What Management Said
Read the full Q1 2026 transcript ↗We delivered another strong quarter, outperforming our guidance across gross profit, adjusted operating income, and adjusted diluted EPS. Gross profit grew 26%-27% year-over-year to $2.91 billion in the first quarter, driven by accelerating growth in both Cash App and Square. Adjusted operating income increased 56% year-over-year to $728 million or 25% margin. Adjusted EBITDA reached $1 billion, and adjusted diluted EPS grew 52% year-over-year to $0.85.
Each of these adjusted metrics represented all-time highs on a dollar and margin basis. Cash App gross profit growth was 38% year-over-year in the first quarter, driven by accelerating growth in both commerce enablement and financial solutions. Cash App monthly transacting actives grew 4% year-over-year as we continued to execute on our product and go-to-market strategies to strengthen network growth. We continued to deepen engagement across our actives base, with inflows per transacting active up 10% year-over-year and Primary Banking Actives growth of 18% year-over-year to 9.7 million.
Turning to Square, where gross profit and GPV growth accelerated in the first quarter to 9% and 13% respectively. On a constant currency basis, GPV grew 11.5% year-over-year, improving across both the U.S. We accelerated GPV growth from food and beverage sellers to 21% year-over-year and from mid-market sellers to 22% year-over-year, both reflecting the strongest growth rates we've seen since Q1 2023. International GPV grew 35% year-over-year or 26% on a constant currency basis.
What went well
- Block delivered a strong first quarter, exceeding guidance across gross profit, adjusted operating income, and adjusted diluted EPS, prompting a raise to the full-year outlook.
- Gross profit grew 26%-27% year-over-year to $2.91 billion, with Cash App gross profit up 38% and accelerating growth in both Cash App and Square.
- Adjusted operating income rose 56% year-over-year to $728 million (25% margin), adjusted EBITDA reached $1 billion, and adjusted diluted EPS grew 52% to $0.85, each an all-time high on a dollar and margin basis.
- Square GPV and gross profit growth accelerated to 13% and 9% respectively, with food and beverage sellers up 21%, mid-market sellers up 22% (strongest since Q1 2023), and international GPV up 35%.
- AI tooling and the reorganization drove sharply higher product velocity, with production code changes per engineer up more than 2.5x from January to April and non-engineer code changes up nearly 60%.
- Cash App engagement deepened, with inflows per transacting active up 10%, Primary Banking Actives up 18% to 9.7 million, and consumer lending originations up 82%.
What went wrong
- Management acknowledged that exceptional Borrow growth, which drove more than half of Cash App growth, is expected to normalize as the company laps very strong prior-year comparisons starting in the second quarter.
- GPV growth and FX face tougher comparisons beginning in the second quarter.
- The surge in AI-generated code created a greater burden on reviewing and merging pull requests into the mainline codebase, a challenge management said it has since worked through.
- Cash App monthly transacting actives were relatively flat sequentially (reported at 59 million for two quarters due to rounding) and grew only 4% year-over-year.
Guidance Changes
| Metric | Period | Current guidance |
|---|---|---|
| Full-year 2026 gross profit | FY2026 | $12.33B (19% growth) (Raised ~1 pt of growth) |
| Full-year 2026 adjusted operating income | FY2026 | $3.34B (27% margin) (Margin raised ~1 pt) |
| Q2 gross profit | Q2 2026 | $3.04B (20% YoY growth) (New) |
| Q2 adjusted operating income | Q2 2026 | $740M (35% growth, 2 pts margin expansion) (New) |
| Q2 adjusted diluted EPS | Q2 2026 | $0.86 (39% YoY growth) (New) |
| Q2 interest expense | Q2 2026 | $55M-$60M (New) |
| Full-year interest expense | FY2026 | ~$200M-$210M (New) |
| Non-GAAP effective tax rate | Q2 and FY2026 | mid-20% (Reaffirmed) |
| Year-end gross profit growth exit rate | exit FY2026 | mid-teens (Reaffirmed) |
Performance Breakdown
| Metric | YoY | Note |
|---|---|---|
| Total gross profit | +26%-27% to $2.91B | Accelerating growth in both Cash App and Square |
| Cash App gross profit | +38% | Accelerating growth in commerce enablement and financial solutions |
| Adjusted operating income | +56% to $728M | Outperformance with disciplined investment; adjusted profitability grew at roughly twice the rate of gross profit |
| Adjusted diluted EPS | +52% to $0.85 | Strong execution and record adjusted profitability |
| Square GPV | +13% (11.5% constant currency) | Acceleration across U.S. and international, driven by NVA and improving net volume retention |
| Cash App monthly transacting actives | +4% | Product and go-to-market execution to strengthen network growth; fastest actives growth in about a year and a half |
| Inflows per transacting active | +10% | Deeper engagement across the actives base |
| Primary Banking Actives | +18% to 9.7M | Increased banking engagement across the platform |
| Consumer lending originations | +82% | Strength in Borrow and broader lending products |
| International GPV | +35% (26% constant currency) | Field sales investments and expansion across U.K., Australia, Canada |
| Square gross profit excluding hardware costs | +11% | Hardware costs (a customer acquisition driver) weighed on reported 9% growth |
Earnings Call Themes & Trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| AI / intelligence-driven products | Everything fundamentally changed over the past five or six months since late last year | MoneyBot generally available, ManagerBot to 1M+ sellers (all Square sellers by June), proactive action-oriented systems as core strategy | Accelerating |
| Product development velocity | Velocity meaningfully increased even from back half of last year | Production code changes per engineer up 2.5x since January; features once scoped to 5-6 engineers and 1-2 quarters now shipped by 1-2 engineers in weeks | Accelerating |
| Organizational reorg / flatter structure | Action taken was monumental and foundational | Smaller, flatter teams driving more autonomy, faster decision-making, and DRI model; further flattening expected | Progressing positively |
| Cash App Borrow / lending expansion | Exceptional growth over the past year | Shifted fully to internal bank (SFS) origination; expanding states, Cash App Green eligibility, and limits; growth normalizing but durable | Normalizing but compounding |
| Buy now, pay later across Cash App | Afterpay Post-Purchase in market over a year | Pre-purchase BNPL launched and scaling; BNPL extended to peer-to-peer and Cash App Pay; each lending product grew faster than the prior one | Expanding |
| Neighborhoods (connecting sellers and consumers) | 2025 was about establishing product-market fit | $320M annualized GPV (up 190% since December); April added more sellers than entire program history; expected to meaningfully drive Cash App actives in 2H | Inflecting |
| Square go-to-market diversification | Field sales and self-onboarded ramping | 140+ active ISO partners (200% QoQ growth in new sellers), exceeding expectations; field presence in U.S., U.K., Australia, Canada | Diversifying and scaling |
Q&A Summary
Wolfe (Darrin Peller): What areas of strength in Q1 inform the raised full-year outlook, and what's expected for the underlying segments?
Strength was broad-based across both ecosystems: Cash App grew on actives (4%), inflows per active (10%), monetization rate, lending originations (+82%), and Primary Banking Actives (+18%); Square saw 20%+ growth in food/beverage, mid-market, and international plus improving net volume retention. The outlook was raised to 19% gross profit growth and 27% margin, with expanding margins in Q3 and Q4 even as Borrow normalizes and the company invests in high-ROI go-to-market; exit-year mid-teens gross profit growth reaffirmed.
JPMorgan (Tien-Tsin Huang): A postmortem on the reorg so far, what worked, what challenges, and what proof points to watch?
Expectations were extremely high and were met across reliability, regulatory/trust commitments, and continued business growth. A key challenge was the increased burden of reviewing the larger volume of AI-generated pull requests, which has been resolved. The strongest outcome was faster decision-making; the goal is an even flatter organization with people closer to customers, with rising product velocity and 'delivered intelligence' as the differentiator.
UBS (Tim Chiodo): What are the big Cash App growth drivers into 2027-2028 beyond Borrow state expansion?
Core long-term drivers are network virality, interconnections, and engagement. Lending is being embedded into peer-to-peer, commerce enablement, Cash App Pay, and Cash App Green. Borrow can scale further via Green integration, higher limits for mature customers, and product innovation. BNPL (Afterpay post-purchase growing faster than Borrow did, driven by net-new customers; pre-purchase early) and Cash App Score are additional drivers.
Cantor Fitzgerald (Ramsey El-Assal): Overview of the overarching AI strategy; is the end state Block becoming primarily an AI company?
Block is evolving into an 'intelligence company,' moving away from traditional app navigation toward delivering customers exactly what they need at the right moment based on deep real-time understanding, tested via MoneyBot and ManagerBot. Built on Goose; internal BuilderBot lets anyone build/fix features via Slack, with a vision that sellers can build their own customizations so the roadmap is no longer the limiting factor.
Mizuho (Dan Dolev): What is driving the uptick in product velocity?
Owen Jennings cited two drivers: AI tooling and the org changes. Production code changes per engineer are up more than 2.5x since the start of the year; smaller, flatter teams create more autonomy and less red tape. Example: BNPL for Cash App Pay, originally scoped to ~3 months and 5-6 engineers, was built and shipped by two ML engineers with no prior exposure in three to four weeks including quality testing.
TD Cowen (Bryan Bergin): Early impact of the broader ManagerBot rollout on retention, cross-sell, and GPV, and what usage informs the roadmap?
ManagerBot, MoneyBot, and BuilderBot share the Goose foundation, so improvements flow across them; the focus is proactive intelligence that takes actions, not reactive chat. ManagerBot runs 100+ local agents acting as a 'COO in your pocket'; retention has surprised to the upside. On MoneyBot, more than a third of customers making a money movement attach to a new product, and over a million actives used it within about a week of GA with no marketing.
KeyBanc (Andrew Schmidt): Will the Square gross profit / GPV growth spread fully converge, and what drives it going forward?
GPV is the primary gross profit driver, with GPV growth expected to accelerate in 2026 vs 2025 and into the low-to-mid teens in 2027-2028. Q1 Square gross profit grew 9% (11% excluding hardware costs, closer to the ~13% GPV growth). Gross profit is expected to grow roughly in line with GPV in the second half, with pricing and packaging the key driver bringing the two metrics back in line.
Autonomous (Ken Suchoski): How to think about Borrow penetration/adoption and its durable normalized growth rate?
Borrow is attractive because it helps customers manage income variability; the shift to internal bank (SFS) origination improved unit economics, enabling expansion into new states and Cash App Green plus higher limits for mature cohorts. Growth will be guided by variable profit (net of risk loss and processing). Risk loss rates fall with cohort maturity: ~3.16% for newest customers, 3.01% for 7-12 month, and 2.67% for 13+ month customers.
More on Block, Inc.
Reported 2026-05-07 · figures from the Block, Inc. Q1 2026 earnings call.
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