Block lifts profit outlook on Cash App strength, reaches preliminary DOJ settlement

Block, under the leadership of Jack Dorsey, raised its full-year gross profit outlook on Tuesday, citing strong performance from its Cash App unit in boosting quarterly earnings. The company's shares surged 7% in extended trading. The US economy expanded at its fastest pace in a year during the third quarter, overcoming higher oil prices stemming from the Iran conflict, which led to robust consumer spending, benefiting financial institutions like Block.

Cash App, the consumer-focused financial platform, experienced a 27% increase in gross profit in the third quarter compared to the previous year. Square's merchant business also saw a 14% rise in gross profit. Block has diversified its revenue streams through Cash App's banking and lending products, which helped offset increases in credit losses.

The company anticipates a 22% growth in gross profit to $12.63 billion for 2026, with a 15% growth forecast for 2027, driven by AI investments. Adjusted operating income for the quarter ending September 30 reached $923 million, or $1.13 per share, up from $480 million, or 54 cents per share, a year ago. Block also reached a preliminary settlement with the US Department of Justice in October, deferring a charge that the company failed to maintain an effective anti-money laundering program in violation of the Bank Secrecy Act.

The agreement could result in a net payment of approximately $764 million after accounting for prior regulatory resolutions, though the final terms could lead to losses exceeding the amount already accrued.