Revenue Fell Year-over-Year for the First Time Since Q2 2022 - Operating Income Still Grew
Block's Q1 2025 total net revenue declined 3.1% year-over-year to $5.77 billion - the first revenue decline since Q2 2022, 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 of the quarters covered here (Q1 2020 to Q1 2025). 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 | -3.1%, first revenue decline since Q2 2022 |
| 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 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 - 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
Prior quarters 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.
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 since Q2 2022 with 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%) - larger than Q3 2023's 33.5% drop, against a quarter whose operating trend (five straight profitable quarters, record operating income) was genuinely strong.
Block, Inc.'s Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, filed with the SEC.