Block Inc (XYZ.N): An AI Company Advantage

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Block Inc (XYZ.N): An AI Company Advantage

Block Inc (XYZ.N)

16 July 2026 Citi Research

Square Debate: Optimal Financial Balance Between ISOs and Direct Field Sales.

ISOs leverage established networks and existing scale while direct sales benefit

from stronger contractual financials (no rev share) and arguably better product

expertise (thus higher cross-selling rates). We believe that both channels are key to

Square’s growth, as the critical KPIs investors currently follow are 1) improving the

GP vs GPV growth spread and 2) sustaining accelerating GPV growth >10%,

suggesting consistent market share gains. We increasingly view AI as an enabler of

both objectives. Square’s Goose and Builderbot infrastructure is materially

compressing product-development timelines, while Managerbot can improve

seller engagement, retention and product discovery. In our view, this gives Square

an AI advantage by allowing it to ship more seller-facing capabilities, improve the

effectiveness of its go-to-market channels and attach a broader suite of software

and financial services products faster than would otherwise be possible.

n Square GP and GPV Growth Should Converge Despite Mix Shifting Toward

Lower-Yield Volume, with AI Supporting Attach and Retention. A key investor

debate is whether faster growth from ISOs, ISVs, international markets and

larger sellers will structurally pressure gross profit per dollar of GPV, since these

channels may carry lower processing yields than Square's traditional small-

business base. In the near term, we expect the reported GP/GPV growth gap to

narrow as Square laps the operational processing change that created a roughly

2ppt headwind to Square GP growth (ends after 2Q26), while also absorbing the

2Q25 network-remediation payment comp.