Block reported third-quarter gross profit of $3.2 billion, up 22% year over year and slightly ahead of Wall Street analysts’ average estimate of $3.1 billion. Management also raised full-year 2026 gross profit guidance to $12.6 billion from $12.5 billion, a sign that the operating overhaul led by Chief Executive Officer Jack Dorsey is continuing to take hold.
Gross profit beats expectations as guidance moves higher
Block said third-quarter gross profit reached $3.2 billion, marking a 22% increase from a year earlier. In his shareholder letter, Jack Dorsey said the company lifted its full-year 2026 gross profit forecast from $12.5 billion to $12.6 billion.
Executives also said that, under the Rule of 40 framework, which combines revenue growth and profit margin, the company was not only meeting the benchmark but moving toward what they described as a Rule of 50.
Deferred prosecution agreement with the U.S. Department of Justice
In a filing submitted to regulators, Block disclosed that it had reached a deferred prosecution agreement with the U.S. Department of Justice over a long-running investigation involving customer rights. The total settlement amount was $964 million, and the net cost after related items was about $764 million.
That amount was higher than the $526 million litigation reserve the company had set aside in the previous quarter. Because the case had stretched on for years, the agreement was seen as removing a legal overhang that had weighed on confidence. Block shares rose 6.2% in after-hours trading to around $80.7.
Restructuring continues across Square and Cash App
Under Dorsey, Block has kept pushing its internal restructuring plan. The company has been deepening Square’s reach in the restaurant sector while expanding Cash App’s role as an everyday financial account for individual users.
The two businesses are also being tied more closely together through a program called Neighborhoods. At the same time, Block is turning internally developed AI tools into commercial products for external sale. Even so, operating expenses rose to $2.8 billion in the third quarter because of follow-on costs tied to workforce reductions and reinvestment in the business.
Bitcoin-related losses remain a source of volatility
Beyond its core payments business, Block also operates a bitcoin trading platform and holds related investment positions. Because of swings in crypto market prices, the company recorded about $230 million in unrealized and realized losses tied to its bitcoin investments in the latest earnings report.
That business remains closely linked to digital asset price movements and continues to be a meaningful source of volatility when investors assess Block’s overall operating performance.
