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    XYZ
    Earnings call· Jun 2026(Q2 FY26)

    Block Q2 FY26 earnings call XYZ

    Aug 5, 2026 Source

    Executive summary

    Block Q2 FY26 — Record Profitability and Raised Full-Year Guidance

    Block delivered a strong second quarter, outperforming guidance with broad-based strength across both Square and Cash App, leading to record profitability and raised full-year outlook. The company is leveraging AI to drive product velocity and efficiency, enabling increased investment in high-ROI growth opportunities like go-to-market initiatives and the Neighborhoods program, while navigating normalizing growth in Cash App Borrow and potential hardware cost increases.

    Highlights

    6

    • Gross profit grew 25% year-over-year.

    • Achieved an all-time high 27% adjusted operating income margin.

    • Adjusted diluted EPS grew 65% year-over-year.

    • Square U.S. GPV growth accelerated to its strongest rate since Q2 2023.

    • Cash App gross profit grew 31% year-over-year.

    • Annualized seller GPV on Neighborhoods crossed $1 billion in June, up 220% year-over-year.

    Concerns

    3

    • Bitcoin pricing decisions were a headwind for Cash App this year.

    • Hardware costs are expected to go up over time, though Block feels it can manage this.

    • Cash App Borrow growth is normalizing in the second half of the year.

    Guidance & targets

    15
    CategoryTargetConfidence
    Full Year 2026 Gross Profit
    $12.51 billion, up 21% year-over-year
    high materiality
    High
    Full Year 2026 Adjusted Operating Income
    $3.47 billion or a 28% margin
    high materiality
    High
    Full Year 2026 Adjusted Diluted EPS Growth
    70% year-over-year
    high materiality
    High
    Q3 2026 Gross Profit Growth
    18% year-over-year
    medium materiality
    High
    Q3 2026 Adjusted Operating Income Margin
    28%
    medium materiality
    High
    Q3 2026 Adjusted Diluted EPS Growth
    89% year-over-year
    medium materiality
    High
    Q3 2026 Interest Expense
    $50 million to $55 million
    low materiality
    Medium
    Full Year 2026 Interest Expense
    $200 million to $210 million
    low materiality
    Medium
    Q3 2026 Non-GAAP Effective Tax Rate
    mid-20%
    low materiality
    Medium
    Full Year 2026 Non-GAAP Effective Tax Rate
    mid-20%
    low materiality
    Medium
    H2 2026 Cash App Actives Growth
    low single-digit percentage range
    medium materiality
    Medium
    H2 2026 Consumer Lending Origination Volume
    normalization
    medium materiality
    Medium
    Q4 2026 Gross Profit Growth
    mid-teens growth rate
    medium materiality
    Medium
    H2 2026 Square Gross Profit vs. GPV Growth
    grow roughly in line with each other
    medium materiality
    Medium
    Investment Magnitude
    increase the magnitude of our investment
    low materiality
    Low

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Square
    Strong growth driven by product velocity, expanding distribution channels (field sales, ISOs, partnerships), and strategic verticals. Pricing and packaging initiatives also contributed. A tariff reimbursement benefit of 2 points roughly offset a network remediation comparison from Q2 '25.
    Gross profit: grew 13% year-over-yearGPV: grew 13% year-over-yearU.S. GPV growth: strongest growth rate since the second quarter of 2023New sellers from ISO channel: over 150% quarter-over-quarter growthGlobal Food and Beverage GPV: up 20% year-over-yearU.S. F&B growth: strongest since Q1 '23Mid-markets growth: over 20%International GPV growth (constant currency): up 25%Self-onboard NVA: fastest pace of growth since Q2 2021Software adoption growth: continuedFinancial Solutions growth: momentumSquare Loans: tremendous room for continued growthSquare Card annualized spend: over $1 billion
    		————
    Cash App
    Strong gross profit growth driven by deeper engagement across commerce, banking, and lending. New products like Tags and Afterpay Pre-Purchase on Cash App Card contributed. Bitcoin pricing decisions were a headwind. Cash App Borrow loss rates continued to be healthy.
    Gross profit: grew 31% year-over-yearMonthly transacting actives (June): grew 3% year-over-yearCommerce Enablement volume: grew 17%Consumer Lending origination volume: grew 59%Inflows per active: 9% growth rate year-over-yearCash Card GPV growth: more than 20% year-over-yearCash Card rank: fourth largest debit program in the U.S.Teens with Cash App Card: 1 in 5
    		————
    Neighborhoods
    Achieved product market fit and is scaling rapidly, showing strong and consistent data on seller GPV and new seller onboarding. There is a strong correlation between the number of sellers on the platform and buyers engaging via Cash App.
    Annualized seller GPV on platform (June): crossed $1 billionAnnualized seller GPV growth: up 220% year-over-yearNew sellers onboarding (July vs. March): 8xSpend from followers: reaches about 10% of a seller's GPV in 3 quarters on average
    		————

    Operational metrics

    13
    Adjusted Operating Income Margin
    27%all-time high
    Q2 FY26

    Achieved record profitability.

    Adjusted Diluted EPS Growth
    65%year-over-year
    Q2 FY26

    Strong growth in profitability.

    Tariff Reimbursement Benefit
    2 pointsroughly offset a network remediation comparison from Q2 '25
    Q2 FY26

    One-time benefit impacting Square's gross profit.

    Square Savings APY
    3.5%8x the national average
    current

    Offered to sellers maintaining at least $10,000 in Square savings, part of SFS deposit-taking expansion.

    Code Changes per Engineer
    150%up
    since start of year

    Reflects increased efficiency and product velocity due to AI tools.

    Square Features Shipped
    130up more than 3x relative to the first half of 2025
    H1 FY26

    Demonstrates increased product velocity due to AI investments.

    Cash App Borrow Loss Rates
    healthy
    Q2 FY26

    Cohort level loss rates improve and decline as borrower cohorts season.

    Transaction Loan and Consumer Receivable Losses Growth
    moderateyear-over-year
    remainder of FY26

    Expected due to normalization of consumer lending origination growth rates and maturation of borrower cohorts.

    AI Budget
    going up
    current

    Focused on ensuring returns from increased investment in AI.

    Cash App Card Age
    10 years old
    current

    Milestone for the Cash App Card product.

    Cash App Tags Sold Out
    much quicker than we thought
    initial launch

    Initial launch of Tags exceeded expectations, second drop sold out in 30 minutes.

    Cash App Tags Notification List
    over 3 million
    current

    Number of people who asked to be notified for the next drop of Cash App Tags.

    Cash App Inflows per Active Growth
    9%year-over-year growth
    Q2 FY26

    Strong performance flowing through numerous products.

    Industry KPIs

    3
    MetricValueDetails
    Funding cost3.5%APY
    Active consumers3%%
    Payments volume gdv13%%

    Product announcements

    5
    ProductTypeDetails
    Buzzlaunch
    Cash App Tags (Wand, Mini Card, Heart)launch
    Cash App Phone Plansroadmap
    Managerbot and Moneybotlaunch
    Stablecoins on Cash Applaunch

    Deals & partnerships

    1
    AfterpayIntegration of Afterpay's pre-purchase functionality into Cash App Card.

    Allows users to utilize Afterpay's buy now, pay later service with their Cash App Card. Brought to general availability.

    Risks & headwinds

    3
    Hardware Costs Increaseover time

    expect our costs to go up over time

    Mitigation: Deep supply chain relationships, identified constraint mid-last year, engineering and operations teams working to mitigate for over a year.

    Cash App Borrow Growth NormalizationH2 FY26

    expect to see normalization in the back half

    Mitigation: Built a broader lending infrastructure platform to drive growth beyond Borrow; maturation of borrower cohorts and healthy loss rates.

    Bitcoin Pricing DecisionsFY26

    been a headwind for us this year

    Mitigation: Strategic move to be the simplest and cheapest Bitcoin exchange, resulting in relative share gains.

    What to watch in Q3 FY26

    5

    Square Gross Profit Growth

    H2 FY26
    Current13% year-over-year (Q2 FY26)
    Targetaccelerate

    Why it matters

    Indicates the effectiveness of product velocity, expanded distribution, and pricing initiatives in the Square ecosystem.

    For Square, we'd expect to accelerate gross profit growth in the back half of this year. And that's on the back of both strong GPV growth as we compound the benefits of not only stronger product velocity, but also our ramping distribution channels. And also on the back of expanding our pricing and packaging initiatives that we rolled out towards the end of last year.

    Q&A highlights

    6

    Update on the 6-month reorg, AI investment/talent needs, and progress on 'streaming intelligence' with proof points.

    Jack Dorsey stated the reorg is on track, evidenced by increased shipping velocity and internal use of tools like Buzz. He highlighted the company's long-standing discipline in intelligence and AI, which has enabled rapid development and a cohesive context across the company, aiming to extend this efficiency to Cash App customers and sellers.

    “I would say we're definitely on track. The biggest proof point is our shipping velocity. The team -- we have a very small team on a product like Buzz, which is not just something that we launch internally, but we're using internally as well.”

    asked by Tien-Tsin Huang · answered by Jack Dorsey

    2 min read6 chapters

    Detailed Narrative

    01

    AI-Driven Efficiency and Product Velocity

    Block's reorganization around intelligence and AI is yielding significant results, with internal tools like Buzz enhancing shipping velocity and code changes per engineer up 150% since the start of the year. This has enabled the company to ship 130 features in Square in H1 2026, a 3x increase from H1 2025, demonstrating improved efficiency and quality in product development. The company attributes this acceleration to its foundational investments in AI tools over the past three years, including Goose and Buzz.

    02

    Open Source Strategy and Monetization

    Block's open-source approach for AI initiatives like Buzz and Goose is seen as a way to gain more information and community contributions, rather than a limitation. The company intends to monetize Buzz through various models, including full Git hosting, code repositories, and a hosted option for teams, with a focus on aligning incentives with customers, from small businesses to large enterprises. Jack Dorsey emphasized that the primary goal is internal efficiency and serving sellers, with monetization to follow as the product matures.

    03

    Hardware Supply Chain Resilience

    Despite industry-wide challenges and rising memory costs, Block has proactively managed its hardware supply chain by building deep relationships with suppliers and their suppliers. This strategy, developed over years, allowed the company to avoid backorders during the COVID-19 pandemic and positions it to mitigate future cost increases. Thomas Templeton noted that while costs are expected to rise, Block has a good handle on trajectory and supply dynamics, differentiating its approach from competitors.

    04

    SFS Expansion Beyond Lending

    Square Financial Services (SFS) is expanding its capabilities beyond lending to include deposit-taking and acquiring transactions. SFS now offers 3.5% APY on deposits for eligible sellers, aiming to build a stable, low-cost deposit base to fund future lending products. Additionally, SFS processed its first Square acquiring transactions in June, with a multi-year plan to gradually migrate more processing infrastructure in-house for increased resilience and redundancy, enhancing its strategic value.

    05

    Neighborhoods Program Scaling

    The Neighborhoods program, connecting Block's Square and Cash App ecosystems, has achieved product-market fit and is scaling rapidly. Annualized seller GPV on the platform crossed $1 billion in June, up 220% year-over-year, with new seller onboarding increasing 8x in July compared to March. The program shows strong engagement, with spend from followers reaching 10% of a seller's GPV within three quarters on average, indicating significant potential for deeper engagement and monetization.

    06

    Cash App Ecosystem Growth Strategy

    Cash App's growth strategy focuses on its massive addressable market of modern earners and deepening engagement within its existing customer base. The ecosystem is built on four pillars: network-based products (Neighborhoods, teens/families), banking/financial services (Cash App Green, phone plans, Borrow), commerce solutions (Afterpay on Cash Card, Tags, Cash App Pay), and Bitcoin. The company aims to maintain strong durable growth rates by integrating these diverse offerings, despite the normalization of Borrow growth.

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