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    XYZ
    Earnings call· Jun 2025(Q2 FY25)

    Block Q2 FY25 earnings call XYZ

    Aug 7, 2025 Source

    Executive summary

    Block Q2 FY25 — Gross Profit and Adjusted Operating Income Exceed Guidance, Driven by Cash App and Square Acceleration

    Block delivered strong Q2 FY25 results, exceeding guidance for gross profit and adjusted operating income, driven by accelerated product velocity and go-to-market investments across Cash App and Square. The company is leveraging AI tools to enhance development and customer experience, while strategically expanding its banking and lending products. Despite near-term Q3 margin dynamics, Block raised its full-year guidance, signaling confidence in continued growth and margin expansion.

    Highlights

    5

    • Gross profit was $2.5 billion, up 14% year-over-year, accelerating from 9% growth last quarter.

    • Adjusted operating income was $550 million, up 38% year-over-year, expanding margins to 22%.

    • Cash App gross profit growth reaccelerated to 16% year-over-year.

    • Square GPV growth accelerated to 10% in the second quarter, with 11% gross profit growth.

    • Full-year gross profit guidance raised to $10.17 billion, representing over 14% year-over-year growth.

    Concerns

    2

    • Q3 adjusted operating income margin is expected to be 18%, compared to 20%+ in other quarters, due to risk loss growth from Borrow expansion and timing of go-to-market initiatives.

    • Square's Q3 gross profit growth is impacted by increased processing costs and further investments in hardware.

    Guidance & targets

    9
    CategoryTargetConfidence
    Q3 Gross Profit
    $2.6 billion
    high materiality
    High
    Q3 Adjusted Operating Income
    $460 million
    high materiality
    High
    Full Year Gross Profit
    $10.17 billion
    high materiality
    High
    Full Year Adjusted Operating Income
    $2.03 billion
    high materiality
    High
    Exit Year Gross Profit Growth
    19%
    medium materiality
    High
    Exit Year Adjusted Operating Income Margin
    over 20%
    medium materiality
    High
    Square GPV Growth
    low double-digit
    medium materiality
    Medium
    Square Q3 Gross Profit Growth
    high single-digit range
    medium materiality
    Medium
    Square Q4 Gross Profit Growth
    roughly in line with GPV growth
    medium materiality
    Medium

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Cash App
    Gross profit growth reaccelerated. Strong engagement across peer-to-peer, commerce, banking, and Bitcoin services. Significant traction with sponsored teen actives and new products like post-purchase BNPL.
    Peer-to-peer volume (LTM): $218 billionCommerce capabilities volume (LTM): $183 billionCommerce capabilities volume growth YoY: 16%Commerce capabilities volume growth YoY (excl. Cash App Business): 21%Banking actives (paycheck deposit or $500+ spend in June): 8 millionBorrow annualized originations: $18 billionBitcoin buy/sell volume (LTM): $58 billionSponsored teen actives (June): 5 millionGraduated sponsored accounts: 1.7 millionCash App Card attach rate (sponsored teens): nearly 80%Cash App Pay attach rate (sponsored teens): over 25%Post-purchase BNPL monthly actives (July): 1 millionPost-purchase BNPL originations run rate (July): $2 billionCash App Pay monthly actives (June): 7 millionPaycheck deposit actives (June): 2.7 millionPaycheck deposit actives (July): 2.8 millionARPU for 8M banking actives (annualized): >$250
    		—16%——
    Square
    GPV growth accelerated, and gross profit growth included a network remediation payment. International GPV growth was particularly strong. Go-to-market efforts, including field sales, are yielding high returns and driving new volume.
    GPV growth YoY: 10%International GPV growth YoY: 25%GPV growth (Food and Beverage): 15%GPV growth (Retail): 10%New volume added: highest everNew volume added growth: strongest since Q3 2021Field sales payback: 5-6 quarters
    		—11% (gross profit)——

    Operational metrics

    10
    Adjusted Operating Income Margin
    22%
    Q2 FY25

    Highest quarterly adjusted operating income margin yet.

    Gross Profit Growth
    14%accelerating from 9% last quarter
    Q2 FY25

    Year-over-year growth.

    Adjusted Operating Income Growth
    38%
    Q2 FY25

    Year-over-year growth.

    BNPL GMV Growth
    17%up from 13% in Q1 FY25
    Q2 FY25

    Reported basis, accelerating from Q1.

    BNPL Gross Profit Growth
    22%
    Q2 FY25

    Year-over-year growth.

    Borrow Annualized Net Margin (ANM)
    24%
    Q2 FY25

    Above the 20% margin threshold.

    Borrow Loss Rates
    3% or less
    Q2 FY25

    Maintained within historical ranges despite expansion.

    Cash App Credit Model Approval Rate
    38% more customerscompared to VantageScore
    Q2 FY25

    Ability to expand access to underserved populations.

    Square Gross Profit Growth
    19%
    Q2 FY25

    Year-over-year growth for international segment.

    Square Processing Costs Impact
    approximately 2 points
    Q2 FY25

    Offset network remediation payment in Q2, expected to impact Q3.

    Industry KPIs

    3
    MetricValueDetails
    Active consumers8 millionactives
    Payments volume gdv$183 billionUSD
    Cards in force credentialsnearly 80%%

    Product announcements

    9
    ProductTypeDetails
    Square AIlaunch
    Square Handheldlaunch
    Square Onlineupdate
    Bitcoin payments on Squaremilestone
    Tap to Pay for Cash App Businesslaunch
    Cashbotlaunch
    Paying monthly for Afterpay single-use paymentslaunch
    Cash App Poolslaunch
    Protoroadmap

    Risks & headwinds

    3
    Q3 Adjusted Operating Income Margin CompressionQ3 FY25

    18% margin (compared to 20%+ in other quarters)

    Mitigation: Investing behind Borrow, which has strong unit economics on incremental growth; loss rates expected to stay within historical ranges. Timing of expanded go-to-market initiatives also contributes.

    Square Q3 Gross Profit Impact from Processing CostsQ3 FY25

    Impacted by increased processing costs

    Mitigation: Decision to increase operational flexibility at a processing partner, which modestly increases processing costs. This is a couple of quarter impact and will be lapped by 2026.

    Square Q3 Gross Profit Impact from Hardware InvestmentsQ3 FY25

    Impacted by further investments in hardware

    Mitigation: Hardware (e.g., Handheld) is a successful go-to-market driver for Square, bringing new customers onto the platform.

    What to watch in Q3 FY25

    5

    Proto Gross Profit Contribution

    H2 FY25
    TargetContributing to gross profit growth

    Why it matters

    Proto is a new initiative expected to drive growth, and its contribution will indicate the success of Block's Bitcoin mining strategy.

    You'll see a lot more at next week's launch event, but we expect Proto to begin contributing to gross profit growth in the second half of the year.

    Q&A highlights

    7

    Given the impressive growth and outlook, what drives management's conviction for H2 acceleration, especially regarding product velocity and any specific areas of bullishness or caution?

    Management is highly confident due to increased product velocity, exemplified by the rapid launch of Cash App Pools and the widespread adoption of AI coding tools like Goose. This allows for faster experimentation and customer feedback. Key drivers for H2 acceleration include Borrow's strength, newer Cash App products like post-purchase BNPL, the upcoming Proto launch, and Square's accelerating performance.

    “I've never been more confident of our ability to do that better than I am today. It's a function of our focus but also the tools we have access to today with all of our AI coding tools. Goose is being used by nearly everyone in the company. It's accelerating our developers. It's accelerating our designers.”

    asked by Tien-Tsin Huang · answered by Jack Dorsey

    2 min read6 chapters

    Detailed Narrative

    01

    Product Velocity and AI Integration

    Block is experiencing a significant increase in product velocity, driven by a focus on shipping faster and leveraging AI tools. New features like Cash App Pools were developed from ideation to pilot in just three months, demonstrating enhanced efficiency. The company is also accelerating the integration of AI functionality, such as Cashbot for customer support and Square AI for merchant operations, with internal tools like Goose boosting developer productivity.

    02

    Cash App Ecosystem Expansion and Banking Strategy

    Cash App continues to build a unique 'money app' for the next generation, expanding its ecosystem across peer-to-peer transactions ($218 billion LTM volume), broad commerce capabilities ($183 billion LTM volume), and banking solutions. The company introduced a new metric of 8 million 'banking actives' (those depositing a paycheck or spending over $500 monthly), growing 16% year-over-year and generating over $250 in gross profit per active annually, indicating deep engagement and trust in Cash App as a primary banking partner.

    03

    Square Go-to-Market and Product Traction

    Square is seeing strong returns on its expanded go-to-market strategy, including field sales and partnerships. Field sales cohorts are showing strong LTV to CAC ratios with 5-6 quarter paybacks, leading to the highest ever new volume added and strongest growth since Q3 2021. New products like Square Handheld, which is portable and affordable, and the evolving Square AI, designed to act as a 'virtual COO' for sellers, are driving customer acquisition and retention across various commerce types.

    04

    Borrow and BNPL Strategic Growth

    The Borrow product is ramping meaningfully, with Square Financial Services (SFS) now originating the majority of loans and annualized originations reaching $18 billion. Post-purchase BNPL on Cash App Card has crossed 1 million monthly actives and a $2 billion originations run rate in July, demonstrating strong early adoption and outperforming Borrow's initial trajectory. These lending products leverage Cash App's internal credit score, which can approve 38% more customers than VantageScore at the same loss threshold, while maintaining loss rates at 3% or less.

    05

    Bitcoin and Stablecoin Philosophy

    Block maintains its strong belief in Bitcoin as a net new, independent currency with properties superior to stablecoins, aiming for it to become the native currency of the internet. The company is enabling Bitcoin acceptance on Square and will support major stablecoins if they gain traction for transactions. However, Jack Dorsey expressed skepticism about offering Block's own stablecoin, citing a lack of clear product-market differentiation compared to existing options and Bitcoin's unique value proposition.

    06

    Proto and Mining Initiatives

    Block is preparing to release news about its Proto mining initiative very soon, with a launch event scheduled for next week. The company believes it has built the best miner in the market, designed to be flexible and customizable based on customer feedback, aiming to grow the market and capture significant market share in Bitcoin mining.

    AI-generated summary of the company’s earnings call. Not investment advice.