Block, Inc. 2026 Q2 Earnings Call

Thank you all for joining us. We had a strong second quarter, and we're raising our guidance for the year based on the strength of our execution. My letter this quarter focuses on our capabilities and how we build. Intelligence tools are making it easier to build all the software we need. What's harder is knowing what to build, owning the capabilities behind it, and connecting those capabilities in ways that create value for customers. That's been our focus from the beginning, and it's why our network gets stronger with every seller and every customer who joins Cash App. There's more detail in my letter, and I hope you get a chance to read through it. With that, I'll turn it over to Amrita.

Thanks, Jack. We outperformed our guidance and achieved record profitability in the second quarter. A few of the highlights. We grew gross profit 25% year-over-year while delivering an all-time high 27% adjusted operating income margin and growing adjusted diluted EPS 65% year-over-year. Square gross profit and GPV both grew 13% year-over-year in the second quarter, with U.S. GPV growth accelerating to our strongest growth rate since the second quarter of 2023. We continue to grow our field sales motion, and we now have more than 200 active ISO partners, helping drive over 150% quarter-over-quarter growth in the number of new sellers joining Square from the ISO channel. We drove strong gross profit growth across commerce enablement and financial solutions, and we continue to expect gross profit to grow roughly in line with GPV in the second half of the year.

Cash App gross profit grew 31% year-over-year in the second quarter. Monthly transacting actives grew 3% year-over-year in June, and we continue to expect low single-digit actives growth in 2026 as we execute on our network growth strategies. Cash App commerce enablement volume grew 17%, and Cash App consumer lending origination volume grew 59%, reflecting our focus on driving deeper engagement. We continue to ship innovative new products in the second quarter, including Cash App Tags and Cash App Mobile, and we brought Afterpay pre-purchase on Cash App Card to general availability. We achieved record profitability this quarter while continuing to invest in the long-term growth of our business.

We expanded go-to-market investment in the second quarter across Square and Cash App, and we continued to drive product velocity through our investments in AI, most notably in the public launch of Buzz, our agentic collaboration platform, in July. We're raising our 2026 guidance across gross profit, adjusted operating income, and adjusted diluted EPS, flowing through the Q2 outperformance and raising our expectations for the second half of the year. For the full year, we now expect gross profit of $12.51 billion, up 21% year-over-year, adjusted operating income of $3.47 billion, or a 28% margin, and adjusted diluted EPS growth of 70% year-over-year. For the third quarter, we expect year-over-year gross profit growth of 18%, adjusted operating income margin of 28%, and year-over-year adjusted diluted EPS growth of 89%.

We expect third quarter interest expense of $50 million-$55 million, full year interest expense of $200 million-$210 million, and a mid-20% non-GAAP effective tax rate in the third quarter and for the full year. As we look to the second half of 2026, we have several initiatives that we can invest in to sustain attractive long-term growth. At Square, we've proven strong ROIs for new go-to-market motions and have further opportunities to invest across self-onboard, field sales, and ISOs. In Cash App, we have numerous products that we expect to continue to grow, including Cash App Tags and Afterpay pre-purchase. Neighborhoods, our program to connect our two ecosystems, has demonstrated strong product market fit, and we expect to lean into investments to scale this differentiated network faster in the second half of the year. AI is helping us deliver more value to more customers.

We plan to continue to invest in our AI infrastructure, including Buzz, to drive further velocity gains. The breadth of high ROI growth opportunities we have is significant, and we plan to increase the magnitude of our investment if we see the right opportunities to deploy profit upside. Our increased guidance reflects the strength of our first half execution and the momentum we're carrying into the second half of 2026. Nearly six months after we reorganized Block to make intelligence the center of the company, we're moving faster to deliver value to customers and are executing on our long-term growth initiatives, all while delivering meaningful margin expansion and profitable growth. With that, I'd like to open up the call to Q&A.

Yeah. Thanks, Tianjun. I would say we're definitely on track. The biggest proof point is our shipping velocity. We have a very small team on a product like Buzz, which is not just something that we launch internally, but we're using internally as well. We're using it internally to develop, we're using it internally to collaborate, we think there's a very long runway for a product like this. But it's really something that's foundational, the only reason we could get it out so quickly, with such richness, is because of all the work that has compounded over the past two years. We were the first to release a coding harness to the world, months before Claude Code. We've been building this discipline and intelligence within the company ever since then.

It's allowed us to do things that other companies just haven't been able to do with their organizational structure, including having a more and more cohesive context and memory for the entire company, which I think Buzz is probably the greatest manifestation of for us, but also for other companies as we look to build around this product as well. I think we're well along the path of implementing these tools to help our organization move faster. Now it's a function of making sure that same sort of magic we can deliver to all of our Cash App customers and sellers as well. I think sellers are some of the most important and probably the most relevant in this next one, because they're also looking for help with AI.

I think we're one of the few that can really make it simple enough that people can use it and not have to think about it, and it actually gives them time back instead of as a burden of learning.