Block raised its 2026 gross-profit outlook after third-quarter growth, while a 66% increase in transaction, loan and consumer receivable losses showed the expense pressure accompanying its lending expansion.
In its third-quarter shareholder letter, Block reported $3.235 billion in gross profit for the quarter through Sept. 30, up 22% from a year earlier. It lifted its 2026 forecast to $12.626 billion from $12.51 billion and raised its adjusted operating-income target to $3.519 billion from $3.47 billion, 69% above the prior-year level.
Cash App generated $2.070 billion in gross profit, a 27% increase, while Square reached $1.16 billion, up 14%. Cash App had 60 million monthly transacting actives in September. Block said Neighborhoods, a product that connects Square sellers with consumers, helped grow that count.
For the third quarter, adjusted operating income was $923 million, up 92% year over year; operating income under generally accepted accounting principles (GAAP) increased 5% to $428 million. Adjusted diluted earnings per share was $1.13, compared with GAAP diluted earnings per share of $0.92. Block identifies adjusted operating income and adjusted diluted earnings per share as non-GAAP measures, and expects adjusted diluted earnings per share of $4.15 for 2026.
The loss line reached $601.706 million, compared with $363.455 million a year earlier. Block attributed the 66% GAAP increase to higher loan volume and shifts in product mix. Consumer-lending originations rose 40% to $19 billion, driven by Cash App Borrow and Afterpay Post-Purchase. The company expects the year-over-year increase in those loss expenses to moderate further in the fourth quarter. Block said annual loan cohorts for Square Loans, launched in 2014, have met or outperformed its 4% loss target and that it is applying the same approach to Cash App consumer lending.
Block forecast fourth-quarter gross profit of $3.315 billion and said it expects its first revenue from machine-intelligence tools during the quarter. Its preliminary 2027 outlook calls for $14.519 billion in gross profit, up 15% year over year. The company plans to introduce Builderlab at a San Francisco event on Tuesday, Nov. 10.
