Block, Inc. (NYSE:XYZ) stock surged Friday after the fintech giant paired a blowout fourth quarter with a sweeping workforce reduction. Deep staff cuts and accelerating Cash App momentum are set to turbocharge margins and reshape earnings power.
Needham analyst Mayank Tandon reiterated his bullish stance on Block, raising his price forecast after the company posted strong fourth-quarter results and announced a major restructuring.
Strong Q4 Results Beat Estimates
Tandon maintained Block with a Buy and raised the price forecast from $80 to $90.
The analyst said Block beat estimates for gross profit, adjusted operating income, and EPS in the fourth quarter.
Gross payment volume reached $66.9 billion, up 8% year-over-year but below his $68.5 billion estimate and the $67.5 billion consensus.
Gross profit rose 24% year-over-year to $2.87 billion, exceeding his $2.76 billion estimate and the $2.74 billion consensus.
Square gross profit increased 7.5% year-over-year, with GPV up 10% year-over-year, driven by 16% growth in food and beverage and continued mid-market strength, though hardware and higher processing costs each created a roughly 2-percentage-point headwind.
Cash App gross profit climbed 33% year-over-year to $1.83 billion, fueled by Borrow, Afterpay post-purchase, and Cash App Card.
Adjusted EBITDA totaled $929.7 million, slightly above his $928.0 million estimate, while EPS of 65 cents topped his 63-cent estimate and the 64-cent consensus.
Workforce Reduction To Boost Profitability
Tandon highlighted Block's significant restructuring, which reduces its workforce by about 40% — from more than 10,000 employees to under 6,000 — as the company shifts to an AI-native operating model.
The analyst said the move should increase profitability and support the stock.
He added that accelerating Cash App growth and improving Square trends demonstrate that Block's growth strategy is working.
Tandon expects the workforce reduction to drive meaningful margin expansion, with fiscal 2026 adjusted operating income projected to rise 54% year-over-year.
Raised 2026 Outlook Reflects Momentum
Tandon said Block meaningfully raised its fiscal 2026 guidance, reflecting business momentum and cost savings from the restructuring.
For the first quarter, the company expects gross profit of $2.80 billion, up 22% year-over-year and above the $2.72 billion consensus, and adjusted operating income of $600 million versus the $570 million consensus.
For fiscal 2026, Block now projects gross profit of $12.20 billion, representing 18% growth and above both its prior ~17% guide and the $11.94 billion consensus.
The company expects adjusted operating income of $3.20 billion, or a 26% margin, exceeding the prior $2.70 billion guide and the $2.50 billion consensus.
It guided adjusted EPS to $3.66, above the $3.19 consensus.
Tandon updated his estimates to reflect the strong quarter and improved outlook.
XYZ Price Action: Block shares were up 15.20% at $62.82 at the time of publication on Friday, according to Benzinga Pro data.
Photo by T. Schneider via Shutterstock
