Block, Inc. (XYZ), Financial Analysis

1 Revenue & Business Model

• Storyline: gross profit grows faster than revenue because bitcoin revenue falls while lending and card fees rise; Square volume growth reached 14%; Cash App adds gross profit through Borrow, Afterpay and Cash App Card faster than it adds users; and 2026 GAAP results carry $1.6bn of legal and restructuring charges after the workforce was cut by more than 40%. Chapters 2 to 4 cover the three drivers: Square, Cash App, and Afterpay and bitcoin.
• Business model: two reportable segments. Square sells payment processing, point of sale software, hardware and Square Loans to sellers (FY2025 gross profit $3.94bn); Cash App earns from Cash App Card interchange, Borrow loans, Afterpay BNPL, instant deposit fees, interest on customer funds and bitcoin sales (FY2025 gross profit $6.34bn). Corporate and Other holds TIDAL, Proto mining hardware and Bitkey (10-K FY2025).
• Bitcoin in revenue: bitcoin ecosystem revenue was $8.50bn in FY2025, 35.1% of revenue, against gross profit of $419m, 4.0% of gross profit. Block sets its outlook and margin targets on gross profit and states its margins as % of gross profit.
• Gross profit FY2021 $4.42bn to FY2025 $10.4bn, a 23.7% CAGR, while revenue rose from $17.7bn to $24.2bn; TTM Q3 2026 gross profit $12.2bn, 47.5% of revenue.
• Revenue categories from FY2025: commerce enablement $11.5bn, financial solutions $4.18bn (+28.5%), bitcoin ecosystem $8.50bn; recast for FY2023 and FY2024 only.
• Regions: United States $22.2bn of FY2025 revenue, international $2.01bn (8.3%); in Q3 2026 international revenue rose 18.2% to $627m.
• Listing: Class A shares trade on the NYSE as XYZ (SQ until 21 Jan 2025), with CDIs on the ASX; unlisted Class B shares carry ten votes each.

2 Square: GPV of $76.4bn, Up 14%, and Gross Profit Up 14%

• Square GPV $76.4bn in Q3 2026, +13.7%, after +12.2% in Q3 2025, +10.3% in Q4 2025, +13.1% in Q1 2026 and +13.4% in Q2 2026; US GPV +10.4% and international +26% (constant currency +26%), with international at 23% of GPV against 21%.
• Square gross profit $1.16bn, +13.7%; excluding hardware $1.21bn against $1.06bn (+14.0%). Square revenue $2.59bn, +15.8%: commerce enablement $2.23bn (+12.5%), financial solutions incl. Square Loans $332m (+27.0%).
• Distribution (Q3 2026 letter): more than 400 ISO partners onboarded; new sellers through ISOs +90% quarter on quarter; ISO partnerships signed in the UK, Canada, Australia, Ireland, France and Spain; 16% of US sellers use monetized software.
• Verticals and products: food and beverage GPV +20%, retail +13%, services +8%; more than 180 new Square features released in 9M 2026; Neighborhoods sellers represented nearly $5bn of annualized GPV in Sep 2026, about five times the Jun 2026 level.
• 2027 outlook: Square GPV growth to rise for a third year with gross profit roughly in line with GPV (letter, 3 Nov 2026).

How merchant payments and point of sale are changing

• Restaurant software: Toast added about 8,500 net locations in Q3 2026 to about 189,000 (+21%), grew GPV 20% to $61.8bn and reached $2.5bn of ARR (+24%) (Toast 8-K, 3 Nov 2026).
• Bank owned processors: Fiserv Merchant Solutions revenue fell 2.5% to $2.52bn in Q3 2026; segment operating margin 28.7% against 37.2%; Fiserv booked a $6.45bn goodwill impairment; Clover revenue is not split out (Fiserv 8-K, 3 Nov 2026).
• Online and wallets: Shopify GMV $119.1bn (+29.5%) with 68% on Shopify Payments; PayPal total payment volume $487.1bn (+6%), net revenues $8.58bn (+2%) (Forms 8-K).
• Legacy systems and AI agents: Block estimates more than half of Square's US addressable market still uses legacy solutions; Toast launched Toast IQ Team and Block launched Squaremates and a voice enabled Square Kiosk in Oct and Nov 2026.

3 Cash App: 60m Actives, Inflows per Active of $1,446 and Lending Originations of $19.0bn

• Cash App gross profit $2.07bn in Q3 2026, +27.5%; Cash App revenue $4.07bn, +7.2%, as bitcoin revenue fell; bitcoin was 43% of Cash App revenue and 3% of its gross profit (10-Q). The letter puts annualized Cash App gross profit above $8bn.
• Users and inflows: 60m monthly transacting actives in Sep 2026 (+4%); primary banking actives 9.4m (+13%); inflows $86bn (+10%) after +15% in Q4 2025; inflows per transacting active $1,446 (+6%), against $1,494 in Q1 2026.
• Lending: consumer lending originations $19.0bn (+40%), more than $75bn annualized; Borrow moved to a six week loan construct by the end of Sep 2026 with limits held flat, which lowered Borrow originations per customer 7% quarter on quarter; average Borrow limit $300. Loans held for investment $4.40bn against $2.20bn a year earlier; loan losses $439m, +83.2%.
• Card and categories: 28m monthly transacting actives used Cash App Card in Sep 2026; Cash App commerce enablement revenue $1.20bn (+22.8%), financial solutions $1.11bn (+32.9%), bitcoin ecosystem $1.77bn ((11.2)%). Cash App sales and marketing $414m against $361m.
• Credit data: Cash App Score is offered to lenders through Nova Credit (Q3 2026 letter).

How consumer finance apps are changing

• Neobanks: Chime active members 10.9m (+20%), revenue $718m (+32%), MyPay earned wage originations $5.3bn with loss rates around 1% (Chime 8-K, 4 Nov 2026); SoFi members 17.1m (+35%), deposits $51.3bn against $37.5bn (SoFi 8-K, 27 Oct 2026).
• Short term credit: Dave revenue $198m (+31%), 28 day past due rate 2.09%, and a pay in four credit card, Dave Flex (Dave 8-K, 4 Nov 2026); Block's Borrow moved to six week loans at Square Financial Services.
• Balances: Robinhood net deposits $15.7bn in Q3 2026, (23%), with a $22.1bn margin book (+59%); PayPal files only the change in Venmo revenue, +$100m in Q3 2026 (Forms 8-K/A and 10-Q).
• Bank funding: Square Financial Services, Block's Utah industrial bank, began issuing brokered CDs in Q3 2026, $381m at a 4.09% average rate (10-Q).

4 Afterpay and Bitcoin: Monetization Rate of 1.74% and 9,237 BTC Held

• Afterpay and commerce enablement: Cash App commerce enablement volume (Cash App Card, Cash App Pay, Afterpay BNPL and Cash App Business) $56.9bn in Q3 2026, +14%, at a 1.74% monetization rate against 1.56%; 10% of Cash App Card and Cash App Pay actives used a BNPL product in Sep 2026. Afterpay Post Purchase revenue rose $57m (10-Q).
• BNPL balance sheet: Block stopped reporting BNPL GMV after Q4 2024 ($10.3bn). Consumer receivables $2.35bn at 30 Sep 2026 against $2.08bn a year earlier; consumer receivable losses $99m in Q3 2026 against $78m.
• Partners: Fanatics chose Afterpay as its preferred BNPL partner and Afterpay Pay Monthly launched in Australia with Apple as launch partner in Q3 2026 (letter).
• Bitcoin ecosystem: revenue $1.80bn (10.7%), gross profit $52m (50.0%), mainly from a lower fee on certain Cash App bitcoin transactions; a 2.9% margin on bitcoin revenue.
• Bitcoin holding: 9,237 BTC at 30 Sep 2026 against 8,883 at Dec 2025, fair value $771.9m, about $83,564 per BTC; 354 BTC bought for $26.0m in 9M 2026; Q3 remeasurement gain $229.7m.
• Proto: Block does not disclose Proto mining hardware revenue. Bitcoin ecosystem revenue booked in Corporate and Other, where Proto sits, was $1.2m in Q3 2026 against $29.9m in Q3 2025 and $109.9m in Q4 2025; inventory rose from $158m at Dec 2025 to $263m.

How BNPL and crypto services are changing

• BNPL lenders: Affirm GMV $50.2bn in its fiscal year to Jun 2026, +37%, active consumers 27.8m against 23.0m, revenue $4.26bn (+32%) and a first full year of GAAP operating profit, $417m (Affirm 10-K). Klarna GMV $36.6bn in Q2 2026, +18%, revenue $1.04bn (+27%), Klarna Card active users 6.5m against 1.3m (Klarna 6-K).
• Rules: the EU revised Consumer Credit Directive brings BNPL under consumer credit rules from Nov 2026 (PayPal 10-K FY2025); the US GENIUS Act of Jul 2025 set federal rules for payment stablecoins, and Block added USDC to Cash App in Q2 2026 (Q2 2026 letter).
• Crypto volumes: Coinbase consumer spot volume $23.4bn in Q3 2026, (59%), consumer transaction revenue $450m, (47%); Robinhood cryptocurrencies revenue $120m, (55%), below its event contracts revenue of $173m (Forms 10-Q).
• Bitcoin price: Block's holding implies about $83,564 per BTC at 30 Sep 2026; 9M 2026 bitcoin ecosystem revenue fell 16% on lower average prices (10-Q).

5 Financial Analysis & Ratios

• GAAP operating margin 6.4% of revenue in Q3 2026 against 6.7%; on Block's gross profit basis 13.2% against 15.4%. TTM operating income $1.19bn includes $1.60bn of contingencies, restructuring and other charges; FY2025 operating income was $1.71bn.
• Net income TTM $461m, diluted EPS $0.74; quarterly net income moves with bitcoin remeasurement, from a ($234m) loss in Q4 2025 to a +$230m gain in Q3 2026. Adjusted Diluted EPS TTM $3.65. FY2024 net income of $2.90bn included about $1.9bn of tax benefits.
• Free cash flow TTM $3.45bn, 28.3% of gross profit. Operating cash flow carries Borrow loans held for sale, while Afterpay receivables and loans held for investment run through investing cash flow; the company's Non GAAP Cash Flow measure, which adds lending flows, was $1.70bn TTM.
• Balance sheet at 30 Sep 2026: cash and debt securities $8.44bn; notes principal $5.78bn ($575m convertible due Nov 2027, senior notes due 2030 to 2033); warehouse facilities $1.54bn drawn; undrawn $900m revolver; total liquidity $10.1bn. Loans held for investment $4.40bn and consumer receivables $2.35bn.
• Capital returns: buybacks of $2.33bn in FY2025 and $700.9m in 9M 2026, none in Q3 2026; $4.6bn of authorization left. No dividend. Shares outstanding rose from 602.1m at Dec 2025 to 604.5m at Oct 2026.

Cost structure and profitability

• Cost of revenue $3.48bn, +0.9%, against revenue growth of 9.9%: bitcoin ecosystem costs fell 9% to $1.75bn, while commerce enablement costs rose 13% (10-Q). Gross profit was 48.1% of revenue against 43.5%.
• Operating expenses $2.81bn, 86.8% of gross profit against 84.6%: product development 19.6% against 26.7%, sales and marketing 21.3% against 22.5%, general and administrative 26.2% against 20.4%.
• Losses $602m, 18.6% of gross profit against 13.7%; loan losses $439m against $240m and consumer receivable losses (Afterpay) $99m against $78m.
• Contingencies, restructuring and other charges $435m in Q3 2026 and $1.54bn in 9M 2026, against $115m in 9M 2025; they explain the gap between GAAP operating income ($429m) and Adjusted Operating Income ($923m).
• Stock based compensation $1.16bn TTM, 9.6% of gross profit; capex $44m in Q3 2026; free cash flow $972m.

6 MD&A & Management Commentary

Q3 2026 shareholder letter and Form 10-Q

• Against the company's own Q3 2026 outlook (letter of 5 Aug 2026): gross profit $3.24bn against $3.13bn; Adjusted Operating Income $923m against $875m; Adjusted Diluted EPS $1.13 against $1.02.
• Revenue (10-Q MD&A): total +10%, +20% without bitcoin ecosystem revenue; commerce enablement +16% (Square processing +$230m, Cash App Card +$69m, Afterpay Post Purchase +$57m); financial solutions +31% (Cash App Borrow +$194m, Square Loans +$71m); bitcoin ecosystem (11%) on lower bitcoin prices.
• Operating expenses (10-Q): product development $636m, (10.6%), with personnel costs $150m lower after the Workforce Plan and software and cloud costs $94m higher, incl. AI tools; sales and marketing $688m, +14.8%; general and administrative $848m, +55.8%, incl. $421m of litigation and regulatory accruals; losses $602m, +65.5%, of which loan losses $439m.
• DOJ matter (10-Q Note 16): an agreement in principle reached in Oct 2026 provides for a three year deferred prosecution agreement on a charge that Block failed to maintain an effective anti‑money laundering program in violation of the Bank Secrecy Act; gross monetary component about $964m, net payment about $764m after credit for prior regulatory resolutions; $764m accrued at 30 Sep 2026; the resolution still requires a final agreement and court approval. The SEC concluded its related investigation in Mar 2026.
• Workforce Plan (10-Q): announced 26 Feb 2026, cut the workforce by more than 40%; restructuring charges $495.0m in 9M 2026 (product development $345.6m, sales and marketing $47.8m, general and administrative $101.6m) plus $126.6m of restructuring stock based compensation; the plan concluded in Q2 2026 with expected annual net savings of $800m to $900m.
• Other legal items (10-Q): derivative suits resolved in principle in Oct 2026 with a $150m payment from insurers to Block, subject to court approval; a Jul 2026 settlement with several state attorneys general on Cash App complaint handling for an immaterial amount.
• Below operating income: bitcoin remeasurement gain $229.7m; tax provision $48.4m, a 7.9% effective rate, reflecting tax effects of litigation accruals and stock compensation; net income $566m, diluted EPS $0.92, Adjusted Diluted EPS $1.13.

Management and CFO commentary

• Financial discussion, Q3 2026 letter (signed by Jack Dorsey and CFO and COO Amrita Ahuja, 3 Nov 2026): gross profit +22% against $3.13bn guidance; Adjusted Operating Income $923m at a 29% margin; bitcoin gross profit (50%) after a lower Cash App fee; product development (11%) on lower personnel costs; growth in losses expected to moderate further in Q4 2026.
• Same letter, capital: free cash flow $972m in Q3 2026 and $3.45bn over 12 months; $1.4bn deployed into lending products over 12 months; total liquidity $10.1bn.
• Opening section, Q3 2026 letter: Buzz piloted with prospective customers from Oct 2026 and first machine intelligence revenue expected in Q4 2026, with a Builderlab launch event on 10 Nov 2026; Neighborhoods named as a source of growth in Cash App actives.
• Q2 2026 letter (5 Aug 2026): a one time tariff reimbursement added about 2 points to Square gross profit growth; GAAP G&A +84% on accrued legal contingencies; USDC added to Cash App.
• Q1 2026 letter (7 May 2026): operating loss ($172m) after $852m of restructuring and other charges and legal accruals; Borrow cohort loss rates of 3.16%, 3.01% and 2.67%.
• Q4 2025 letter (26 Feb 2026): headcount to fall from over 10,000 to just under 6,000; Dorsey gave as the core thesis that intelligence tools have changed what it means to build and run a company.

• Context for the second statement: the Q3 2026 letter links it to the expansion of Cash App commerce products as Borrow growth normalizes after the six week migration.

7 Sector & Competitor Analysis

• Sector: merchant payments and point of sale software, consumer finance apps, BNPL and bitcoin services. Block TTM revenue $25.65bn against PayPal $34.3bn, Shopify $14.17bn, Toast $7.15bn, Coinbase $5.63bn, Robinhood $5.08bn and Affirm $4.26bn (fiscal year to Jun 2026).
• Growth: XYZ revenue +9.9% in Q3 2026 (gross profit +21.6%) against SHOP +31.6%, TOST +21.3%, HOOD +20.9%, PYPL +2.0% and COIN (26.6%); AFRM +32.1% in its fiscal year to Jun 2026.
• Margins on revenue: XYZ TTM operating margin 4.6%, after $1.6bn of legal and restructuring charges, against HOOD 45.7%, PYPL 17.0%, SHOP 14.6%, AFRM 9.8%, TOST 7.2% and COIN 3.6%; free cash flow margin 13.5% against PYPL 18.4% and TOST 8.4%.
• Valuation: XYZ 118.9x TTM GAAP P/E and 24.1x on Adjusted Diluted EPS; PYPL 10.9x, AFRM 13.4x, TOST 37.5x, HOOD 39.4x, SHOP 87.5x; XYZ EV/Sales 2.0x against PYPL 1.3x and TOST 2.6x.
• Balance sheet: XYZ net cash $1.18bn after warehouse debt ($2.72bn before); TOST $1.89bn; PYPL $1.6bn; HOOD $2.33bn; SHOP $5.25bn.

8 Material Events & Contracts

• Twelve Forms 8-K in twelve months: five shareholder letters, the workforce reduction under Item 2.05, the buyback increase, the revolving credit agreement, the bylaws amendment, three officer changes and the annual meeting results.
• Revolving credit facility: amended and restated on 14 Jan 2026 and raised from $775m to $900m, maturing 14 Jan 2031, with an earlier maturity if liquidity falls below $250m 91 days before a note maturity; undrawn at 30 Sep 2026.
• Bylaws: on 28 Oct 2026 the board amended and restated the bylaws with clarifying changes to the exclusive forum provisions, effective immediately (8-K of 2 Nov 2026, Ex 3.1).
• Accounting officers: Chief Accounting Officer Ajmere Dale left on 26 Feb 2026; Andrea Acosta joined on 26 May 2026.

9 Ownership, Voting Power & Annual Meeting

• Jack Dorsey holds 42.2% of voting power through 47,844,566 Class B shares (79.8% of Class B) and 1,000,000 Class A shares; James McKelvey holds 10.5%; directors and executive officers as a group 53.3% (2026 proxy, 31 Mar 2026). Vanguard holds 12.8% of Class A, T. Rowe Price 8.8% and BlackRock 7.3%.
• Annual meeting of 16 Jun 2026: 92.67% of voting power present, with Class B votes about 57% of votes present. Four Class II directors elected to 2029: Roelof Botha 87.2% of votes cast, Amy Brooks 82.9%, Shawn Carter 92.4%, James McKelvey 93.8%. Say on pay 97.8%; Ernst & Young 99.9%; a stockholder proposal for a board technology committee received 4.0%.
• Insider trades, 5 Nov 2025 to 5 Nov 2026 (113 Forms 3, 4 and 5): no open market purchases; open market sales of about $90.0m, all under prearranged trading plans. Director Anthony Eisen, Afterpay cofounder, sold about $75.6m from 1 Jun to 28 Oct 2026 at $66 to $85.85 and holds 1,212,672 shares directly; Ecosystem Lead Brian Grassadonia about $8.1m; CFO and COO Amrita Ahuja about $5.6m; Business Lead Owen Jennings about $0.5m. Jack Dorsey reported no transactions.
• Other filings: remaining Forms 4 cover RSU tax withholding and director RSU grants.

2026 annual meeting and governance changes

• Meeting of 16 Jun 2026: results filed under Item 5.07 on 18 Jun 2026; Block filed no prepared remarks.
• Board and officers: Class II directors serve to 2029; engineering reports to Jack Dorsey since Jun 2026; a new Chief Accounting Officer joined in May 2026.
• Bylaws: exclusive forum provisions amended on 28 Oct 2026.

10 Risk Factors

• Scope: Item 1A of the FY2025 Form 10-K compared with the FY2024 Form 10-K, heading by heading and body by body, plus the full restatements of Item 1A in the three 2026 Forms 10-Q.

How risk factors changed

• Comparison: 10-K FY2025 filed 26 Feb 2026 acc 0001628280-26-012254 against 10-K FY2024 filed 24 Feb 2025 acc 0001628280-25-007376.
• AI appears in 9 of 50 factors in the FY2025 10-K against 5 of 48 a year earlier, and in 13 factors by the Q3 2026 10-Q; mentions rose from 17 to 47 to 59.
• The workforce reduction of more than 40% announced in Feb 2026 is named in 7 factors in the FY2025 10-K and every 2026 10-Q, against none in the FY2024 10-K.
• CFPB references fell from 5 in the FY2024 10-K to 1 in the FY2025 10-K and 0 in the Q3 2026 10-Q, while DOJ references rose from 2 to 5 as of Q3 2026, when an expected deferred prosecution agreement was first disclosed.
• Item 1A grew 2.7% from 26,126 to 26,836 words between the two Forms 10-K and to 27,393 words by the Q3 2026 10-Q; factor count moved from 48 to 50 and stayed at 50 through 2026.
• Stablecoins enter the risk factors with the Q2 2026 Form 10-Q, after USDC support launched in Cash App in Q2 2026; the Q1 2026 Form 10-Q and both Forms 10-K carry none.

11 Stock Price, Scenarios & Sensitivity

• XYZ traded at $87.98 before the open on 5 Nov 2026, after the Q3 2026 results of 3 Nov, +15.4% on the Oct 2026 close of $76.22. The 52 week range is $48.22 (Feb 2026) to $88.50.
• Price path: month end close $90.82 in Jan 2025, the month the ticker changed from SQ to XYZ (partial month), $54.33 in Mar 2025, $60.18 in Mar 2026 and $76.22 in Oct 2026. Earlier monthly history under SQ is outside this data set.
• Valuation: 118.9x TTM GAAP EPS of $0.74, 24.1x TTM Adjusted Diluted EPS of $3.65 and 21.2x the FY2026 outlook of $4.15; market value $53.2bn on 604.5m Class A and B shares; EV 4.3x TTM gross profit and 2.0x TTM revenue.
• Scenario model: revenue grows from TTM Q3 2026 $25.6bn for three years; GAAP operating margin on revenue as stated; net interest expense $211m a year as in the TTM; 23% tax rate; bitcoin remeasurement excluded; price equals TTM Q3 2029 EPS times exit P/E.

Critical factors and core assumptions

• Revenue base TTM Q3 2026 $25.6bn; gross profit $12.2bn; GAAP operating income $1.19bn (4.6% of revenue) after $1.60bn of contingencies, restructuring and other charges.
• Best case: 12% revenue CAGR, 22% operating margin on revenue, 28x P/E; gross profit grows about 18% a year as Borrow, Afterpay and Square volume grow and bitcoin revenue stabilizes.
• Base case: 9% revenue CAGR, 17% margin, 20x P/E; the company's 2027 outlook of at least 15% gross profit growth extended, with legal and restructuring charges falling away after the DOJ payment.
• Worst case: 4% revenue CAGR, 9% margin, 13x P/E; credit losses rise, Cash App actives stay near 60m, Square GPV growth slows to high single digits and bitcoin revenue keeps falling.
• Tax rate 23% (FY2025 effective 22.8%); share count 604.5m held flat, with buybacks from the $4.6bn authorization offsetting stock based compensation; no dividend.

Scenarios, three years forward

Sensitivity analysis

Disclaimer

This analysis is for information only and is not financial advice. It is derived from public SEC filings retrieved via sec-api.io and is not a publication of the U.S. Securities and Exchange Commission. Scenario values are model outputs under stated assumptions and are not forecasts. Data as of 5 November 2026.

Sources

All company figures are read from SEC filings retrieved through the sec-api.io MCP server. Management statements come from the shareholder letters (Forms 8-K, Ex 99.1) and the Forms 10-Q. Statements made only on the earnings call are left out.