Block (XYZ) Shares Surge 8% Following Impressive Q1 Earnings Performance

Key Highlights

• Shares of Block climbed 7.9% to $75.70 in after-hours trading following a Q1 earnings report showing $0.85 per share versus the $0.68 consensus — a 25.68% beat
• Year-over-year gross profit surged 27% to reach $2.91 billion, powered by Cash App’s impressive 38% expansion
• The company reported a $173.8 million loss from Bitcoin remeasurement, leading to a $309 million net quarterly deficit — the first such loss in three years
• Revenue from Bitcoin operations declined 26% as a result of market dynamics and lower transaction fees on Cash App
• Management increased full-year projections, now expecting 19% gross profit expansion and 62% adjusted EPS growth for 2026

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Jack Dorsey’s Block Inc revealed first-quarter 2026 results showing adjusted earnings of $0.85 per share, comfortably surpassing the Zacks consensus forecast of $0.68 by more than 25%. The payment technology company’s shares responded with a 7.9% rally in extended trading, reaching $75.70.

Gross profit figures climbed 27% compared to the same period last year, totaling $2.91 billion. The Cash App ecosystem demonstrated particularly robust performance with 38% gross profit expansion to $1.91 billion, fueled by strength in lending services, banking products, and commerce solutions.

Adjusted operating income posted an impressive 56% increase to $728 million. This achievement pushed adjusted operating margins to an all-time high of 25% relative to gross profit.

Block, Inc., XYZ

On an adjusted EPS basis, the financial technology firm delivered 52% year-over-year growth. Company executives highlighted “strong execution” as justification for upgrading their full-year financial outlook.

Management now projects 19% gross profit growth for fiscal 2026, accompanied by 62% adjusted diluted EPS expansion. These revised targets represent a substantial improvement over previous guidance.

However, the surface-level metrics mask some underlying challenges. Block recorded a net deficit of $309 million during the three-month period — marking its first quarterly loss since 2023.

A significant $172.8 million Bitcoin remeasurement charge on the company’s corporate treasury played a major role in generating that net loss. As of March 31, Block maintained ownership of 8,883 Bitcoin, with total BTC holdings — including customer balances — reaching 28,355 BTC, representing approximately $2.2 billion in value.

Bitcoin-related revenue across Block’s product portfolio fell to $1.8 billion from $2.33 billion in the prior-year quarter, representing roughly a 26% decline. Management attributed this reduction to evolving “Bitcoin trading dynamics” and a strategic choice to reduce fees on select Cash App Bitcoin transactions.

Cash App’s Bitcoin segment specifically contracted 31% year-over-year. Square reported minimal Bitcoin activity, with cryptocurrency operations generating approximately $28 million in revenue — which was offset by matching costs.

Bitcoin Strategy Remains Unchanged Despite Revenue Headwinds

Notwithstanding the revenue softness, Jack Dorsey shows no signs of retreating from Bitcoin. During late April, Block introduced a proof-of-reserves system for both its corporate Bitcoin holdings and for Cash App and Square user accounts.

Block also introduced an updated Bitkey hardware wallet featuring touchscreen functionality, and rolled out a Cash App capability allowing eligible users to automatically convert incoming payments to Bitcoin.

Square merchants gained access to 5% Bitcoin cash back rewards. Customer withdrawal thresholds were increased fivefold to $10,000 daily and $25,000 weekly.

More than 800,000 merchants based in the United States have activated Bitcoin payment processing through Block’s infrastructure, according to a late April company announcement.

Headcount Reductions and Operational Cost Dynamics

Block’s operational expenditures increased 57.2% year-over-year to $3.08 billion during Q1. This followed a significant organizational restructuring in late February, when Dorsey revealed plans for approximately 4,000 job eliminations — representing roughly 40% of total headcount.

Since the workforce reduction announcement, Block’s stock price has appreciated by approximately 25%.

Sean Emory, founder of Avory & Co., characterized Block’s performance as a “strong quarter,” emphasizing that the company “beat and raised” guidance metrics comprehensively.

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