Revenue Fell for the First Time in This Backfill - Operating Income Still Grew
Block's Q1 2025 total net revenue declined 4.9% year-over-year to $5.77 billion - the first revenue decline anywhere in this backfill, a real inflection after four straight quarters of decelerating-but-positive growth (19.4% → 11.2% → 6.4% → 4.5%). But gross profit still grew 9.3% to $2.29 billion, and GAAP operating income grew 31.9% to $329.3 million - a fifth consecutive profitable quarter, and the strongest single-quarter operating income this entire backfill has shown. The revenue decline is, once again, largely a bitcoin story: bitcoin's low-margin pass-through revenue continuing its multi-quarter deceleration drags the headline number down even as the underlying gross-profit-generating business keeps growing.
Net income, though, tells yet another story: it fell 60% year-over-year to $188.7 million, from $470.8 million a year ago. This isn't an operating deterioration - it's the bitcoin investment's fair-value accounting, adopted back in Q4 2023, cutting the other direction this quarter: a $93.4 million remeasurement loss on the corporate bitcoin position, against a $233.4 million gain in the same quarter last year - a $326.8 million swing in a single line item that alone explains most of the year-over-year net-income decline.
The Prescription
Block should keep letting operating income - now five consecutive profitable quarters and growing at its fastest pace yet - be the metric investors are told to anchor on, since it's the one line that's proven genuinely insulated from bitcoin's price swings. What it should stop doing is holding a corporate bitcoin position sized large enough (worth $708.5 million at this quarter's close) to swing reported net income by hundreds of millions of dollars purely on a market-price move, while continuing to frame it as a long-term treasury holding rather than a trading position - under fair-value accounting, that framing doesn't change the accounting reality that this asset now injects real, unhedged earnings volatility into the P&L every single quarter, in both directions.
Key Financial Metrics
Q1 2025 vs. Q1 2024, consolidated, reported in USD
| Metric | Q1 2025 | Q1 2024 | YoY |
|---|---|---|---|
| Total Net Revenue | $5,771.8M | $5,957.1M | ⚠️ -4.9%, first revenue decline in this backfill |
| Gross Profit | $2,289.6M | $2,094.5M | ✅ +9.3% |
| Operating Income | $329.3M | $249.7M | ✅ +31.9%, fifth straight profitable quarter |
| Bitcoin Remeasurement Gain (Loss) | $(93.4)M | $233.4M | ⚠️ $326.8M unfavorable swing |
| Net Income | $188.7M | $470.8M | ⚠️ -59.9% |
| Adjusted EBITDA» | $812.8M | $705.1M | ✅ +15.3% |
| Free Cash Flow» | $101.5M | $457.4M | ⚠️ -77.8% |
| Balance sheet metric | Mar 2025 | Dec 2024 | Change |
|---|---|---|---|
| Cash and Cash Equivalents | $7,088.8M | $8,075.2M | ⚠️ -12.2% |
| Total Assets | $36,395.6M | $36,777.6M | ⚠️ -1.0% |
| Total Liabilities | $14,960.5M | $15,542.6M | ✅ -3.7% |
| Total Stockholders' Equity | $21,435.1M | $21,235.0M | ✅ +0.9% |
Free Cash Flow fell 77.8% to $101.5 million, driven by two working-capital items rather than any operating weakness: net cash outflows from loan-product originations of $311.0 million (up from $185.7 million a year ago), and a $168.5 million net outflow from period-end timing on other assets and liabilities, against a $122.5 million inflow from the same line a year ago - a $291.0 million swing on timing alone.
Block's Q1 2025 posted its strongest quarterly operating income yet ($329.3 million, up 31.9%), but a $326.8 million unfavorable swing in the bitcoin investment's fair value pulled net income down 60% and working-capital timing pulled Free Cash Flow down 78% - both non-operating effects layered on top of an operating trend that kept improving.
Segment Comparison: Cash App vs. Square
Q1 2025 vs. Q1 2024
| Metric | Cash App Q1 2025 | Cash App Q1 2024 | YoY | Square Q1 2025 | Square Q1 2024 | YoY |
|---|---|---|---|---|---|---|
| Segment Gross Profit | $1,380.0M | $1,258.5M | ✅ +9.7% | $897.9M | $820.3M | ✅ +9.5% |
Cash App
Cash App's segment gross profit growth of 9.7% is its slowest pace anywhere in this backfill, a real deceleration from the 20%+ rates seen through most of 2023-2024 - worth tracking closely, since Cash App has been the primary growth engine in every prior quarter covered so far.
Square (formerly Seller)
Square's segment gross profit growth of 9.5% is essentially in line with Cash App's for the first time in this backfill - the two segments have converged to a similar growth rate this quarter, a genuinely new pattern after multiple years of Cash App consistently outpacing Square by a wide margin.
Key Operational Metrics
Q1 2025 vs. Q1 2024
| Metric | Q1 2025 | Q1 2024 | YoY |
|---|---|---|---|
| GPV | $56,797M | $54,426M | ✅ +4.4% |
| Bitcoin Investment Fair Value (period-end) | $708.5M | $573.3M | ✅ +23.6% |
| Bitcoins held (period-end) | ~8,584 | ~8,038 | ✅ +546 bitcoins added |
Beyond the Usual
The Growth Gap Between Cash App and Square Has Closed for the First Time in This Backfill
Every prior quarter in this backfill showed Cash App's segment gross profit growing meaningfully faster than Square's - often by ten to twenty percentage points. This quarter both segments grew within half a point of each other (9.7% vs. 9.5%). It's one quarter of data, not yet a confirmed trend reversal, but a genuine change worth flagging given how consistent the gap had been up to this point.
A $326.8 Million Bitcoin Swing Is Now Large Enough to Move the Headline Net-Income Number by Itself
The bitcoin investment's remeasurement loss of $93.4 million this quarter, against a $233.4 million gain a year ago, is by far the single largest driver of the year-over-year net-income decline - larger than the entire year-over-year change in operating income, interest expense, or the tax provision combined. This is a direct, quantified illustration of how much earnings volatility a ~$700 million treasury bitcoin position now injects into results under fair-value accounting, a dynamic that didn't exist under the pre-2023 impairment-only model this backfill's earlier posts covered.
A $40 Million NYDFS Penalty Landed as a Subsequent Event, Adding a New Regulator to the List
As a subsequent event, Block entered into a consent order with the New York State Department of Financial Services in April 2025 - one of its money-transmitter and virtual-currency regulators - related to aspects of its Bank Secrecy Act/anti-money-laundering and bitcoin programs, paying a $40 million civil monetary penalty and agreeing to an independent monitor. This lands just months after the CFPB consent order and multistate money-transmitter settlement disclosed in the FY2024 filing - a third distinct regulator reaching a settlement with the company inside of four months, all touching compliance and anti-money-laundering programs.
Three separate regulators (CFPB, a multistate money-transmitter group, and now NYDFS) have all settled compliance-related matters with Block within a single four-month stretch. Each settlement individually looks resolved and priced, but the pattern - not any single fine - is what's worth tracking: does this reflect legacy issues finally clearing the pipeline, or an ongoing compliance-program weakness surfacing across multiple regulators independently?
Target Valuation Range
~2.4x EV/TTM Revenue at quarter-end - a modest compression from FY2024's ~2.6x close, driven by the falling share price. The market appears to be pricing in the revenue deceleration and softer net income more than crediting the operating-income growth and Cash App/Square convergence - a reasonable, if cautious, read given this is the first quarter this backfill has shown an outright revenue decline.
| Market cap → enterprise value | Q1 2025 (period-end) |
|---|---|
| Share price (period-end, Mar 31 2025) | $54.33 |
| Weighted-average diluted shares (Q1 2025) | ~635.3 million |
| Market capitalization | ~$34.5 billion |
| Total liabilities | $14.96 billion |
| Less: cash and cash equivalents | $7.09 billion |
| Enterprise value | ~$42.4 billion |
| Peer-multiple sanity check | TTM ending Q4 2024 | TTM ending Q1 2025 | Change |
|---|---|---|---|
| Enterprise Value | ~$61.6 billion | ~$42.4 billion | ⚠️ -31% |
| TTM Revenue | ~$24.12 billion | ~$23.94 billion | roughly flat |
| EV/Revenue | ~2.6x | ~1.8x | ⚠️ sharp compression |
The enterprise value drop is driven almost entirely by the share price falling from $84.99 to $54.33 over the quarter (-36.1%) - the sharpest single-quarter share-price decline in this entire backfill, larger than Q3 2023's 33.5% drop, against a quarter whose operating trend (five straight profitable quarters, record operating income) was genuinely strong.
| DCF scenario (illustrative, EV/Revenue-multiple-based) | Key assumption | Implied EV | Implied share price |
|---|---|---|---|
| Bear | Revenue keeps declining and the Cash App growth slowdown proves structural; multiple stays compressed near ~1.8x forward revenue | ~$41.0 billion | ~$50 |
| Base | Gross-profit and operating-income growth continue and revenue stabilizes; multiple recovers toward ~2.3x forward revenue | ~$54.0 billion | ~$66 |
| Bull | Cash App reaccelerates and the bitcoin position stops being a quarterly earnings drag; multiple re-rates to ~3x forward revenue | ~$70.0 billion | ~$85 |
| Current (period-end close) | — | ~$42.4 billion | $54.33 |
Block, Inc.'s Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, filed with the SEC.