Key Takeaways
Block Inc.’s shares rose more than eight percent in late trading after the company reported first-quarter results that beat analyst estimates and raised its full-year outlook, offering the first quantitative proof that its pivot to an artificial intelligence-first model is paying off.
"A significantly smaller team, using the tools we are building, can do more and do it better," Chief Executive Officer Jack Dorsey said in a shareholder letter. "We were early and deliberate in this strategy."
For the quarter ended March 31, Block reported adjusted earnings of 85 cents per share on revenue of $6.06 billion, surpassing the 68 cents per share expected by analysts. Gross profit grew 27 percent year-over-year to $2.91 billion, outpacing the company’s own guidance. The performance comes just three months after Block laid off roughly 40 percent of its workforce to remake itself into a leaner, AI-driven firm.
The restructuring’s impact was most visible in its consumer-facing Cash App, where gross profit climbed 38 percent to $1.91 billion. A near-tripling in Cash App Borrow originations signals a deeper push into lending, a move that could create new revenue streams and position it against competitors like PayPal and Affirm. The Square segment, which serves merchants, saw gross profit grow a more modest nine percent to $982 million.
Block’s management detailed a company-wide AI adoption, with 100 percent of employees now using AI tools. The company said that as of mid-April, production code changes per engineer were running at more than 2.5 times the rate in January, while incident rates after a code change fell more than 70 percent year-over-year.
An internal AI agent named Builderbot has reviewed more than 90 percent of production code change requests and is making 15 percent of them nearly autonomously, according to the company. Block is also rolling out customer-facing AI “protectors,” including Moneybot for Cash App and Managerbot for its Square sellers.
Buoyed by the strong quarter, Block raised its full-year 2026 guidance. The company now expects a gross profit of $12.33 billion, up from a prior forecast of $12.2 billion, and adjusted operating income of $3.34 billion. For the second quarter, Block guided for gross profit growth of 20 percent to $3.04 billion.
The strong results and guidance suggest the company has turned a corner after a difficult 2025, with the market now watching to see if the AI-driven efficiency can produce sustained margin expansion and validate its controversial mass-layoff strategy.
This article is for informational purposes only and does not constitute investment advice.
