It has been about a month since the last earnings report for Block (XYZ). Shares have added about 5.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Block due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Block's Q2 Earnings & Revenues Beat on Cash App & Square Strength
Block reported second-quarter 2026 adjusted EPS of $1.02, up 64.5% year over year and above the Zacks Consensus Estimate of 86 cents by 18.6%.
Revenues rose 9.3% to $6.62 billion, beating the consensus mark of $6.54 billion by 1.3%. Cash App lending, commerce activity and stronger Square payment volume supported the quarter's results. Total Square GPV increased 13.4% to $72.85 billion.
Revenue Mix Benefits From Commerce Enablement Growth
Commerce Enablement revenues increased 15.3% year over year to $3.34 billion. Financial Solutions revenues advanced 40.4% to $1.38 billion, reflecting continued growth across lending and other financial products.
Bitcoin Ecosystem revenues declined 12.8% to $1.89 billion. Despite that pressure, total gross profit climbed 24.8% to $3.17 billion. Commerce Enablement gross profit rose 18% to $1.81 billion, while Financial Solutions gross profit increased 42.9% to $1.29 billion.
Cash App Monetization Gains Momentum
Cash App gross profit advanced 31.5% year over year to $1.97 billion. Cash App Commerce Enablement volume rose 17% to $56.5 billion, supported by Cash App Card and BNPL products. Commerce Enablement monetization rate improved 12 basis points to 1.65%, aided by higher Afterpay Post-Purchase attach rates.
Consumer Lending origination volume increased 58.8% to $18.9 billion, driven largely by Cash App Borrow. Cash App Primary Banking Actives grew 17% to 9.4 million, while monthly transacting actives reached 59 million in June. Inflows per transacting active rose 9.2% to $1,469.
Square Trends Strengthen Across Markets
Square's gross profit increased 13% year over year to $1.16 billion. Growth was driven by Commerce Enablement, reflecting stronger payment volumes, increased software adoption and continued momentum in Financial Solutions, particularly Square Loans. A one-time tariff reimbursement contributed roughly two percentage points to Square's gross profit growth.
Square GPV reached $72.85 billion. U.S. GPV increased 9.8%, marking the strongest domestic growth rate since the second quarter of 2023. International GPV rose 28% on a reported basis and 25% at constant currency. Food and beverage GPV grew 20%, retail advanced 13% and services increased 7%.
Adjusted Profitability Reaches a Record
GAAP operating income was $447 million compared with $484 million a year earlier. General and administrative expenses increased sharply, primarily due to higher accrued legal contingencies.
Adjusted operating income rose 57.1% year over year to a record $864 million. The adjusted operating margin expanded to 27% of gross profit from 22%. Adjusted EBITDA increased 31.1% to $1.17 billion, while adjusted net income climbed to $620 million from $385 million.
Expenses Reflect Lending & Legal Costs
Operating expenses totaled $2.72 billion, up from $2.05 billion in the prior-year quarter. Contingencies, restructuring and other charges were $365 million compared with $16 million in the prior-year quarter. Non-GAAP operating expenses increased to $2.32 billion from $2.00 billion.
Transaction, loan and consumer receivable losses increased 99% year over year, primarily because of higher loan volumes. Management noted that cohort-level Borrow risk-loss rates remained healthy as origination volume shifted toward the six-week loan product.
Block Raises Its 2026 Financial Outlook
For the third quarter of fiscal 2026, Block expects gross profit of $3.13 billion, representing 18% year-over-year growth. Adjusted operating income is projected at $875 million, with a 28% margin. Adjusted EPS is forecasted at $1.02, up 89%.
Management raised its full-year outlook to gross profit of $12.51 billion, implying 21% growth. Adjusted operating income is now anticipated to be $3.47 billion, representing a 28% margin and 67% year-over-year growth. Adjusted EPS is expected to increase 70% to $4.02.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
The consensus estimate has shifted 9.37% due to these changes.
VGM Scores
At this time, Block has a great Growth Score of A, a score with the same score on the momentum front. Charting a somewhat similar path, the stock has a score of B on the value side, putting it in the top 40% for value investors.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Interestingly, Block has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Block is part of the Zacks Internet - Software industry. Over the past month, Paylocity (PCTY), a stock from the same industry, has gained 1.9%. The company reported its results for the quarter ended June 2026 more than a month ago.
Paylocity reported revenues of $444.73 million in the last reported quarter, representing a year-over-year change of +11%. EPS of $1.84 for the same period compares with $1.56 a year ago.
For the current quarter, Paylocity is expected to post earnings of $1.92 per share, indicating a change of +9.7% from the year-ago quarter. The Zacks Consensus Estimate has changed +9.6% over the last 30 days.
Paylocity has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.
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This article originally published on Zacks Investment Research (zacks.com).
