Block Inc.’s Bitcoin bet backfires? Q1 loss hits $309 mln despite 27% YoY profit

Block Inc. [NYSE: XYZ], the payments company led by Jack Dorsey, accelerated gross profit growth to 27% year over year in the first quarter of 2026. It reached $2.91 billion and surpassed its own guidance, as strength across its subsidiaries, Cash App and Square, pushed adjusted operating margins to record levels. The San Francisco-based payments company reported adjusted operating income of $728 million for the three months ended on the 31st of March, representing a 56% year-over-year increase that lifted adjusted operating margin to 25%, the highest in the company’s history. Shares climbed roughly 4% in after-hours trading following the release of the shareholder letter, with the stock briefly reaching $75 in pre-market trading for the first time since April 1. Cash App drives quarterly growth Cash App remained the company’s primary growth engine, with gross profit expanding 38% year over year to $1.91 billion. Consumer lending drove a significant share of that momentum, as origination volume grew 82% year over year to $17.6 billion, fueled by near triple-digit growth in Cash App Borrow originations. Commerce enablement volume on the platform also rose 18% year over year. Meanwhile, Square contributed $982 million in gross profit, up 9% year over year. Gross payment volume across the Square ecosystem increased 13%, with international markets outpacing domestic performance. International GPV rose 35%, compared to U.S. volume growth of 8.2%. Adjusted diluted earnings per share (EPS) came in at $0.85, up 52% year over year and well above analyst consensus estimates of $0.68. Bitcoin-related losses weigh on results Despite the strong operational performance, the company’s GAAP results painted a sharply different picture. Block’s Bitcoin holdings resulted in a $173 million fair value loss in Q1 2026, nearly double the $93 million remeasurement loss recorded on the same position a year earlier, as the company’s mark-to-market accounting obligations translated Bitcoin price movements directly into reported earnings. That loss, combined with $852 million in restructuring and other charges tied to the February workforce reduction that cut headcount from more than 10,000 employees to just under 6,000, pushed Block to a $172 million operating loss and a $309 million net loss for the quarter under standard accounting rules. At the time of writing, Block Inc. held roughly 9,032 Bitcoin valued at approximately $724.4 million, compared to its 8,692 BTC holdings worth $1.08 billion as of the 6th of October, 2025. The development follows an announcement by Square expanding its services to allow small businesses in the U.S. to accept Bitcoin payments for goods and services. The losses were not limited to Block Inc. alone. Coinbase also reported weaker quarterly results, with the leading U.S.-based crypto exchange posting revenue of $1.41 billion, down 30.5% year over year, while continuing cost-cutting measures after reducing its workforce earlier this year. Final Summary Block Inc. posted gross profit growth of 27% year over year, although quarterly net loss reached $309 million. Block Inc. recorded a $173 million Bitcoin-related fair value loss, while its Bitcoin holdings stood at 9,032 BTC valued at roughly $724.4 million.