Today's discussion includes forward-looking statements regarding our strategy, guidance, and long-term goals. Throughout the call, I will ask questions directly of Jack, Amrita, Owen, and Thomas based on topics our shareholders asked us to explore on our earnings call. We had a strong second quarter, and we're raising our guidance for the year based on the strength of our execution. Intelligence tools are making it easier to build all the software we need.
We outperformed our guidance and achieved record profitability in the second quarter. We grew gross profit 25% year-over-year while delivering an all-time high 27% adjusted operating income margin and growing adjusted diluted EPS 65% year-over-year. Square gross profit and GPV both grew 13% year-over-year in the second quarter, with U.S. GPV growth accelerating to our strongest growth rate since the second quarter of 2023.
We drove strong gross profit growth across commerce enablement and financial solutions, and we continue to expect gross profit to grow roughly in line with GPV in the second half of the year. Monthly transacting actives grew 3% year-over-year in June, and we continue to expect low single-digit actives growth in 2026 as we execute on our network growth strategies. Cash App commerce enablement volume grew 17%, and Cash App consumer lending origination volume grew 59%, reflecting our focus on driving deeper engagement. We achieved record profitability this quarter while continuing to invest in the long-term growth of our business.
| Metric | Period | Current guidance |
|---|---|---|
| Full-year gross profit | FY2026 | $12.51 billion, up 21% (raised) |
| Full-year adjusted operating income | FY2026 | $3.47 billion, a 28% margin (raised) |
| Full-year adjusted diluted EPS growth | FY2026 | +70% year over year (raised) |
| Q3 gross profit growth | Q3 2026 | +18% year over year |
| Q3 adjusted operating income margin / EPS | Q3 2026 | 28% adjusted operating income margin; adjusted diluted EPS up 89% |
| Q4 exit gross profit growth | Q4 2026 | Mid-teens (consistent with Investor Day framework) |
| Interest expense / tax rate | FY2026 | Q3 interest expense $50M-$55M; FY $200M-$210M; mid-20% non-GAAP effective tax rate |
| Metric | YoY | Note |
|---|---|---|
| Total net revenue | +9.3% to $6.62B | Grew more slowly than gross profit, partly due to deliberate Bitcoin pricing decisions. |
| Gross profit | +25% | Broad-based strength across Square and Cash App, commerce enablement, and financial solutions. |
| Square gross profit & GPV | +13% each | Strongest U.S. GPV growth since Q2 2023 on product velocity, ramping distribution (self-onboard, field sales, ISOs), and pricing/packaging; mid-market and international (25% constant currency) strong. |
| Cash App gross profit | +31% | Deeper engagement across commerce, banking, and lending; inflows per active up and consumer lending origination up 59%. |
| GAAP operating income | $447M (6.8% of net revenue; down from $484M) | GAAP profitability declined year over year even as adjusted metrics set records. |
| Adjusted operating income | Record $864M (27% margin) | Strong gross profit growth translating into an all-time-high adjusted operating income margin. |
| Adjusted EBITDA | Record $1.2B | Record profitability alongside continued long-term investment. |
| Adjusted diluted EPS | $1.02 (+65%) | Margin expansion and profitable growth; GAAP diluted EPS was $0.15. |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| AI at the center of the company | Reorganized around intelligence six months ago | Buzz agentic collaboration platform launched publicly in July; goose remains model-agnostic with an internal per-task model-evaluation system routing workloads for cost/quality efficiency; management refuses to constrain developer velocity, citing 150% higher code changes per engineer. | — |
| Neighborhoods (ecosystem connection) | Early rollout | Confirmed product-market fit with annualized seller GPV over $1 billion (+220%); follower spend reaches ~10% of a seller's GPV within three quarters; focus shifting to accelerating seller-side distribution and density. | — |
| Cash App durable growth | Borrow-led growth | Management outlined a four-part ecosystem (network, banking, commerce, Bitcoin) with runway from Neighborhoods, Teams & Families, Tags, Afterpay on Cash App Card, and new bets, aiming to sustain growth while lapping Borrow; Borrow loss rates remain healthy and expected to moderate. | — |
| Square Financial Services | Lending only | Expanding beyond lending: sellers holding $10,000+ in Square savings now earn a 3.5% APY (8x the national average) to build a low-cost deposit base, and SFS processed its first Square acquiring transactions in June, a multi-year effort to bring processing in-house for resilience. | — |
| Hardware and supply chain | Product differentiation | Deep multi-tier supplier relationships let Block identify the memory constraint mid-last-year and mitigate it, avoiding back-orders; Tags (a viral NFC 'payment wand') launched with three form factors, sold out quickly, and drew over 3 million notify-me sign-ups with zero marketing. | — |
| Bitcoin pricing strategy | — | Deliberate pricing decisions to be the simplest and cheapest Bitcoin exchange have been a revenue headwind this year but are gaining relative share. | — |