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Block's Profit Margin Squeezed Despite Soaring Transaction Volumes
11 Nov
Summary
- Square's gross purchase volume climbed 12% in Q3
- Gross profit grew only 9% due to higher processing costs
- Analysts offer mixed views, but mostly maintain positive outlooks
On November 11, 2025, Block (NYSE:XYZ) reported its latest quarterly results, which showed a slowdown in profit growth at its Square division despite higher transaction volumes. Square's gross purchase volume climbed 12% year over year to $67.2 billion in Q3, but its gross profit grew only 9% to $1.02 billion.
The narrower spread between revenue and profit growth reflected higher costs tied to changes in a processing partnership, which Block's Chief Financial Officer Amrita Ahuja said created a 2.6 percentage point drag on Square's profit margin for the quarter. Analysts offered mixed views on the results, with Citi's Bryan Keane saying the issue masked otherwise solid growth and expecting improvement by mid-2026. Evercore ISI's Adam Frisch noted the pricing effects were anticipated, while BTIG's Andrew Harte called the share decline an overreaction, highlighting Block's strong top and bottom-line beats.
Despite the profit margin squeeze, analysts largely kept positive outlooks on Block. Citi and Evercore both reaffirmed Buy ratings, citing improving momentum across Block's businesses. The company is set to share long-term growth targets at its Investor Day on November 18.
