Block, Inc. Q2 FY26 Results

We’ve never accepted shortcuts to building exceptional capabilities. Through multiple technology shifts, we’ve recognized early what would matter for our customers and built the infrastructure to deliver it ourselves. That work is slower at first but it compounds. And as AI collapses the cost of building software, the things that can’t be built on demand become the differentiators: judgment, trust, depth of understanding, and capability. Owning those is why we believe our growth is durable through this shift just as it was through the last ones. Our results this quarter, year over year gross profit growth of 25% and record profitability, and our raised guide for the full year, reflect years of that compounding. This letter is about the two capabilities compounding fastest right now: hardware and AI. We founded Square because many sellers didn’t have access to the tools they needed to run their business. Building a card reader that worked with early smartphones forced us to master the hard details: chip architecture, power consumption, industrial design, supply chains, manufacturing, and cryptographic security. We could have relied on third parties to build it for us, but instead we built the capability ourselves, and the reader became more than a product. It became a viral engine for customer acquisition. That is the pattern we look for: a hard capability owned end to end that converts directly into growth. That same practice keeps producing. It built Bitkey and Proto for bitcoin custody and mining. It gave tens of millions of people custom designed Cash App Cards. And this quarter it produced Cash App Tags, NFC chips that connect physical objects to a customer’s Cash App Card and turn everyday items into payment instruments, with a foundation for agentic commerce built in. Tags follow the reader’s playbook exactly: iconic hardware driving viral acquisition. A capability we built fifteen years ago is still opening new growth surfaces today. Intelligence tools are the next major technology shift, but machine learning is not new to Block. We’ve run it in production since our beginning because our business doesn’t work without it. Instant seller onboarding, rapid fraud detection, and loan underwriting are all machine learning problems, and we’ve been solving them at scale for over fifteen years. So when generative models arrived, the question was never whether we could put AI into production, but how to build on a technology improving this fast. Our answer was to stay model agnostic. We built goose in early 2024 to work with any model because betting on a single lab means inheriting its ceiling. That led to us creating Builderbot to own orchestration across Block’s entire codebase, and in June, agentic AI helped write and review nearly all of our production code changes. Moneybot is generally available with over 1 million weekly engaged accounts and Managerbot is already automating marketing, margin analysis, and operational fixes for sellers.5 In July we launched Buzz, our internally developed system for agent collaboration, communication, and code repositories, built to give teams of all sizes more time back, reduce coordination drag, and increase the speed at which we can ship and learn for customers. All of it runs on one internal platform for model access, routing, tools, and permissions, with evaluation systems that let us improve quality independently of the underlying models. When a better model ships we can switch, and everything we’ve built gets better the same day. These capabilities matter because of what they’re combined with. Block sits on both sides of commerce: millions of sellers running their businesses on Square, tens of millions of people managing and moving their money on Cash App, and Afterpay connecting both. That network generates first-party context no one else has. Transactions, inventory, staff, cash flow, and operations all on one side. Spending, saving, sending, and borrowing on the other. And we already know what happens when we combine that data with owned capability. Risk and lending were our first intelligence layer. Square Loans are underwritten on data banks can’t see and serve sellers banks won’t. Our loan cohorts have had loss rates of less than 4% through every cycle we’ve seen. Cash App Borrow does the same for consumers. We chartered our own bank rather than always relying on someone else’s banking stack. The intelligence layer we’re building runs that same play across everything our customers do: giving them time back, helping improve their decisions, and getting stronger with every interaction. The durable differentiation is the combination of a two-sided network generating proprietary data and the AI capabilities to use it well. Many companies have proprietary data but lack those capabilities. They will build on one vertically integrated lab that owns the model, the interface, and the economics. That may be the easy path. But generic AI creates generic outcomes, and no one differentiates with a model everyone else can rent. We took the opposite path. To us the models are interchangeable, and everything that matters, the harness, the data, and the distribution, is ours. AI will make software creation abundant. Judgment, trust, depth of understanding, and capability will become scarce. Our advantage is that we understand which things matter for the customers we serve, we own the hard capabilities behind them, and we’ve connected them into a network that compounds with every seller and every customer who joins. That is what has sustained our growth through every shift so far, and it is what will sustain it through this one.

We outperformed our gross profit guidance, growing 25% year over year in the second quarter, with strong gross profit growth across Cash App and Square. We reached an all time high Adjusted Operating Income margin of 27% and grew Adjusted Diluted EPS by 65% year over year to a record $1.02. We are raising our full-year guidance to reflect the momentum we are seeing across Block. For 2026, we now expect $12.51 billion in gross profit, up 21% year over year, and Adjusted Operating Income of $3.47 billion, or 28% margin, growing 67% year over year. We also expect Adjusted Diluted EPS to grow 70% to $4.02.