Second Quarter 2026 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2026 OR

• TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-37622

(Exact name of registrant as specified in its charter)

Delaware 80-0429876

(State or other jurisdiction of incorporation or organization)

1955 Broadway, Suite 600

Oakland, CA 946121

(Address of principal executive offices, including zip code)

(415) 375-3176

(Registrant's telephone number, including area code)

(I.R.S. Employer Identification No.)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class Trading Symbol(s) Name of each exchange on which registered

Class A common stock, $0.0000001 par value per share XYZ New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July 31, 2026, the number of shares (in thousands) of the registrant's Class A and Class B common stock outstanding were 540,816 and 59,979, respectively.

1 We have adopted a distributed work model and, therefore, have no formal headquarters. This address represents our "principal executive office," which we are required to identify under Securities and Exchange Commission rules.

TABLE OF CONTENTS

Page No.

Item 1. Financial Statements

Condensed Consolidated Statements of Operations (unaudited) 5

Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited) 6

Condensed Consolidated Statements of Stockholders' Equity (unaudited) 7

Notes to the Condensed Consolidated Financial Statements (unaudited) 10

Item 3. Q uantitative and Q ualitative Disclosures About Market Risk 54

PART II-Other Information

Item 1A. Risk Factors 55

Item 3. Defaults Upon Senior Securities 94

Item 5. Other Information 94

Signatures 96

‌CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as "may," "will," "appears," "should," "expects," "plans," "anticipates," "could," "intends," "target," "projects," "contemplates," "believes," "estimates," "predicts," "potential," or "continue," or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans, or intentions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about our future financial and operating performance, our expectations regarding transaction and loan losses, the adequacy of our allowance for credit losses on loans held for investment, or increased delinquencies, and the impact of inaccurate estimates or inadequate reserves, our anticipated growth and growth strategies and our ability to effectively manage that growth, our ability to invest in and develop our products and services to operate with changing technology, including our ability and timing to integrate artificial intelligence ("AI") and cryptocurrency features into our business and products, the expected benefits of AI tools to our employees, to our customers, to the pace of our innovation and to our overall business, the expected benefits of our products to our customers and the impact of our products on our business, our expectations regarding product launches, trends in our markets and the continuation of such trends, our expectations related to our workforce reduction and anticipated costs, impact, risks and benefits of such action, our plans with respect to patents and other intellectual property, our expectations regarding litigation and regulatory matters, the adequacy of reserves for such matters and the impact of any such matters or settlements thereof on our business, our expectations regarding share-based compensation, our expectations regarding the impacts of accounting guidance and the timing of our compliance therewith, our expectations regarding restricted cash, and the sufficiency of our cash and cash equivalents and cash generated from operations to meet our working capital and capital expenditure requirements.

We have based these forward-looking statements on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations, prospects, business strategy, and financial needs. The outcome of the events described in these forward-looking statements is subject to known and unknown risks, uncertainties, and other factors described in the section titled "Risk Factors" and elsewhere in this Quarterly Report on Form 10-Q. We operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. We cannot assure you that the results, events, and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements.

All forward-looking statements are based on information and estimates available to us at the time of filing this Quarterly Report on Form 10-Q and are not guarantees of future performance. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law.

‌Stockholders' equity:

Preferred stock, $0.0000001 par value: 100,000 shares authorized at June 30, 2026 and December 31, 2025. None issued and outstanding at June 30, 2026 and December 31, 2025.

-

-

Class A common stock, $0.0000001 par value: 1,000,000 shares authorized at June 30, 2026 and December 31, 2025; 540,782

and 542,085 issued and outstanding at June 30, 2026 and December 31, 2025, respectively. - -

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4

‌BLOCK, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share data)

Three Months Ended June 30,

Six Months Ended June 30,

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5

‌BLOCK, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited) (In thousands)

Three Months Ended June 30,

Six Months Ended June 30,

(i) Includes foreign currency translation gains related to goodwill of $10.8 million and $118.2 million for the three and six months ended June 30, 2026, respectively. The three and six months ended June 30, 2025 includes foreign currency translation gains related to goodwill of $312.4 million and

$398.4 million, respectively.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

6

‌BLOCK, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited) (In thousands)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

7

BLOCK, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited) (In thousands)

Six Months Ended June 30,

2026 2025

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

8

‌BLOCK, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued

(Unaudited) (In thousands)

Six Months Ended June 30,

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

9

BLOCK, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 - DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business

Block, Inc. (together with its subsidiaries, "Block" or the "Company") creates tools that empower businesses, sellers, and individuals to participate in the economy. Block is comprised of two reportable segments, Square and Cash App. Square is a cohesive commerce ecosystem that helps sellers start, run, and grow their businesses, including enabling sellers to accept card payments, providing reporting and analytics, and facilitating next-day settlement. Square's point-of-sale software and other business services help sellers manage inventory, locations, and employees; access financial solutions; engage buyers; build a website or online store; and grow sales. Cash App is an ecosystem of financial products and services focused on helping consumers make their money go further by enabling customers to store, send, receive, spend, invest, buy now, pay later ("BNPL"), borrow, or save their money. Cash App seeks to redefine the world's relationship with money by making it more relatable, instantly available, and universally accessible.

Block was founded in 2009 and has offices globally. The Company operates under a distributed work model and does not designate a headquarters

location.

Basis of Presentation

The accompanying interim condensed consolidated financial statements of the Company are unaudited. These interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP") and the applicable rules and regulations of the United States ("U.S.") Securities and Exchange Commission ("SEC") for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The December 31, 2025 condensed consolidated balance sheet was derived from the audited financial statements as of that date, but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements.

The accompanying unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments of a normal recurring nature considered necessary to state fairly the Company's consolidated financial position, results of operations, comprehensive income (loss), and cash flows for the interim periods. The condensed consolidated financial statements include the financial statements of Block and its wholly-owned and majority-owned subsidiaries, including variable interest entities for which the Company is deemed to be the primary beneficiary. All intercompany transactions and balances have been eliminated in consolidation. Minority interests are recorded as a noncontrolling interest, which is reported as a component of stockholders' equity on the condensed consolidated balance sheets. The interim results for the three and six months ended June 30, 2026 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026, or for any other future annual or interim period.

The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Consolidated Financial Statements and related notes in the Company's Annual Report on Form 10-K for the year ended December 31, 2025.

Reclassifications

Certain prior period amounts reported in our condensed consolidated statements of operations and notes thereto have been reclassified to conform to the current year presentation.

The reclassifications in the condensed consolidated statements of operations primarily represent changes to present revenue line items consisting of Commerce enablement, Financial solutions, and Bitcoin ecosystem. The Company believes this updated presentation will improve the usefulness of the financial information for the reader and is more reflective of the business today.

10

The presentation of cost of revenues has been conformed to reflect the changes related to the presentation of revenues. Such reclassifications related to the presentation of revenues and cost of revenues had no impact on total revenues, gross profit, operating income, or net income previously reported.

Use of Estimates

The preparation of the Company's condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses, as well as related disclosure of contingent assets and liabilities. Actual results could differ from the Company's estimates. To the extent that there are material differences between these estimates and actual results, the Company's financial condition or operating results will be materially affected. The Company bases its estimates on current and past experience, to the extent that historical experience is predictive of future performance and other assumptions that the Company believes are reasonable under the circumstances. The Company evaluates these estimates on an ongoing basis.

Estimates, judgments, and assumptions in these condensed consolidated financial statements include, but are not limited to, those related to accrued transaction losses, contingencies, including outcomes from claims and disputes, valuation of loans held for sale, valuation of goodwill and acquired intangible assets, determination of goodwill and intangible asset impairment charges, determination of allowance for credit losses for loans held for investment, determination of allowance for credit losses for consumer receivables, allocation of acquired goodwill to reporting units, income and other taxes, operating lease right-of-use assets and related liabilities, severance and restructuring charges, and share-based compensation.

The Company's estimates of valuation of loans held for sale, allowance for credit losses associated with consumer receivables and loans held for investment, and accrued transaction losses are based on historical experience, adjusted for market data relevant to the current economic environment. The Company will continue to update its estimates as developments occur and additional information is obtained. Refer to Note 5, Fair Value Measurements for further details on amortized cost over fair value of the loans, Note 6, Consumer Receivables, net for further details on consumer receivables, Note 7, Customer Loans for further details on customer loans, and Note 9, Other Consolidated Balance Sheet Components (Current) for further details on transaction losses.

Concentration of Credit Risk

For the three and six months ended June 30, 2026 and June 30, 2025, the Company had no customer that accounted for greater than 10% of total net

revenue.

The Company had four third-party payment processors that represented approximately 44%, 14%, 14%, and 11% of settlements receivable as of June 30, 2026. As of December 31, 2025, the Company had four third-party processors that represented approximately 36%, 25%, 11% and 10% of settlements receivable. In both periods, all other third-party payment processors were insignificant. Certain of the Company's products are reliant on third-party service providers such as partner banks, card issuers, and payment service providers. The Company's relationships with third-party service providers may result in operational concentration risks for some of these products.

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, restricted cash, marketable debt securities, settlements receivable, customer funds, consumer receivables, loans held for sale, and loans held for investment. To mitigate the risk of concentration associated with cash and cash equivalents, as well as restricted cash, funds are held with creditworthy institutions and, at certain times, temporarily swept into insured programs overnight to reduce single firm concentration risk. Amounts on deposit may exceed federal deposit insurance limits. The associated risk of concentration for marketable debt securities is mitigated by holding a diversified portfolio of highly rated investments. Settlements receivable are amounts due from well-established payment processing companies and normally take one or two business days to settle, which mitigates the associated risk of concentration. The associated risk of concentration for loans and consumer receivables is partially mitigated by credit evaluations that are performed prior to facilitating the offering of loans and receivables and ongoing performance monitoring of the Company's loan customers.

11

Sales and Marketing Expenses

Advertising costs are expensed as incurred and included in sales and marketing expenses on the condensed consolidated statements of operations. Total advertising costs were $137.3 million and $239.4 million for the three and six months ended June 30, 2026, respectively, compared to $119.0 million and

$209.6 million for the three and six months ended June 30, 2025, respectively. The Company also records services, incentives, and other costs to acquire customers that are not directly related to a revenue generating transaction as sales and marketing expenses, as the Company considers these to be marketing costs to encourage the usage of Cash App. These expenses include, but are not limited to, Cash App peer-to-peer processing costs and related transaction losses, overdraft losses, card issuance costs, customer referral bonuses, and promotional giveaways. These costs are generally expensed as incurred. The Company recorded $279.8 million and $576.4 million for the three and six months ended June 30, 2026, respectively, compared to $211.6 million and $415.1 million for the three and six months ended June 30, 2025, respectively, for such expenses.

Recent Accounting Pronouncements

Recently Issued Accounting Pronouncements Not Yet Adopted

In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses ("ASU 2024-03"), and in January 2025, the FASB issued ASU No. 2025-01, Clarifying the Effective Date ("ASU 2025-01"). The amendments are intended to enhance disclosures regarding an entity's costs and expenses by requiring additional disaggregated information disclosures about certain income statement expense line items. The amendments, as clarified by ASU 2025-01, are effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is evaluating the effect of adopting the new disclosure requirements.

NOTE 2 - REVENUE

The following table presents the Company's net revenue disaggregated by revenue source (in thousands):

Three Months Ended

Six Months Ended

(i) Revenue from other sources relates to revenue generated from the Company's Square Loans, Cash App Borrow loans, consumer receivables originated through, and affiliate relationship revenue from, our BNPL products, Afterpay Post-Purchase loans, interest income earned on customer funds, and interest income earned on funds held by Square Financial Services, Inc., which is a Utah state-chartered industrial loan company ("Square Financial Services").

12

NOTE 3 - INVESTMENTS IN DEBT SECURITIES

The Company's short-term and long-term investments in debt securities as of June 30, 2026 and December 31, 2025 were as follows (in thousands):

June 30, 2026

Amortized Cost

Gross Unrealized Gains

Gross Unrealized

Losses Fair Value

December 31, 2025

Gross Unrealized Gross Unrealized

The amortized cost of investments classified as cash equivalents approximated the fair value due to the short-term nature of the investments.

13

The Company's gross unrealized losses and fair values for those investments that were in an unrealized loss position as of June 30, 2026 and December 31, 2025, aggregated by investment category and the length of time that individual securities have been in a continuous loss position were as follows (in thousands):

June 30, 2026

Less than 12 Months Greater than 12 Months Total

Gross Unrealized

Gross Unrealized

Gross Unrealized

December 31, 2025

Less than 12 Months Greater than 12 Months Total

Fair Value

Gross Unrealized

Losses Fair Value

Gross Unrealized

Losses Fair Value

Gross Unrealized Losses

The Company does not intend to sell nor anticipate that it will be required to sell these securities before recovery of the amortized cost basis. Unrealized losses on available-for-sale debt securities were determined not to be related to credit related losses, therefore, an allowance for credit losses was not required.

The contractual maturities of the Company's short-term and long-term investments as of June 30, 2026 were as follows (in thousands):

14

NOTE 4 - CUSTOMER FUNDS

The following table presents the assets underlying customer funds (in thousands):

(i) The Company has accounted for the reverse repurchase agreement with a third party as an overnight lending arrangement, collateralized by the securities subject to the repurchase agreement. The Company classifies the amounts due from the counterparty as cash equivalents due to their short term nature.

The amortized cost of investments classified as cash equivalents approximated the fair value due to the short-term nature of the investments.

15

NOTE 5 - FAIR VALUE MEASUREMENTS

The Company measures its cash equivalents, customer funds, short-term and long-term marketable debt securities, marketable equity investments, and bitcoin investment at fair value. The Company classifies these investments within Level 1 or Level 2 of the fair value hierarchy because the Company values these investments using quoted market prices or alternative pricing sources and models utilizing market observable inputs.

The Company's assets and liabilities that are measured at fair value on a recurring basis were classified as follows (in thousands):

The carrying amounts of certain financial instruments, including settlements receivable, consumer receivables, accounts payable, customers payable, accrued expenses, and settlements payable, approximate their fair values due to their short-term nature. The carrying amounts of the Company's warehouse funding facilities approximate their fair values.

16

The Company estimates the fair value of its convertible and senior notes based on their last actively traded prices (Level 1) or market observable inputs (Level 2). The estimated fair value and carrying value of the convertible and senior notes were as follows (in thousands):

June 30, 2026 December 31, 2025

Fair Value (Level Fair Value (Level

The estimated fair value and carrying value of loans held for sale and loans held for investment were as follows (in thousands):

June 30, 2026 December 31, 2025

If applicable, the Company will recognize transfers into and out of levels within the fair value hierarchy at the end of the reporting period in which the actual event or change in circumstance occurs. During the three and six months ended June 30, 2026 and June 30, 2025, the Company did not have any transfers in or out of Level 1, Level 2, or Level 3 assets or liabilities.

NOTE 6 - CONSUMER RECEIVABLES, NET

Consumer receivables represent amounts due from consumers for outstanding installment payments on orders processed through the Company's Pay in 4, Advertising and Affiliate, and Afterpay Card BNPL products. Consumer receivables are classified as held for investment. These receivables are typically interest free and are generally due within 14 to 56 days.

The Company classifies consumer receivables as held for sale when the Company has the intent to sell all of its rights, title, and interest in these receivables to third-party investors, and there is an available market for such receivables. For the three and six months ended June 30, 2026, no consumer receivables were reclassified from held for investment to held for sale and sold to third parties. For the three and six months ended June 30, 2025, $210.0 million and $420.0 million of consumer receivables were reclassified from loans held for investment to loans held for sale and sold to third parties, respectively, resulting in immaterial net losses.

The Company closely monitors credit quality for consumer receivables to manage and evaluate its related exposure to credit risk. The criteria the Company monitors when assessing the credit quality and risk of its consumer receivables portfolio is primarily based on internal risk assessments, as they provide insight into customer risk profiles and are useful as indicators of potential future credit losses. Consumer receivables are internally rated as "Pass" or "Classified." Pass rated consumer receivables generally consist of consumer receivables that are current or up to 60 days past due. Classified consumer receivables are generally comprised of consumer receivables that are greater than 60 days past due and have a higher risk of default. Internal risk ratings are reviewed and, generally, updated at least once a year. As of June 30, 2026, the amortized cost of Pass rated consumer receivables was $2.6 billion and the amount of Classified consumer receivables was $151.7 million.

17

The following table presents an aging analysis of the amortized cost of consumer receivables by delinquency status (in thousands):

The amount listed as 1 - 60 days past due in the above table includes $255.3 million and $245.4 million of cash in transit as of June 30, 2026 and December 31, 2025, respectively, which reflects ongoing repayments from consumers that have been sent from consumers' bank accounts but have not yet been received at the Company's bank account as of the date of the financial statements.

Consumer receivables are charged off when they are over 180 days past due as the Company has no reasonable expectation of recovery. When consumer receivables are charged off, the Company recognizes the charge against the allowance for credit losses. While the Company expects collections at that point to be unlikely, the Company may recover amounts from the respective consumers. Any subsequent recoveries following charge-off are credited to transaction, loan, and consumer receivable losses on the condensed consolidated statements of operations in the period they are recovered. The amount of recoveries for both the three and six months ended June 30, 2026 and June 30, 2025 were immaterial.

The following table summarizes activity in the allowance for credit losses for consumer receivables (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Customer loans primarily consist of Square Loans, Cash App Borrow, Afterpay Post-Purchase, and Pay Monthly products. Square Loans are originated by the Company's wholly-owned subsidiary, Square Financial Services, to qualified Square sellers. The majority of Square Loans are sold to third-party investors with a portion retained on the Company's balance sheet. Cash App Borrow and Afterpay Post-Purchase are credit products for consumers that allow customers to access short-term loans for a fee. Pay Monthly is a buy now, pay later product that allows consumers to pay for larger transaction sizes over a three-, six-, twelve-, or twenty-four-month period using a monthly payment option. Historically, these loans were originated through a partnership with a third-party industrial bank from whom the Company purchased the loans obtaining all rights, title, and interest, and were classified as held for sale on the Company's balance sheet. Beginning in the second quarter of 2025, the Company also began originating Cash App Borrow and Afterpay Post-Purchase loans through Square Financial Services, which are retained on the Company's balance sheet and classified as held for investment. Beginning July 1, 2025, Cash App Borrow loans, Afterpay Post-Purchase loans, Pay Monthly, and certain other customer loan products purchased from the partnership with the third party, along with all customer loan products originated through Square Financial Services, are retained on the Company's balance sheet and classified as held for investment.

The Company classifies customer loans as held for investment when the Company has both the intent and ability to hold them for the foreseeable future, until maturity, or until payoff. Customer loans are classified as held for sale when there is an available market for such loans and it is the Company's intent to sell all of its rights, title, and interest in these loans to third-party investors. The Company's intent and ability in the future may change based on changes in the business strategies, the economic environment, and market conditions.

18

The Company categorizes loans held for investment and loans held for sale by the intended customer of the loan product. Commercial loans primarily include Square Loans; Consumer loans include Cash App Borrow, Afterpay Post-Purchase and Pay Monthly loans; and Other loans include those outside of consumer and commercial loans such as Square credit card.

Loans Held for Investment

Loans held for investment are recorded at amortized cost, less an allowance for potential uncollectible amounts. Amortized cost basis represents principal amounts outstanding, net of unearned income, unamortized deferred fees and costs on originated loans, premiums or discounts on purchased loans, and charge-offs. When loans are charged off, the related accrued interest receivable is recognized as a credit loss expense. The following table presents the Company's loans held for investment by category (in thousands):

June 30, 2026

December 31, 2025

The Company considers Square Loans that are 60 days or more past due to be delinquent, and Square Loans 90 days or more past due to be nonperforming. Square Loans that are 120 days or more past due are generally considered to be uncollectible and are written off. When a Square Loan is identified as nonperforming, recognition of income is discontinued. A Square Loan is restored to performing status after total overdue unpaid amounts are repaid and the Company has reasonable assurance that performance under the terms of the loan will continue.

Cash App Borrow, Afterpay Post-Purchase, and Pay Monthly loans that are 1 day or greater past due are considered delinquent. Cash App Borrow and Afterpay Post-Purchase loans that are 90 days or more past due, and Pay Monthly loans that are 180 days past due, are generally considered to be uncollectible and are written off.

The following table presents an aging analysis of the amortized cost of consumer loans held for investment by delinquency status (in thousands):

As of June 30, 2026 and December 31, 2025, the amount of Commercial and Other loans that were identified as delinquent and nonperforming was immaterial.

19

The following table presents the Company's loans held for investment allowance for credit losses by category (in thousands):

Three Months Ended June 30, 2026

Six Months Ended June 30, 2026

The allowance for credit losses, amount of charge-offs recorded, and amount of recoveries for the three and six months ended June 30, 2025 were immaterial.

The Company closely monitors economic conditions and loan performance trends to assess and manage its exposure to credit risk. The criteria the Company monitors when assessing the credit quality and risk of its loan portfolio is primarily based on internal risk ratings, as they provide insight into borrower risk profiles and are useful as indicators of potential future credit losses. Loans are internally rated as "Pass" or "Classified." Pass rated Square Loans generally consist of loans that are current or up to 59 days past due. Classified Square Loans generally comprise of loans that are 60 days or more past due and have a higher risk of default. Pass rated Cash App Borrow, Afterpay Post-Purchase, and Pay Monthly loans generally consist of loans that are current. Classified Cash App Borrow, Afterpay Post-Purchase, and Pay Monthly loans are comprised of loans that are 1 day or greater past due, due to their short-term nature and repayment period, and have a higher risk of default. Internal risk ratings are reviewed and, generally, updated at least annually. As of June 30, 2026 and December 31, 2025, the amortized cost of Pass rated loans was $3.8 billion and $3.4 billion, respectively. As of June 30, 2026 and December 31, 2025, the amount of Classified loans was $509.5 million and $381.0 million, respectively.

Loans Held for Sale

The following table presents the Company's loans held for sale by category (in thousands):

Loans held for sale are recorded at the lower of amortized cost or fair value. Square Loans that are 120 days or more past due and Cash App Borrow loans that are 90 days or more past due are generally considered to be uncollectible and are written off. Past due status is based on contractual terms of the loans.

20

For the three and six months ended June 30, 2026, $1.2 billion and $2.5 billion of Square Loans were sold to third-party investors, respectively, and the Company recognized net gains on the sales of loans of $69.1 million and $141.2 million, respectively. For the three and six months ended June 30, 2025,

$1.1 billion and $2.2 billion of Square Loans were sold to third-party investors, respectively, and the Company recognized net gains on sales of loans of $62.3 million and $127.7 million, respectively. The net gains on sales of loans are recognized in net income (loss) through "Financial solutions revenue" in the Company's condensed consolidated statements of operations.

NOTE 8 - ACQUIRED INTANGIBLE ASSETS

The following table details acquired intangible assets (in thousands):

Balance at June 30, 2026

Weighted Average

Balance at December 31, 2025

All intangible assets are amortized over their estimated useful lives.

The change in the carrying value of intangible assets was as follows (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

The estimated future amortization expense of intangible assets as of June 30, 2026 was as follows (in thousands):

21

NOTE 9 - OTHER CONSOLIDATED BALANCE SHEET COMPONENTS (CURRENT)

Other Current Assets

The following table presents the detail of other current assets (in thousands):

1. Includes a portion invested in money market funds. Refer to Note 5, Fair Value Measurements for further details.

2. Refer to Note 7, Customer Loans for further details.

3. In June 2026, the Company received cash proceeds of $329.8 million from the sale of a non-marketable equity security, which are included within "Other investing activities" on the condensed consolidated statements of cash flows for the three and six months ended June 30, 2026.

The following table presents the detail of inventory, net (in thousands):

22

Accrued Expenses and Other Current Liabilities

1. The Company is exposed to potential credit losses related to transactions processed by sellers that are subsequently subject to chargebacks when the Company is unable to collect from the sellers primarily due to insolvency. Generally, the Company estimates the potential loss rates based on historical experience that is continuously adjusted for new information and incorporates, where applicable, reasonable and supportable forecasts about future expectations.

The following table summarizes the activities of the Company's reserve for transaction losses (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

1. Estimated losses related to Cash App overdrafts are classified within sales and marketing expenses and are accounted for separately from the provision for transaction losses. Such losses were immaterial for the three and six months ended June 30, 2026.

In addition to amounts reflected in the table above, the Company recognized additional provisions for transaction losses that were realized and written-off within the same period. Such losses are primarily related to Cash App transactions, such as peer-to-peer transactions, overdrafts, and negative balances, that are uncertain in nature. The Company recorded $91.2 million and $172.5 million for the three and six months ended June 30, 2026, respectively, and $62.0 million and $121.0 million for the three and six months ended June 30, 2025, respectively, for such losses. Losses from peer-to-peer activity and overdrafts are classified within sales and marketing expenses, while other transaction losses, including negative balances, are presented within transaction, loan, and consumer receivable losses on the condensed consolidated statements of operations.

23

NOTE 10 - OTHER CONSOLIDATED BALANCE SHEET COMPONENTS (NON-CURRENT)

Other Non-Current Assets

The following table presents the detail of other non-current assets (in thousands):

1. Investment in non-marketable equity securities represents the Company's investments in equity of non-public entities. These investments are measured using the measurement alternative and are therefore carried at cost, less impairment, adjusted for observable price changes from orderly transactions for identical or similar investments of the same issuer. Adjustments are recorded within other expense (income), net on the condensed consolidated statements of operations.

The adjustments to the carrying value of the Company's non-current non-marketable equity securities measured using the measurement alternative were as follows (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

1. Net reductions for the six months ended June 30, 2026 relates to a reclassification from non-current to current assets.

The following table summarizes the cumulative net unrealized upward and downward adjustments related to the Company's non-current non-marketable equity securities measured using the measurement alternative (in thousands):

24

NOTE 11 - BITCOIN

1. Company Owned Bitcoin

   The Company holds bitcoin for long-term investment purposes ("bitcoin investment") and also holds bitcoin for the facilitation of customer sales and purchases of bitcoin on Cash App ("bitcoin for operating purposes"). The Company accounts for its bitcoin as an indefinite-lived intangible asset in accordance with Accounting Standards Codification ("ASC") 350, Intangibles-Goodwill and Other and has ownership of and control over its bitcoin.

   The Company's bitcoin investment is initially recorded at cost, inclusive of transaction costs, and remeasured at fair value at the end of each reporting period. Changes in fair value are recognized in net income (loss) through "Remeasurement loss (gain) on bitcoin investment" on the Company's condensed consolidated statements of operations. As of June 30, 2026 and December 31, 2025, the Company held approximately 9,117 and 8,883 bitcoins for investment purposes with a cost basis of $310.2 million and $292.6 million, respectively.

   The following table summarizes the changes in the Company's bitcoin investment (in thousands, except amount of bitcoin):

   Amount of bitcoin Value

   Balance at December 31, 2025	8,883	$ 777,515
   Additions (i)	149	12,593
   Remeasurement loss	-	(172,818)
   Balance at March 31, 2026	9,032	$ 617,290
   Additions (i)	85	5,050
   Remeasurement loss	-	(88,474)
   Balance at June 30, 2026	9,117	$ 533,866
   	Amount of bitcoin	Value
   Balance at December 31, 2024	8,485	$ 792,282
   Additions (i)	99	9,519
   Remeasurement loss	-	(93,351)
   Balance at March 31, 2025	8,584	$ 708,450
   Additions (i)	108	11,041
   Remeasurement gain	-	212,165
   Balance at June 30, 2025	8,692	$ 931,656

   1. Additions primarily represent the Company's purchases of bitcoin for investment purposes.

      The Company's bitcoin for operating purposes is initially recorded at cost, inclusive of transaction costs. Subsequent to purchase, any sales related to bitcoin occur at its current market price, plus a small margin. As such, any change in fair value of bitcoin purchased and sold for customer orders is captured within bitcoin ecosystem revenue. Given the small amount of bitcoin for operating purposes held at any time, and that the bitcoin is held for a relatively short period of time, typically being purchased and sold within a day, the changes in fair value are not material to the Company. As of June 30, 2026 and December 31, 2025, the Company held approximately 299 and 238 bitcoins for operating purposes with a fair value of $19.5 million and $20.0 million, respectively, to facilitate the purchases and sales of bitcoin on behalf of Cash App customers. The bitcoin for operating purposes is reflected on the condensed consolidated balance sheets within "Other current assets."

      25

2. Bitcoin Held for Other Parties

The Company allows its Cash App customers to store their bitcoin in the Company's digital wallets free of charge. The Company also holds an immaterial amount of bitcoin from select trading partners to facilitate bitcoin transactions for customers on Cash App. Other than bitcoin, the Company does not hold or store any other types of crypto-assets for customers or trading partners. The Company holds the cryptographic key information and maintains the internal recordkeeping of the bitcoin held for other parties. The Company's contractual arrangements state that its customers and trading partners retain legal ownership of the bitcoin; have the right to sell, pledge, or transfer the bitcoin; and also benefit from the rewards and bear the risks associated with the ownership, including as a result of any bitcoin price fluctuations. The customer also bears the risk of loss as a result of fraud or theft, unless the loss was caused by the Company's gross negligence or the Company's willful misconduct. The Company does not use any of the bitcoin custodied for customers or trading partners as collateral for any of the Company's loans or other financing arrangements; nor does it lend or pledge bitcoin held for others to any third parties. The Company occasionally engages third-party custodians to store and safeguard bitcoin on the Company's behalf. The Company has concluded, under ASC 450-20, Loss Contingencies, that it does not have a probable loss that would require it to recognize a custodial obligation as of June 30, 2026.

NOTE 12 - INDEBTEDNESS

1. Notes

   The 2027 Convertible Notes (as defined below), together with the Company's senior notes set forth in the tables below ("Senior Notes"), are collectively referred to as the "Notes."

   The following tables summarize the Company's Notes as of June 30, 2026 and December 31, 2025 (in thousands):

   June 30, 2026

   	Principal Outstanding	Unamortized Debt Issuance Costs	Net Carrying Value
   2030 Senior Notes	$ 1,200,000	$ (13,087)	$ 1,186,913
   2031 Senior Notes	1,000,000	(6,932)	993,068
   2032 Senior Notes	2,000,000	(20,842)	1,979,158
   2033 Senior Notes	1,000,000	(11,772)	988,228
   2027 Convertible Notes	575,000	(1,798)	573,202
   Total	$ 5,775,000	$ (54,431)	$ 5,720,569
   		December 31, 2025
   	Principal Outstanding	Unamortized Debt Issuance Costs	Net Carrying Value
   2026 Senior Notes (i)	$ 1,000,000	$ (1,173)	$ 998,827
   2030 Senior Notes	1,200,000	(14,467)	1,185,533
   2031 Senior Notes	1,000,000	(7,628)	992,372
   2032 Senior Notes	2,000,000	(22,266)	1,977,734
   2033 Senior Notes	1,000,000	(12,419)	987,581
   2026 Convertible Notes (i)	575,000	(568)	574,432
   2027 Convertible Notes	575,000	(2,461)	572,539
   Total	$ 7,350,000	$ (60,982)	$ 7,289,018

   1. Net carrying value disclosed as current portion of long-term debt within total current liabilities on the condensed consolidated balance sheet.

      26

      The Company recognized interest expense on the Notes as follows (in thousands):

      Three Months Ended June 30,

      Six Months Ended June 30,

      	2026	2025		2026	2025
      Contractual interest expense	$ 78,131	$ 48,398		$ 157,854	$ 96,777
      Amortization of debt issuance costs	3,049	2,481		6,552	5,430
      Total	$ 81,180	$ 50,879		$ 164,406	$ 102,207

      Senior Unsecured Notes due in 2026

      On May 20, 2021, the Company issued $2.0 billion in aggregate principal amount of senior unsecured notes comprised of $1.0 billion in aggregate principal amount of senior unsecured notes due 2026 ("2026 Senior Notes"). The 2026 Senior Notes bore interest at a rate of 2.75% and matured on June 1, 2026. The Company paid $1.0 billion in cash to settle the outstanding principal balance of the 2026 Senior Notes, plus accrued and unpaid interest, on June 1, 2026.

      Convertible Notes due in 2026 and 2027

      On November 13, 2020, the Company issued $1.2 billion in aggregate principal amount of convertible senior notes comprised of $575.0 million in aggregate principal amount of convertible senior notes due 2026 ("2026 Convertible Notes") and $575.0 million in aggregate principal amount of convertible senior notes due 2027 ("2027 Convertible Notes"). The 2026 Convertible Notes bore a zero rate of interest and matured on May 1, 2026. As of the maturity date, no principal had converted and the if-converted value did not exceed the outstanding principal amount. The Company paid $575.0 million in cash to settle the outstanding principal balance of the 2026 Convertible Notes on May 1, 2026. The 2027 Convertible Notes mature on November 1, 2027, unless earlier converted or repurchased, and bear interest at a rate of 0.25% payable semi-annually on May 1 and November 1 of each year.

      The circumstances to allow the holders to convert their 2027 Convertible Notes were not met during the six months ended June 30, 2026. As of June 30, 2026, no principal had converted and the if-converted value did not exceed the outstanding principal amount on the 2027 Convertible Notes.

2. Revolving Credit Facility

   On January 14, 2026, the Company amended and restated its revolving credit agreement (the "Restated Credit Agreement") with certain lenders, which, among other things, increased the revolving loan commitments from $775 million to $900 million and extended the maturity date to January 14, 2031, provided that if on the date that is 91 days prior to the maturity date of any of the Company's existing convertible notes or senior notes, the aggregate amount of liquidity (as defined in the Restated Credit Agreement) would be less than $250 million after giving pro forma effect to the repayment of such existing convertible notes or such senior notes at maturity, then the maturity date of the revolving loan facility shall be modified to be such date. The Restated Credit Agreement replaced the prior financial covenant with a maximum total net leverage ratio covenant, determined as set forth in the Restated Credit Agreement, to be tested on the last day of each fiscal quarter.

   Loans under the Restated Credit Agreement bear interest at the Company's option at (i) an annual rate based on the forward-looking term rate based on the Secured Overnight Financing Rate ("Term SOFR") or (ii) a base rate. Loans based on Term SOFR shall bear interest at a rate equal to Term SOFR plus a margin of between 1.25% and 1.75%, depending on the Company's total net leverage ratio. Loans based on the base rate shall bear interest at a rate based on the highest of the prime rate, the federal funds rate plus 0.50%, and Term SOFR with a tenor of one-month plus 1.00%, in each case, plus a margin ranging from 0.25% to 0.75%, depending on the Company's total net leverage ratio.

   The Restated Credit Agreement also contains customary affirmative and negative covenants typical for a facility of this type that, among other things, restrict the Company's domestic restricted subsidiaries from incurring debt for borrowed money, the Company and its domestic restricted subsidiaries from granting liens to secure debt for borrowed money and entering into sale and leaseback transactions, and the Company and its subsidiaries from making certain investments and certain restricted payments.

   27

   The Company is obligated to pay customary fees for a credit facility of this size and type including a commitment fee of 0.10% to 0.20% per annum on the undrawn portion of the revolving loan commitments available under the Restated Credit Agreement. As of June 30, 2026, no funds have been drawn and no letters of credit have been issued under the Restated Credit Agreement. The Company incurred immaterial unused commitment fees during the three and six months ended June 30, 2026 and June 30, 2025. As of June 30, 2026, the Company was in compliance with all financial covenants under the Restated Credit Agreement.

3. Square Financial Services Lines of Credit

   The Company also has uncommitted and unsecured lines of credit with certain third-party banks for short-term liquidity needs, subject to availability of funds, through Square Financial Services. There were no outstanding balances as of June 30, 2026 and December 31, 2025.

4. Warehouse Funding Facilities

   The Company has financing arrangements with financial institutions in Australia, New Zealand, the United States, and the United Kingdom (collectively, the "Warehouse Facilities") in connection with certain BNPL products. The Warehouse Facilities have been arranged utilizing wholly-owned and consolidated entities (collectively, the Warehouse Special Purpose Entities ("Warehouse SPEs")) formed for the purpose of financing the origination of consumer receivables to partly fund certain BNPL products. Borrowings under the Warehouse Facilities are secured against the respective consumer receivables. While the Warehouse SPEs are included in our consolidated financial statements, they are separate legal entities that maintain legal ownership of the receivables they hold. The assets of the Warehouse SPEs are not available to satisfy our claims or those of our creditors.

   These Warehouse Facilities have maturity dates through September 2028. As of June 30, 2026, the aggregate amount of the Warehouse Facilities, using the respective exchange rates at period-end, was $1.5 billion on a revolving basis, of which $1.2 billion was drawn and $342.5 million remained available. All Warehouse Facilities contain portfolio parameters based on performance of the underlying consumer receivables, which each respective region has satisfied as of June 30, 2026. None of the Warehouse Facilities contain corporate financial covenants.

   All Warehouse Facilities are on a variable rate basis which aligns closely to the weighted-average life of the consumer receivables they finance. Borrowings under these facilities bear interest at (i) a base rate aligned to either the local risk free rate, such as Term SOFR and the Sterling Overnight Index Average or similar, and (ii) a margin which is set for the term of the availability period. The interest expense incurred on the Company's Warehouse Facilities is included within general and administrative as part of the Company's operating expenses. Interest expense on the Company's Warehouse Facilities was $16.3 million and $28.8 million for the three and six months ended June 30, 2026, respectively, and $10.9 million and $25.8 million for the three and six months ended June 30, 2025, respectively. In addition, each Warehouse Facility requires payment of immaterial commitment fees.

   The table below summarizes the future scheduled principal payments of amounts drawn on the Company's Warehouse Facilities (in thousands):

   June 30, 2026

   2026	$	221,407
   2027 (i)		640,537
   2028		300,000
   Total	$	1,161,944

   1. Includes $351.0 million of future scheduled principal payments disclosed as warehouse funding facilities, current, on the condensed consolidated balance sheet.

28

NOTE 13 - INCOME TAXES

The Company recorded an income tax expense of $214.4 million and $130.4 million for the three and six months ended June 30, 2026, respectively, compared to $121.0 million and $159.4 million for the three and six months ended June 30, 2025, respectively. Pre-tax income was $301.5 million and pre-tax loss was $91.1 million in the current three and six months periods, respectively, compared to pre-tax income of $659.4 million and $886.4 million in the prior-year periods, reflecting restructuring charges related to the Workforce Plan and accruals related to certain litigation and regulatory matters. Refer to Note 19, Restructuring, and Note 16, Commitments and Contingencies for more details.

The difference between the income tax expense for the three and six months ended June 30, 2026 and the income tax expense for the three and six months ended June 30, 2025 was primarily driven by the change in pre-tax results and a one-time benefit related to a partial release of a valuation allowance associated with certain California deferred tax assets recorded in the second quarter of 2026, partially offset by the tax impact of non-deductible accruals related to certain litigation and regulatory matters.

The difference between the income tax expense at the U.S. federal statutory rate and the income tax expense recorded for the three and six months ended June 30, 2026 was primarily due to the tax impact of non-deductible accruals related to certain litigation and regulatory matters, partially offset by a one-time tax benefit from the partial release of a valuation allowance associated with certain California deferred tax assets.

The Company is subject to income taxes in the U.S. and certain foreign tax jurisdictions. The tax provision for the three and six months ended June 30, 2026 and June 30, 2025 is calculated on a jurisdictional basis.

The Company estimated the worldwide income tax provision using the estimated annual effective income tax rate expected to be applicable for the full year. The Company's effective tax rate may be subject to fluctuations during the year as new information is obtained, which may affect, among other things, the assumptions used to estimate the annual effective tax rate, including factors such as the mix of forecasted pre-tax earnings in the various jurisdictions in which the Company operates, changes in valuation allowances against deferred tax assets, the recognition and de-recognition of tax benefits related to uncertain tax positions, and changes in or the interpretation of tax laws in jurisdictions where the Company conducts business.

NOTE 14 - STOCKHOLDERS' EQUITY

Share Repurchase Program

In November 2025, the board of directors of the Company authorized an increase to the Company's share repurchase program to repurchase up to an additional $5 billion of the Company's Class A common stock, for a total authorization of $9 billion. During the six months ended June 30, 2026, the Company repurchased 11.6 million shares of its Class A common stock for an aggregate amount of $700.9 million, excluding excise tax, which was immaterial. As of June 30, 2026, $4.6 billion remained available and authorized for repurchases under this share repurchase program.

Repurchases may be made from time to time through open market purchases or through privately negotiated transactions subject to market conditions, applicable legal requirements and other relevant factors. The repurchase program does not obligate the Company to acquire any particular amount of its Class A common stock and may be suspended at any time at the Company's discretion. The timing and number of shares repurchased will depend on a variety of factors, including the stock price, business and market conditions, corporate and regulatory requirements, alternative investment opportunities, acquisition opportunities, and other factors.

Stock Plans

The Company maintains two share-based employee compensation plans: the 2015 Equity Incentive Plan ("2015 Plan") and the 2025 Equity Incentive Plan ("2025 Plan"). The 2025 Plan became effective as of June 17, 2025 and replaced the 2015 Plan as of such date, such that no further awards will be granted under the 2015 Plan. Any awards outstanding under the 2015 Plan as of the date the 2025 Plan became effective will remain outstanding under the 2015 Plan in accordance with their existing terms.

29

Under the 2025 Plan, shares of the Company's Class A common stock are reserved for the issuance of incentive and nonstatutory stock options (ISOs and NSOs, respectively), stock appreciation rights ("SARs"), restricted stock awards, restricted stock units ("RSUs"), performance awards, and other stock and cash-based awards to eligible employees, directors, and consultants. The awards must be granted at a price per share not less than the fair market value at the date of grant. A maximum aggregate of 80,000,000 shares were reserved for issuance pursuant to awards under the 2025 Plan. As of June 30, 2026, there were

15.5 million shares outstanding under the 2015 Plan and 49.3 million shares available for future issuance under our 2025 Plan.

A summary of stock option activity for the six months ended June 30, 2026 is as follows (in thousands, except per share data):

Weighted Average

Weighted Remaining

30

Share-Based Compensation

The following table summarizes the effects of share-based compensation on the condensed consolidated statements of operations (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

The Company capitalized $6.1 million and $13.3 million of share-based compensation expense related to capitalized software costs during the three and six months ended June 30, 2026, respectively, compared to $6.4 million and $15.3 million during the three and six months ended June 30, 2025, respectively.

As of June 30, 2026, there was $2.5 billion of total unrecognized compensation cost related to outstanding stock options and restricted stock awards that are expected to be recognized over a weighted-average period of 3.0 years.

NOTE 15 - NET INCOME (LOSS) PER SHARE

The Company computes net income (loss) per share attributable to our common stockholders using the two-class method required for multiple classes of common stock and participating securities. The holders of our Class A and Class B common stock (together, "common stock") have identical liquidation and dividend rights but different voting rights. Accordingly, we present net income (loss) per share for Class A and Class B common stock together.

Basic net income (loss) per share is computed by dividing the net income (loss) by the weighted-average number of shares of common stock outstanding during the period. Diluted net income (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares of common stock outstanding adjusted for the dilutive effect of all potential shares of common stock. In periods when the Company reported a net loss, diluted net loss per share is the same as basic net loss per share because the effects of potentially dilutive items were anti-dilutive.

31

The following table presents the calculation of basic and diluted net income (loss) per share (in thousands, except per share data):

Three Months Ended June 30,

Six Months Ended June 30,

The following potential common shares were excluded from the calculation of diluted net income (loss) per share because their effect would have been anti-dilutive for the periods presented (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

32

NOTE 16 - COMMITMENTS AND CONTINGENCIES

Litigation and Regulatory Matters

The Company is currently subject to, and may in the future be involved in, various litigation matters, legal claims, investigations, and regulatory proceedings.

Regulatory and Governmental Matters

In July 2026, the Company entered into a resolution with Attorneys General from multiple states to settle for an immaterial amount claims related to, among other things, Cash App's handling of customer complaints and disputes.

The Company also received inquiries from the SEC and Department of Justice ("DOJ") shortly after the publication of a short seller report in March 2023. In July 2024, the Company received a follow-on inquiry from the SEC. The Company believes these inquiries primarily relate to the allegations raised in the short seller report, the Company's compliance and risk practices, and related disclosures. In March 2026, the SEC staff notified the Company that it had concluded its investigation and did not intend to recommend an enforcement action against the Company.

The DOJ inquiry remains ongoing, and in March 2026, the DOJ presented the Company with potential terms for resolving this matter. The Company disputes the basis and methodology underlying the DOJ's assessment of the matter, and it does not reflect the Company's view of the merits or its view of an appropriate measure of loss, harm or the Company's potential financial liability. The Company is negotiating with the DOJ to determine if this matter can be settled on acceptable terms.

The Company has accrued an estimate of loss in the amount of $526 million as of the second quarter of 2026. The Company cannot provide any assurance that the DOJ will not ultimately take legal action against the Company should negotiations not result in an acceptable resolution. While the Company cannot predict the final outcome or estimate a range of loss in excess of amounts accrued, it is reasonably possible that the ultimate resolution could result in losses in excess of the amount accrued and such losses could be material. The Company cannot provide any assurance that the ultimate resolution will not have a material adverse effect on the Company.

Litigation Matters

On January 17, 2025, a putative federal securities class action was filed in the U.S. District Court for the Northern District of California against the Company and certain of its officers alleging violations of Sections 10(b) and 20(a) of the Exchange Act on behalf of a putative class of persons who purchased or otherwise acquired the Company's Class A common stock between February 26, 2020 and August 1, 2024. The plaintiff alleges, among other things, that the Company made materially false or misleading statements regarding its anti-money laundering ("AML") and compliance programs and seeks unspecified damages, attorneys' fees and other costs. On June 18, 2025, plaintiffs filed an amended consolidated complaint. On January 6, 2026, the court denied the Company's motion to dismiss.

In addition, between February 5, 2025 and April 24, 2025, multiple shareholder derivative actions were filed in the U.S. District Court for the Northern District of California against certain of the Company's current and former directors and officers based on allegations substantially similar to the securities class action. The plaintiffs seek unspecified damages, attorneys' fees and other costs. On May 7, 2025, the Court ordered that the actions were related and renamed the related cases as "In re Block, Inc. Shareholder Derivative Litigation." On January 6, 2026, the court denied the Company's motions to dismiss in the derivative actions. A separate derivative action making similar claims and requesting similar damages was filed on October 9, 2025 in the U.S. District Court for the Northern District of California that has not been consolidated. In April 2026, the board of directors of the Company formed a special litigation committee and empowered it to investigate the claims raised in the derivative actions.

It is reasonably possible that the Company will incur a loss in connection with these federal securities and derivative matters, and the loss could be material; however, the Company cannot estimate the amount of loss or range of loss at this time.

33

Tax Matters

In June 2024, the Office of the Treasurer and Tax Collector of the City and County of San Francisco (the "Tax Collector") issued an assessment of San Francisco gross receipts tax, including interest and penalties, for fiscal years 2020 through 2022, asserting the Company owes incremental taxes on a portion of the receipts generated by the Company related to sales of bitcoin. The Company paid the assessed amount of $71.4 million in January 2025. In September 2025, the Tax Collector issued an assessment of gross receipts tax, including tax, interest, and penalties, of $42.7 million for fiscal years 2023 and 2024, which the Company paid in October 2025. In both cases, the Company paid the assessment in order to preserve its rights to dispute the assessments and initiate the dispute process. The Company strongly disagrees with the Tax Collector's assessments and plans to vigorously pursue all available remedies. Given the assessed amounts must be paid to initiate the dispute process and will be returned in full or used to settle any final amount due to the Tax Collector, the Company views the amounts as deposit assets.

The Company estimates its aggregate exposure for fiscal years 2020 through 2024 could be up to $114 million, which is the full amount of the assessments already paid. The Tax Collector may continue to challenge the Company's gross receipts tax positions. The Company has currently concluded that a loss for this matter is not probable.

The Company regularly assesses the likelihood of adverse outcomes resulting from litigation and regulatory proceedings and adjusts the financial statements based on such assessments. The eventual outcome of these matters may differ materially from the estimates the Company has currently accrued in the financial statements.

In addition, the Company is subject to various legal matters, investigations, subpoenas, inquiries, audits, claims, lawsuits, arbitrations, and disputes, including with regulatory bodies and governmental agencies. The Company cannot at this time fairly estimate a reasonable range of exposure, if any, of the potential liability, if any, with respect to any of these other matters. Although the Company may be subject to an adverse decision or settlement, it does not believe that the final disposition of any of these other matters will have a material adverse effect on its results of operations, financial position, or liquidity. However, the Company cannot give any assurance regarding the ultimate outcome of any of these matters, and their resolution could be material to the Company's operating results.

Purchase Commitments

From time to time, we may enter into non-cancelable purchase obligations related to cloud computing infrastructure. The commitment amounts in the table below are associated with contracts that are enforceable and legally binding and that specify all significant terms, including fixed or minimum services to be used, and the approximate timing of the actions under the contracts.

34

Other Contingencies

The Company is under examination, or may be subject to examination, by several tax authorities. These examinations may lead to proposed adjustments to the Company's taxes or net operating losses with respect to years under examination, as well as subsequent periods. The Company regularly assesses the likelihood of adverse outcomes resulting from tax examinations to determine the adequacy of the Company's provision for direct and indirect taxes. The Company continues to monitor the progress of ongoing discussions with tax authorities and the effect, if any, on the Company's provision for direct and indirect taxes.

Management believes that an adequate provision has been made for any adjustments that may result from tax examinations. However, the outcome of tax audits cannot be predicted with certainty. If any issues addressed in the Company's tax audits are resolved in a manner not consistent with the Company's expectations, the Company could be required to adjust the Company's provision for direct and indirect taxes in the period such resolution occurs.

NOTE 17 - SEGMENT AND GEOGRAPHICAL INFORMATION

The Company reports its segments to reflect the manner in which the Company's chief operating decision maker ("CODM") reviews and assesses performance. The Company's CODM is the Block Head and Chairperson. The Company has two reportable segments, Square and Cash App. Products and services that are not assigned to a specific reportable segment, including but not limited to TIDAL and other emerging ecosystems, are aggregated and presented within a general corporate and other category. Square and Cash App are defined as follows:

• Cash App includes the financial tools available to individuals within the mobile Cash App, including peer-to-peer payments, bitcoin and stock investments. Cash App also includes Cash App Card, which is linked to customer stored balances that customers can use to pay for purchases or withdraw funds from an ATM, as well as Cash App Borrow, which is a credit product that allows eligible customers to access short-term loans for a fee. Cash App also includes all BNPL products.

• Square includes managed payment services, software solutions, hardware, and financial solutions offered to sellers, excluding those that involve Cash App.

The primary financial measures used by the CODM to evaluate performance and allocate resources are revenue and gross profit. The CODM uses segment gross profit for each segment during the annual budgeting and forecasting process. Further, the CODM uses gross profit as the metric to guide the business trajectory and to consider the overall gross profit growth by segment on a quarterly basis, when making decisions about the allocation of operating and capital resources to each segment. The CODM does not evaluate performance or allocate resources based on segment asset data, and therefore such information is not included.

35

The following tables present information on the reportable segments revenue and segment gross profit, as well as amounts for the "Corporate and Other" category, which includes products and services not assigned to reportable segments and intersegment eliminations (in thousands):

Three Months Ended June 30, 2026

2,704,353

-

587,426

2,116,927

1,382,368

-

305,461

1,076,907

Financial solutions revenue

Corporate and

Six Months Ended June 30, 2026

Corporate and

Cash App Square

Other Total Cash App Square

Other Total

Revenue:

Commerce enablement

revenue $ 1,130,858 $ 2,160,757 $ 49,956 $ 3,341,571 $ 2,217,324 $ 3,963,581 $ 99,136 $ 6,280,041

Bitcoin ecosystem

revenue 1,812,918 37,345 43,485 1,893,748 3,557,138 64,878 68,124 3,690,140

Segment revenue $ 4,020,683 $ 2,503,563 $ 93,441 $ 6,617,687 $ 7,891,389 $ 4,615,885 $ 167,260 $ 12,674,534

Less: Cost of revenue 2,047,680 1,343,327 60,599 3,451,606 4,010,252 2,474,099 114,863 6,599,214

Segment gross profit $ 1,973,003 $ 1,160,236 $ 32,842 $ 3,166,081 $ 3,881,137 $ 2,141,786 $ 52,397 $ 6,075,320

Amortization of acquired

technology assets $ 11,672 $ 1,133 $ - $ 12,805 $ 23,343 $ 2,279 $ - $ 25,622

1,859,564

-

476,635

1,382,929

984,553

-

251,096

733,457

Financial solutions revenue

Three Months Ended June 30, 2025

Corporate and

Six Months Ended June 30, 2025

Corporate and

Cash App Square

Other Total Cash App Square

Other Total

Revenue:

Commerce enablement

revenue $ 940,416 $ 1,915,179 $ 42,707 $ 2,898,302 $ 1,840,520 $ 3,541,800 $ 82,957 $ 5,465,277

Bitcoin ecosystem

revenue 2,171,055 - 547 2,171,602 4,500,493 - 919 4,501,412

Segment revenue $ 3,844,928 $ 2,166,275 $ 43,254 $ 6,054,457 $ 7,723,942 $ 4,018,435 $ 83,876 $ 11,826,253

Less: Cost of revenue 2,344,428 1,139,464 34,035 3,517,927 4,843,491 2,093,726 62,903 7,000,120

Segment gross profit $ 1,500,500 $ 1,026,811 $ 9,219 $ 2,536,530 $ 2,880,451 $ 1,924,709 $ 20,973 $ 4,826,133

Amortization of acquired

technology assets $ 12,897 $ 1,507 $ - $ 14,404 $ 26,063 $ 3,015 $ - $ 29,078

36

The following table provides a reconciliation of total segment gross profit to the Company's income (loss) before applicable income taxes (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Revenue

Revenue by geography is based on the addresses of the sellers or customers. The following table details revenue by geographic area (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

No individual country from the international markets contributed more than 10% of total revenue for the three and six months ended June 30, 2026 and June 30, 2025.

Long-Lived Assets

The following table details long-lived assets by geography (in thousands):

Assets by reportable segment were not included, as this information is not reviewed by the CODM to make operating decisions or allocate resources and is reviewed on a consolidated basis.

37

‌NOTE 18 - SUPPLEMENTAL CASH FLOW INFORMATION

The supplemental disclosures of cash flow information consist of the following (in thousands):

Six Months Ended June 30,

NOTE 19 - RESTRUCTURING

In February 2026, the Company announced a workforce reduction restructuring plan (the "Workforce Plan") designed to better align our organizational structure with our operating model and strategic priorities. As part of the Workforce Plan, the Company reduced its workforce by more than 40%. Restructuring charges in connection with the Workforce Plan for the six months ended June 30, 2026 were $495.0 million, which primarily consisted of cash expenditures for notice period and severance payments, employee benefits and related costs, as well as share-based compensation expense. Restructuring charges for the three months ended June 30, 2026 were immaterial. The Workforce Plan concluded during the second quarter of fiscal 2026 and the Company does not expect to incur any further material related charges.

The following table presents a summary of severance and other personnel costs related to the Workforce Plan for the six months ended June 30, 2026 (in thousands):

Six Months Ended June 30, 2026

The following table summarizes the changes in the restructuring reserve related to the Workforce Plan, which are included within accrued expenses and other current liabilities on the condensed consolidated balance sheets, for the six months ended June 30, 2026 (in thousands):

Severance and other termination benefits

(i) Excludes share-based compensation expense of $104.7 million as well as severance payments incurred and paid within the period.

38

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis in conjunction with the information set forth within the condensed consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q, as well as our Annual Report on Form 10-K. The statements in this discussion regarding our expectations of our future performance, liquidity and capital resources, our plans, estimates, beliefs and expectations that involve risks and uncertainties, and other non-historical statements in this discussion are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described under "Risk Factors" and elsewhere in this Quarterly Report on Form 10-Q. Our actual results may differ materially from those contained in or implied by any forward-looking statements.

Overview

We launched the Square ecosystem in February 2009 to enable businesses ("sellers") to accept card payments, a critical capability that had previously been inaccessible to many businesses. We have since expanded to provide sellers additional products and services and to give them access to a cohesive ecosystem of tools to help them start, run, and grow their businesses. Similarly, with Cash App, we have built an ecosystem of financial products and services to help consumers manage their money. Cash App now provides an ecosystem of commerce solutions, financial solutions, and bitcoin capabilities focused on helping consumers make their money go further by enabling customers to store, send, receive, spend, invest, BNPL, borrow, or save their money. In addition, our nascent ecosystems include TIDAL as well as Bitcoin, which includes businesses such as Proto and Bitkey.

In the second quarter of 2026, we generated gross profit of $3.2 billion, up 25% year over year. Cash App generated gross profit of $2.0 billion in the second quarter of 2026, up 31% year over year, driven by growth in Cash App Borrow and Cash App Card. Square generated gross profit of $1.2 billion in the second quarter of 2026, up 13% year over year, driven primarily by Square processing, Square software, and Square Loans.

In the second quarter of 2026, operating income was $446.9 million and Adjusted Operating Income was $863.8 million, compared to operating income of $484.3 million and Adjusted Operating Income of $549.6 million in the second quarter of 2025. Net income attributable to common stockholders was $88.5 million for the second quarter of 2026, compared to net income attributable to common stockholders of $538.5 million for the same period in 2025, and Adjusted EBITDA was $1.2 billion for the second quarter of 2026, compared to $891.4 million for the same period in 2025. Net income for the second quarter of 2026 and 2025 included a loss of $88.5 million and gain of $212.2 million, respectively, from the remeasurement of our bitcoin investment.

Refer to the Key Operating Metrics and Non-GAAP Financial Measures section below for reconciliations of non-GAAP financial measures to their nearest generally accepted accounting principles ("GAAP") equivalents.

In February 2026, we announced a workforce reduction restructuring plan (the "Workforce Plan") designed to better align our organizational structure with our operating model and strategic priorities. As part of the Workforce Plan, we reduced our workforce by more than 40%. Restructuring charges in connection with the Workforce Plan for the six months ended June 30, 2026 were $495.0 million, which primarily consisted of cash expenditures for notice period and severance payments, employee benefits and related costs, as well as share-based compensation expense. Restructuring charges for the three months ended June 30, 2026 were immaterial. The Workforce Plan concluded during the second quarter of fiscal 2026, and we do not expect to incur any additional material charges related to the Workforce Plan. We have begun realizing benefits related to our focus on disciplined growth and cost efficiencies, and we expect to continue to benefit from these actions in future periods. We plan to continue to operate at this smaller size and are continuing to look at ways to improve our efficiency through a combination of AI automation, prioritization of our scope, performance management, and centralization of teams and functions to reduce duplication.

39

The following table presents a summary of severance and other personnel costs related to the Workforce Plan for the six months ended June 30, 2026 (in thousands):

Six Months Ended June 30, 2026

We expect annualized net cost savings associated with the Workforce Plan of approximately $800 million to $900 million, related to employee compensation, a portion of which we expect to strategically reinvest in the Company. We began to realize these cost savings during the second quarter of fiscal 2026 following the conclusion of the Workforce Plan. Refer to Note 19, Restructuring, within Notes to the Condensed Consolidated Financial Statements for further details regarding charges related to the Workforce Plan.

We ended the second quarter of 2026 with $8.8 billion in available liquidity, with $7.9 billion in cash, cash equivalents, restricted cash, and investments in marketable debt securities, as well as an undrawn amount of $900.0 million available under our revolving credit facility. During the second quarter of fiscal 2026, we settled $1.6 billion of debt upon the maturity of our 2026 Senior Notes and 2026 Convertible Notes and continued to invest in our lending products, while maintaining a strong liquidity position. Refer to Liquidity and Capital Resources section below for further details.

In November 2025, the board of directors of the Company authorized an increase to the Company's share repurchase program to repurchase up to an additional $5 billion of the Company's Class A common stock, for a total authorization of $9 billion. The goal of the program is to return capital to shareholders. The timing and number of shares repurchased will depend on a variety of factors, including the stock price, business and market conditions, corporate and regulatory requirements, alternative investment opportunities, acquisition opportunities, and other factors. As of June 30, 2026, we have repurchased a total of $4.4 billion of our Class A common stock under the program, of which $700.9 million was purchased in fiscal 2026.

Results of Operations

Revenue (in thousands, except for percentages)

Three Months Ended June 30,

Six Months Ended June 30,

Total net revenue for the three and six months ended June 30, 2026 increased by $563.2 million, or 9%, and $848.3 million, or 7%, compared to the three and six months ended June 30, 2025, respectively. Bitcoin ecosystem revenue decreased by $277.9 million and $811.3 million, respectively. Excluding bitcoin ecosystem revenue, total net revenue increased by $841.1 million, or 22%, and $1.7 billion, or 23%, respectively.

40