Block’s third-quarter beat and AI pivot lift shares as guidance rises for third straight q

Block Inc. posted its best third-quarter performance to date, with adjusted earnings exceeding expectations and a third straight guidance increase—sparking a 7% after-hours stock rally. The company reported $6.72 billion in revenue, up nearly 10% year-over-year, while gross profit grew 22% to $3.24 billion, according to SiliconANGLE. Adjusted operating income nearly doubled to a record $923 million, and Cash App’s monthly transacting users reached 60 million, boosted by integrations like the Neighborhoods loyalty network.

The results highlight Block’s push toward higher-margin businesses. Cash App’s gross profit rose 27% to $2.07 billion, and consumer lending originations climbed 40% to $19 billion. However, transaction and loan losses jumped 66%, signaling potential risks as lending volumes expand. Square’s payment volume grew 14% to $76.4 billion—the fastest pace since early 2023—while the company’s bitcoin business continued to shrink, with gross profit falling to $52 million after fee reductions.

In his shareholder letter, CEO Jack Dorsey emphasized AI, positioning Block as a company that delivers real-time intelligence. The open-source workspace Buzz, released in alpha in July, has seen over two dozen updates, and Block expects its first machine intelligence revenue in Q4. A formal launch of Builderlab, its ecosystem for selling Buzz tools to businesses, is scheduled for November 10. For Q4, the company forecasts 15% gross profit growth to $3.32 billion, with full-year adjusted earnings now projected at $4.15 per share—up from $4.02 in August.

The 2027 outlook is equally aggressive, targeting at least 15% gross profit growth to $14.52 billion and a 30% rise in adjusted operating income to $4.58 billion—well above the $3.51 billion goal set at last November’s investor day. Analysts had expected $4.06 in adjusted earnings for the year, but Block’s consistent upward revisions reflect strong confidence in its strategy.

What’s notable is Block’s ability to raise guidance three quarters in a row amid economic uncertainty. Unlike some peers facing cash flow or stock-split challenges, Block has maintained disciplined cost control—product development spending fell 11% year-over-year—while focusing on high-growth areas like lending and AI. Still, the company’s bitcoin business remains a drag, and its AI monetization strategy is unproven. The November 10 Builderlab event will be a key test of whether Buzz can attract enterprise customers beyond early adopters.

For those following fintech’s shift toward AI-driven services, Block’s performance demonstrates how financial infrastructure companies can evolve without abandoning core revenue. The next challenge will be determining whether Buzz can succeed commercially—and whether its open-source approach can compete with proprietary alternatives.

Sources: siliconangle.com