Block Inc (SQ) proved on Thursday that sometimes a “beat and raise” is enough to silence the bears, even when the bottom line is written in red ink. Shares of Jack Dorsey’s fintech powerhouse climbed 7.9% to $75.70 in after-hours trading following a Q1 2026 report that delivered a significant earnings surprise, overshadowing the company’s first quarterly net loss in three years.
AI Efficiency Restructuring Pays Off
The primary driver behind the investor optimism was a stellar performance in adjusted profitability. Block reported quarterly earnings of 85 cents per share, comfortably clearing the Zacks consensus estimate of 68 cents.
This outperformance comes on the heels of a brutal restructuring initiated in late February. Dorsey cut roughly 4,000 jobs, about 40% of the company’s workforce, as part of a strategic pivot to replace manual operations with AI-driven efficiency. While operational expenses rose 57.2% year-on-year to $3.08 billion due to restructuring costs, the underlying gross profit surged 27% to reach $2.9 billion.
Navigating the Bitcoin Remeasurement Loss
Despite the operational strength, Block was forced to report a net loss of $309 million for the quarter. The culprit wasn’t a failure in the business model, but rather the volatility of its corporate treasury. Block held 8,883 Bitcoin as of March 31, and a 23.8% drop in the asset’s price during the quarter triggered a $172.8 million remeasurement loss.
Bitcoin revenue via Cash App also faced headwinds, falling to $1.8 billion from $2.33 billion a year prior. Block attributed this to shifting “trading dynamics” and a deliberate strategic decision to reduce fees on certain Cash App transactions. This fee reduction is part of Dorsey’s long-term play to transition Bitcoin from a speculative asset into a functional peer-to-peer electronic cash system.
Scaling Bitcoin for 800,000 Merchants
While the accounting losses made headlines, Block’s integration of Bitcoin into the real-world economy continued to scale. The company revealed that over 800,000 US merchants have now enabled Bitcoin transactions.
To bolster this ecosystem, Block recently launched Bitkey, a touchscreen hardware wallet, and introduced a 5% Bitcoin cashback reward for Square merchants. By raising customer withdrawal limits fivefold to $25,000 per week and introducing automated payment-to-BTC conversions, Block is aggressively lowering the friction for everyday Bitcoin usage. As Avory & Co. CIO Sean Emory noted, the company “beat and raised” its guidance, suggesting that the “AI-first” Block is just starting to find its stride.
