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Earnings Analysis

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Summary

I'm upgrading Block to a Buy after Q1 earnings, reversing my November skepticism, on Cash App's stronger-than-expected growth and Dorsey's company-wide AI restructuring bet.

Block beat on non-GAAP EPS and revenue, with adjusted EBITDA crossing $1B for the first time, but posted a sharp net income loss tied to layoffs.

Cash App is the standout: primary banking actives grew 18% YoY to 9.7M, and inflows per active rose 10%, driven by direct deposit capture.

Lending is the yellow flag. Origination volume is ramping fast, but loss rates are climbing alongside it, suggesting standards are loosening to grow the book.

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I last covered Block Inc. ( XYZ ) back in November when I said that I wasn't buying the dip .…