Block (XYZ): a wide EPS beat on August 5 did not stop shares from falling 6%

An adjusted EPS of $1.02 put Block Inc. (NYSE: XYZ) well past the $0.87 Wall Street consensus on August 5, and the company raised full-year guidance across the board. Shares fell roughly 6% in the following session. What the tape chose to act on was Cash App's monthly transacting actives: growth of just 3% year-over-year in June.

The numbers on the quarter

Second-quarter gross profit rose 25% year-over-year. Adjusted operating income margin reached an all-time high of 27%, and management frames the improvement as durable, tracing it to the February workforce reduction of 40% where AI tools replaced headcount. Code changes per engineer have climbed 150% since the start of the year. Square's US gross payment volume accelerated to its fastest pace since 2023, supported by more than 200 active ISO partners driving quarterly new-seller growth of more than 150% from that channel. Cash App gross profit grew 31%, consumer lending originations rose 59%, and commerce enablement volume gained 17%.

The setup from here

Management is now guiding for low single-digit actives growth across all of 2026. That is a meaningful step down for what has been Block's fastest-moving segment. The bull case depends on AI-driven margin expansion compounding while the user base stabilizes; the bear case is that flat actives eventually limit the network effects Block has spent years building.

CFO Amrita Ahuja sold 8,971 shares on the earnings date under a Rule 10b5-1 plan she adopted in March, a transaction disclosed at roughly $770,000. The sale trimmed her direct stake by about 2%, leaving her with 454,275 shares. The paperwork behind a pre-scheduled plan is different from a discretionary sale, but the timing drew attention regardless. Sixty-three hedge funds held positions in the most recent quarter and the one before it, a flat reading with no accumulation or exit visible. Short interest stands at 3.11% of float. As of August 14, shares trade at 21.37 times forward earnings.

What to watch is whether Cash App actives stabilize in the second half of the year as Block scales Neighborhoods, the program connecting Square sellers to Cash App customers, and extends new products including Cash App Tags, Cash App Mobile, and Afterpay Pre-Purchase on the Cash App Card to a wider user base. The stock sits more than 75% below its 2021 peak.