Block's Q3 2025 Earnings Call: Contradictions Emerge on Cash App Growth, Gross Profit, and Macro Strategy

Date of Call: November 05, 2025

Financials Results

• Gross Margin: $2.66B gross profit, up 18% year over year (accelerated from 14% last quarter)
• Operating Margin: Adjusted operating income margin 18% in Q3; adjusted operating income $480M; company expects Q4 margin ~20%

Guidance:

• Q4 gross profit expected to grow >19% YoY to $2.755B and adjusted operating income of $560M (~20% margin)
• Full-year gross profit expected $10.243B (>15% YoY) and adjusted operating income $2.056B (nearly 28% YoY)
• Expect to be approaching Rule of 40 heading into 2026; long-term tax rate mid-20% and Q4 net interest expense ~$45M
• Management will provide more detailed 2026 and long-term outlook at Investor Day on Nov 19

Business Commentary:

• Revenue and Gross Profit Growth:
• Block reported a gross profit of $2.66 billion for Q3 2025, accelerating 18% year-over-year from 14% growth in Q2.

• This growth was driven by strong performance in cash-up, with a 24% year-over-year increase in gross profit, and continued expansion in primary banking actives and new products.

• Cash-up and Engagement Metrics:

• Cash-up reached 58 million monthly active users in September, with a 10% year-over-year growth in inflows per active user.

• Engagement was boosted by improvements in user experience, referrals, and core payment flows, leading to increased monthly actives and retention.

• Square and Market Expansion:

• Square's gross profit grew 9% year-over-year in Q3, with GPV increasing 12%, driven by accelerated growth in both the U.S. and international markets.

• This was attributed to effective product and go-to-market strategies, especially in the food and beverage sector, and expansion into larger sellers and international markets.

• Lending and Financial Products:

• Cash-up's lending products, such as borrow and post-purchase buy now, pay later, reached $2 billion in annualized originations in early October.
• This growth was supported by successful underwriting improvements, expanded state eligibility, and strong market acceptance for short-term liquidity solutions.

Sentiment Analysis:

Overall Tone: Positive

• Management: "We had another strong quarter... Gross profit grew 18% year over year to $2.66 billion." Guidance raised: "Q4... gross profit growing over 19% year over year to $2.755 billion" and "adjusted operating income margins... 20%"; repeated emphasis on product launches, accelerating actives, and margin expansion.

Q&A:

• Question from Tin Chin Huang (JPMorgan): Progress report on Cash App network density and when we might see an inflection in network growth given current investments?
  Response: Monthly actives accelerating (58M in Sept, continued acceleration in Oct); product fixes, social features (pools—1.5M by Oct), teen accounts (5M MAUs) and targeted marketing are driving engagement, with more work ahead.

• Question from Tim Chioda (UBS): Color on field sales productivity and the GPV/gross profit contributions those teams bring as they scale?
  Response: Field sales ramped from near zero to 100+ reps with strong marginal ROI; sales-driven NVA up 28% YTD, stable margins so far, and ample room to scale to drive GPV and gross profit growth.

• Question from Andrew Jeffrey (William Blair): Why is Borrow a superior consumer product and how does Block differentiate on underwriting/credit quality?
  Response: Borrow shows strong product-market fit: originations +134% YoY, losses below 3% target, annualized net margins ~24%, powered by a proprietary Cash App credit score and AI/ML underwriting.

• Question from Darren Peller (Wolfe Research): Aside from Cash App Borrow, what levers are driving Cash App gross profit into double digits and is that sustainable?
  Response: Growth is broad-based across network products, banking (direct deposit/primary banking), commerce and Bitcoin; borrow adds high ROIC (~30%) plus second-order engagement benefits that compound growth.

• Question from Adam Frisch (Evercore ISI): How do you view macro vs company-specific trends for the guide and what is driving strong Square go-to-market execution?
  Response: Guide is grounded in strong Q3 and October metrics; management remains data-driven and can adjust; go-to-market strength comes from flow optimization, AI-enabled self-onboard plus scaling field sales and partnerships.

• Question from Dan Dolez (Mizuho): Thoughts on Square Bitcoin full integration and early signals from testing/betas?
  Response: Bitcoin payments launch to sellers next week; beta merchants report easy integration and promotion benefits; it's fee-free for accepting sellers and adoption/education is the primary focus.

• Question from Jason Kupferberg (Wells Fargo): Is new Square volume coming from legacy non-cloud POS or from cloud competitors, and any pricing changes observed?
  Response: Wins come from both legacy POS conversions and former competitor customers; pricing environment stable and Square simplified software pricing into three tiers to lower total cost of ownership.

• Question from Brian King (Citi): Update on Afterpay/post-purchase BNPL—trajectory and opportunities ahead?
  Response: Post-purchase Afterpay scaling rapidly (>$3B annualized originations by early Oct), conversion ahead of expectations, loss rates in line, and expanding merchant partnerships globally.

• Question from Mahir Bhatia (Bank of America): How will AI impact Block in near term and longer term—cost savings or growth driver?
  Response: AI is both a growth and cost lever: deploying Square AI/Cash App AI (built from internal tools like Goose) to automate tasks, surface relevant products, and build proactive virtual COO/CFO experiences using real-time proprietary data.

• Question from Harshita Ravat (Bernstein): What is needed to attract more inflows and increase commerce spend per Cash App user?
  Response: Focus on converting users to primary banking actives (8.3M→8.7M in Oct) via product levers—limits, overdraft, rewards, borrow eligibility, BNPL—to drive significant ARPU and LTV uplift.

• Question from James Fawcett (Morgan Stanley): How does up-market expansion impact pricing and profitability and which segments are responding to new Square features?
  Response: Up-market wins leverage Block’s combined assets (58M Cash App actives plus Square sellers); product features (menu management, delivery integrations) are resonating in F&B and larger sellers, prioritizing growth and scaled sales with attractive marginal ROI over price cuts.

Contradiction Point 1

Cash App MAU Growth

It involves differing expectations for user growth on Cash App, which is a critical metric for evaluating the company's expansion and product success.

What is the progress of Cash-up's active growth and when might network growth inflect? - Tin Chin Huang(JPMorgan)

2025Q3: Cash-up reported 58 million monthly actives in September, with an acceleration in year-over-year growth. - Owen Jennings(CPO)

What will drive Cash App MAU growth: increased marketing, new products, or other factors? - Robbie Bamberger(Baird)

2024Q4: Cash App MAUs are expected to be relatively flat year-over-year in 2025. - Amrita Ahuja(CFO)

Contradiction Point 2

Gross Profit Growth

It involves discrepancies in the projected growth trajectory for gross profit, which is a key financial metric indicating the company's profitability.

What are the key drivers of Cash-up's gross profit growth excluding contributions from Cash-up's borrowing? - Darren Peller(Wolfe Research)

2025Q3: Cash-up's growth is driven by the entire ecosystem, including network products, banking, commerce, and Bitcoin. - Jack Dorsey(CEO)

What are the components driving the expected gross profit growth this year? - Darrin Peller(Wolfe Research)

2024Q4: Gross profit growth is expected to ramp throughout the year, led by Cash App. - Amrita Ahuja(CFO)

Contradiction Point 3

Macro Assumptions and Growth Expectations

It involves the company's approach to macroeconomic uncertainties and its impact on growth expectations, which are critical for investor sentiment and strategic planning.

How does Block assess the macroeconomic environment versus company-specific growth, and what go-to-market strategies are driving growth acceleration? - Adam Frisch (Evercore ISI)

2025Q3: Block is focused on its internal performance, with strong guidance based on recent results and October metrics. Go-to-market strategies include scaling field sales, leveraging proprietary data, and partnering with companies like Grubhub and Cisco. - Amrita Ahuja(CFO)

How did Block develop its view that growth will accelerate despite macroeconomic uncertainties? What factors support this view? - Tien-Tsin Huang (J.P. Morgan)

2025Q1: We're taking a more cautious approach to guidance, embedding macro softening assumptions. This is due to changes in consumer spending behavior impacting Cash App inflows. Despite this, we are investing in high ROI growth opportunities across business lines. - Amrita Ahuja(CFO)

Contradiction Point 4

Cash-up's Growth Strategy and User Base

It involves different approaches to driving growth and user engagement within the Cash-up platform, which are critical for the company's overall success.

Can you discuss field sales teams' productivity and their contributions to GPV and gross profit? - Tim Chioda (UBS)

2025Q3: We’re seeing strong returns from our expanded go-to-market playbook, especially in sales and partnerships. Our sales motion, both field and telesales, has shown LTV to CAC ratios in the 5- to 6-quarter range, giving us confidence to continue ramping these efforts. - Amrita Ahuja(CFO)

Are you more bullish in any areas compared to previous discussions, and where are you more cautious now than 90 days ago? - Tien-Tsin Huang (JPMorgan)

2025Q2: We’re more bullish on our ability to ship products faster, which directly contributes to network growth. The recent launch of Pools is an example of accelerated shipping, allowing Cash App to invite friends who are not on the platform to contribute to pools using Apple Pay or Google Pay. - Jack Dorsey(CEO)