How Block’s reliance on Cash App contributed to rough Q1 earnings

The news: Block’s gross profit increased 9% YoY in Q1 2025, per its earnings release—down from 22% a year ago.

• Cash App’s gross profit grew 10% YoY, versus 25% in Q1 2024.
• Square’s gross product increased 9% YoY, compared with 19% a year ago.

Why it matters: Across metrics, Block missed Wall Street analyst expectations, and the company cut its full-year adjusted operating income guidance from $2.1 billion to $1.9 billion.

CEO Jack Dorsey said in his shareholder letter that “growth in the first half of this year does not meet our bar.” And investors agreed, sending its share price down more than 20% on Friday.

What’s happening: Block attributed “the majority” of its forecast miss to weaker consumer spending and macroeconomic uncertainty. Spending in discretionary categories like travel and media fell the most.

But economics aside, much of Block’s issues center on Cash App.

• The number of Cash App monthly actives has been stagnant since March 2024.
• Total Cash App inflows grew 7% YoY, versus 17% a year ago.

The company attributed the inflows slowdown to fewer people depositing their tax returns into Cash App in February-March. Tax refunds are typically a large driver of Cash App inflows in Q1. It’s unclear whether fewer people decided to deposit in Cash App this year or whether more people than usual waited to file until April.