Block Inc (NYSE:SQ) will hand down its fourth quarter earnings next month with expectations skewed toward a modest beat, though Jefferies analysts say the stock will likely need clearer near-term earnings momentum and improved visibility into Square’s profitability trends to move meaningfully higher.
Wall Street analysts, on average, expect revenue to increase to $6.36 billion from $6.03 billion, while earnings per share are expected to decline to $0.65 from $0.71.
“Q4 should beat,” Jefferies wrote, supported by seasonal factors and contributions from both the Square and Cash App ecosystems, but cautioned that investor confidence hinges on progress toward longer-term targets.
Jefferies is modeling Square gross payment volume (GPV) growth of about 10% year over year in Q4, in line with the company’s December update. That outlook reflects US GPV growth of roughly 7.5%, down from 9% in Q3, and international GPV growth of about 20% on a constant-currency basis.
The analysts attribute the expected deceleration to weaker same-store sales tied to October weather, as well as difficult comparisons against a strong holiday season in the prior year.
The analysts see potential upside to Block’s Q4 gross profit guidance, largely driven by Cash App. A one-percentage-point gross profit beat would imply Cash App gross profit growth of around 28% year over year, compared with Street expectations closer to 24%.
That upside scenario is underpinned by strong growth in Cash App Borrow, with originations expected to reach roughly $7.1 billion, up about 165% year over year, alongside higher monthly active users and increased volume per user, the analysts noted. Easier year-ago comparisons are also expected to contribute to an acceleration in ex-Borrow Cash App gross profit growth.
On the Square side, Jefferies expects continued pressure on profitability metrics. The analysts forecast a negative spread of roughly 250 basis points between Square gross profit and GPV in the fourth quarter, driven by higher processing costs, hardware discounting tied to new merchant acquisition, and a change to the Square Loans underwriting model that temporarily weighed on originations during the quarter.
Looking ahead, Jefferies expects management to emphasize accelerating GPV growth in the first quarter of 2026, supported by typical seasonal patterns, tax refund-related spending, and continued expansion of the field sales force.
Based on historical seasonality, the analysts believe GPV acceleration of more than 150 basis points from the fourth quarter is achievable.
While gross profit growth is expected to accelerate into early 2026, Jefferies is cautious on near-term operating income upside. The firm sees limited room for a significant Q4 adjusted operating income beat, given operating expense growth that appears in line with normal seasonal patterns after adjusting for one-time costs in Q3.
The analysts also note ongoing investor concern around Q1 2026 operating income guidance, even as Street estimates already reflect lower incremental margins compared with the fourth quarter.
Jefferies maintains a ‘Buy’ rating on Block with a $75 price target, implying upside from current levels of about $64.
Block will report its Q4 earnings on February 19.