Block posts weak Q3 results despite raising full-year guidance

Block took a heavy hit on Thursday as its stock (XYZ) crashed by almost 12% in after-hours trading, after the FinTech company released third-quarter results that failed to meet expectations, even while it lifted full-year forecasts.

The earnings report showed a sharp miss on both earnings per share and revenue, disappointing investors who had been expecting a much stronger performance by the Jack Dorsey-led company.

Block’s adjusted EPS came in at $0.54, which far below the analyst consensus of $0.63, a 14% miss, while revenue came in at $6.11 billion, also far below the $6.33 billion predicted by LSEG analysts.

The weaker results overshadowed what was otherwise solid operational growth across Block’s key ecosystems Cash App and Square, with gross profit on both increasing 18% year over year to $2.66 billion.

Within that, Cash App produced $1.62 billion, up 24%, while Square contributed $1.02 billion, up 9%. Square’s Gross Payment Volume (GPV) also surged by 12%, and Cash App recorded 58 million monthly active users as of September.

Jack said, “We had another strong quarter delivering for our customers with high quality and high velocity. Square GPV growth accelerated to 12%, and we gained profitable market share through product innovation and expanded distribution.”

Block raises guidance after weak quarterly results

Despite missing expectations, Block raised its 2025 full-year guidance, forecasting $10.24 billion in gross profit, which is over 15% year-over-year growth, and $2.06 billion in adjusted operating income at a 20% margin.

For the Q4, Block expects gross profit of $2.76 billion, which is a 19% surge from last year. The earnings report also said that Block’s Proto ecosystem generated revenue for the first time last quarter, describing it as a potential “next major ecosystem” for Block, expanding beyond its established platforms.

Alongside that, the company continues to embed AI across both Cash App and Square, with AI voice ordering and AI-powered procurement tools designed to help sellers operate faster and more efficiently.

Jack shared Block’s long-term AI plans in a letter to shareholders, writing that:-

“Our vertically integrated platform allows us to move quickly, and it gives us unique advantages in launching AI tools for sellers. Our engineering team has been on the frontier of AI for years, building internal tools like codename goose to ship features faster, reinvent interfaces, and pioneer new underwriting methods for credit products.”

Jack also said that Square AI now helps sellers explore data and uncover insights, adding that soon it will proactively suggest actions to improve growth or efficiency, and execute them with a single tap.

Capital allocation and financial outlook heading into 2026

By the end of September, Block had repurchased about $1.5 billion worth of stock, and the company said it plans to continue returning capital as it generates cash and will discuss its capital allocation strategy at the upcoming Investor Day, according to the earnings report.

Looking ahead, Block projects fourth-quarter 2025 adjusted operating income of $560 million, an improvement on last year, alongside an expansion of operating margins to 20%. The company expects to be approaching the “rule of 40” as it heads into 2026, balancing growth and profitability.

For the full year, gross profit is expected to reach $10.243 billion, reflecting more than 15% annual growth, while adjusted operating income should climb nearly 28%, despite increased spending on marketing and its Borrow and other lending products.

Block also revealed new tax and expense guidance, projecting its 2025 and long-term tax rate to remain in the mid-20% range, consistent with earlier quarters, and net interest expense of around $45 million for Q4 due to higher benchmark rates and new debt issuance.

The company said those figures are good representations of its long-term expectations across both financial lines.

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