automatically convert incoming payments to Bitcoin.
Square merchants now have access to 5% Bitcoin cashback rewards. Customer withdrawal thresholds were increased fivefold to $10,000 daily and $25,000 weekly limits.
According to a late April company announcement, more than 800,000 merchants across the United States have activated Bitcoin transaction capabilities through Block’s payment infrastructure.
Workforce Cuts and Cost Pressures
Block’s operational expenditures increased 57.2% year-over-year to $3.08 billion in the first quarter. This followed a substantial organizational restructuring announced in late February, when Dorsey revealed plans to eliminate roughly 4,000 positions — approximately 40% of the total workforce.
Since the restructuring announcement, Block’s stock price has appreciated roughly 25%.
Sean Emory, founder of Avory & Co., characterized Block’s performance as a “strong quarter,” highlighting that the company “beat and raised” guidance across multiple metrics.
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