Block (XYZ) | Credit Investor

Next 12 Months: Starting Case

$ in millions	Last 12 Months	Next Quarter (4Q26E)	vs. 4Q25A	Next 12 Months	Change
Revenue	$25,646	$6,731	7.7%	$27,615	7.7%
Adj. EBITDA	$3,227	$899	2.8%	$3,389	5.0%
Free Cash Flow	$3,453	$714	23.2%	$2,645	(23.4%)
Net Debt, end of period	($2,136)	($2,851)		($4,781)	(123.8%)
Net Debt / Adj. EBITDA	-0.7x	-0.9x		-1.4x	-0.7x
Total Liquidity, end of period	$8,759	$9,474		$11,404	30.2%

The credit over the next year

Block's credit rests on two engines: Square payment volume, which accelerated to 14% growth in Q3 2026, and Cash App, where gross profit is rising 27% on fast growth in short-term consumer lending rather than on new users (actives are up only 4%). Management guides 2027 gross profit up at least 15% and Adjusted Operating Income up 30% to about $4.6 billion, so the question for the next year is whether Borrow and Afterpay originations keep compounding while the loss rate, which has climbed from about 2.2% to 3.2% of originations in two years, levels off as the company says it will in Q4 2026.

Leverage falls from -0.7x to -1.4x over the next four quarters on the starting case.
Free cash flow of $2.64bn is projected over the next year, with no itemised debt due in that time.
Net debt shrinks from -$2.14bn to -$4.78bn.
Liquidity a year out is $11.40bn, against $8.76bn today.

Built from the inputs on the Projections tab of the model; change them there. A starting case from history, not a forecast.

Capital Structure

Cap Structure	Amt Out.	Mkt Price	Yield	Lev. Through	View
Unrestricted Cash	$7,859.3
Convertible Senior Notes due 2027	573.5	100.0%	N/a	0.2x	Bullish
Senior Unsecured Notes due 2030	1,187.6	100.0%	N/a	0.5x	Bullish
Senior Unsecured Notes due 2031	993.4	100.0%	N/a	0.9x	Bullish
Senior Unsecured Notes due 2032	1,979.9	100.0%	N/a	1.5x	Bullish
Senior Unsecured Notes due 2033	988.6	100.0%	N/a	1.8x	Bullish
Total Debt	$5,723.0			1.8x
Net Debt	($2,136.3)			-0.7x

Last Twelve Months

Revenue	$25,646
Implied Costs	(22,420)
Adj. EBITDA	$3,227
(-) Interest Expense	(393)
(-) Capex	(169)
Memo: FCF	$3,453
Total Liquidity	$8,759.3

Next 12 months, starting case▲ Revenue $25.65bn → $27.61bn▲ Adj. EBITDA $3.23bn → $3.39bn▼ Free cash flow $3.45bn → $2.64bn▼ Net leverage -0.7x → -1.4x▲ Liquidity $8.76bn → $11.40bn

Block

			9/30/26				Face Value / Adj. EBITDA
Cap Structure	Coupon	Maturity	Amt Out.	Mkt Price	YTM	View	2021A	2022A	2023A	2024A	2025A	LTM	3Q27E LTM	3Q28E LTM
Unrestricted Cash			$7,859.3
Undrawn Revolver ($900mm facility)			900.0
Total Liquidity			$8,759.3

Convertible Senior Notes due 2027	N/a	2027	573.5	100.0%	N/a	Bullish
Senior Unsecured Notes due 2030	N/a	2030	1,187.6	100.0%	N/a	Bullish
Senior Unsecured Notes due 2031	N/a	2031	993.4	100.0%	N/a	Bullish
Senior Unsecured Notes due 2032	N/a	2032	1,979.9	100.0%	N/a	Bullish
Senior Unsecured Notes due 2033	N/a	2033	988.6	100.0%	N/a	Bullish
Other debt, discounts and issuance costs	N/a	N/a	0.0
Total Debt			$5,723.0				6.3x	7.3x	3.7x	2.2x	1.7x	1.8x	1.7x	1.6x
Net Debt			($2,136.3)				-2.4x	-2.7x	-1.4x	-0.8x	-0.6x	-0.7x	-1.4x	-2.1x
				Adj. EBITDA			$904	$787	$1,538	$2,615	$3,293	$3,227	$3,389	$3,522

Key Financials

	2021A	2022A	2023A	2024A	2025A	LTM	3Q27E LTM	3Q28E LTM
Revenue	$17,661	$17,532	$21,916	$24,121	$24,194	$25,646	$27,615	$29,638
Y/Y Growth		(0.7%)	25.0%	10.1%	0.3%		7.7%	7.3%
(-) Cost of Revenue	(13,241)	(11,540)	(14,411)	(15,232)	(13,834)	(13,464)	(14,392)	(15,454)
Gross Profit	$4,420	$5,992	$7,505	$8,889	$10,360	$12,183	$13,223	$14,184
Gross Margin	25.0%	34.2%	34.2%	36.9%	42.8%	47.5%	47.9%	47.9%
(+/-) Other Operating Costs, net of D&A	(4,124)	(6,276)	(7,375)	(7,621)	(8,282)	(10,616)	(10,999)	(11,827)
EBITDA	$296	($284)	$130	$1,269	$2,078	$1,567	$2,224	$2,357
(+) Add-backs: stock comp, restructuring, impairments	608	1,071	1,408	1,346	1,216	1,660	1,165	1,165
Adj. EBITDA	$904	$787	$1,538	$2,615	$3,293	$3,227	$3,389	$3,522
Margin	5.1%	4.5%	7.0%	10.8%	13.6%	12.6%	12.3%	11.9%
(-) Restructuring and other cash add-backs	--	--	--	--	--	(495)	--	--
Cash EBITDA	$904	$787	$1,538	$2,615	$3,293	$2,732	$3,389	$3,522
(-) Interest Expense (Cash Only)	(40)	(85)	(130)	(206)	(246)	(393)	(297)	(297)
(-) Cash Taxes	--	--	--	--	(129)	(265)	(265)	(265)
(-) Capex	(134)	(171)	(151)	(154)	(155)	(169)	(182)	(196)
(+/-) Working Capital and Other	(16)	(527)	(1,307)	(702)	(338)	1,549	--	--
Memo: FCF	$714	$5	($50)	$1,553	$2,425	$3,453	$2,645	$2,764
% of Debt	12.5%	0.1%	(0.9%)	27.1%	42.4%	60.3%	46.2%	48.3%

Liquidity

Unrestricted Cash	$7,859.3
Undrawn Revolver	900.0
Total Liquidity	$8,759.3
(-) Debt due through 2028	(573.5)
(+/-) Free cash flow, last twelve months	3,453.4
Liquidity after maturities and a year of cash flow	$11,639.2

Tranches are from the debt table in the latest quarterly or annual report.Blue figures are inputs in the model. Price is 100% of face unless marked *, which is a bond fund's own valuation from its SEC holdings report, not a traded price.Secured and unsecured are judged from each instrument's name. Adj. EBITDA is operating income plus D&A, stock compensation, restructuring and impairment charges as tagged in SEC filings; it is not the company's own adjusted figure. Free cash flow is cash from operations less capital spending.

The basket review for this company has not finished yet. When it does, this tab shows the dollar capacity to move value or prime lenders, the playbook moves that fit, and what they would do to each tranche. Meanwhile, see the liability management playbook.

Key Financials

	2021A	2022A	2023A	2024A	2025A	LTM	3Q27E LTM	3Q28E LTM
Revenue	$17,661	$17,532	$21,916	$24,121	$24,194	$25,646	$27,615	$29,638
Y/Y Growth		(0.7%)	25.0%	10.1%	0.3%		7.7%	7.3%
(-) Cost of Revenue	(13,241)	(11,540)	(14,411)	(15,232)	(13,834)	(13,464)	(14,392)	(15,454)
Gross Profit	$4,420	$5,992	$7,505	$8,889	$10,360	$12,183	$13,223	$14,184
Gross Margin	25.0%	34.2%	34.2%	36.9%	42.8%	47.5%	47.9%	47.9%
(+/-) Other Operating Costs, net of D&A	(4,124)	(6,276)	(7,375)	(7,621)	(8,282)	(10,616)	(10,999)	(11,827)
EBITDA	$296	($284)	$130	$1,269	$2,078	$1,567	$2,224	$2,357
(+) Add-backs: stock comp, restructuring, impairments	608	1,071	1,408	1,346	1,216	1,660	1,165	1,165
Adj. EBITDA	$904	$787	$1,538	$2,615	$3,293	$3,227	$3,389	$3,522
Margin	5.1%	4.5%	7.0%	10.8%	13.6%	12.6%	12.3%	11.9%
(-) Restructuring and other cash add-backs	--	--	--	--	--	(495)	--	--
Cash EBITDA	$904	$787	$1,538	$2,615	$3,293	$2,732	$3,389	$3,522
(-) Interest Expense (Cash Only)	(40)	(85)	(130)	(206)	(246)	(393)	(297)	(297)
(-) Cash Taxes	--	--	--	--	(129)	(265)	(265)	(265)
(-) Capex	(134)	(171)	(151)	(154)	(155)	(169)	(182)	(196)
(+/-) Working Capital and Other	(16)	(527)	(1,307)	(702)	(338)	1,549	--	--
Memo: FCF	$714	$5	($50)	$1,553	$2,425	$3,453	$2,645	$2,764
% of Debt	12.5%	0.1%	(0.9%)	27.1%	42.4%	60.3%	46.2%	48.3%

Key Drivers

Driver	4Q25A	1Q26A	2Q26A	3Q26A	4Q26E	1Q27E	2Q27E	3Q27E	4Q27E	1Q28E	2Q28E	3Q28E	Sensitivity	Next 12m impact ($mm)
Square gross payment volume (GPV) $ billion per quarter	65.0	61.2	72.8	76.4	73.4	69.8	83.0	87.0	83.7	79.6	94.6	99.2	$29.2mm on revenue	1,104
Cash App monthly transacting actives million	59.0	59.0	59.0	60.0	60.5	60.8	60.8	61.8	62.3	62.6	62.6	63.7	$38.4mm on revenue	265
Cash App commerce enablement monetization rate basis points of commerce volume	161	161	165	174	174	174	174	174	174	174	174	174	$5.7mm on revenue	199
Cash App consumer lending origination volume $ billion per quarter	18.5	17.6	18.9	19.0	21.3	20.2	21.7	21.9	24.5	23.2	25.0	25.2	$36.0mm on revenue	400
Risk loss rate (transaction, loan and consumer receivable losses over consumer lending originations) percent of originations	2.76	2.84	3.10	3.17	3.17	3.17	3.17	3.17	3.17	3.17	3.17	3.17	$190.0mm on other operating costs	154

Block's credit rests on two engines: Square payment volume, which accelerated to 14% growth in Q3 2026, and Cash App, where gross profit is rising 27% on fast growth in short-term consumer lending rather than on new users (actives are up only 4%). Management guides 2027 gross profit up at least 15% and Adjusted Operating Income up 30% to about $4.6 billion, so the question for the next year is whether Borrow and Afterpay originations keep compounding while the loss rate, which has climbed from about 2.2% to 3.2% of originations in two years, levels off as the company says it will in Q4 2026.

Bottoms-Up Projections: starting case

$ in millions	4Q25A	1Q26A	2Q26A	3Q26A	4Q26E	1Q27E	2Q27E	3Q27E	4Q27E	1Q28E	2Q28E	3Q28E
Revenue	$6,253	$6,057	$6,618	$6,719	$6,731	$6,544	$7,135	$7,204	$7,216	$7,008	$7,662	$7,752
Y/Y Growth	3.6%	4.9%	9.3%	9.9%	7.7%	8.1%	7.8%	7.2%	7.2%	7.1%	7.4%	7.6%
Adj. EBITDA	$875	$758	$801	$792	$899	$743	$902	$845	$937	$767	$937	$880
Margin	14.0%	12.5%	12.1%	11.8%	13.4%	11.3%	12.6%	11.7%	13.0%	10.9%	12.2%	11.4%
Free Cash Flow	$580	$935	$967	$972	$714	$559	$714	$657	$749	$581	$746	$689
Cash, end of period	6,564	6,858	6,427	7,859	8,574	9,132	9,847	10,504	11,253	11,833	12,579	13,268
Total Debt, end of period	7,289	7,293	5,721	5,723	5,723	5,723	5,723	5,723	5,723	5,723	5,723	5,723
Net Debt / Adj. EBITDA	0.2x	0.1x	-0.2x	-0.7x	-0.9x	-1.1x	-1.2x	-1.4x	-1.6x	-1.8x	-2.0x	-2.1x

Revenue is built from Commerce Enablement, Bitcoin Ecosystem, Financial Solutions, each driven by volume and by price and mix against the same quarter a year earlier. Every cost line, interest, taxes, capital spending and working capital has its own input on the Projections tab of the model. This is a starting case built from history, not a forecast.

Earnings call: Q3 2026 · Nov 3, 2026

Slides Webcast and audio replay Prepared remarks Investor relations site

Block beat its Q3 2026 guidance, lifted full-year 2026 targets again and gave a first look at 2027 that calls for at least 15% gross profit growth and a 32% adjusted operating margin.

Takeaways

Gross profit rose 22% to $3.24 billion. Cash App grew 27% and Square grew 14%, the best Square GPV growth since early 2023. Bitcoin gross profit fell by half after a fee cut.
Adjusted operating income nearly doubled to $923 million, a record 29% of gross profit. GAAP operating income was only $428 million because of $435 million of contingency and restructuring charges, mostly accrued legal costs.
Free cash flow was $972 million in the quarter and $3.45 billion over twelve months. Non-GAAP cash flow, which nets out lending growth, was $668 million.
Liquidity was $10.1 billion, made up of $9.2 billion of cash and marketable securities plus revolver capacity. Another $809 million was undrawn on warehouse lines.
Lending keeps growing fast. Cash App originations rose 40% to $19.0 billion and credit losses rose 66%. Management says margins per loan held steady and expects loss growth to slow in Q4.
Legal accruals are a watch item. Contingency charges total about $1.5 billion so far in 2026, and accrued liabilities roughly doubled to $3.1 billion since year end.

Debt and capital

Long-term debt was $5.72 billion at September 30, and $1.57 billion of debt is now classified as current, meaning it comes due within a year.
Warehouse funding facilities totaled about $1.54 billion, used to fund consumer and seller loans. Net warehouse draws of about $1.0 billion over twelve months helped fund $2.4 billion of lending book growth.
Block repaid $575 million of convertible notes so far in 2026 and has not issued new senior notes this year.
Share buybacks were about $701 million in the first nine months, down from about $1.54 billion a year earlier.
No new leverage target, refinancing plan or rating action was discussed in the published materials. Management plans to reinvest profit upside into new growth bets.

Guidance

2026 raised: gross profit $12.626 billion (up 22%), adjusted operating income $3.519 billion (28% margin) and adjusted diluted EPS $4.15 (up 75%).
Q4 2026: gross profit $3.315 billion (up about 15%), adjusted operating income $1.005 billion (30% margin) and adjusted diluted EPS $1.15.
2027 preliminary outlook, new: gross profit growth of at least 15% to about $14.5 billion and adjusted operating income up 30% to $4.575 billion (32% margin). Both sit well ahead of Investor Day targets.
Square gross profit is expected to grow roughly in line with GPV, and Cash App actives should grow at least at a low single digit rate in 2027. Full 2027 detail comes on the Q4 call in February.

Tone: Confident and upbeat, with management stressing record profit, margin gains running a year ahead of plan and heavy reinvestment in AI and Neighborhoods.

Q2 2026Slides · Webcast
Q1 2026Slides · Webcast
Q4 2025Slides · Webcast

Summary written with AI from Company-published prepared remarks from the Q3 2026 call plus the Q3 2026 shareholder letter (8-K Exhibit 99.1). The Q&A portion is not in the published remarks, so analyst questions are not covered.. Slides, audio and any transcript are the company's and open on its own site. Full transcripts from transcript vendors are not reproduced here.

Last quarter: Third quarter 2026

Block beat its Q3 guidance with 22% gross profit growth and $923mm Adjusted Operating Income, and raised 2026 targets.

Results

Revenue was $6.72bn, up from $6.11bn a year earlier; gross profit rose 22% to $3.24bn, with Cash App at $2.07bn (+27%) and Square at $1.16bn (+14%).
Adjusted EBITDA was $1.23bn, up from $833mm, a 38% margin on gross profit; Adjusted Operating Income nearly doubled to $923mm.
GAAP operating income was only $428mm because of $435mm of contingency, restructuring and other charges, mostly accrued legal costs.
Free cash flow (operating cash flow less capex) was $972mm on $44mm of capex; the company's Non-GAAP Cash Flow, which nets out lending and warehouse flows, was $668mm.

Why

Cash App lending drove growth: Financial Solutions gross profit rose 32% and consumer lending originations rose 40% to $19.0bn, led by Borrow and Afterpay Post-Purchase.
Square payment volume grew 14% to $76.4bn, the fastest pace since early 2023, helped by new sellers from self-onboarding, field sales and ISO partners.
Margins expanded as non-GAAP product development and G&A costs fell after the February workforce changes, while sales and marketing spend rose.
Bitcoin Ecosystem gross profit fell 50% after Cash App cut fees on some bitcoin trades, and loan and receivable losses rose 66% with loan growth.

Balance sheet and guidance

Total liquidity was $10.1bn: $9.2bn of cash, restricted cash and marketable debt securities plus $900mm undrawn on the revolver, with another $809mm available under warehouse facilities.
Long-term debt was $5.72bn with no current portion, after repaying $1.0bn of senior notes and $575mm of convertible notes in the first nine months; warehouse borrowings were $1.54bn.
Lending balances (consumer receivables and loans) reached $7.49bn, up $2.43bn from a year earlier, and the company bought back $701mm of stock year to date.
Full-year 2026 gross profit guidance raised to $12.626bn from $12.51bn in August.
Full-year 2026 Adjusted Operating Income guidance raised to $3.519bn (28% margin) from $3.47bn; Adjusted Diluted EPS raised to $4.15 from $4.02.
Fourth quarter 2026 guidance: gross profit of $3.315bn (+15%) and Adjusted Operating Income of $1.005bn (30% margin).
Preliminary 2027 outlook: gross profit growth of at least 15% and Adjusted Operating Income of $4.575bn, up 30%.

What to watch

Legal and other contingency charges: $435mm this quarter and about $1.54bn over the first nine months, mostly accrued legal costs in G&A; watch for cash settlements.
Credit losses after the Borrow move to six-week loans: the company plans to raise Borrow limits again soon and expects loss growth to slow in the fourth quarter.
Funding of the lending book: lending balances grew $2.43bn in a year, partly through warehouse lines, and Bitcoin gross profit and the bitcoin investment value remain volatile.

From the company's press release filed Nov 3, 2026. Figures in this section are as the company reports them, including its own adjusted EBITDA.

Filings

Earnings releases 8

Nov 3, 20268-K for Nov 3, 2026: Results
Aug 5, 20268-K for Aug 5, 2026: Results · Press release
May 7, 20268-K for May 7, 2026: Results · Press release
Feb 26, 20268-K for Feb 26, 2026: Results; Restructuring · Press release
Nov 6, 20258-K for Nov 6, 2025: Results · Press release
Aug 7, 20258-K for Aug 7, 2025: Results · Press release
May 1, 20258-K for May 1, 2025: Results · Press release
Feb 20, 20258-K for Feb 20, 2025: Results · Press release

Annual reports (10-K) 5

Quarterly reports (10-Q) 12

Current reports (8-K) 20

Nov 2, 20268-K for Oct 28, 2026: Bylaw change
Jun 18, 20268-K for Jun 16, 2026: Shareholder vote
Jun 5, 20268-K for Jun 5, 2026: Director or officer change
May 4, 20268-K for Apr 30, 2026: Director or officer change
Jan 23, 20268-K for Jan 21, 2026: Director or officer change
Jan 14, 20268-K for Jan 14, 2026: Material agreement; New debt
Nov 19, 20258-K for Nov 19, 2025: Other event
Aug 21, 20258-K for Aug 18, 2025: Director or officer change
Aug 18, 20258-K for Aug 13, 2025: Material agreement; New debt; Other event
Jun 20, 20258-K for Jun 17, 2025: Director or officer change; Shareholder vote
Feb 6, 20258-K for Feb 6, 2025: Director or officer change
Jun 21, 20248-K for Jun 18, 2024: Shareholder vote
May 9, 20248-K for May 6, 2024: Material agreement; New debt; Other event
Apr 15, 20248-K for Apr 10, 2024: Director or officer change
Apr 1, 20248-K for Mar 29, 2024: Material agreement; New debt
Feb 9, 20248-K for Feb 9, 2024: Director or officer change
Sep 18, 20238-K for Sep 13, 2023: Director or officer change
Jul 27, 20238-K for Jul 27, 2023: Director or officer change
Jul 11, 20238-K for Jul 5, 2023: Director or officer change
Jun 15, 20238-K for Jun 13, 2023: Shareholder vote

Proxy statements 3

Links open the document on SEC EDGAR. Earnings call transcripts are not SEC filings and belong to their publishers, so they are not reproduced here; the press release and slides filed with each results 8-K are.

Rating actions

Invalid DateMoody's: Upgraded to Ba1 from Ba2. The 2025 10-K reports a Ba1 rating received during 2025, after the Q3 2025 10-Q still showed Ba2, placing the upgrade in the fourth quarter; the filing gives no stated reason. · source
Invalid DateMoody's: Affirmed Ba2. Company reported the rating was affirmed in the third quarter of 2025, around its August 2025 senior notes offering. · source
Invalid DateS&P: Affirmed BB+. Company reported the rating was affirmed in the third quarter of 2025, around its August 2025 senior notes offering. · source
Invalid DateFitch: Affirmed BBB-. Company reported the rating was affirmed in the third quarter of 2025, around its August 2025 senior notes offering. · source
Invalid DateFitch: Upgraded to BBB- from BB+ (investment grade). Company reported receiving an investment grade rating from Fitch in the second quarter of 2025; the filing gives no stated reason. · source

Coming up

Feb 25, 2027Results. Full-year results for the period ending 2026-12-31. The date is an estimate: last year's filing date moved forward a year.
2027Maturity. Convertible Senior Notes due 2027: $574mm outstanding comes due.

Recent 8-K filings

Nov 3, 2026Reported results
Aug 5, 2026Reported results
Jun 18, 2026Shareholder vote