Block (SQ) Q2 Profit Jumps 176%

Core Insights - Block reported strong growth in profitability for Q2 2025, with net income and gross profit increasing year-over-year, despite missing consensus revenue and adjusted earnings expectations [1][5][11] Financial Performance - Adjusted EPS (non-GAAP) was $0.62, slightly below the estimate of $0.63, and up 31.9% from $0.47 in Q2 2024 [2] - GAAP revenue was $6.05 billion, missing the estimate of $6.30 billion, and down 1.8% from $6.16 billion in Q2 2024 [2] - Gross profit reached $2.54 billion, a 13.9% increase year-over-year [2] - Net income (GAAP) was $538 million, more than doubling from $195 million in Q2 2024, reflecting a 175.9% increase [2] Business Segments - Square's gross profit grew 11% year-over-year to $1.03 billion, with international gross payment volume up 25%, now representing 19% of all Square payments [6] - Cash App generated gross profit of $1.50 billion, up 16% year-over-year, but user growth stagnated at 57 million monthly actives [7] Strategic Focus - Block is emphasizing the integration of its business and consumer ecosystems to enhance cross-selling and customer engagement [4] - New product rollouts include Cash App Borrow loans and the Pools group payment feature, with a focus on targeting younger users [4][7] Profitability and Cost Management - Adjusted operating income rose nearly 38% to $550 million, yielding a 22% adjusted operating income margin on gross profit [8] - Operating leverage was partly achieved through software and cloud cost reductions, while sales and marketing expenses increased to support new product launches [8] Future Outlook - For FY2025, Block raised its guidance, expecting gross profit of $10.17 billion and adjusted operating income of $2.03 billion [11] - Growth levers identified include expansion of Cash App's lending, deeper integration of buy-now-pay-later, and international growth for Square [12]