I have the Q1 2026 details. Let me gather recent news and stock price context to round out the preview.# Block, Inc. (NYSE: XYZ) — Q2 2026 Earnings Preview
Block heads into its Q2 print with strong momentum in both the business and the stock. Q1 2026 was a clean beat-and-raise: gross profit grew 27% YoY to $2.91B, adjusted operating income rose 56% to a record $728M (25% margin), and adjusted diluted EPS grew 52% to $0.85 — all-time highs on both a dollar and margin basis. Management raised the full-year outlook and leaned hard into an AI-driven operating transformation.
The stock has responded. XYZ has rallied from the low-$50s in mid-February to ~$85 as of August 4, roughly a 65% move off the lows and near 52-week highs. That means expectations are elevated going into this report — the bar is no longer just "beat," it's "beat and re-raise again."
For Q2 2026, Block guided to:
| Metric | Q2'26 Guide | YoY Growth |
|---|---|---|
| Gross Profit | $3.04B | +20% |
| Adjusted Operating Income | $740M | +35% |
| Adj. OI Margin | 24% | +2 pts |
| Adjusted Diluted EPS | $0.86 | +39% |
For the full year 2026 (raised at Q1): - Gross profit $12.33B (+19%) - Adjusted operating income $3.34B (27% margin, +60%) - Adjusted diluted EPS $3.85 (+62%) - "Rule of X" of 46%
Critically, management reiterated it expects to exit 2026 at a mid-teens gross profit growth rate — consistent with the long-term framework laid out at the November 2025 Investor Day. Watch whether that exit-rate commitment holds, or whether the strong start pulls the full-year guide higher again.
Borrow has been the single biggest driver of Cash App. Q1 consumer-lending origination volume grew 82% YoY to $17.6B, with Borrow originations alone up 175%. But management explicitly flagged that Borrow growth will normalize in H2 as it laps a year of exceptional expansion.
Watch for: - The deceleration slope in consumer lending origination growth — how gracefully it comes down matters for the Cash App narrative. - Loss rates by cohort. Q1 showed 3.16% / 3.01% / 2.67% for 0–6mo, 7–12mo, and 13+mo cohorts respectively. The bull case rests on mix-shift toward mature, lower-loss cohorts driving variable profit even as growth slows. Any uptick in loss rates would be a red flag. - The "next legs": Afterpay Post-Purchase (growing faster than Borrow at a comparable stage and adding net-new BNPL customers), the newly launched Afterpay Pre-Purchase, BNPL on Cash App Pay and P2P, and Cash App Score monetization.
Square gross profit grew only 9% in Q1 while GPV grew 13% (11% ex-hardware). Management guided that Square GP should grow roughly in line with GPV in H2 as it laps last year's operational processing change and the Q2'25 network remediation payment.
For Q2 specifically, note two one-timers pulling in opposite directions: a headwind from lapping the network remediation payment and a benefit from a one-time tariff refund on Square hardware. Management said the GP/GPV gap should narrow versus Q1. The health of GPV itself looked good — F&B +21%, mid-market +22%, international +35% — all the strongest since Q1 2023.
On the Q1 call, management gave April color: Square GPV +12% cc (US +9%, international +25% cc), with healthy Cash App inflows and monetization. These set a baseline — the read-through will be whether the full quarter sustained or improved on that pace.
Management said it would meaningfully increase go-to-market investment in Q2 in high-ROI channels. Expect margins to be a touch pressured in Q2 (guided to 24% AOI margin vs. 25% in Q1), with margin expansion resuming in Q3/Q4. The distribution story — field sales (now in US, UK, Australia, Canada), self-onboard, and the fast-ramping ISO channel (140+ partners) — is a key durability signal for Square.
Jack Dorsey has made AI the central theme, framing Block as evolving into an "intelligence company." Watch for updates on: - Managerbot — reached GA for all Square sellers in June (was 1M+ sellers in Q1); early retention "surprised to the upside." - Moneybot — now GA in Cash App; ~1/3 of money-movement users attached to a new product. - Builderbot / internal velocity — production code changes per engineer up 2.5x since January. This is the crux of the margin-expansion-with-reinvestment story; investors will want proof it's translating to shipped product and durable opex leverage. - Neighborhoods — the Square↔Cash App connector inflected in April ($320M annualized GPV, +190% since December). Management expects it to become a meaningful Cash App actives driver in H2 — an important user-growth catalyst to monitor.
Monthly transacting actives grew just 4% YoY (~59M) — network growth remains the softer spot versus deep engagement (inflows/active +10%, PBAs +18% to 9.7M). Management guided to low-single-digit actives growth for the rest of 2026 and warned of a slight seasonal sequential PBA decline in Q2 vs. Q1. Don't be surprised by a modest PBA step-down; the trend line matters more than the sequential.
Recent insider activity is limited to routine, pre-scheduled (10b5-1) sales — most notably director Anthony Eisen (Afterpay co-founder) trimming ~$460–495K blocks and a planned filing from Brian Grassadonia — each representing ~0% of holdings. These look programmatic rather than signal-bearing, but worth noting given the stock's run.
XYZ enters the print with the wind at its back: accelerating gross profit, record margins, a raised full-year guide, and a stock near highs. The reward-to-risk is now more balanced. The positive catalysts would be another beat-and-raise, evidence that Square GP/GPV is converging on schedule, and proof that AI-driven velocity plus new growth legs (Afterpay Pre-Purchase, Cash App Score, Neighborhoods) can offset Borrow's deceleration. The key risks are a sharper-than-expected Borrow slowdown, any deterioration in lending loss rates, soft Cash App actives, and margin optics from the Q2 go-to-market step-up. With the guide already implying +20% GP and +39% EPS growth for the quarter, the market will be laser-focused on whether management again nudges the full-year outlook higher — and whether the mid-teens exit-rate story stays intact.
Note: "XYZ" is the NYSE ticker for Block, Inc. (formerly SQ). Figures above are drawn from Block's Q1 2026 shareholder letter and earnings call; all forward figures are company guidance, not consensus.