Block lifts 2026 profit forecast on Cash App growth, margin gains

The results cap a strong earnings season for the U.S. payments industry and underscore resilience in the face of inflationary pressures fueled by the Middle East conflict and elevated borrowing costs.

Payments firms have continued to process healthy transaction volumes even as consumers rein in discretionary spending and prioritize everyday essentials, since both transactions flow through the same networks.

Block has also stepped up its cost-cutting efforts. Its adjusted operating margin expanded to 27% in the second quarter from 22% a year earlier.

In February, the company said it will cut over half its workforce as part of an overhaul to embed AI across its operations.

"So far, management's decision to reduce staff seems to be paying off, as the company's margins are moving up and growth appears to be unaffected," Morningstar analysts wrote in a note.

On a per-share basis, adjusted profit of $1.02 in the three months ended June 30 beat expectations of 87 cents, according to estimates compiled by LSEG.

Revenue at $6.62 billion also topped expectations of $6.49 billion.

Aug. 5 (Reuters) - Block raised its full-year gross profit forecast on Wednesday after delivering market-beating second-quarter results on the back of resilient consumer spending, strong growth at Cash App and improved margins.

Cash App has largely fended off competition by evolving beyond peer-to-peer transfers into a broader consumer financial services platform offering banking, investing and lending products.

Gross profit at Cash App surged 31% in the quarter.

Block now expects gross profit of $12.51 billion, representing a 21% growth in 2026, versus its prior forecast of $12.33 billion, or 19% growth.