Block Delivers Strong Q4, Slashes Workforce 40%
Block, Inc. (NYSE: XYZ) reported fourth-quarter 2025 results after market close on 26 February that comfortably cleared Wall Street expectations on the metrics that matter most, while simultaneously unveiling a sweeping restructuring that will cut more than 40% of its…
Block, Inc. (NYSE: XYZ) reported fourth-quarter 2025 results after market close on 26 February that comfortably cleared Wall Street expectations on the metrics that matter most, while simultaneously unveiling a sweeping restructuring that will cut more than 40% of its workforce. The stock surged over 22% in after-hours trading. For the quarter, Block posted adjusted diluted earnings per share of $0.65, matching the Street consensus of $0.65 and well ahead of some lower estimates around $0.49. Revenue of $6.25 billion came in marginally below the $6.27–$6.36 billion range analysts had pencilled in, but the real story was gross profit: $2.87 billion, up 24% year-over-year, comfortably exceeding Block’s own Q4 guidance of $2.755 billion and analyst expectations for roughly 19% growth. That gross profit beat, driven overwhelmingly by Cash App, is the number the market cared about. Cash App: The Engine Room Cash App gross profit surged 33% year-over-year to $1.83 billion in Q4, propelled by explosive growth in Cash App Borrow (origination volumes up 69% to $18.5 billion), expanding BNPL adoption, and growing Cash App Card engagement. Monthly transacting actives reached 59 million, with Primary Banking Actives—customers using Cash App as a primary financial hub—rising 22% to 9.3 million. Inflows per active in Q4 averaged $1,410 per month. On a full-year basis, Cash App pulled in $316 billion of inflows and generated $6.3 billion of gross profit, up 21%. The lending expansion does carry risk. Transaction, loan, and consumer receivable losses jumped 108% year-over-year in Q4, with full-year loan losses up 154% to $821 million. Management insists loss rates remain stable even as volumes scale, but this line will remain under scrutiny as Cash App Borrow matures and the macro cycle evolves. Square: Steady, Not Spectacular The Square seller ecosystem delivered $3.9 billion of gross profit for the full year, up 9%, with GPV growing 10% to $250 billion across 4.5 million sellers and 5.9 billion transactions. Q4 saw GPV growth accelerate to 12% through late February, a positive signal. Financial solutions, particularly Square Loans, contributed meaningfully. The segment is performing well but is clearly the secondary growth driver behind Cash App. Full-Year Picture and 2026 Outlook For the full year 2025, Block generated total net revenue of $24.2 billion (essentially flat due to a $1.9 billion decline in bitcoin ecosystem revenue from lower trading volumes), gross profit of $10.4 billion (up 17%), GAAP operating income of $1.7 billion, and Adjusted EBITDA of $3.5 billion (up 14%). Adjusted diluted EPS was $2.37, up from $1.95 in 2024, and GAAP net income was $1.3 billion—down from $2.9 billion in 2024, which was inflated by a $1.9 billion deferred tax benefit. For 2026, Block now targets $12.2 billion in gross profit (up 18%), Adjusted Operating Income of $3.2 billion at a 26% margin, and Adjusted Diluted EPS of $3.66—all above prior guidance and well ahead of the $3.22 consensus. The company also surpassed the “Rule of 40” benchmark in Q4 and is targeting a Rule of X score of 44% in 2026. The 40% Cut: Dorsey’s AI Gambit The headline alongside earnings was Jack Dorsey’s announcement that Block will reduce its headcount from over 10,000 to fewer than 6,000—a reduction of more than 40%. Restructuring charges are expected at $450–$500 million, primarily in Q1 2026. In his shareholder letter, Dorsey framed this as a proactive transformation: “Intelligence tools have changed what it means to build and run a company. We believe Block will be significantly more valuable as a smaller, faster, intelligence-native company.” Affected employees will receive 20 weeks’ pay plus one additional week per year of tenure. This follows 931 layoffs in March 2025 and signals that Dorsey views AI not as an incremental efficiency tool but as a fundamental restructuring of how software companies should be organised. The market’s emphatic after-hours endorsement suggests investors agree—at least for now. Execution risk is real: cutting 4,000 people while maintaining product velocity, compliance, and risk management across two complex financial ecosystems is non-trivial. Bitcoin: A Store of Value, Not Money Block’s bitcoin ecosystem generated $8.5 billion in revenue for the full year 2025, down 18% from 2024 due to lower trading volumes, though the average price of bitcoin was higher. Critically, gross profit from bitcoin was only 4% of the total—$419 million on $8.5 billion of revenue—a razor-thin margin business that essentially passes bitcoin through to customers at a small spread. Block holds approximately 8,883 bitcoins for long-term investment purposes, valued at $778 million as at 31 December 2025. The company took a $55.9 million remeasurement loss on this holding in 2025, compared to a $420.9 million gain in 2024. This volatility directly impacts GAAP earnings: Q4 2025 diluted EPS included a negative $0.38 impact from a $234 million…
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