Q1 2020 Earnings Call
Good day, ladies and gentlemen, and welcome to the square first quarter 2020 earnings Conference call.
I would like to turn the call over to your hosts Jason Lee head of Investor Relations. Please go ahead.
Hi, everyone. Thanks for joining our first quarter 2020 earnings call, you have joc and ever done with us today.
Firstly launch remind everyone of the format of earnings call. You had published a shovel letter on our Investor Relations website, which was available shortly after the market close.
Again this constant shortly most important open the call directly to your questions. During Q an 80, we'll take questions for more sellers. In addition to questions from conference call participants.
We would also like to remind everyone that was making forward looking statements on this call actual results could differ materially from those contemplated bar forward looking statement.
Reported results or should not be considered as an indication of future performance.
You take a look at our filings with the FCC for discussion of the factors like a caused results to differ.
Also note that the forward looking statements on this call are based on information available to us as of today.
We disclaim any obligation to update any forward looking statements, except as required by law.
During this call will be Scott scrapping preliminary gross profit growth results for the month of April.
These represent our current estimate for even performance as we have not yet close our cabin financially for the month April and our monthly results are not subject to interview auditors as a result actual results may differ from these oh.
Also during this call will discuss certain non-GAAP financial measures reconciliations to the most directly comparable GAAP financial measures are providing the showed a letter on investor Relations website <unk>.
These non-GAAP measures are not tends to be a substitute for GAAP results.
Additionally, as a reminder of evil we discontinued the use of adjusted revenue in the third quarter contract.
Following receipt of a comment letter from and discussions with yes.
Our statement of operations continues to disclose told him that revenue production based cost and pick one called determined in accordance with GAAP, which are the key component of a Jessica.
There are no changes to any other go non-GAAP metrics, we have posted a spreadsheet and investor relations website with our historical financials additional details related to where it comes it.
Finally, this call's entirety being audio webcast on our Investor Relations website, an audio replay of this call will be available on our website shortly.
I'd like to turn over to John.
Hello, everyone. Thank you for joining us today.
We'll start with a few remarks for me and I'm reader and then we'll get your questions.
Before we begin on a sharp gratitude for all those on the frontline spreading the cobot 19 pandemic.
We will not be able to do our work without the sacrifices you make every moment to yours.
Thank you to our healthcare workers and everyone, providing a central services around the world to keep us all healthy and say.
Acknowledge and we appreciate your.
We've seen our customers rise to the occasion to well shelter in place orders have slowed foot traffic to our sellers. They found new ways to keep the doors open retained stuff and serve customers.
Retailers want shops in QSR as launch online ordering by building websites and less than a day for delivery and curbside pickup.
Larger full service restaurants opened community markets, So raw ingredients produced and fruit staples through online stores, even Michelin star restaurants like shaping the Berkeley.
Still reason Taylor's shifted to selling personal protective equipment like hand sanitizer Josh.
Hairdressers and beautician to move to video appointments to advise on self styling.
For the past six weeks, we've also seen cashed up customers come together like never before.
Folks are donating to strangers in need through social media fund raising for charities small business isn't churches and tipping artist steering online performances.
Artists like low Nox Sox and Jeffery star as people opposed to their cash tax so they can send their fans money.
City, let's do the 12, our dance with on to help raise money for healthcare workers by pending the cash tag did he dances onto his Instagram like all funds go into direct relief.
In March we looked critically at our Roadmaps and decided that quickly reprioritize our work to advance some initiatives originally slated later in the year.
Within two weeks of the first shelter in place orders, we launched curbside pickup and delivery options in square online store I made them free for all sellers, we eliminated piece for software products in March and April and watch and wait for sellers to pause to be subscriptions to help them cut cost temporarily and quickly on pause them when they rebound.
We launched a gift card <unk> portal to help buyers search for square sellers and their neighborhoods to continue to support them.
We launched a simple resource hub with information and buys and gave our account management customer support and sales teams information to enable them to better help our sellers.
As a terrorist acts stimulus was being drafted in finalize teams across both are seller and cash up ecosystems move past to help sellers and individuals get access to government support as quickly as possible.
First square capital secured SBH approval to offer P.P.P. ones.
Built a new product the remove complexity from the P.P.P. process by naming sellers to quickly move through a simple application form.
So far we've submitted 855 million in verified applications on behalf of 54000 sellers.
And approximately 520 million has been approved by the S.P.A. to 45000 sellers.
The average loan size to businesses in all 50 states is $12000.
60% of the applicants were sole proprietors, 40% for employers.
Cash at published straightforward epic used to help folks understand stimulus program and instructions on how to get their money fast doubling our web traffic overnight.
From there we worked with our partner banks to expand direct deposit access for cash of customers, making it easy for people to get their money deposit directly so they could sense, it's a family or friends or use it to purchase whatever they need with their kashkari.
And for weeks the number of catch up customers with direct deposit access grew from 3 million support team right.
Now more than ever we see the strength and value of our ecosystem strategy.
It comes down to speed and trust our tools have been have proven to be simple enough that anyone current or new customers can quickly pick them up and adapt in many different challenges they may meet.
And we have shown that we aren't just here to provide tools that help and support navigating complexity safely.
This is a transformative moment and as a business. We've made the strategic decision to invest through this challenge to come out on the other side in the position of strength.
We see significant opportunity to bring new sellers and individuals into our ecosystems and build and launch new products that serve them, both today and long term.
And while we slowed down the central hiring we believe this is a unique opportunity to find great people. So we prioritize critical roles to help us.
We're working on something foundational to society, and we're really proud of our agility and heart through these times. Thanks, all for customers our employees and you for the trust as we continue to build and serve.
With that over the Amrita.
Thanks, Jack I Hope you all are safe and healthy with their families. During this time and I Echo Jack's comments with gratitude for those on the front lines of this pandemic.
There are three key items, which I'd like to share with you today.
First our first quarter results, we achieved strong growth in January and February prior to the significant slowdown and our seller business in the last two weeks of March.
Second on trends in April we thought early signs of potential stabilization and improvement in our seller ecosystem with continued strong momentum and catch up.
Third we believe it's now more important than ever to invest behind our mission of economic empowerment and service our customers.
First I look at our overall first quarter results.
We achieved strong growth in January and February prior to the slowdown seller in the last two weeks of March.
Overall in the first quarter gross profit was $539 million up 36% year over year or 40% growth year over year, excluding caviar.
These growth rates for about 10 points lower than what we observed through January and February prior to the impact of covered 19.
Our seller ecosystem gross profit grew 18% year over year in the first quarter. This includes the last two weeks of March where seller GPV decelerated sharply to a decline of 39% year over year.
Card present volumes were down approximately 60% year over year in the last two weeks of March well card not present volumes are less affected.
Additionally, we were funded all mark software subscription fees for our sellers to support them during the call. The 19 pandemic and beginning in mid March we paused new Corplex one offers for square capital get on lower visibility in this disrupt the time.
Cash up delivered impressive growth in the first quarter with gross profit up 115% year over year.
While we saw a modest deceleration in peer to peer volumes in cash card spend from cobot 19 in March overall gross running strong with cash up gross profit up 112% year over year in March.
A key driver remained efficient new customer acquisition.
In March and then again in April Tasha set new highs for its number of net new monthly transacting active.
For our bitcoin in stock brokerage products the market volatility helped increase adoption and drive strong volume growth during the quarter.
Turning to profitability net loss was $106 million, an adjusted EBITDA was $9 million during the first quarter with two key factors to call out.
First the primary impacting the quarter with a significant increase in reserves for transaction in loan losses, which reflected an estimate for the anticipated impact of cobot 19 on future losses related to stellar transaction processing and square capital.
We recognize actual losses could vary based on severity and duration of the impact of called the 19th.
The second lesser factor was a slowdown in high margin revenue in our seller ecosystem in the last two weeks in March.
The macroeconomic environment. We're experiencing is unlike anything we've seen our focus is on our customers and communities who have been meaningfully impacted we also recognize there could be a wide range of outcomes for our financial results in a second quarter and learning during the year, depending on the length and severity of Coca 19.
Therefore, we are not providing second quarter full year revenue or earnings financial guidance at this time.
Instead, we wanted to share with you what we're seeing in real time with an update on business trends from April including early signs of potential stabilization and improvement in salary GPV with continued momentum in cash shock.
And our seller ecosystem, we expect gross profit to be down approximately 35% year over year in April.
Seller GPV was down 39% year over year in April while we saw a decline of approximately 45% year over year from the last week of March to the first half of equal as trend line stabilized at these levels, we have seen improving growth rate since mid April.
We recognize it's still early and we continue to see daily volatility, but we've been encouraged by these recent trend.
We believe this improvement coincides with a few potential factors one existing sellers adapting as they shift to omni channel Commerce to acquisition at me sellers three the timing of Easter and for a benefit from government stimulus efforts.
While GPV from in person activity was down significantly year over year April card not present, GPV achieved positive year over year growth as we thought that was adapt their businesses in leverage many of our omnichannel offerings.
Our online store with an area of strong growth in acquisition with weekly GPV up more than five ex since mid March and with the strongest adoption by sellers in two of the hardest hit vertical food and drink and retail, notably we saw over two thirds of square online store GPV come from our recently launched pickup and delivery service.
Additionally, we have taken measures to support our customers and protect our company through Coca 19 measures that will impact seller topline results in the second quarter, but we believe benefit us and our customers for the long term.
We waves subscription fees for our sellers in April and offered to the option to pause subscription billing temporarily to allow our sellers to better manage costs.
For square capital, while we paused offers for Nucor Corplex long Corplex loan, we intend to reopen flex loan origination, where we see stability in the coming weeks and months.
As you heard from Jack we started distributing loan and the second round of PPP.
While there is a tremendous amount of work happening here to support our sellers, we don't expect capital to contribute materially to revenue and gross profit in the second quarter.
Turning to cash out performance in April where we expect gross profit growth of over 100% year over year.
Cash EPS strong performance was broad based.
As we achieved our highest monthly totals for net new transacting active peer to peer volume cash cards than new direct deposit transacting active bitcoin and stock brokerage volume and stored fun.
After modest initial deceleration in late March cashed out peer to peer volumes and cash card spend improved during the first half was April as we saw customer seek new use cases for sending money.
Shifts commerce to ecommerce channels.
During the second half was able to care attack stimulus program helps drive even stronger growth across various cashed out products.
In particular, we saw strong adoption of direct deposit some catch up customers compared to March April direct deposit volumes grew by three X and new direct deposit transacting actives grew by four x.
This helps drive customers the store more than $1.3 billion, an aggregate cash balances during the month, which roughly doubled compared to the beginning of January and was up one point fourx month over month.
Well, we are encouraged by cash EPS results in April we will continue to monitor how customer behavior normalizes post stimulus and this dynamic macro environment.
Turning to my final topic, our investment framework and key factors that impact profitability.
First as I mentioned earlier, we have high incremental margins in our seller business as a result decreases and seller gross profit will largely closer to profitability.
Good transaction in loan losses in future quarters are determined by two primary input.
Actual losses on first quarter volumes.
Which could prove higher or lower than our first quarter reserves.
And estimates were expected losses on volumes generated in subsequent periods.
Both of these inputs may vary depending on the lengths in severity of cobot 19 impact.
As it relates to second quarter volumes, we and our sellers have taken steps to mitigate risks and this new macro environment, but this is an area. We continue to watch closely.
Third while we have reviewed our operating expenses and taken steps to pull back discretionary expenses, where appropriate. We believe it is now more important than ever to invest in our mission is economic empowerment and service of booksellers an individual.
We have pulled back certain non essential spend around seller marketing hiring for non critical positions facility build out travel company events and other discretionary expenses.
Leading to an expected reduction in 2020, non-GAAP operating expenses 75 million to $125 million compared to our initial expectations for 2020 product development sales and marketing and Gionee.
For the second quarter, we expect non-GAAP product development sales and marketing and DNA in aggregate to be in line with first quarter spend.
We intend to pursue originally planned to catch up investment given strong performance and as a reminder, a large portion of cashes operating expenses such as P to P costs are nondiscretionary and expected to scale along with the growth as a platform.
While we were being appropriately deliberate with our investments in our seller ecosystem. We've seen encouraging early signs of attractive returns on marketing that could lead us to add back investment to reaching customers.
We deferred our global brand campaign and shifted our sales and marketing messages to prioritize targeted omni channel products and multi product awareness campaigns.
We saw early signs early results in mid March and April that indicate the quality of new sellers improved from pre coded level as recent cohorts and sellers or larger on both in volume and gross profit basis.
We believe our seller ecosystem is significantly differentiated, especially in times like these are portfolio of products enable sellers to quickly move between offline and online commerce in an integrated and seamless manner.
Speed up money movement and communicate with buyers in a way that few other companies can offer.
For cash off this is a unique moment in which new customer consumer driven commerce habits are taking shape.
The cash up team is focused on crafting new experiences with it demonstrated product Paula velocity that hasn't slowed in this time of great disruption.
Jack mentioned, our team's efforts around the stimulus, resulting inflection on direct deposit is meaningful direct deposit customers have generated revenue, which is multiples higher compared to customers who on these period of here.
As catch up with added more products, we've expanded the addressable market opportunity as customers have increased their adoption of those products their lifetime value as increased which has driven improvements in cash shops profitability overtime.
And we believe it is still early days.
Finally, our strong balance sheet with $3.4 billion and liquidity at the end of the first quarter and he recently Upsized revolver.
Affords us the opportunity to be deliberate and long term oriented as we invest.
The work, we do to serve our customers has never been more urgent or important.
We believe the investments we make today to support our existing customers amplify our go to market approach, reaching new customers and strategically and selectively higher great talent.
Will enable us to emerge stronger as we look ahead to a recovery.
I'll now turn it back to the operator to start the Q any portion of a call.
At this time I'd like to remind everyone in order to ask a question. Please press star and the number one on your telephone keypad and please limit yourself to one question.
Our first question comes from the line of can't Shanghai from JP Morgan Your line is open.
Great. Thanks. Thanks, so much for this data I wanted to ask I think you sort of touched upon it but we did just.
How you're approaching risk management on the seller side, both for square capital and underwriting in general It sounds like you are skewing a little bit bigger.
Which is helping on the.
On the quality as you suggested so just anything else to add to that and then also just to clarify some give me some questions on it and the first quarter EBITDA, how much was driven by the higher loss reserve and I presume that should stabilize the.
Volumes stabilize and looking ahead is it fair to apply a decremental margin that look like your incremental margin when things are going well I think that was in the sixties all else equal is that a good starting point to think about that all else equal. Thank you.
Okay, and I can start us off.
Maybe I'll start us off with your second question around EBITDA impacts for the first quarter and then we can tap tackle the rest of your questions with respect to EBITDA in the fourth quarter, which was $9 million. There were two primary impacts the larger of the impact was related to risk loss reserves, which we'll speak to.
In a moment.
The left or the impact was the topline impact and the flows through to margin. There as you noted high incremental margins on our seller business, which benefits us obviously as as revenues grow and then we saw the impact in the other direction in terms of decremental margins in the last two weeks of the quarter for Q.
One you know Q1 X risk lost EBITDA would've been up even with the impact of the last two weeks of March EBITDA would've been up 30% year over year. So riskless clearly clearly the larger impact for Q1.
And let me talk through some of the puts and takes with respect to our transaction in loan losses.
And then we can see if there's there's more of your question that I that I've missed so with respect to transaction loan losses, we booked a $109 million in the first quarter.
It's primarily driven by the seller transaction processing volume in the first quarter, along with our capital loans on balance sheet of just over $160 million.
And the way you can look at that is for both of those two areas. The reserve that we took which isn't estimate at this point. The reserve that we took is about four x. higher than the prior quarterly run rate on a dollar basis. So think of Q4. When we took in Q1 was about fourx higher.
On to give you a sense of what we're tracking we watch charge backs on the seller side related to non delivery of goods is one, indicating leading indicator of losses and what we've seen so far on charge backs is actually less than two x. normal level.
However, we know that will we see here you know very much dependent on what happens in terms of the duration and severity of the cobot packs and that we could see additional losses, hence we set a provision and reserve that's for acts.
The typical level.
On the capital business similar sort of approach.
22 million dollar provision on the capital loans on our balance sheet, which is about four x. The prior run rate on a dollar basis, but only about two and a half backs.
From a loss rate basis, and similarly, seeing lower in terms of current.
Repayment.
Flows than what we actually booked in the expectation that there would be further impact from coated.
And to your question we have taken.
We have taken risks committed mitigating measures to manage our exposure in this very dynamic time on some of the things that we've done.
On a seller business, our manage our exposure related to higher risk sellers, including assessing some of the industry isn't products that have been most impacted in this time.
Releasing dispute management features and products that help our sellers.
For instance, SMS reminders to help sellers navigate a dispute process square contract service, which is a legal framework for extended payment terms on the capital side Weve cause core flex loan originations for now, but as we see stabilization across verticals.
Across Geos and on particular sellers, we do plan to reopen our core flex loan product in the coming weeks and months.
And in terms of the future outlook here in terms of risk lost.
There are number of puts and takes obviously that as I mentioned in the intra remarks, they're the actual losses that flow through in Q1, which could be higher or lower than the reserve assumptions that we've made theres future GPV level, there's a mix of products.
That we serve and the mix of vertical and then there's these actions that we're taking to mitigate our risks as we look forward to this is an area that could be variable, but we're very very focused on monitoring here and taking proactive men measures to manage our risk.
Yes.
Your next question comes from the line.
Darrin Peller your line is open.
Hey, Thanks, guys glad to hear your your all doing okay.
First just addressing the questions we get around the resilience of your customers is there any early indications you can give us into the sense of the types of merchants that you know the numbers that are managing through this versus perhaps not the maybe the mix of merchants, we should expect going the other side of this and.
And then really more importantly, looking through 2020, you guys clearly have some of the better omni channel technology. So can you comment on the kind of in bounds you're getting from your motions to help them with your you know with your tech and Omni channel and what does that mean for market share for square versus the industry on the other side of this.
Hey, there I'll I'll start us off on what we're seeing to start and then check can jump in on a on where we believe our ecosystem is differentiated.
So what we're seeing so far in terms of the diversity of our ecosystem because you're right. We serve a variety of verticals, we serve across a number of geographies some with shelter in place matters, most with shelter in place measures and some that are easing.
On both domestically and internationally and we serve a variety of products across our ecosystem. So let me try to tease apart a bit of what we're seeing across all of that had the aggregate level. What we saw in the back half of of March and then through April was sellers.
PV down 39% year over year, but it's important to tease apart the nuances when you look on a week by week basis.
Last week of March and the first half of April was down about 45% year over year.
On the back half of April we've seen improvement.
On that has rebounded above that blended 39% year over year number. We believe it's driven by three main factors for existing sellers adapting to contact list Commerce, and we'll talk through some of the products that we have that have really served our sellers on this time and enabled them.
On to stay open and and interacting with our buyers we've seen new sellers join our platform in this time because of the differentiated aspect of our ecosystem on and we've seen the impact of both the timing of Easter and the potential impact from the government stimulus programs, which have real.
We started taking effect in mid April.
I'm, a commerce type perspective, which really speaks to the breadth of our ecosystem and we have seen positive year over year growth.
In our card not present products as sellers have adapted to contact list Commerce solutions and now card not present products, which used to account for about a third of our volumes now account for well over 50% of our GPV in April.
Some of the key outperform rail to point out here include the online store, which on since the launch of curbside pickup in seller power delivery.
I mentioned, a weekly GPV on the online stories about Fivex, what we had seen earlier in Q1.
Sellers are shifting their approach to contact less options. Additionally, virtual terminal at invoices, both achieved positive year over year growth, which may be partly related to the less impact we've seen in the services vertical which really makes use of that product.
And from a.
Market standpoint, or a geographic standpoint.
We've seen a variety of outcomes across international markets, Australia, Interestingly, which has had the most success and reducing cobot cases is our first market was our first market to return to positive year over year growth.
In the past 10 days as we've seen growth rates stabilize and that positive range and we've also seen as I mentioned in some of the states in the U.S. that in late April started easing shelter and placed restrictions early data that indicates a stronger uplift in those states versus the state.
With shelter in place measures in place, we only have a week of data so far and obviously there was a lot to look out here a lot of considerations around health metrics and otherwise, but this is an area that we will continue to monitor.
Across the diversity of our seller base.
As you noted we serve sellers across.
Every vertical on millions of businesses.
Widespread across the U.S. in particular, we've seen impacts from coven 19 in a number of different ways. While all industries have experienced year over year decline from GPV. The services vertical as I mentioned like home and repair and professional services has been the most resilient and we've seen verticals that have been hard hit like food and beverage.
Retail make use of those omni channel products that I was mentioning earlier by seller sides. So maybe the my final point before Jackson's and by seller size all sides segments were impacted micro sellers.
Gross declines are now more comparable to larger sellers, but what you see with micro there's both higher churn and higher same store sales growth, so still nuance across the system, but serve a diversity across verticals geographies and products.
Hi, there hopefully will [noise].
So we we are we are seeing a lot of opportunity here, we are seeing solar switch to square from our competitors because look good the omni channel ecosystem.
We you know in terms of inbound so that the person most was just how do I, how do I run my business Oman.
And we were able to quickly help people shift and the lobby sellers wanted to get online.
Wanted to sell online, but just doesn't make the time to do so so this was you know kind of a forcing function to show them. The all the benefits of being online and I think what that ultimately does is they will have a lot more attention online as he often comes back and be much stronger businesses because of it which is also.
We've also seen some some some calls from very large sellers.
Which have increased since March it's been up over 30%.
And they're coming to us because of the because the omni channel ecosystem as well. We saw just just one example, we had a trainer breweries, which are struggling to adopt a rich endemic and they came to us today's to installed or online business.
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With that with a competitor instead, we were able to looked at them up and running much much faster so that they switched everything to us.
So it's it's really important.
To emphasize the as we come up to this.
We do believe that a lot of sellers are going to get creative and they're not just going to be in the retail category or in the restaurants category or services category, they're going to merge these things and squares. The only went out there that.
Actually covers all the verticals with all the critical tools, it's actually be creative in sort of your customers under way. So we're seeing larger sellers at scale, we're seeing our current customers and we're seeing your customers who see this this this omnichannel offering and and want to go with us because were easier and I do believe.
The speed at which we are able to move and the volume we were able to move with the PPP program for our sellers versus the rest of the financial institutions will be a net positive for us in terms of a goodwill halo attracting a lot of sellers are way.
Because they're very very rich solar networks.
I was asking another solar what tools to use and why what's your company like what does the you know done well for you in the past and wasn't what a good poorly.
So I think how we've handled our sellers and supported them throughout this time will be a huge one for us in terms of.
Retaining but also also newer solutions role.
And just to add a final point to that you know some of the marketing results that were saying that I mentioned earlier are showing that those new weekly seller cohorts that we're tracking since then the middle of March our larger or both and aggregate across the cohort and on an individual seller by seller base.
Yes.
Versus pre covance levels, which really shows under underscore the point jaquith, making that we believe we're a differentiated ecosystem that is attracting not only larger sellers, but but broader sizes of cohorts and sellers in this very dynamic time.
That's helpful. Thank you.
Your next question comes from a line of Dan Ms., Rebecca from Red White and King Your line is open.
Hi, I'm a square so <unk> do you smoke I'm sure corny bigger.
Right.
Squarely on store shelves sold out.
Outside wants an item.
George It's zero well for a business like ours.
Several Mount each day as work quick service restaurants, like doesn't roadway to shift to square online store count that killed it actually we're seeing more it for a flexible inventory management system. Other players. The build up features like this for a quick service restaurants square online store.
Hey, Dan This Chuck Thanks reason square and hope here, what you're saying. So does this is something we're actively working on inventory as a big focus area for us and we.
We accelerated a bunch of our roadmap in order to support.
Curbside pickup and delivery and we need to make sure that.
We're adding the option to organize orders, but fulfillment channel that as I said on mobile without the up modify delivery zones. So we're getting a ton of T. Buck in this time on what's working what's not working.
In regards to inventory and generally with the system as we as we've shifted to this new world.
We're working as fast we count on it so depreciate feedback and we're on it.
Your next question comes from the line of at least the LS from Moffett Nathanson. Your line is open.
Good afternoon, good to hear you got voices and my questions on related to cash up in the transaction activity, you're seeing there last week visa reported that their U.S. debit volumes were actually trending positive low single digits in late April due to some of the stimulus spending are you seeing similar trends like that on the cash card.
And then looking forward to do you expect cash card volumes to remain at pretty resilient to because they're tied to non discretionary spending or how are you thinking about the employment impact there are a lot of the cash up users you know some of the folks that Unfortunately, we're seeing I'm unemployed currently once just your outlook enjoy.
No for the transaction activity on Kashkari. Thank you.
Hey, Lisa all that sort of thoughts thanks for the question.
On April with a strong month as you heard for cash Apo her all hand, including for cash card, where we saw.
Cash cards highest monthly total for both orders and for volumes at spend across the cash card.
Following the deceleration that we saw in late March growth Troughed around the end of March and spend began to rebound in early April even before the stimulus payments, which roughly came in about mid April.
Head of the governance government stimulus programs customers explored direct deposit functionality and engaged with the App. We saw a significant increase in cash card orders and a growth in active.
Across the active phase for cash card and that was prior to the second IRS portal release on on April 15th.
As the stimulus payments were just first.
We saw material increase in on volumes per card active as cash shops, or you know really critical need here by helping customers access and use their fund rapidly. The uplift in weekly spend has continued and the second half of that Upul, although still below pre.
Covered levels on we're seeing this spending behavior on cash card shift towards more card not present, an online commerce.
As you can understand given sheltering place measures. We're also seeing elevated nondiscretionary spend grocer health and wellness.
Retail away from bars restaurants entertainment transportation on that will you what we would have seen pre covance and we believe the unique aspect that we have here with a boost program has positioned us to help individual.
Well, we're using our ecosystem here to help benefit our customers and actively rotating our booster awards offered to specific merchants and categories, including things like grocery pharmacies and dollar stores.
In terms of the broader question about unemployment you know we are very watchful here and we want to see what normalized spending looks like post the stimulus efforts on so it's probably too early for us to say, but we're very encouraged both in the growth of the base of users across Kashyap and cash card.
And the depth of engagement that we've seen through products like direct deposit in the last weeks and months.
Super helpful. Thank you.
Your next question comes from the line of Timothy Chatto from.
Credit Suisse. Your line is open.
Thank you for taking my question also related to catch up in a little bit of a follow up there on direct deposit. So yes. The catch ups that's across the board were pretty impressive, especially I think the direct deposit was really a standout their shareholder letter shows direct deposit active users.
More than it looks like more than two X month over month into April and mentioned the stimulus checks being a big driver there of the Doug a direct deposit activity, but what can you tell us about these users in terms of perhaps their propensity to continue to use direct deposit with their paychecks beyond the stimulus and then as somewhat of a follow up there what does it.
So the things in general that cash up either has already done or is planning to do to help continue that strong adoption of primary count usage I did notice that you mentioned the eligibility increased from about 3 million to 14 million in terms of direct deposit so that sounds like a pretty good start.
Yeah. Thanks, Thanks, Tim I hope, you're well, we Oh, we do believe direct deposit is a huge opportunity and as we said and in the opening.
How's the customers or some of the most engaged on the on the platform and they typically carry much higher balances and use more more where products like the coin and equities.
Turning to cash card and peer to peer.
We saw two significant bumps recently customers every key they're tough tax refunds should be positive paychex I'm used to our ecosystem whole lot more we saw an increase in PDP volumes and cash card spend in late February and and also in late March and then in April obviously, the government stimulus to provide.
That's an opportunity.
To help folks received their money much much faster.
And our teams did work as you mentioned with her partner banks to expand the 3 million direct deposit accounts.
In February to 14 million. We also made sure that the interface was really clear so when you click into the top that.
Actually where the your money as Stuart.
You should see your direct deposit routing number right away. So just putting it upfront to let people know that this is a a tool that can be used for tax forward or stimulus for your paycheck.
Your your job is critical.
And that does lead to.
People seeing tasha ultimately as a as a primary account not needing to go to a bank branch simply coding going to the App store.
Signing up and they are there in business and it's not just around peer to peer and.
Storing money.
And using on the card, but the do it the people who are for using that money to buy equities I'm guessing that the investing product and also by the coin.
Has been pretty pretty incredible. So this is part of the reason why we think the ecosystem strategies. So strong we're not just a peer to peer up we're not just a stock purchasing up we're not just a big going up.
If everything in one and everything that is interesting in terms of how I think about my own personal finances finances and spend my money is all in one simple straightforward out that we will continue to make better and that more adjacent features that they complement some of these critical needs.
That that people are telling us they have.
And Tim just to add a couple metrics.
To this topic from March to April we saw a direct deposit volumes grow by three acts for.
From March to April we saw new direct deposit transacting active grow by four x.
And from March to April we saw our stored funds grow from 945 million across the base of cash up users to over 1.3 billion.
So clearly this is a product that's resonated on you know we believe we're in a transformational moment right now where new commerce standard new banking habits on new ways of conducting financial services and commerce are taking shape and kashyap along with our seller business has an opportunity to.
Serve our customers uniquely in this moment, so while I think it's early for us to say what happens or what changes with the curve of direct deposit in the future. This is a key priority for us and an encouraging sign but we've seen in the month of April here.
[laughter].
Great. Thanks, a lot definitely noted on the metrics the change to the interface and more features to come so thanks a lot.
Thank you.
Your next question comes from a line of Josh Beck from Keybanc. Your line is open.
[noise], yes. Thank you for taking the question and you are really impressive work that you've done for your consumers and sellers.
I wanted to ask a higher level question on cash up when you look at the newer customers that you may be pulled in and the last month or so is it expanding the audience and addressable market in anyways, and obviously had some really good stats on the online store any sense to give us.
How many sellers have actually lit up that product that would be really helpful. Thank you.
Thanks, Josh.
Yeah I.
I do believe it is extending the audience pretty dramatically cash catch up has.
Has been something really special for us and not that it is it has a lot of.
As a lot of association with a pretty strong culture.
It's not seen as you know trusted traditional financial up it's gene as part of the culture in many ways and we're seeing that play out, especially now during cold. Good 19, as I mentioned in my opening remarks like all the donating that's happening on social media the fund raising the tipping to artist and musician.
<unk>.
This is this is all pretty new and we're looking at this closely and we're we're taking me opportunities to poor partnerships with or something like we announced a partnership response to fight which looks listeners contribute.
And sending money to artist to of course or catch take on the artist stage and more than 25000 artists to already went there casualty don't respond for.
We saw more than 100000, except in the first week since the launch.
Other big area is gamers, we're seeing a lot of activity in regards to catch up on Twitch.
And the in the first quarter, we launched our Twits channel immigrant fall or come to over 180000.
But what's interesting about this is like there's a lot of similarities between what we're seeing around music and also gaming and how catch up is being used and both so we have reached a very mainstream influence your audience and because of the simplicity because of how we handle the standard stimulus Chuck.
And because of everything that you can do within the up inclusive of buying stocks and decline and then the Kashkari, We think will benefit and draft off a lot of trust a lot of love for you know what what would it offers and what it can do.
And word of mouth is definitely our friend here I'm. So we we consistently see the catch up in the top 10 of the or the up stores.
And consistently see it rise as as new people broadcaster on use of it so theres a theres a very nice viral loop.
Is inherent in the system that continues to to compound believe and grow favorably.
Second question, how many sellers so views the square online store and really the onto because.
Sure I'll hit that one and maybe just one final point before I do that on the cash opportunity.
I don't remember, Josh we released some slides.
In late March related to addressable market across both our cash up ecosystem and the seller ecosystem catch up ecosystem addresses over 100 million people in the U.S. with a target age of between 15, and 39, which represent $60 billion opportunity across just the product areas that.
We served today, so we envision a.
Really significant runway ahead, her kashyap and catch up in the month of April at various points within the top five of the iOS App store in terms of downloaded apps only behind untapped. So clearly resonating as Jack said in this sort of cultural moments that work in.
Turning to your second question on square online store on you know, we can speak about Scoreline store, and then let's level up and talk about broader or our CNP offerings. Our card not present offerings. The online store and we haven't provided a usage number in terms of active sellers, but on a weekly GPV basis a fivex.
Since.
Mid March pre Cove, it effectively on and our most recent weekly GPV run rate was at $59 million or $3 billion on an annualized basis and now the daily sign ups that we're seeing.
To square online store are higher in number and what our typical finance would have been for the point of sale at pre covered so clearly resonating and and ER and resonating for new sellers as well as existing sellers, but again I would think about our broader omni channel strategy, rather than just I'm focusing.
On the online store and more broadly our card not present products as I mentioned earlier now over 50% of our volumes versus a third of our volumes prior to Cove, it and that spans not just for online store, but invoices virtual terminal parts of our developer platform or the ecommerce <unk> and this within an area of strength for us.
Positive GPV growth year over year in the month of April.
Very helpful. Jakone inhibitor. Thanks, so much.
Thank you.
Your next question comes from line of Jason Kupferberg earned from Bank of America. Your line is open.
Hi, This is kashi on for Jason. Thanks for taking my question I, just wanted to get an update on seller truck and whether you found specific programs or initiatives with sellers to be particularly effective and perhaps if you have any new products or initiatives coming maybe to complement some of the existing ones you already have thank you.
I can maybe start us off on this one so you know in terms of churn. It's typically a variable figure for us given the large portion of micro sellers that we serve who may be seasonable seasonal on so given the noise that we see today and then how early trends are shaping up the main indicator.
I'd point, you towards would be a change in gross profit or change in GPV growth, which as noted for the seller business is in that minus 35 or minus 39% range for the month of April.
We've noted earlier on the call that the back half of April we've seen improving trends on based on existing sellers transitioning to new forms of commerce based on new sellers coming in based on stimulus effort.
Also noted that you know certain areas with shelf easing shelter in place measures. We've seen further improvement and what we've seen in terms of number of unique cards and number of unique sellers in the back half of April has also improved.
Which to US indicates that we have sellers, who are able to reopen their business I'm in the back half of April. So those are kind of the trend that we've seen around churn.
In terms of the key things that we can do for our sellers. It took a lot of them I've been noted on this call sellers are looking for omni channel solutions that enable them to interact with their buyers in new formats, whether that's <unk> plus commerce online invoices et cetera, and they're also looking for cash flow and opportunities.
Bridge them, and that's really disruptive time, and the P.P.T. program, where we've helped enable over a half a billion dollars in loans in the past week has also gone a long way to supporting our sellers and speaks to the strength of the ecosystem that we were able to move quickly and get this product up and running and just a few short weeks.
Within each of these products you see features that are working towards supporting our sellers, whether its pre populating applications in the PPP program for payroll sellers or it's the order and pick up delivery product that was launched in the Stan of issue you short weeks as well is on the cash business, where the sprint towards.
Enabling government stimulus in direct deposit accounts. Our teams are working very very hard no boondoggles happening at the company right now our teams are working very very hard to enable new products and features across.
Supporting our sellers and individual.
'cause. It. This is also one of the areas where the ecosystem surety makes us a lot stronger US dollar may turn out of one products. So be using two others are three others from us so they're not turning out with all its a whole company.
And as we add more of those critical functions and tools.
Gets even more and more durable I'm. So a lot of the reason why behind the ecosystem. Shortly is exactly this but like like everyone else. We're learning as quickly as possible in partnership with her sellers on on what's working during this time or what the what they need how how the how they think about.
Rebounding as four things reopened and all those learnings will be the spilled into products and features going forward.
And we're doing that with their current customers are small customers and even or larger customers, who are rediscovering, new ways and discovery or or other tools like Ben and Jerry's is a. Good example, this these are point of sale across 200 retail shops and needed to pivot to the online so.
We showed a we demoed the square online store and they're rolling it out nationwide over the coming weeks I'm. So pure very small are very large.
Well, we think helps the most with retaining is making sure that people see our full suite of services and.
I think getting value out of them.
Great Thanks to the answer.
Your next question comes from a line of Jason Friedman from Susquehanna. Your line is open.
Hi.
Thanks for taking my question could you give wishes that Ben and Jerry's make me hungry I just want to ask.
With that part of the investment in operating narrative has been about the cross selling of seller and cash up.
And I was just wondering in late at the current business environment, how that may have affected your thinking on the cross selling of cash in seller ecosystems, yes, a lot of good use cases, Jack in your prepared remarks.
Is that something that you're moving forward in terms of your kind of time horizon. Thank you.
Yeah, Great question, driven so we are we're moving forward, we did have to Reprioritize, our roadmap and trust to handle some of the issues that were presently seeing challenges, we're seeing with a first sellers of cash of customers due to cover it but we do believe that's there is a lot of real strengths that comes.
From connecting the two ecosystems third amazing independently.
But as we look for you know those connection points when they'd be a boost to local sellers, what we've done with our payroll product and paying employees fix a catch up so they could exercise farms immediately.
There's a number of those that we we think our or really interesting and potentially really impactful.
But we are we wanted to make sure that we're handling to present.
The President Sean first.
But we're definitely not taking our I'm comfortable in terms of how are we connect these these two dozen one.
Thank you.
Thank you.
Your last question comes from the line of Ramsey El Assal from Barclays. Your line is open.
Hey, guys. This is Ben on for Randy and thanks, So much for taking the question I just kind of wanted to follow up on some of the earlier questions about the change in the product roadmap noticed international revenue had grown pretty nicely in the quarter and I guess first is that just due to a kind of a broader suite of products now being rolled up all the countries, but but more specifically the question I'm kind of wondering is that one of the opportunities you see being.
Pushed out and you kind of how does your roadmaps typically there you know change with everything going on right now.
Maybe I can kick us off with what we've seen from an international perspective in the first quarter on and in April from a from an April perspective International GTV was down 20%.
On which was a deceleration versus prior co head levels from the first quarter perspective, a gap international revenue was up 51% strong growth for us and consistent with what we had seen in the prior couple of quarters, where we had seen outperformance as our products are resonating internationally.
In terms of breaking down some of those trends the related to co bid that we've seen in April as I mentioned earlier in April thing in Australia, We're now seeing positive year over year growth.
From the UK perspective, we're seeing modest declines in Japan in Canada are still down year over year, but seeing improvement as well so very consistent with a broader narratives and we've been sharing on this call. So far from a co head impact perspective, and obviously our products continue to resonate there from an omni channel perspective.
Only as they do in the U.S.
Yeah, and just to follow up where we're not going to.
We're not going to take our focus off growing outside of of the United States and making sure that our ecosystem is the sound and comprehensive outside the United States. We have we've done a lot of good work over the past few quarters, but there's a lot more to do and we did the same.
Needs that we see during this time and the rest with coated we're seeing a globally as well and we want to make sure that the you know than the thing that sets us apart is this ecosystem in the house has set us apart not just in the United States, but but everywhere.
And we've learned that tongue from U.S. Sunday.
How how various products took off and that helps or sequencing around the shorten up so we can be more sure, but the impact as we put the working to actually do the do the work to launch.
Great. Thank so much for taking my question.
Thank you. Thank you.
I'd like to turn the call back over to the company for closing remarks.
Thank you everyone for joining our call we'd like to remind everyone that we've been hosting our second quarter 2020 earnings call on August 15, Thanks again for participating today.
This concludes today's conference call you may now disconnect.
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