Block Inc.’s XYZ consumer-lending business is emerging as a key growth driver, fueled by the rapid adoption of Cash App Borrow and Afterpay. Consumer-lending originations reached $17.6 billion in the first quarter of 2026, up 82% year over year, led by a roughly 175% increase in Cash App Borrow originations as eligibility expanded to more Cash App Green customers.
Block continues to broaden its lending ecosystem through Afterpay's installment offerings, including Post-Purchase, Pre-Purchase, Pay Monthly and BNPL options integrated into Cash App Pay and peer-to-peer payments. The strategy is driving higher engagement and monetization. Financial Solutions gross profit climbed 55% year over year in the first quarter, while Cash App Financial Solutions gross profit per active customer increased 60%. Overall, Cash App gross profit rose 38%, with lending among the largest contributors.
Rapid expansion, however, has been accompanied by higher credit costs. Transaction, loan and consumer receivable losses rose to $500 million in the first quarter from $170 million a year earlier. The allowance for credit losses on loans held for investment increased 26% sequentially to $482.8 million, while classified higher-risk loans grew 23% to $467.3 million.
Cash App Borrow gross loss rates ranged from 3.16% for newer borrowers to 2.67% for customers with more than 13 months of tenure, indicating relatively stable cohort performance. With $6.86 billion in cash and strong operating cash flow, Block appears well positioned to support lending growth, provided gross profit continues to outpace normalized credit losses.
How Are Block’s Competitors Faring?
Dave Inc.’s DAVE offers ExtraCash advances of up to $500 with no interest, credit checks or late fees. In first quarter 2026, DAVE reported $158.4 million in revenue, up 47%, while ExtraCash originations rose 37% to $2.1 billion. DAVE also reached roughly 3 million monthly transacting members.
SoFi Technologies SOFI competes through larger unsecured personal loans for debt consolidation and major expenses. SOFI originated $8.3 billion in personal loans in the first quarter 2026. Unlike short-term cash advances, SOFI uses fixed monthly installments and serves borrowers seeking larger loan amounts.
XYZ’s Price Performance, Valuation & Estimates
Shares of Block have rallied 20.5% over the past three months, outperforming the broader industry and the S&P 500 Index.
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In terms of forward 12-month P/E, XYZ stock is trading at 17.30X, which is at a discount to the Zacks Internet Software industry’s 27.09X.
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Block’s earnings estimate revisions reflect a positive trend. The Zacks Consensus Estimate for full-year 2026 EPS has been revised marginally northward. The figure indicates a significant increase year over year.
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Block currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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