Block Promises Profit Momentum as Its AI Efforts Take Hold

Block has been investing in AI. (Michael Nagle/Bloomberg)

Key Points

Block shares rose over 8% in after-hours trading Tuesday after third-quarter earnings and revenue beat analyst expectations.
The fintech firm raised its full-year outlook, now expecting adjusted earnings of $4.15 a share and gross profit of $12.63 billion.
CEO Jack Dorsey said Block began piloting its Buzz platform in October and expects to generate its first machine intelligence revenue in Q4.

Shares of fintech firm Block shot up more than 8% in after-hours trading Tuesday when its third quarter earnings beat analyst expectations.

Adjusted earnings of $1.13 a share beat expectations for $1.03 a share, and revenue also surpassed estimates, at $6.72 billion compared with the $6.58 billion consensus.

Looking ahead, the company expects earnings to increase to $1.15 a share in the fourth quarter. It also bolstered its outlook for the full year “to reflect the momentum we are seeing across Block.”

It now expects adjusted earnings of $4.15 a share for the year. Gross profit is forecast to increase 22% to $12.63 billion from a year earlier, up from the $11.98 billion it previously forecast. For 2027, that figure should increase to $14.52 billion, the company said, “as our investments in AI and our broader focus on velocity drive sustained growth at scale.”

Block makes money through transaction fees on its apps, which include Square, Cash App, and the buy now pay later platform Afterpay. It also makes money from Bitcoin trades on Cash App. The company said the value of its Bitcoin holdings rose by $229.7 million during the quarter.

In July, it also announced Buzz, a free, open source collaboration platform in a shared workspace. CEO Jack Dorsey said that the company began piloting Buzz in October and expects to “generate our first machine intelligence revenue in the fourth quarter.”

Write to Anita Hamilton at anita.hamilton@barrons.com

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