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Should You Buy, Hold or Fold Block Stock Post Q1 Earnings?
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Key Takeaways
Block posted Q1 2026 revenues of $6.06B, up 4.9%, with adjusted EPS rising 51.8% year over year.
Cash App drove growth with a 38.3% gross profit rise, fueled by lending, BNPL and new features.
XYZ returned to a net loss of $309M as expenses surged despite strong adjusted operating income growth.
Last Thursday, Block (XYZ - Free Report) , which offers financial and marketing services through its commerce ecosystem to sellers and consumers, reported impressive first-quarter 2026 results. The fintech stock reported better-than-expected adjusted earnings per share (EPS) in the quarter. Management also raised its full-year outlook following the strong start to 2026.
Given the solid results and increased outlook, we intentionally waited before publishing our review to gauge whether price movements might reveal deeper sentiment trends.
XYZ stock has outpaced its peers, such as PayPal Holdings, Inc. (PYPL - Free Report) and StoneCo Ltd. (STNE - Free Report) , while it underperformed the S&P 500 composite in the year-to-date period. PayPal and StoneCo shares have declined 22.5% and 30.7%, respectively, over the same time frame.
Image Source: Zacks Investment Research
Let’s delve deeper and find out.
Key Highlights of XYZ’s Q1 Earnings Release
On paper, Block reported strong growth in the first quarter of 2026. The company’s net revenues came in at $6.06 billion, rising 4.9% year over year. Adjusted EPS were 85 cents, reflecting a 51.8% year-over-year increase. Adjusted operating income surged 56.2% to $728 million, translating to a 25% margin.
In the quarter, gross profit increased 27.1% year over year to $2.91 billion. Cash App, the crown jewel of Block’s ecosystem, posted $1.91 billion in gross profit, up 38.3% year over year, driven by growth across Cash App Borrow and Commerce Enablement (including Cash App Card and BNPL). The company highlighted that Cash App’s growth in the first quarter is being driven by deeper engagement, new features like Afterpay pre-purchase, Cash App Score, and Moneybot, plus broader lending integration across the platform. Moreover, Square reported a 9.4% gross profit increase to $982 million, driven primarily by Financial Solutions, most notably Square Loans.
Block reported total gross payment volume (GPV) of $63.11 billion, up 11.1% year over year. Square GPV was $61.21 billion, up 13.2% year over year, while Cash App GPV was $1.90 billion, down from $2.70 billion in the year-ago quarter. The company continues to expect to accelerate GPV growth in 2026 compared to last year.
In the first quarter of 2025, Cash App monthly actives came in at 59 million, remaining unchanged from the prior quarter. The company continues to expect low single-digit actives growth for the remainder of 2026. Bitcoin remains a meaningful part of Block’s strategy; however, its first-quarter 2026 revenues were 29% down.
What’s Supporting Block’s Progress?
The biggest driver behind Block’s momentum is Cash App, which has evolved into far more than a peer-to-peer payments platform. It now functions as a multi-service financial hub, particularly for younger, digitally native consumers. With products spanning payments, banking, commerce and Bitcoin transactions, Cash App is broadening its role in users’ financial lives.
Primary Banking Actives growth remained strong, helping drive continued strong Cash App Card performance in the first quarter. Cash App Primary Banking Actives rose 18% year over year to 9.7 million in March 2026, highlighting continued engagement gains. Although the company expects a slight seasonal sequential decline in the second quarter compared to the first quarter, it expects continued year-over-year growth in primary banking actives.
Meanwhile, Square, which is Block’s merchant-facing ecosystem, remains solid. Double-digit growth in gross payment volume (GPV) alongside innovations like the next generation of Square Register, highlights the company’s efforts to keep Square competitive in the evolving point-of-sale and software landscape. In addition, the company is scaling its independent sales organization (ISO) channel, with more than 140 active ISO partners, extending its reach new sellers.
Block is advancing its AI strategy by developing assistant-like capabilities across both Cash App and Square. Management referenced AI-driven assistants, described as “Moneybot” within Cash App and “Managerbot” within Square. Moneybot acts as a personal financial assistant that analyses spending, offering insights and helps automate decisions. While Managerbot serves as a business assistant that monitors operations, surfaces insights, and automates tasks for sellers. Moneybot is now live on Cash App. Meanwhile, Managerbot is already being used by more than 1 million sellers and is gradually expanding, with plans to be available to all Square sellers by June 2026. These assistants reflect Block’s broader ambition to embed intelligence directly into its ecosystem and create more proactive, AI-native experiences.
Block has also raised its full-year 2026 outlook. The company expects gross profit of $12.33 billion, rising 19% growth year-over-year, up 1 percentage point from its prior expectations. It projects adjusted operating income of $3.34 billion with margin expectations also up 1 percentage point relative to its prior guide. It expects to deliver $3.85 adjusted EPS, up 62% year-over-year. It continues to expect to exit 2026 at a mid-teens gross profit growth rate, consistent with its long-term guidance.
What’s Hurting Block’s Progress?
Despite its strengths, Block faces material headwinds. Competition in digital payments is intensifying. PayPal continues to command stronger merchant acceptance globally, while Apple Pay and other wallet providers are expanding their reach. In consumer finance, established banks and emerging fintechs are vying for the same demographics that Block targets.
Block remains highly concentrated in the U.S. market and heavily reliant on a younger demographic base through Cash App. While this has fueled strong growth to date, geographic and demographic concentration may limit long-term resilience compared with more globally diversified peers.
Another major concern was the return to a net loss, driven largely by higher expenses. Block posted a net loss of around $309 million compared to a profit in the prior year period. This deterioration was primarily due to a sharp increase in operating expenses, which rose significantly during the quarter.
XYZ’s Earnings Estimate Revision Trends Upward
The Zacks Consensus Estimate for Block’s 2026 sales calls for a year-over-year rise of 9%, while that for EPS suggests a 57% increase year over year. EPS estimates have been trending upward by 4 cents to $3.76 per share over the past week.
Image Source: Zacks Investment Research
XYZ Shares Trade at a Premium
In terms of forward 12-month Price/Earnings (P/E), Block is trading at 27.53X, which is at a premium to PayPal’s 8.26X.
Image Source: Zacks Investment Research
Final Take on Block
Block continues strengthening its position as a leading fintech innovator through its expanding Square and Cash App ecosystems. Innovations across these ecosystems highlight the company’s strong execution.
While competition, demographic concentration and premium valuation raise caution, Block’s diversified revenue base, user growth strategies and continued momentum justify holding the stock. For now, maintaining a position in XYZ seems prudent as it navigates challenges while unlocking new growth avenues.
View the Zacks #1 Rank List
Image: Bigstock
Should You Buy, Hold or Fold Block Stock Post Q1 Earnings?
Key Takeaways
Last Thursday, Block (XYZ - Free Report) , which offers financial and marketing services through its commerce ecosystem to sellers and consumers, reported impressive first-quarter 2026 results. The fintech stock reported better-than-expected adjusted earnings per share (EPS) in the quarter. Management also raised its full-year outlook following the strong start to 2026.
Given the solid results and increased outlook, we intentionally waited before publishing our review to gauge whether price movements might reveal deeper sentiment trends.
XYZ stock has outpaced its peers, such as PayPal Holdings, Inc. (PYPL - Free Report) and StoneCo Ltd. (STNE - Free Report) , while it underperformed the S&P 500 composite in the year-to-date period. PayPal and StoneCo shares have declined 22.5% and 30.7%, respectively, over the same time frame.
Image Source: Zacks Investment Research
Let’s delve deeper and find out.
Key Highlights of XYZ’s Q1 Earnings Release
On paper, Block reported strong growth in the first quarter of 2026. The company’s net revenues came in at $6.06 billion, rising 4.9% year over year. Adjusted EPS were 85 cents, reflecting a 51.8% year-over-year increase. Adjusted operating income surged 56.2% to $728 million, translating to a 25% margin.
In the quarter, gross profit increased 27.1% year over year to $2.91 billion. Cash App, the crown jewel of Block’s ecosystem, posted $1.91 billion in gross profit, up 38.3% year over year, driven by growth across Cash App Borrow and Commerce Enablement (including Cash App Card and BNPL). The company highlighted that Cash App’s growth in the first quarter is being driven by deeper engagement, new features like Afterpay pre-purchase, Cash App Score, and Moneybot, plus broader lending integration across the platform. Moreover, Square reported a 9.4% gross profit increase to $982 million, driven primarily by Financial Solutions, most notably Square Loans.
Block reported total gross payment volume (GPV) of $63.11 billion, up 11.1% year over year. Square GPV was $61.21 billion, up 13.2% year over year, while Cash App GPV was $1.90 billion, down from $2.70 billion in the year-ago quarter. The company continues to expect to accelerate GPV growth in 2026 compared to last year.
In the first quarter of 2025, Cash App monthly actives came in at 59 million, remaining unchanged from the prior quarter. The company continues to expect low single-digit actives growth for the remainder of 2026. Bitcoin remains a meaningful part of Block’s strategy; however, its first-quarter 2026 revenues were 29% down.
What’s Supporting Block’s Progress?
The biggest driver behind Block’s momentum is Cash App, which has evolved into far more than a peer-to-peer payments platform. It now functions as a multi-service financial hub, particularly for younger, digitally native consumers. With products spanning payments, banking, commerce and Bitcoin transactions, Cash App is broadening its role in users’ financial lives.
Primary Banking Actives growth remained strong, helping drive continued strong Cash App Card performance in the first quarter. Cash App Primary Banking Actives rose 18% year over year to 9.7 million in March 2026, highlighting continued engagement gains. Although the company expects a slight seasonal sequential decline in the second quarter compared to the first quarter, it expects continued year-over-year growth in primary banking actives.
Meanwhile, Square, which is Block’s merchant-facing ecosystem, remains solid. Double-digit growth in gross payment volume (GPV) alongside innovations like the next generation of Square Register, highlights the company’s efforts to keep Square competitive in the evolving point-of-sale and software landscape. In addition, the company is scaling its independent sales organization (ISO) channel, with more than 140 active ISO partners, extending its reach new sellers.
Block is advancing its AI strategy by developing assistant-like capabilities across both Cash App and Square. Management referenced AI-driven assistants, described as “Moneybot” within Cash App and “Managerbot” within Square. Moneybot acts as a personal financial assistant that analyses spending, offering insights and helps automate decisions. While Managerbot serves as a business assistant that monitors operations, surfaces insights, and automates tasks for sellers. Moneybot is now live on Cash App. Meanwhile, Managerbot is already being used by more than 1 million sellers and is gradually expanding, with plans to be available to all Square sellers by June 2026. These assistants reflect Block’s broader ambition to embed intelligence directly into its ecosystem and create more proactive, AI-native experiences.
Block has also raised its full-year 2026 outlook. The company expects gross profit of $12.33 billion, rising 19% growth year-over-year, up 1 percentage point from its prior expectations. It projects adjusted operating income of $3.34 billion with margin expectations also up 1 percentage point relative to its prior guide. It expects to deliver $3.85 adjusted EPS, up 62% year-over-year. It continues to expect to exit 2026 at a mid-teens gross profit growth rate, consistent with its long-term guidance.
What’s Hurting Block’s Progress?
Despite its strengths, Block faces material headwinds. Competition in digital payments is intensifying. PayPal continues to command stronger merchant acceptance globally, while Apple Pay and other wallet providers are expanding their reach. In consumer finance, established banks and emerging fintechs are vying for the same demographics that Block targets.
Block remains highly concentrated in the U.S. market and heavily reliant on a younger demographic base through Cash App. While this has fueled strong growth to date, geographic and demographic concentration may limit long-term resilience compared with more globally diversified peers.
Another major concern was the return to a net loss, driven largely by higher expenses. Block posted a net loss of around $309 million compared to a profit in the prior year period. This deterioration was primarily due to a sharp increase in operating expenses, which rose significantly during the quarter.
XYZ’s Earnings Estimate Revision Trends Upward
The Zacks Consensus Estimate for Block’s 2026 sales calls for a year-over-year rise of 9%, while that for EPS suggests a 57% increase year over year. EPS estimates have been trending upward by 4 cents to $3.76 per share over the past week.
Image Source: Zacks Investment Research
XYZ Shares Trade at a Premium
In terms of forward 12-month Price/Earnings (P/E), Block is trading at 27.53X, which is at a premium to PayPal’s 8.26X.
Image Source: Zacks Investment Research
Final Take on Block
Block continues strengthening its position as a leading fintech innovator through its expanding Square and Cash App ecosystems. Innovations across these ecosystems highlight the company’s strong execution.
While competition, demographic concentration and premium valuation raise caution, Block’s diversified revenue base, user growth strategies and continued momentum justify holding the stock. For now, maintaining a position in XYZ seems prudent as it navigates challenges while unlocking new growth avenues.
At present, Block carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.