Block Inc. (XYZ) Stock: Investors React to Q1 Earnings Surprise

TLDR:

Block reported a 9% increase in gross profit to $2.29 billion in Q1 2025 The company missed earnings expectations with $0.56 per share vs. $0.88 estimate Block’s revenue came in at $5.77 billion, missing estimates by 6.65% Cash App saw 10% gross profit growth while Square had 9% growth Block shares have declined 31.2% year-to-date, underperforming the S&P 500

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Block Inc., the company behind Square and Cash App, released its first quarter 2025 earnings report with mixed results that paint a complex picture for investors. The financial technology firm reported a 9% year-over-year increase in gross profit, reaching $2.29 billion for the quarter.

Block, Inc. (XYZ)

However, the company’s earnings told a different story. Block posted quarterly earnings of $0.56 per share, falling well short of analyst expectations of $0.88 per share.

This represents a substantial earnings surprise of -36.36% compared to estimates. The figure also shows a decline from the $0.85 per share reported in the same quarter last year.

Revenue performance was similarly disappointing. Block reported Q1 revenues of $5.77 billion, missing the consensus estimate by 6.65%.

This revenue figure also represents a year-over-year decline when compared to $5.96 billion in the same quarter of 2024.

Performance Across Business Units

Looking at Block’s individual business segments, Cash App showed the strongest performance with a 10% growth in gross profit. The company’s banking products and integrated payments helped drive this increase.

Square, the company’s merchant services platform, followed closely with a 9% increase in gross profit.

Despite these growth areas, Block acknowledged a slower-than-expected start to 2025. Management remains optimistic about accelerating growth in the second half of the year.

The company plans to enhance Cash App Borrow and increase marketing efforts to expand its customer base.

Block is also focusing on innovation, with plans to integrate advanced systems to improve both efficiency and customer experience.

Market Performance and Outlook

The earnings miss comes as Block shares have already experienced significant pressure in 2025. The stock has lost approximately 31.2% since the beginning of the year.

This performance stands in stark contrast to the broader market, with the S&P 500 index down only 5.3% during the same period.

Looking forward, Block projects a 12% increase in gross profit for the full year 2025. This outlook suggests management expects improved performance in the coming quarters.

The current consensus from analysts calls for earnings of $1 per share on $6.59 billion in revenues for the next quarter.

For the full fiscal year 2025, analysts project earnings of $4.12 per share on $26.06 billion in revenues.

Block’s consistent struggles with meeting analyst expectations may concern some investors. The company has surpassed consensus EPS estimates only once in the last four quarters.

The company’s recent quarterly report marks the second consecutive earnings miss, following a 14.46% negative surprise in the previous quarter.

Block currently holds a Zacks Rank #3 (Hold), suggesting market expectations for the stock to perform in line with the broader market in the near term.

The company’s position within the internet software industry may present additional headwinds. According to Zacks Industry Rank, the sector currently sits in the bottom 43% of industries, potentially creating further challenges for Block’s stock performance.

Block’s most recent quarterly performance highlights the company’s ability to grow gross profit despite facing challenges in meeting overall earnings and revenue expectations.

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