Block beats Q3 estimates, lifts 2026 gross profit outlook

Block, the company behind Square and Cash App, narrowly beat Wall Street's third-quarter estimates on Tuesday, Nov. 3, and nudged its full-year forecast higher. Gross profit rose 22% to $3.2 billion, ahead of the average analyst estimate of $3.1 billion, Bloomberg reported. The company now expects 2026 gross profit of $12.63 billion, or 22% growth, up from its earlier forecast of $12.51 billion, according to Reuters.bloomberg.com+1

The results are the first quarterly check on Block's plan to keep expanding margins after the cost cuts and AI-focused overhaul it announced earlier this year. Investors are also weighing whether growth in Cash App lending is worth the rising credit losses that come with it.

Cash App drives growth

Cash App gross profit rose 27% from a year earlier, while Square's rose 14%, Reuters reported. Adjusted operating income was $923 million, or $1.13 per share, compared with $480 million, or 54 cents, a year earlier. In his shareholder letter, Jack Dorsey credited Neighborhoods, a feature that links Square sellers with Cash App customers, for helping Cash App reach 60 million monthly transacting actives in September.reuters.com

Management had guided for third-quarter gross profit of $3.13 billion, adjusted operating income of $875 million and adjusted earnings of $1.02 per share, according to a Yahoo Finance preview. Block beat all three numbers.finance.yahoo.com

Block expects fourth-quarter gross profit of $3.32 billion and gave a first 2027 forecast of $14.52 billion, which would be 15% growth. Chief Operating Officer Owen Jennings said the fourth quarter should be the first in which the company earns revenue directly from AI tools, Reuters reported.reuters.com

Credit losses climb

Loan losses were a key concern before the report. Losses on transaction, loan and consumer receivables rose 65.6% to $601.7 million in the quarter, per Reuters. That is slower than in the second quarter, when loss expense grew 99% to $585 million, or 18% of gross profit, Yahoo Finance noted.finance.yahoo.com+1

Analysts have been split on the risk. On Oct. 28, Morgan Stanley's James Faucette downgraded Block to Equal Weight and cut his price target to $80 from $90. He said Cash App Borrow originations would likely slow as Block moves to longer loans, which he warned could also raise credit losses, Yahoo Finance reported.finance.yahoo.com

Chief Financial Officer Amrita Ahuja pointed to steady consumer health. "We've seen continued strong spending on Cash App Card as well as strong repayment rates on Borrow, which for us are the signals that collectively tell us consumers are managing their finances and the strength of their pocketbook," she told Reuters.reuters.com