Whether conservatism is factored into the raised H2 guidance, and color on Square and Cash App gross profit growth for the next two quarters, considering comps.

Amrita Ahuja highlighted broad-based Q2 strength (25% GP growth, 65% Adj. EPS growth) across Cash App (actives, inflows per active) and Square (accelerated GPV, strong strategic verticals). She noted Q3 GP growth of 18% and Q4 in the mid-teens, expecting Square GP growth to accelerate in H2 due to GPV and pricing, while Cash App Borrow growth normalizes. “First, on the numbers, obviously, a very strong quarter for us in the second quarter, 25% gross profit growth, 65% adjusted diluted EPS growth on a year-over-year basis. What was encouraging for me to see was how broad-based the strength was.”

Discussion on hardware and pricing environment, impact on business, range of outcomes for hardware costs, and how Block's strategy differs from competitors.

Thomas Templeton explained Block's deep supply chain expertise, going beyond direct suppliers to their suppliers' suppliers, which allowed them to identify and mitigate memory cost constraints since mid-last year. He acknowledged expected cost increases but expressed confidence in managing them, noting Block never went on backorder during COVID, unlike many. “Most companies have a relationship with our supplier, but we're different in that and we go deeper, and we have relationships with our supplier's suppliers. And for key and core technologies, we go down to the supplier, supplier, supplier.”

XYZ

Block (XYZ) Q2 FY26 earnings call: guidance and Q&A

Q: How Block plans to monetize open-source efforts like Buzz and Goose, and whether open-sourcing limits benefits to Block.

Jack Dorsey explained that open-sourcing increases contributions and information. He confirmed intent to monetize Buzz with a 'huge menu of options,' including Git hosting and hosted options, and exploring agents that can transact. He emphasized that the primary goal is internal efficiency and serving sellers, with monetization to follow. “It doesn't limit it. I think it gives us a lot more information. It gives us a lot more people who can actually contribute to the code. We're already seeing ideas in the ecosystem and the community that we can integrate within Buzz proper.”

Earnings call· Jun 2026 (Q2 FY26)· Information Technology· Aug 5, 2026

Source: earnings call transcript

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

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

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

Category	Target	Timeline	Confidence
Full Year 2026 Gross Profit	$12.51 billion, up 21% year-over-year high materiality	FY26	High
Full Year 2026 Adjusted Operating Income	$3.47 billion or a 28% margin high materiality	FY26	High
Full Year 2026 Adjusted Diluted EPS Growth	70% year-over-year high materiality	FY26	High
Q3 2026 Gross Profit Growth	18% year-over-year medium materiality	Q3 · FY26	High
Q3 2026 Adjusted Operating Income Margin	28% medium materiality	Q3 · FY26	High
Q3 2026 Adjusted Diluted EPS Growth	89% year-over-year medium materiality	Q3 · FY26	High
Q3 2026 Interest Expense	$50 million to $55 million low materiality	Q3 · FY26	Medium
Full Year 2026 Interest Expense	$200 million to $210 million low materiality	FY26	Medium
Q3 2026 Non-GAAP Effective Tax Rate	mid-20% low materiality	Q3 · FY26	Medium
Full Year 2026 Non-GAAP Effective Tax Rate	mid-20% low materiality	FY26	Medium
H2 2026 Cash App Actives Growth	low single-digit percentage range medium materiality	H2 FY26	Medium
H2 2026 Consumer Lending Origination Volume	normalization medium materiality	H2 FY26	Medium
Q4 2026 Gross Profit Growth	mid-teens growth rate medium materiality	Q4 · FY26	Medium
H2 2026 Square Gross Profit vs. GPV Growth	grow roughly in line with each other medium materiality	H2 FY26	Medium
Investment Magnitude	increase the magnitude of our investment low materiality	H2 FY26 and next year	Low

Segment performance

Segment	Revenue	YoY	QoQ	Margin
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	—	—	—	—

XYZ operating KPIs by quarter

XYZ operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Dec 2024 Q4 FY24	Mar 2025 Q1 FY25	Jun 2025 Q2 FY25	Sep 2025 Q3 FY25	Dec 2025 Q4 FY25	Mar 2026 Q1 FY26	Change vs prior quarter
Active accounts Cash App Borrow	5M We ended 2024 with 5 million Cash App Borrow monthly actives. Source: earnings call transcript	—	6M First, on the strength of Borrow, we now have 6 million monthly actives on Borrow. Source: earnings call transcript	—	—	—	—
Active accounts Cash App Card	25M Cash App Card at 25 million monthly actives in December is an amazing distribution surface for us to launch these sorts of product features into. Source: earnings call transcript	—	—	26M And so -- and we have 26 million Cash App card active on a monthly basis right now. Source: earnings call transcript	—	—	—
Active accounts Cash App	57M But there's some deliberate decisions that we've made as part of our banker-based strategy in the near term that have resulted in a consistent sort of 57 million monthly actives, which grew 2% year-over-year in December. Source: earnings call transcript	57M It's a pretty meaningful unlock for us that deepens the connection between the ecosystems and exposes our Buy Now, Pay Later products to the 57 million monthly actives over time. Source: earnings call transcript	—	58M Cash App's 24% year-over-year gross profit growth in the third quarter accelerated from 16% in the second quarter, our focus on reaccelerating active growth and increasing network density is working as we reached 58 million monthly actives in September. Source: earnings call transcript	59M Cash App monthly actives returned to growth in the second half of 2025, ending the year at $59 million, and we executed on our engagement strategies with primary banking actives growing 22% year-over-year to 9.3 million monthly actives in December. Source: earnings call transcript	59M And while this looks like 59 million for 2 quarters in a row, that's just an artifact of rounding and how we report. Source: earnings call transcript	0%
Active accounts Cash App Banking	—	—	—	—	9.3M Cash App monthly actives returned to growth in the second half of 2025, ending the year at $59 million, and we executed on our engagement strategies with primary banking actives growing 22% year-over-year to 9.3 million monthly actives in December. Source: earnings call transcript	9.7M We continue to deepen engagement across our actives base with inflows per transacting active up 10% year-over-year and primary banking actives growth of 18% year-over-year to $9.7 million. Source: earnings call transcript	+4.3%
Active accounts Cash App Sponsored Teen	—	—	5M In June, we had 5 million sponsored teen actives and 1.7 million actives that had graduated from a sponsored account to an individual Cash App account. Source: earnings call transcript	5M We've achieved massive scale on the Teams and Family side, we have 5 million monthly active teen accounts that are using Cash App, and we continue to invest to serve them. Source: earnings call transcript	—	—	0%
Active accounts Cash App Pay	—	—	7M If you compare post-purchase BNPL to Borrow at similar points in time, the newer product, which gets to learn from Borrow, is outpacing in terms of attach rates and in terms of loss rates and Cash App Pay now at 7 million monthly actives as of June. Source: earnings call transcript	—	8M+ It's continued to scale at a very meaningful pace, up 55% year-on-year and active surpassing 8 million in the fourth quarter. Source: earnings call transcript	—	—

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Product announcements

Product	Type	Timeline
Buzz	launch	July
Cash App Tags (Wand, Mini Card, Heart)	launch	Earlier in the summer
Cash App Phone Plans	roadmap	—
Managerbot and Moneybot	launch	current (GA)
Stablecoins on Cash App	launch	current (GA)

Deals & partnerships

Afterpay Integration 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

Hardware Costs Increase over 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 Normalization H2 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 Decisions FY26

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

Square Gross Profit Growth

H2 FY26

Current 13% year-over-year (Q2 FY26)

Target accelerate

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.

Find out whether XYZ delivers this. Inve re-checks your case every morning.

Q&A highlights

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 read 6 chapters

Detailed narrative

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.

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.

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.

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.

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.

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.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.