Block, Inc. (XYZ Quick QuoteXYZ - Free Report) outlined an accelerated growth strategy during its third-quarter 2026 earnings call, emphasizing Square's improving momentum, Cash App's expanding ecosystem and investments in artificial intelligence.

Management raised its 2026 outlook and provided preliminary 2027 targets, highlighting continued margin expansion alongside investments in customer acquisition, lending and artificial intelligence (AI)-powered products.

XYZ Beats Q3 Earnings and Revenue Estimates

Block reported adjusted earnings of $1.13 per share for the third quarter of 2026, surpassing the Zacks Consensus Estimate of $1.02. Adjusted earnings surged 109% year over year. Revenues increased approximately 9.9% year over year to $6.72 billion, exceeding the Zacks Consensus Estimate of $6.62 billion.

Block, Inc. Price, Consensus and EPS Surprise

Block, Inc. price-consensus-eps-surprise-chart | Block, Inc. Quote

Gross profit climbed 22% year over year to $3.24 billion, while adjusted operating income jumped 92% to $923 million, reflecting strong growth across Cash App and Square and improved operating efficiency.

XYZ Raises Outlook and Targets 2027 Growth

Chief financial officer Amrita Ahuja said Block expects 2026 gross profit of $12.626 billion, representing 22% year-over-year growth. Adjusted operating income is projected at $3.519 billion, with a 28% margin.

For 2027, management anticipates at least 15% gross profit growth to $14.519 billion and adjusted operating income of $4.575 billion, representing 30% annual growth and a 32% margin.

Responding to Wolfe Research, Ahuja attributed confidence in the outlook to existing business momentum and expanding distribution channels. She emphasized that preliminary growth expectations do not depend on emerging initiatives such as Builderlab or Squaremates.

Block Sees Square Distribution Investments Paying Off

Square's gross payment volume increased 14% year over year to $76.4 billion, its strongest growth rate since the first quarter of 2023. Gross profit also increased 14%.

During an exchange with Baird, Ahuja highlighted accelerating customer acquisition through self-onboarding, field sales and independent sales organizations. Square now has more than 400 ISO partners, with new sellers joining through these partnerships increasing 90% sequentially.

Management also identified software adoption as an expansion opportunity. Only 16% of U.S. Square sellers currently use monetized software, leaving room for additional product penetration and recurring revenue growth.

XYZ Expands Cash App Through Neighborhoods

Cash App reached 60 million monthly transacting actives in September, increasing 4% year over year. Cash App gross profit advanced 27%, supported by commerce and lending products.

Business lead Owen Jennings told TD Cowen that Neighborhoods generated more than 500,000 monthly actives in September, approximately half of whom were incremental to Cash App's existing transacting base.

Following the addition of roughly 30,000 seller locations, participating merchants represented approximately $5 billion in annualized GPV. Jennings expects broader merchant participation to support customer acquisition, with monetization opportunities developing through product cross-selling and deeper engagement.

Block Explains Lending Growth and Credit Economics

Cash App consumer lending originations increased 40% year over year to $19 billion. Management emphasized variable profit returns rather than credit losses in isolation when evaluating lending performance.

Responding to Goldman Sachs, head of credit and underwriting Juan Hernandez explained that Cash App Borrow transitioned from four-week loans carrying a 5% fee to six-week loans carrying a 7.5% fee.

The transition temporarily reduced originations per customer by 7% sequentially as credit limits remained unchanged. Hernandez indicated that experiments involving higher limits and expanding buy now, pay later products could support future growth while maintaining targeted lending returns.

XYZ Expands AI Ambitions and Investment Priorities

Co-founder, Block Head and Chairman Jack Dorsey emphasized Builderlab, Block's new AI ecosystem, and Buzz, its collaborative platform. Management expects initial AI-related revenue in the fourth quarter of 2026.

Responding to JPMorgan, Dorsey described plans to offer AI capabilities to businesses ranging from small merchants to large enterprises. Monetization approaches remain under evaluation.

During discussions with KeyBanc, Ahuja reiterated Block's disciplined reinvestment strategy. Management reported approximately five-quarter acquisition paybacks across Square distribution channels and less than three-quarter paybacks for Cash App marketing and referrals.

Block Balances Expansion With Operating Discipline

Management's overarching message centered on sustaining profitable growth while expanding the company's financial services and AI capabilities.

The company plans to direct incremental profitability toward established acquisition channels and emerging platforms, particularly Neighborhoods and Builderlab, while maintaining its focus on operating efficiency.

What XYZ's Zacks Rank and Style Scores Indicate

XYZ currently carries a Zacks Rank #3 (Hold), indicating a neutral near-term outlook. Its Value Score of B reflects favorable valuation characteristics, while a Growth, Momentum and VGM Score of A each indicates stronger positioning across those investment styles.

The favorable Style Scores complement the stock's Zacks Rank, although the combination does not carry the same historical performance advantages associated with Zacks Rank #1 (Strong Buy) or 2 (Buy) stocks with strong style scores. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Rank remains sensitive to changes in earnings estimates and may shift as analysts revise their projections following the third-quarter results.