XYZ · Forward model · Bear case

The Bear case, 20 quarters out

Each segment is projected from its own operating driver, rolled up into consolidated cash flow, and discounted back to a fair value per share. The assumptions below are editable — change them and every number on this page moves with them.

Verticals are Block's three reported revenue categories - Commerce Enablement, Financial Solutions, Bitcoin Ecosystem - because each carries a disclosed revenue line and a disclosed cost-of-revenue line, so each has a real gross margin, and the three sum to total net revenue to the dollar in 2026 Q2 ($3,341,571K + $1,382,368K + $1,893,748K = $6,617,687K). The reportable segments (Cash App, Square, Corporate and Other) are deliberately NOT used: the 10-Q states the CODM evaluates segments on revenue and gross profit only, so no segment operating profit exists and Square and Cash App cannot be given honest margins. 2025 Q1 and 2026 Q1 are marked estimated because they are derived as six-months less the June quarter, not separately filed; 2025 Q3 and Q4 come from the shareholder letter's $1M-precision table. Operating expense is not split by category either, so it stays as one corporate overhead line. That line is set at 34.98% of revenue, the derived Q2 2026 figure that ties out exactly - gross profit $3,166M plus $13M of acquired-technology amortization less $2,315M of non-GAAP operating expenses equals the reported $864M of Adjusted Operating Income - and the model's first projected quarter lands at 28.0% of gross profit against the guided 28%. The honest cost of holding it flat is real and is the largest distortion in this model: Block's opex actually scales with gross profit, not with revenue, and revenue contains a shrinking 29% slice of near-zero-margin bitcoin, so the base case drifts to 34.7% of gross profit in 2028 against the roughly 29% Block's own 2028 outlook implies, and 38.4% by 2031 Q2. It was left at the tie-out value rather than raised, because raising it to the 38.0% that would land 2028 on 29% makes the model print $713M in Q3 2026 against a guided $875M - breaking the quarter it is built from to fit an extrapolation. The vertical margins are gross margins BEFORE credit losses: $585.5M of transaction, loan and consumer receivable losses in Q2 2026 sit in operating expenses and are inside the overhead line, which is why the 93.2% on Financial Solutions is not a contribution margin. The lending capital programme is recoverable working capital, so free cash flow here reads closer to Block's Non-GAAP Cash Flow than to its GAAP Free Cash Flow. All three verticals were tested for seasonality and all three were left aseasonal; the derivation and the reason are in each vertical's first note.

Where each case comes from

From cash flow to fair value

Capex outside the verticals

Each vertical's capex is a share of its own revenue, which is the right shape for capacity that scales with sales. These are not that: fixed-size programmes with their own schedule that spend whether or not any segment grows. They are added on top, and they are why free cash flow dips in the years below.

The projected path

Every row is projected. A year-over-year change is shown only where the quarter it compares against exists — an em dash means there is no comparable quarter, not a flat year.

Model revisions

Assumptions are marked to reality as each quarter prints. Every change is appended here, with the fair value the model produced at the time, so the model's own history stays visible.