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Block, Inc. (XYZ)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 was mixed: gross profit rose 9% YoY to $2.29B, record Adjusted Operating Income of $466M, but Cash App growth under-ran management’s plan and total revenue/EPS missed Street estimates; management cut FY25 guidance and framed H2 acceleration as the key catalyst .
  • Versus S&P Global consensus, revenue $5.77B vs $6.18B and Primary EPS $0.56 vs $0.92; Adjusted Operating Income beat internal guidance ($466M vs $430M) even as growth decelerated in H1 due to softer inflows and Cash App Card spend and risk-controls frictions; management expects H2 acceleration driven by Cash App Borrow expansion, BNPL, and Square upmarket momentum .
  • FY25 guidance lowered: gross profit $9.96B (12% YoY), AOI $1.90B (19% margin), “Rule of X” 31; Q2 2025 gross profit guided to $2.45B (+9.5% YoY), AOI $450M (18% margin); management highlights FDIC approval for Borrow nationwide and larger marketing ramp as drivers .
  • Stock narrative catalyst: H2 reacceleration credibility via Borrow rollout, retroactive BNPL on Cash App Card, and Square product velocity plus field sales/partnerships; near-term caution from macro softness and revised FY guide .

What Went Well and What Went Wrong

  • What Went Well

    • Square momentum: GPV +7.2% (8.2% CC), Square gross profit +9% YoY, market-share gains across target verticals, with accelerating mid-market segment growth and strong partnership-led lead generation .
    • Profitability: Record Adjusted Operating Income of $466M (+28% YoY), Adjusted EBITDA $813M (+15% YoY) and AOI margin 20% despite heavier go-to-market investments .
    • Strategic features: Launch cadence and AI/agentic systems (“goose”/MCP) improving engineering productivity ~30%; first seasonal release event to showcase 100+ launches for sellers (Square Handheld, unified POS) .

  • What Went Wrong

    • Cash App underperformance: gross profit growth below plan due to softer inflows/Card spend and risk controls that “unintentionally disrupted good customers,” prompting refinements to controls and a marketing step-up .
    • Guide down: FY25 gross profit cut to $9.96B (from $10.22B) and AOI to $1.90B (from $2.10B), reflecting more cautious macro stance; Rule of X reduced to 31 (from 35.5) .
    • Bitcoin mark-to-market noise: Remeasurement loss on bitcoin investment ($93M) impacted GAAP EPS and net income optics in Q1 .

Financial Results

Headline P&L vs prior periods

MetricQ1 2024Q4 2024Q1 2025
Total Net Revenue ($USD Millions)$5,957.1 $6,032.6 $5,771.8
Gross Profit ($USD Millions)$2,094.5 $2,311.4 $2,289.6
Operating Income ($USD Millions)$249.7 $13.0 $329.3
Adjusted Operating Income ($USD Millions)$364.3 $401.9 $466.3
Diluted EPS ($)$0.74 $3.05 $0.30
Adjusted Diluted EPS ($)$0.47 $0.71 $0.56

Margins vs prior periods

Margin (as % of Gross Profit)Q1 2024Q4 2024Q1 2025
Operating Income Margin (%)12% 1% 14%
Adjusted Operating Income Margin (%)17% 17% 20%
Adjusted EBITDA Margin (%)34% 33% 35%

Consensus vs Actual (S&P Global)

MetricQ1 2025 ConsensusQ1 2025 ActualSurprise
Revenue ($USD)$6,181.4M*$5,771.8M*Miss*
Primary EPS ($)$0.92*$0.56*Miss*

Values retrieved from S&P Global.*

Segment Gross Profit

Segment Gross Profit ($USD Millions)Q1 2024Q1 2025
Cash App$1,258.5 $1,380.0
Square$820.3 $897.9
Corporate & Other$15.7 $11.8
Total$2,094.5 $2,289.6

KPIs and Operating Metrics

KPIQ4 2024Q1 2025
Total Square GPV ($B)$58.9 $54.1
Square GPV YoY Growth (%)10% 7.2% (8.2% CC)
Cash App Monthly Transacting Actives (M)57 57
Cash App Card Monthly Transacting Actives (M)25 25
Inflows per Transacting Active ($)$1,255 $1,355
Cash App Monetization Rate (%)1.51% 1.49%
Gross Profit per Monthly Transacting Active ($)$76 $81
BNPL GMV ($B)$10.3 $7.89
BNPL Gross Profit ($M)$298 $237

Additional cash flow and balance sheet notes: Q1 Adjusted Free Cash Flow TTM $1,526M; cash, equivalents and investments $8.5B; $445M buyback (6.8M shares) with $2.2B remaining authorization .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Gross Profit ($)FY 2025$10.22B $9.96B Lowered
Adjusted Operating Income ($)FY 2025$2.10B $1.90B Lowered
AOI Margin (%)FY 202521% 19% Lowered
Rule of X (%)FY 202535.5% 31% Lowered
Gross Profit ($)Q2 2025N/A$2.45B; +9.5% YoY New
Adjusted Operating Income ($)Q2 2025N/A$450M; 18% margin New
Gross Profit GrowthQ3/Q4 2025N/ALow double-digit (Q3) / mid-teens (Q4) New directional

Non-GAAP reconciliations for forward metrics not provided per Reg S-K Item 10(e) exception .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2, Q-1)Current Period (Q1 2025)Trend
AI/agentic systems (“goose”, MCP)Introduced and prioritized to automate engineering and across functions Expand goose as single interface for functions; weave into consumer/seller UI for “personal CFO/COO” in 2025 Expanding scope and deployment
Square product velocity & upmarketNew unified POS, onboarding improvements; field sales ramp and partnerships; marketing step-up (H2’24) 100+ launches event; Square Handheld; unified POS; share gains in core verticals Accelerating releases, share gains
Cash App Borrow & banking flywheelScaling Borrow; drive paycheck deposit actives; retro BNPL on Cash App Card launched Feb’25 FDIC approval to issue Borrow nationwide; doubling actives eligible; higher limits and engagement Scaling access, unit economics focus
Macro/consumer softnessH2’24: improving retention; cautious but strong ROI in go-to-market Softer inflows/card spend; macro incorporated into revised FY guide Near-term headwind, H2 acceleration targeted
Risk controls/customer experienceCompliance/resolutions in Q4; ongoing negotiations with NYDFS Some controls disrupted good customers; refining approach to sustain growth while policing unwanted activity Adjusting controls for balance

Management Commentary

  • “Our growth in the first half of this year does not meet our bar… we remain confident in our ability to accelerate Block’s gross profit growth in the second half of 2025 and beyond.”
  • “We gained market share in our core verticals and we exceeded volume targets across our sales and partnerships channels.”
  • “We’re now expanding the use of these agentic systems to every role in the company… we’ll achieve both of these goals by the end of this year.”
  • Prepared remarks: Square gained share; Cash App H2 growth drivers include Borrow expansion and retroactive BNPL; focus on teens/families, product controls optimization, and increased marketing .

Q&A Highlights

  • Adoption/engagement funnel: Analysts probed retroactive BNPL adoption via Cash App Card and strategies to move customers to direct deposit; management framed long-term funnel from card volumes to paycheck deposits .
  • Square acceleration drivers: Questions on product features and U.S. vs international mix; CFO highlighted encouraging share gains and continued investment across field sales/partnerships .
  • Macro and risk: Discussion of tax refund timing, consumer softness, and risk control refinement to limit disruption to “good customers” .

Estimates Context

  • Street (S&P Global) expected revenue ~$6.18B and Primary EPS ~$0.92; Block delivered $5.77B and $0.56, respectively; both misses driven by weaker Cash App inflows/card spend and risk-control frictions, partially offset by Square’s execution and AOI beat vs internal guidance ($466M vs $430M) .
  • FY25 consensus likely to move down post-guide cut; H2 reacceleration narrative (Borrow rollout, BNPL, Square releases) will anchor revisions to back-half growth assumptions .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • H1 softness acknowledged; focus is on H2 acceleration via Cash App Borrow (FDIC-approved nationwide issuance), retroactive BNPL on Cash App Card, and Square product velocity/go-to-market scale .
  • Near term, expect Street estimate cuts to FY25 gross profit/AOI and cautious Q2 prints; AOI discipline provides downside support (record Q1 AOI, AOI beat vs guide) .
  • Watch execution milestones: Borrow eligibility expansion, teen/family network initiatives, desktop signups, marketing ramp (~+50% QoQ in Q2) for actives/inflows recovery .
  • Square’s share gains, field sales, and partnerships (DoorDash/UberEats/Resy/WooCommerce) should sustain GPV/gross profit momentum; seasonal release events strengthen discovery/adoption .
  • Non-GAAP changes: Adjusted EPS now includes SBC starting FY25; bitcoin remeasurement adds GAAP volatility—anchor on gross profit and AOI progress .
  • Capital allocation: Ongoing buybacks ($445M in Q1; $2.2B authorization remaining) and $8.5B liquidity provide flexibility to invest while supporting shareholder returns .
  • Trading lens: Near-term sentiment hinges on credibility of H2 acceleration and macro stabilization; beats/misses vs S&P consensus and granular Borrow/BNPL KPIs will be key stock movers .

Additional Source Documents and Press Releases

  • 8-K Item 2.02 and Shareholder Letter (Q1 2025): full financials, guidance, KPIs .
  • Press releases: Q1 earnings announcement and Square product releases (Square Handheld, unified POS, banking feature expansions) .