Block lifts profit outlook on Cash App strength, reaches preliminary DOJ settlement

Block announced two major developments. First, it lifted its full-year gross-profit forecast after stronger performance from Cash App helped its quarterly earnings. Second, it reached an agreement in principle with the U.S. Department of Justice over alleged weaknesses in its anti-money-laundering program.

The financial upgrade reflects growth across both major businesses. Cash App gross profit rose 27% year over year in the third quarter, while Square gross profit increased 14%. Block now expects $12.63 billion in 2026 gross profit, up from its previous $12.51 billion forecast.

The DOJ agreement could reduce uncertainty around the investigation, but it is not final. The deferred prosecution agreement still requires a final agreement and court approval. Block expects to pay roughly $764 million after credits, and warned that the final cost could be higher.

Gross profit is revenue minus the direct costs required to provide a product or service. It shows how much money remains to cover expenses such as staff, technology, marketing, and administration, and eventually contribute to operating profit. It is different from net profit, which comes after more costs are deducted.

Block raised its 2026 gross-profit forecast from $12.51 billion to $12.63 billion. That is an increase of $120 million. The new forecast represents 22% growth, according to the company. The upgrade followed stronger quarterly performance, especially in Cash App, where gross profit climbed 27% from a year earlier.

The higher outlook signals confidence in Block’s business momentum, but it does not mean all costs are improving. Losses on transaction, loan, and consumer receivables rose 65.6% in the third quarter. Block also expects $14.52 billion in gross profit for 2027, partly reflecting expected benefits from AI investment.

Cash App gross profit increased 27% in the third quarter compared with the same period a year earlier. Square gross profit rose 14%. These figures show that both of Block’s main platforms expanded, but Cash App delivered the stronger growth rate.

Cash App is Block’s consumer-focused financial platform. Its growth has been supported by banking and lending products, which give the company revenue sources beyond transaction fees. Block also reported continued strong spending on Cash App Card and strong repayment rates on its Borrow product. Those trends helped support management’s view that consumers were managing their finances.

The growth strengthened Block’s overall profit outlook. The company raised its 2026 gross-profit forecast to $12.63 billion and expects $3.32 billion in the fourth quarter. However, the expansion also carries risk. Losses on transaction, loan, and consumer receivables rose 65.6% to $601.7 million.

Cash App’s banking and lending services broaden how Block makes money. Instead of relying mainly on fees from processing transactions, the company can generate revenue from financial products used by consumers. The article does not break out the exact revenue earned by each product, but it says these offerings have diversified Block’s revenue streams.

Cash App Card encourages everyday spending through Block’s consumer platform. Block’s Borrow product adds lending activity, while its broader banking services deepen customer relationships. Chief Financial Officer Amrita Ahuja said strong Cash App Card spending and strong Borrow repayment rates were signs that consumers were managing their finances and had financial strength.

This diversification supports growth but adds risk. When Block provides or holds loans and consumer receivables, some customers may not repay fully. Losses on transaction, loan, and consumer receivables rose 65.6% to $601.7 million in the third quarter. Thus, broader revenue comes with greater credit exposure.

Block’s profit outlook improved because its platforms generated stronger gross profit, especially Cash App. But gross profit growth and credit losses measure different things. Gross profit tracks money earned after direct costs, while credit losses reflect amounts tied to transactions, loans, and consumer receivables that Block may not recover.

Cash App has expanded into banking and lending products, including Borrow. Those products diversify revenue beyond transaction fees and helped Cash App gross profit rise 27% in the third quarter. However, lending and consumer receivables create repayment risk. If customers fail to repay, Block records losses even while the broader business is growing.

As a result, losses on transaction, loan, and consumer receivables rose 65.6% to $601.7 million. This does not cancel the improved outlook, but it shows the trade-off in Block’s strategy. The company is building more financial products, while accepting greater exposure to credit performance and consumer repayment behavior.

The Bank Secrecy Act is a U.S. law that requires financial institutions to maintain controls that help detect and prevent money laundering and related financial crime. An anti-money-laundering program is the company’s system for identifying suspicious activity, checking customers, monitoring transactions, and reporting concerns to authorities. These controls help protect the financial system.

Block disclosed that it agreed in principle with the DOJ after the department alleged the company failed to maintain an effective anti-money-laundering program. The alleged failure would violate the Bank Secrecy Act. The article does not describe the specific transactions or control failures that prompted the investigation.

The proposed resolution is a deferred prosecution agreement. It would defer the charge for three years, subject to final terms and court approval. Block expects a net payment of roughly $764 million after credits for earlier regulatory resolutions. The company warned that the final terms could produce losses above the amount already accrued.

A deferred prosecution agreement allows prosecutors to postpone pursuing a charge for a set period while the company meets agreed conditions. In Block’s case, the proposed agreement would defer for three years the charge that it failed to maintain an effective anti-money-laundering program. The arrangement is not final because it still needs a final agreement and court approval.

Block said the expected net payment is roughly $764 million after credits for prior regulatory resolutions. That payment would be a major cash cost and could reduce the resources available for investment or other business needs. The article does not state the precise payment schedule or accounting impact.

The agreement would remove some uncertainty around the DOJ probe, but it does not eliminate all risk. Block warned that the ultimate terms could result in losses exceeding the amount already accrued. The resolution therefore offers greater clarity while leaving open the possibility of a higher final cost.