Despite a steep decline in net income during the first quarter, Block anticipates the second half of 2025 to generate gains, driven by product expansion.

Block reported $190 million in net income in Q1, a 90.2% decrease from the previous quarter and a 50.7% drop from Q1 2024, which founder and Chief Executive Jack Dorsey in a May 1 letter to shareholders attributed primarily to macroeconomic volatility.

THE BIG PICTURE: Block expects a more profitable second half of 2025, with its lending business a key growth driver, Chief Financial Officer Amrita Ahuja said during the company’s earnings call on May 1.

Block in March received Federal Deposit Insurance Corp. approval to issue nationwide Cash App Borrow consumer loans through its bank, Square Financial, which Ahuja said during the call unlocks two revenue opportunities:

• Enabling Block to double the number of Cash App users offered Cash App Borrow loans; and
• Allowing Block to offer and manage loans internally, improving cost efficiency per loan.

Block reported 5 million Q1 Cash App Borrow active users in its earnings presentation.

Buy now, pay later service through Cash App Afterpay is also showing signs as being a growth driver since it was rolled out in February, Ahuja said.

‘We’ve seen strong early conversion and adoption in April and are excited to continue ramping this product to more actives,” she said.

BY THE NUMBERS: Block reported in Q4:

• $2.3 billion in total gross profit, flat from Q4 2024 and up 9% year over year;
• $1.4 billion in Cash App gross profit, flat from Q4 and up 9.5% YoY;
• $76.9 billion in Cash App inflows, up 8.2% both QoQ and YoY; and
• $898 million in Square gross profit, down 2.8% QoQ and up 9% YoY.

While Cash App inflows grew sequentially and annually, they fell below both analyst and company expectations, Ahuja said during the call, attributing the performance to macroeconomic-related reductions in consumer spending during tax season.

“Tax refunds are an important seasonal driver of Cash App inflows,” Ahuja said. “This year, we saw a pronounced shift in consumer behavior during the time period that we typically see the largest disbursements, late February and into March. This coincided with inflows coming in below our expectations.”

Approximately 70% of consumers are opting to save rather than spend their tax refunds due to economic uncertainty, according to an April 16 report by consumer research firm Attest.

Nearly 25% of consumers who do plan to invest, particularly millennials, are focused on cryptocurrency, according to the report.

OF NOTE: Block is rolling out new Square Online features in two weeks, Ahuja said during the earnings call.

Block, which already uses AI and machine learning for fraud prevention, employee workflows and consumer-facing products such as Cash App Borrow, is planning to accelerate AI product development this year, CEO Dorsey said during the call.

“We’ll keep pushing our roadmap forward at a faster pace and bring AI automation to more sellers,” Dorsey said.

The company also plans to launch its first bitcoin mining chips and systems in the second half of 2025, Ahuja added.

MARKET REACTION: Shares of Block (NYSE: XYZ) were trading down 18% from market open on May 1 to $48.40 after market close.

The fall mimics a 17.9% stock plunge from the company on Feb. 20 after Block reported its Q4 2024 earnings.

Block shares were trading up/down 21% from market open today to $46.17 at the time of publication.

Block has a market capitalization of $28.4 billion.