Block Lifts Full-Year Profit Forecast to $12.6 Billion as Cash App Expansion Accelerates

Block has raised its full-year 2026 profit forecast to $12.63 billion, driven by a 27% surge in Cash App gross profit. The financial upgrade arrives alongside a preliminary $764 million settlement with the U.S. Department of Justice over anti-money laundering compliance.[2][7]

The financial technology firm reported third-quarter gross profit of $3.24 billion, representing a 22% increase year-over-year. The performance exceeded internal guidance and demonstrated sustained momentum across both its consumer and merchant ecosystems despite rising credit losses.[1][4]

Total revenue reached $6.72 billion for the quarter ended September 30, 2026, surpassing Wall Street estimates. Adjusted diluted earnings per share more than doubled to $1.13, up from 54 cents in the same period last year.[1][5]

"We believe we've meaningfully crossed the chasm of transforming our company from one that creates traditional financial products into one that streams intelligence as people need it," Chief Executive Officer Jack Dorsey wrote in his quarterly shareholder letter.[6][7]

Cash App and Square momentum

Cash App served as the primary growth engine, generating $2.07 billion in gross profit. The consumer payments platform reached 60 million monthly transacting active users in September, maintaining its position as a dominant force in peer-to-peer transfers.[3][7]

The segment's financial solutions division saw significant expansion, fueled by a 40% year-over-year increase in consumer lending origination volume. Total originations reached $19.0 billion, though transaction and loan losses concurrently rose 66% to $601.7 million.[4][6]

The surge in consumer lending highlights Cash App's evolution from a simple peer-to-peer transfer utility into a comprehensive digital banking alternative. The platform's integrated credit products are capturing younger demographics who traditionally rely on credit cards.[3][4]

However, the rapid expansion in credit origination requires careful risk management. The 66% jump in transaction and loan losses outpaced the 40% growth in lending volume, indicating that Block is absorbing higher default rates to secure market share.[4][6]

Square, the company's merchant-focused division, recorded a 14% increase in gross profit to $1.16 billion. This acceleration marked the strongest gross payment volume growth for the point-of-sale unit since the first quarter of 2023.[1][7]

Overall profitability metrics improved sharply during the quarter. Adjusted operating income climbed 92% to $923 million, yielding a record 29% margin that management noted places the firm well ahead of its long-term operational targets.[4][6]

Resolving federal compliance probes

Alongside the earnings beat, Block disclosed a preliminary three-year deferred prosecution agreement with federal authorities. The proposed deal aims to resolve a long-running Justice Department investigation into alleged failures within the company's anti-money laundering controls.[2]

The agreement addresses compliance requirements under the Bank Secrecy Act. Block expects to make a net payment of roughly $764 million, a figure the company has already accrued on its balance sheet as of the third quarter.[2]

The resolution carries a gross monetary penalty of approximately $964 million. This total is reduced by credits from previous regulatory settlements, allowing the firm to contain the financial impact of the multi-year federal probe.[2]

Federal scrutiny of the platform intensified in 2023 following a report by short-seller Hindenburg Research. The firm alleged that Cash App maintained weak identity verification protocols, which permitted fraudulent accounts and illicit transactions to bypass detection.[2]

Block has consistently rejected those allegations as inaccurate and misleading. However, the company previously paid a $40 million fine to the New York Department of Financial Services in April 2025 over a backlog of suspicious transaction alerts.[2]

The deferred prosecution structure allows Block to avoid a formal criminal conviction, provided the company meets strict compliance milestones over the next three years. If the firm fully adheres to the terms, prosecutors will move to dismiss the deferred charges.[2]

The resolution removes a significant legal overhang that had weighed on the stock since the federal probe became public. Investors had feared a protracted legal battle could disrupt Cash App's operations or force structural changes to its onboarding process.[2][3]

Strategic shift in Bitcoin operations

While the core payments business expanded, Block’s cryptocurrency operations contracted sharply. The firm's Bitcoin ecosystem gross profit plunged 50% year-over-year to $52 million during the third quarter, down from $104 million a year earlier.[1][7]

Total Bitcoin-related revenue declined 11% to $1.8 billion. The company attributed the profitability drop to a deliberate strategic decision to reduce fees on certain Cash App cryptocurrency transactions, prioritizing trading volume over immediate margins.[1][7]

The fee reduction aims to maintain user engagement in an increasingly competitive retail cryptocurrency market. By lowering transaction costs, Block intends to keep Cash App attractive to frequent traders who might otherwise migrate to dedicated digital asset exchanges.[3][7]

The $52 million Bitcoin profit represents a fraction of the company's overall $3.24 billion gross profit. The shift underscores Block's ongoing transition away from relying on cryptocurrency volatility to drive its quarterly earnings growth.[1][6]

The strategic pivot reflects a broader maturation of the digital payments sector. Rather than relying on speculative retail trading fees, Block is anchoring its revenue model to recurring merchant services and high-frequency consumer transactions.[3][4]

Artificial intelligence monetization

To offset the Bitcoin margin compression, Block is accelerating its commercial artificial intelligence initiatives. The company plans to detail a new developer ecosystem, dubbed Builder Lab, at an upcoming corporate event in November 2026.[6][7]

"We're also leaning into investments in AI and expect to generate our first AI revenue in the fourth quarter as we begin to externalize Block's AI capabilities," Chief Financial Officer Amrita Ahuja stated during the earnings presentation.[6][7]

The new tools, which include a collaboration environment called Buzz, represent Block's first direct monetization of its internal machine learning models. Management expects these high-margin software products to further boost the company's operating leverage.[6][7]

The pivot toward software and AI aligns with the firm's broader efficiency goals. Block is targeting what it describes as "Rule of 50" performance for 2026, combining 22% gross profit growth with a 28% adjusted operating margin.[4][6]

Upgraded multi-year forecasts

Reflecting the third-quarter outperformance, Block raised its full-year 2026 adjusted operating income guidance to $3.52 billion. The company also increased its adjusted diluted earnings per share target to $4.15, up from previous estimates.[1][3]

For the fourth quarter of 2026, the firm projects gross profit of approximately $3.32 billion. Adjusted operating income is expected to reach $1.0 billion, maintaining a 30% margin as the holiday shopping season drives payment volumes.[1][7]

Looking further ahead, management provided an initial 2027 forecast projecting at least 15% gross profit growth to $14.52 billion. The multi-year outlook signals confidence in the durability of the Cash App and Square ecosystems.[6][7]

Adjust operating income for 2027 is expected to grow 30% to approximately $4.58 billion. This implies a 32% margin, sitting comfortably above the 28% baseline Block pledged following its corporate restructuring earlier in the year.[6][7]

Navigating the competitive landscape

The robust growth metrics stand in stark contrast to legacy competitors in the digital payments space. PayPal, for instance, reported payment volume growth of just 6% in its most recent quarter, trailing Square's 14% expansion.[4][7]

Meanwhile, Square continues to fiercely contest the restaurant and retail point-of-sale market against specialized rivals. The 14% gross payment volume growth suggests Block's integrated hardware and software ecosystem remains highly competitive among small and medium-sized businesses.[4][7]

With the Justice Department legal risk largely contained and Cash App metrics accelerating, Block's next operational test will be proving that its upcoming artificial intelligence tools can deliver the projected fourth-quarter revenue.[1][2][3]