Block raised its 2026 gross profit outlook to $12.51 billion after Cash App growth offset the Bitcoin fee trade-off and margins hit a record 27%.
Block (NYSE: XYZ), the payments company founded by Jack Dorsey, reported a 31% drop in second-quarter Bitcoin Ecosystem gross profit, to $72 million. Management attributed the decline to fee cuts on selected Cash App Bitcoin transactions, introduced earlier in the year, and to softer trading across the broader Bitcoin market during 2026.
Segment revenue came to about $1.89 billion, down 13% from a year earlier and up from the first quarter. The cuts apply to selected Bitcoin transactions in Cash App, not to every trade on the platform. The fee reductions were a strategic trade-off, Block said, favoring adoption and transaction volume over margin per trade. Gross profit of $72 million on $1.89 billion of revenue puts the segment's margin near 4%; most of that revenue is the cost of the Bitcoin Block sells.
The pricing change fits a longer-term push, the company said, to position Bitcoin inside Cash App as a payment and savings feature rather than a high-margin trading product.
Block continues to build self-custody tools and related infrastructure, and it directs part of its Bitcoin-related gross profit into additional Bitcoin purchases.
The wider business kept growing. Total gross profit rose 25% year over year to $3.17 billion. Cash App handles consumer payments and Bitcoin buying; Square runs the merchant payments side. Cash App posted $1.97 billion in gross profit, up 31%, and Square grew 13% to $1.16 billion.
Adjusted operating income hit a record, and the adjusted operating income margin reached an all-time high of 27%. Net income attributable to common stockholders was $89 million, down from $538 million a year earlier. The prior-year quarter included a substantial unrealized gain on Bitcoin holdings; this quarter carried an $88.5 million unrealized remeasurement loss. Under the fair-value accounting Block uses for its crypto assets, Bitcoin's price moves flow through the income statement each quarter, and Block said the decline stemmed from that mark rather than from the operating businesses. Adjusted operating income excludes the remeasurement loss, which is why that line hit a record in the same quarter net income fell. Adjusted diluted earnings per share rose 65% to $1.02.
Block raised its full-year 2026 outlook after the report. It now expects $12.51 billion in gross profit, or 21% growth. The company also raised its forecasts for adjusted operating income and adjusted diluted earnings per share. Management cited growth in Cash App's lending and commerce products and in Square's payment volumes as the basis for the higher numbers.
Shares of Block rose in extended trading, then reversed and ended the session lower. AlphaScala's Alpha Score for Block is 42 out of 100, a Mixed reading, with details on Block's stock page.
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