Strong Cash App Momentum Drives Favorable Outlook for Block (XYZ)

Cash App segment is becoming a major driver of the growth story for Block Inc. (NYSE:XYZ) in 2026, as the underlying lending operations within the segment standout as key determinants of management's outlook for the remainder of the year. Recent initiatives around the company's proprietary credit signal support the narrative and broaden the company's lending reach. For the first time, Block will open its Cash App Score for external lenders by collaborating with Nova Credit's Cash Flow Intelligence Platform.

Bull Case: Lending as the Core Growth Driver

Cash App Score was previously limited to internal use by the company for its consumer lending offerings such as the Cash App Borrow. This latest development could pave way for the monetization of company's data infrastructure, resulting in an additional revenue source.

During the second quarter, Block exceeded its prior guidance, reporting $3.17 billion in gross profit and $864 million in adjusted operating income. Revenue reached $6.62 billion, up 9.3% year over year. Gross profit expanded by 25% relative to the same period last year, and the company posted record 27% adjusted operating margins. Adjusted EPS clocked in at $1.02, exhibiting year-over-year growth of 65%.

Block's impressive second quarter print was driven by strong consumer spending, along with Cash App gross profit expansion of 31% year-over-year increase. This can be attributed to significant expansion in consumer lending, driven by Cash App Borrow. Block said Financial Solutions gross profit growth was driven primarily by Cash App Borrow. It reflects favorably on broader user engagement, who are utilizing Cash App for short-term credit financing instead of just a savings or payment mechanism. Despite a nominal 3% growth in monthly transacting actives, volumetric growth within Cash App was impressive. There was a 59% year-over-year jump in Cash App Consumer Lending origination volume, and 17% increase in Cash App Commerce Enablement volume.

This led management to raise its full-year guidance, with gross profit projections of above $12.5 billion. Moreover, the management expects 28% full-year adjusted operating margin, along with 70% growth in adjusted diluted EPS. There is continued optimism surrounding the Cash App momentum, further supported by AI-enabled operational efficiencies and broader cost-cutting measures. The Cash App's lending business has picked up at an accelerated rate compared to the overall platform.