Block delivered the most consequential quarter in its post-rebrand history. Gross profit of $2.87B (+24% YoY) marked the fourth consecutive quarter of acceleration (Q1 +9%, Q2 +14%, Q3 +18%, Q4 +24%), while a 40% headcount reduction — from 10,000+ to approximately 6,000 — repositioned the company as an AI-restructured fintech with dramatically different unit economics. Borrow originations surged +223% YoY in what management called the strongest quarter ever for first-time lending actives. After hours, the stock traded at $66.50.
Our committee maintained all signal labels with zero classification changes but recorded one trajectory shift: COMPETITIVE_POSITION moved from NARROWING to STABILIZING as Cash App's 59M MAU returned to growth and Square GPV re-accelerated past 10%. The key new finding is a data paradox at the heart of the lending story: Block is building Cash App Score as a sophisticated third-party credit scoring service while declining to share vintage data or specific loss rates with its own investors.
By the Numbers
The 40% Headcount Cut: AI as Operating System
The headline number is stark: Block reduced its workforce from over 10,000 to approximately 6,000 employees. CEO Jack Dorsey framed this as structural rather than cyclical: “Intelligence tools have changed what it means to build and run a company.” Developer velocity increased +40% since September. The full financial impact begins flowing through in Q2-Q3 2026.
The productivity claim is unusually concrete for an AI restructuring narrative. Block is not merely layering AI onto existing workflows — it is fundamentally resizing the organization around a smaller, higher-output workforce. If sustained, this represents a permanent step-function improvement in operating leverage. The 2026 AOI guidance of $3.2B (+54% YoY) with 6 points of margin expansion reflects management's confidence that the cuts are structural.
Borrow: +223% and the Data Paradox
Borrow originations grew +223% YoY in Q4, contributing to +69% consumer lending growth overall. Management reported the strongest quarter ever for first-time Borrow actives and noted that higher portfolio losses in December and January reflected new cohort mix “by design.” As of mid-February, management stated “all 2026 cohorts trending below risk loss targets.”
The paradox: Block is simultaneously developing Cash App Score as a third-party credit scoring service — implying it possesses sophisticated credit data on its 59M MAU base — while declining to provide investors with vintage data or specific loss rates. This asymmetry is the single most important analytical gap in the thesis. The credit data exists; it is being productized for external consumption. But it is not being shared with the investors funding the risk.
Cash App: 59M MAU, PBA Inflection
Monthly active users returned to growth at 59M (from 58M), reversing the stagnation that concerned our prior assessment. More significant is the PBA (price-based actives) metric: 9.3M, +22% YoY. Cash App Green — a feature launched in 2025 — is driving 7x engagement lift among users who adopt it. Cash App Pay reached 8M+ actives, up +55% YoY.
The engagement flywheel appears to be working: more features drive more monetizable activity per user, which in turn drives the +33% GP growth. Whether this compounds or plateaus depends on whether Cash App can sustain feature adoption cadence against increasingly feature-rich competitors (Venmo, Apple Pay, Zelle).
Square: GPV Re-Acceleration
Square GPV grew +10.3% in Q4, crossing the 10% threshold that our forecast market tracked. More notable: Q1 2026 QTD is running above 12%, suggesting genuine re-acceleration rather than a one-quarter anomaly. New vendor acquisitions (NVA) grew +29% in Q4 — the strongest year ever — with sales-led NVA up +62% YoY.
The sales-led motion appears to be working. This was a strategic pivot from Block's historically self-serve model, and the +62% growth in sales-led NVA suggests the upmarket push is gaining traction. The question is whether the incremental revenue per sales-acquired merchant justifies the higher acquisition cost relative to self-serve.
2026 Guidance: Raised Across the Board
Management raised all key guidance metrics from the November 2025 Investor Day:
Forecast Market Resolutions
Two forecast markets resolved with this earnings event:
| Market | Outcome | Brier Score | Quality |
|---|---|---|---|
| Q4 GP Growth >15% YoY | YES (24%) | 0.020 | Excellent |
| Square GPV Growth >10% | YES (10.3%) | 0.102 | Good |
The GP growth market resolved with a Brier score of 0.020 — near-perfect calibration. The ensemble assigned 86% probability pre- earnings, and the actual 24% growth exceeded the 15% threshold decisively. The Square GPV market was tighter: the ensemble assigned 68% probability, and the 10.3% actual result barely cleared the 10% threshold, yielding a Brier of 0.102 — still well-calibrated.
Signal Assessment
Zero signal label changes. One trajectory shift:
| Signal | Assessment | Change |
|---|---|---|
| COMPETITIVE_POSITION | CONTESTED | Trajectory: NARROWING to STABILIZING |
| ASSUMPTION_FRAGILITY | CONCENTRATED | 2 key assumptions (lending + AI productivity) |
| NARRATIVE_REALITY_GAP | DIVERGING | Maintained — Cash App Score paradox noted |
| ACCOUNTING_INTEGRITY | QUESTIONABLE | Maintained — no vintage data disclosed |
The COMPETITIVE_POSITION trajectory shift from NARROWING to STABILIZING reflects tangible evidence: Cash App MAU returned to growth (59M from 58M), Square GPV re-accelerated past 10%, and the sales-led NVA motion is producing +62% growth. These are operational metrics, not narrative claims.
What to Watch
The +223% origination surge demands vintage-level loss data. If the 10-K still omits this, the data paradox deepens.
Developer velocity +40% is the claim. First full quarter of restructured operations will reveal whether productivity holds or regresses.
Guided $2.8B (+22%). A fifth consecutive quarter of acceleration above 20% would be unprecedented. Deceleration would be normal.
Productizing credit data for third parties while withholding it from investors creates a credibility gap that must resolve.
Management says all 2026 cohorts trend below risk targets as of mid-Feb. This is the most important claim to verify over time.