Block Reaches Preliminary Deal With DOJ to Defer Anti-Money Laundering Charge, Net Payment About $764 Million

Block's earnings report on Tuesday, Nov. 3, came with two pieces of news. The company beat Wall Street's profit expectations and raised its outlook. It also disclosed a preliminary deal with the Justice Department over its anti-money laundering program.

Shares of the Jack Dorsey-led company rose 7% in extended trading after the report.

The DOJ agreement

Block said it reached an agreement in principle with the Justice Department in October. Under it, the department would defer for three years a charge that Block failed to maintain an effective anti-money laundering program, in violation of the Bank Secrecy Act.

The deferred prosecution agreement carries an expected total of about $964 million, according to Block's regulatory filing. After credits for prior regulatory resolutions, the company expects a net payment of roughly $764 million.

Block had accrued $526 million by the end of June. It raised that accrual to $764 million by the end of September.

Nothing is final. The deal still requires a final agreement with the department and court approval. Block warned that the ultimate terms could produce losses above the amount it has already accrued.

A deferred prosecution agreement means the government holds off on pursuing the charge while the company meets the agreed terms. The filing describes the charge as one the department would defer. It does not describe a conviction.

The quarter

Gross profit rose 22% to $3.2 billion in the third quarter. The average analyst estimate was $3.1 billion.

Cash App gross profit jumped 27% from a year earlier. Square, the merchant business, grew 14%.

Adjusted operating income came in at $923 million, or $1.13 per share, for the three months ended Sept. 30. A year earlier it was $480 million, or 54 cents per share.

Block now expects 2026 gross profit of $12.63 billion, up 22%. Its prior forecast was $12.51 billion. It guided to $3.32 billion in gross profit for the fourth quarter.

For 2027, the company forecast gross profit of $14.52 billion, or 15% growth. It tied that outlook to AI investments. Owen Jennings said the fourth quarter should be the first in which Block generates revenue directly from AI tools.

Credit losses climb

The growth comes with a cost. Block's losses on transaction, loan and consumer receivables rose 65.6% to $601.7 million in the third quarter.

That figure reflects Cash App's push into banking and lending products, which has helped Block diversify beyond transaction fees. Losses on those products are rising along with the revenue they bring in.

Chief Financial Officer Amrita Ahuja told Reuters the company is reading healthy signals from customers. "We've seen continued strong spending on Cash App Card as well as strong repayment rates on Borrow, which for us are the signals that collectively tell us consumers are managing their finances and the strength of their pocketbook," she said.

The broader backdrop is favorable. The U.S. economy grew at its fastest pace in a year in the third quarter.

What comes next

The quarter shows Block growing profit faster than analysts expected while still absorbing a sharp rise in credit losses. The DOJ matter is narrowing but not closed. A $764 million net payment, if it holds, is a large sum for a company whose full-year gross profit is projected at $12.63 billion.

The final number is still uncertain. Block has said the finished agreement could cost more than the $764 million it has accrued, and the terms have not been approved by a court.