Block boosts its earnings outlook for 2025 | PaymentsSource

Block says it’s seeing an early impact from artificial intelligence in accelerating product development, which is making the company more bullish about the months ahead. 

“Nearly everyone in the company is using ‘goose,”” Jack Dorsey said Thursday during Block’s second-quarter earnings call. “It’s allowing us to experiment at nearly zero cost.”

Block in January released “codename goose,” an agentic artificial intelligence framework that enables users to use large language models for development and other tasks. This has made product work and development, data analysis, and programming happen faster.

“We can get customer feedback much quicker and can double down with what resonates with people,” Dorsey said, adding that goose enables developers to free up time for “more impactful work. … The number of products that we can launch this year is more than we have been able to do in the past.” 

Block’s earnings

For the quarter ending June 30, Block reported gross profit of $2.54 billion, up 14% from the prior year, and better than analysts’ consensus estimate of $2.45 billion, according to Zacks Investment Research. Earnings per share were 62 cents, below the analysts’ projection of 69 cents. Block doesn’t report revenue.

Block said the company outperformed its own guidance for the second quarter and raised its guidance for the second half of the year. It now expects $10.17 billion in gross profit for 2025 and expects full-year adjusted operating income of $2.03 billion, or a 20% margin. Block’s previous full-year outlook called for gross profit of $9.96 billion. Block’s stock jumped nearly 10% in after-hours trading on the outlook boost.

Read more about earnings. Corporate Earnings News | American Banker

“A solid beat driven by strong outperformance in Cash App gross profit that was ahead of heightened expectations coming into the print. Seller gross profit was a tad lighter than consensus, but importantly, seller gross payment volume beat expectations. The 2025 outlook is higher and implies a stronger second half versus consensus,” KBW said in an analyst note.

In a research note, Jefferies analysts said Block is making progress in its strategy to reach larger merchants beyond its core market of micromerchants.

“Square’s recent multilocation wins point to early returns from a concerted push up-market,” the Jefferies analysts said, pointing to Square’s wins with retailers such as Bambu Desserts, Five O Fore Entertainment and Bluestone Lane.

“This shows early success moving up-market on the back of recent distribution and product improvements, and indicates a change in perception after our January 2025 small to medium-sized business survey showed merchants were more likely to view Square as lacking scalability versus rivals Toast and Fiserv’s Clover.”

Agent AI and stablecoins

Block had what it described as a busy product development schedule in the second quarter, driven in part by its use of AI. 

“This will make everything about Cash App and Square more usable,” Dorsey said. 

Codename goose uses agentic AI, a newer form of AI that performs tasks with little or no human interaction. Other payment firms such as PayPal, Visa and Mastercard are investing in the technology to enhance product development, creating a potential arms race in payment technology.

Read more about artificial intelligence. Artificial intelligence | American Banker

Block’s recent product launches included Pools for Cash App, Block’s first new P2P release in two years. Pools, released in July, enables contributions from Cash App, Apple Pay and Google Pay to fund expenses and goals for a group of users.

Pools took about three months from “ideation” to launch, Dorsey said, crediting AI’s role in its development amid broader changes in Block’s technology project management in a timeframe that was much faster than in the past.

Pools enables groups to include users who are not Block customers, though Dorsey said he hopes the benefits of Pools will act as a customer acquisition lure.

“This feels like the early days of Cash App,” Dorsey said. “The days of not shipping products are over. We’re only a function of how quickly we can ship, and it’s never been faster.”

Block, which retains its original Square brand for its business-focused unit, also recently launched Square AI, a “conversational” interface that enables sellers to explore sales trends, and spot top-selling items by time of day, customer spending patterns and other data.

“Square AI is getting more sophisticated,” Dorsey said. “It’s starting with customized reports, but we want it to act as a virtual manager to help folks run their business.”

The recent product launches follow a restructuring in 2024 that was designed to make the company more nimble. As part of the reorganization, Block combined its Afterpay buy now/pay later unit with its Cash App payments and business-facing Square units.

Cash App is a major part of how Block competes with rivals such as PayPal and Stripe, as well as the bank-supported Zelle transfer app. Cash App is a baseline for products that the company sells to consumers and merchants. It’s also a funding rail for the company’s cryptocurrency investments, and for products that enable customers to buy, sell and hold cryptocurrency. Block also markets Cash App within Afterpay.

In an effort to speed product development and sales, Block migrated away from organizing its staff along business lines such as its Cash App, Square, and other units, instead using a structure that focuses on functions such as engineering, product development, sales and other tasks.

An employee’s expertise — such as engineering, design, product or sales — now drives who they report to and how they work.

Beyond Pools and Square AI, this reorganization has contributed to other recent initiatives, such as Square Cash Advance, a credit product for small businesses that relies on a digital application that has less paperwork than a traditional small business loan.

Like Square’s other small business loans, payment is taken from a portion of each sale that the business makes, rather than based on a monthly repayment schedule.

In their research note, the Jefferies analysts said hiring for Square sales roles increased in June and July, suggesting progress on its strategy. Jefferies counted 63 open sales roles in July, 49 in June and 25 in April, noting that the July number was Square’s highest number of open sales positions in four years. And hiring for field sales roles has increased, with territory account executive listings averaging 33 in July, 25 in June and 15 in May.

Dorsey also weighed in Thursday on stablecoins, which are getting more attention from banks and payment companies following the signing of the Genius Act.

Block plans to support stablecoins, but Dorsey said it has no current plans to issue one of its own.

“We accept every form of payment that comes across the counter,” he said, “We do have a bank and can offer our own stablecoin, but I don’t always see the market fit. Stablecoins are primarily used for remittances now. If they become more retail payments oriented, we’ll be there.”