Block misses on revenue, earnings in Q3 | PaymentsSource

• Key insights: Block’s stock fell 11% in afterhours trading on Thursday after the fintech missed Wall Street’s earnings estimates.   
• What’s at stake: The selloff came as the fintech posted growth across key performance indicators in Cash App and Square. 
• Forward look: Block raised its gross-profit guidance for Q4 and full year. 

Shares of Block tumbled 11% in after hours trading on Thursday following the company’s third quarter earnings report that missed analysts expectations for revenue and net income. 

The selloff came even as key performance indicators in Cash App and Square posted year-over-year increases and Block upped its outlook for gross-profits in the fourth quarter and full year. Block also boosted its earnings outlook last quarter. 

“Although it was a headline EPS miss (mostly on [seller gross profit, adjusted operating margin, and adjusted earnings per share]), Block delivered solid results on all key metrics including total gross profit, adjusted operating income, and Seller gross payment volume growth,” Keefe Bruyette and Woods analyst Vasundhara Govil said in a research note. 

“The stock is weaker in the after hours, and we think it likely reflects heightened expectations into the print,” Govil said.  

Block’s revenue for the third quarter ended September 30 came in at $6.1 billion, a 2% increase when compared to the same reporting period last year and behind Wall Street’s estimates of $6.3 billion, according to S&P Capital IQ. 

GAAP net income landed at $284 million, or 45 cents per diluted share. Analysts expected net income of $330.7 million, or 52 cents per diluted share, according to S&P. 

Still, gross profit was $2.6 billion, an 18% increase from a year ago. Analysts at Jefferies expected a 16% year-over-year increase in gross profits. Cash App helped lead the gross-profit beat, according to Jefferies analysts. 

“We see a number of positives: U.S. gross payment volume accelerated 200 basis points to +9% year over year (Food/Bev +17%), Cash App monthly active users grew Q/Q, and inflows per active accelerated by 200 basis points,” Jefferies analysts said in a research note Thursday evening. 

Cash App gross profit jumped 24% from a year ago to $1.6 billion, thanks to a 134% growth in originations in its lending product, Cash App Borrow; increased uptake in Afterpay, Block’s buy now pay later product; and higher usage of the Cash App Card.  

Buy now, pay later gross merchandise value increased 17% from a year ago to $9.7 billion, attributed to increased consumer interest in post-purchase BNPL, including on Cash App Card. Post-purchase BNPL annualized originations on Cash App Card crossed the $3 billion threshold in early October, according to Block. 

The growth in Cash App makes good on Block’s promise to return focus to Cash App’s network following a surprise slowdown in Cash App that drove an earnings miss in the second quarter of the year. 

“What we’ve seen is an acceleration in year-over-year growth for monthly active [users] since we declared this a top priority at Block and at Cash App,” Block Business Lead Owen Jennings said on the earnings call with investors Thursday. “We reported 58 million [monthly active users] for September… We actually saw that acceleration in year-over-year growth for monthly active users again in October.” 

Growth in Cash App monthly users was a first in “many quarters,” KBW’s Govil said. 

To drive that growth, Block has made network enhancements to ensure it is easy to transact on Cash App, driving uptake on its group payments option Pools, and getting more teens and families on the platform, Jennings said. 

“We have 5 million monthly active teen accounts that are using Cash App,” Jennings said. “A couple weeks ago, we launched high yield savings for our teen customers, and we’re going to continue building both for teens and for parents.” 

Square, Block’s business unit, also tallied gains across its business. Gross profits rose 9% from the prior year to just over $1 billion, and gross payment volume grew 12% to $67.2 billion. 

Block increased fourth quarter and full year guidance said it expects to be approaching its earnings goal of Rule of 40 “as we head into 2026,” Chief Operating Officer and Chief Financial Officer Amrita Ahuja said on the earnings call. Block expects $10.24 billion in gross profit for 2025, representing 15% growth on a year-over-year basis. Adjusted operating income is expected to be $2.06 billion, rising at a rate of 28% year over year. 

Block did not provide forward year guidance on the call, saying it would be provided at the company’s Investor Day on November 19.