Block, Inc. (NYSE: XYZ) has revealed that its Cash App Borrow service originated over $27 billion in loans during the twelve months ending March 2026, with more than 15 million active accounts utilizing the feature. The disclosure, made ahead of the company's second-quarter earnings report scheduled for August 5, provides investors with greater transparency into Block's expanding lending operations.
According to Block's internal data, Cash App Borrow accounted for approximately 44% of the company's $61.6 billion in consumer-lending originations for the quarter. This broader figure includes both Borrow and buy now, pay later (BNPL) products. The scale of the lending business has grown substantially, with first-quarter consumer lending reaching $17.6 billion, an 82% year-over-year increase.
Shifting Profit Dynamics
Financial solutions have become the primary driver of Cash App's profitability. In the first quarter, gross profit from financial solutions surged to $957 million, up from approximately $577 million in the prior-year period. This segment contributed nearly 72% of the $528 million year-over-year increase in Cash App's total gross profit. Its share of segment gross profit climbed to 50.2% from 41.8% a year earlier.
Block does not separately disclose profit from Borrow, meaning the financial-solutions category encompasses more than just loan income. However, the trend is clear: lending and related services are increasingly central to Cash App's earnings profile.
Credit Quality and Underwriting
Chief Operating and Financial Officer Amrita Ahuja noted during the first-quarter earnings call that underwriting performance was "in-line with our expectations." The gross loss rate for Borrow stood at 3.16% for customers with up to six months' tenure, 3.01% for those with seven to twelve months, and 2.67% for borrowers with more than a year of history. While newer customers drove a larger share of originations, loss rates declined in older cohorts, suggesting improving credit quality over time.
The customer base presents a mixed credit profile. Seventy percent of Borrow active accounts had credit scores below 580, yet 56% of personal-loan users reported household incomes exceeding $70,000. This divergence highlights the complexity of the borrower population.
Cost of Growth
Expanding lending comes with rising costs. Block's transaction, loan, and consumer-receivable losses jumped 195% year-over-year in the first quarter, while Borrow originations increased 175%. The company attributed most of the loss increase to higher loan volume. Repayment rates on Borrow have remained above 97%, though this metric does not fully capture cohort-specific loss rates. Block management expects the pace of loss growth to moderate for the remainder of 2026.
Market Context and Peer Comparison
Cash App's consumer lending volume of $17.6 billion in the first quarter outpaced Affirm Holdings' gross merchandise volume of $11.6 billion by about 52%. However, the two companies measure their metrics differently: Block reports Borrow and BNPL loans, while Affirm counts transaction value on its platform after refunds.
In a separate development, PayPal Holdings surged 16.1% following reports that Stripe and Advent International submitted a $60.50 per share bid, valuing PayPal at over $53 billion. Block's midday market capitalization stood at approximately $49.5 billion, just $3.5 billion below that offer price. While there is no indication Block has received any acquisition approach, the PayPal news provides a live valuation benchmark for large consumer-payment platforms.
Outlook
Block's management has guided for second-quarter gross profit of $3.04 billion, representing 20% growth, and adjusted operating income of $740 million, up 35%. The company does not break out Borrow revenue or profit separately, so the August 5 earnings report will include those figures within the broader financial-solutions category and credit-loss expense line.
The key question for investors is whether financial-solutions gross profit can outpace credit costs as Block maintains its guidance. While concerns about Borrow's scale have receded, the sustainability of its after-loss contribution remains an open question.
