Block earnings show a growth pickup, in a potential validation of the massive AI push

A previous version of this report contained an incorrect title for Block's Owen Jennings. By Emily Bary

100% of Block employees now use AI at work, three months after the company's eye-popping mass-layoff announcement

Block is the parent company of Square and Cash App.

Block topped expectations with its latest quarterly results, which management says validates the financial-technology company's recent high-profile move to cut more than 40% of staffers and double down on artificial intelligence.

Three months after that layoff announcement, Block (XYZ) posted an acceleration of gross-profit growth to 27% from 24%. Gross profit came out to $2.9 billion in the first quarter, above the FactSet consensus of $2.8 billion.

"A lot of that is underpinned by our ability to ship faster and move faster," CFO Amrita Ahuja told MarketWatch.

Shares were up about 8% in after-hours action on Thursday

Read: Block plans to lay off nearly half its staff in 'deliberate and bold' embrace of AI

The company, which is the parent of Square and Cash App, has developed internal AI tools that executives say are speeding up workflow. Features that once were given two- to three-month timelines for small teams of engineers are now showing serious progress in just two to three weeks with one or two engineers, said Owen Jennings, the company's business lead.

Additionally, the AI push has allowed more nontechnical employees to identify bugs and request coding fixes. All of Block's workers now use AI for their jobs to some degree.

See also: Block says AI will allow it to cut more than 4,000 jobs. Some argue that's not the whole story.

Block issued gross-profit guidance of $3.04 billion for the second quarter, which would mark a 20% increase relative to a year before. Analysts look to gross profit as a revenue proxy for Block since its headline top-line figure is skewed by volatility in bitcoin-trading flows that carry minimal margin.

Analysts were expecting $3.02 billion for the second quarter.

The company's outlook also calls for adjusted earnings per share of 86 cents in the period, above the 82-cent consensus view and up 39% from a year earlier.

Block executives say the business is holding up well in the current economy. While other companies have called out pressures on discretionary spending, food and beverage was one of Block's strongest verticals in the first quarter, Ahuja said.

That's the result of some of the company's own actions as well as "the underlying health of the consumer," she added.

-Emily Bary

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05-07-26 1656ET