Q1 2021 Square Inc Earnings Call

These non-GAAP measures are not intended to be a substitute for our GAAP results.

Filings and finally the column in its entirety is being audio webcast on our Investor Relations website, an audio replay of this call will be available on our website shortly with that and let me turn it over to Jack.

Thanks, Jason and thank you all for joining us.

We continue to focus on helping our customers through COVID-19, as many states and the rest of the countries we serve reopen.

With that focus and mine this quarter, we again participated and the paycheck protection program, enabling us to.

Facilitate more than $1 4 billion and loans to day $531 million and the first quarter to small businesses across the U S. The vast majority of which were solid growth less than five employees.

Square financial services, our newly opened bank will eventually allow us to expand access to banking services to many more small businesses.

We also made government disbursements available to individuals through cash app, enabling access to these funds up to two day two days early and saw customer spending across the platform on critical needs such as rent car payments food and utility dose.

Now a few up based on our business before I turn to Amrita and your questions.

We launched square messages this quarter and their future and our seller ecosystem that more efficiently and connect sellers with the buyers through text or email.

Square messages is accessible from sellers online square dashboard and consolidated communications with buyers from square feedback square receipts and square appointments and one place.

Now I'll buyers from simply fax or E mail from sellers regarding their latest purchases or upcoming appointments and sellers can respond while keeping their attention on the business.

Consumers and sellers have both expressed interest and being able to message each other directly and we believe this will help deepen the relationship and ultimately gross sales.

Our omnichannel efforts have enabled us to attract and retain larger sellers too.

Larger sellers come to square for the breadth of our ecosystem, including our vertical point of sale products.

So if you use square for restaurants per square for retail have adopted more than three of our products on average and generated greater than buybacks. The gross profit compare to the average seller and the first quarter.

Within cash App this quarter, we launched bitcoin peer to peer functionality custom.

Customers can now from bitcoin to friends and family for free within the App, which has attracted new customers to bitcoin.

And even more opportunities to build new network effects across across the entire cash ecosystem.

We've also found purpose of all opportunities to connect seller and cash.

This quarter, we incorporated square loyalty and the cash out to drive customer discovery and data right and retention, while also deepening the connection between buyers and sellers.

Integration allows for a richer customer experience with square buyers to view and manage rewards and cash app enables cash up to reach and engage tens of millions of buyers and square loyalty based.

Source of integrations are only possible because we have scaled ecosystems for both sellers and individuals and we're excited about the opportunity for future connections.

Lastly, we closed the transaction to acquire a majority ownership stake and title and JV has joined squares board of directors.

We believe there is a compelling intersection between music and the economy.

And making the economy work for artists and similar to what square has done for sellers and we're going to start small and focus on the most critical needs of artists and growing their fan bases and we're really enthusiastic to finally be able to start this work force.

And that over to Amrita.

Thanks, Jack and there are three topics I'd like to cover today first look at our performance and the first quarter of 2021.

And second an update on our business through April and how we're thinking about gross comparisons going forward.

Third I will look at our investment approach and the rest of 2021, given our strong start to the year.

And the first quarter, our ecosystem has delivered impressive growth and gross profit was $964 million and increase of 79% year over year.

Net income was $39 million and adjusted EBITDA was $236 million.

Each of our seller and cash app ecosystems exhibited strength from quarter.

Hello, and generated gross profit of $468 million and increase of 32% year over year.

Relatively stable gross profit growth and January and February before trends improved in March behind regional reopening government disbursements and lapping of the early pandemic last year.

A few factors driving sellers and strong performance first we continue to make meaningful progress with mid market sellers, which now accounts for 30% of our cell and gene P mix up four point, Tony here and Gov.

And the first quarter mid market seller GTD grew 43% year over year more than twice the growth.

Of total salary GPT, we experienced and notable recovery and GPT from existing seller cohorts and GPT growth also benefited from strong acquisition of larger sellers during the pandemic.

And our markets outside the U S delivered strong growth with gross profit up nearly 80% year over year, and first quarter and with our largest market, Australia doubling year over year.

We see an opportunity to drive greater scale and have launched more of our software and financial services offerings globally and expand to new markets.

Third volume from our online channels remained strong and up more than 50% year over year, even if car type and volume returned to positive growth.

Cash app generated gross profit of $495 million up 171% year over year looking.

And looking at some other drivers first we saw increased engagement across our ecosystem with customers transacting more on each cash app product and year over year.

Monthly active and the first quarter transaction and average it's 18 times per month across the ecosystem with March reaching an all time high for transaction per customer.

Cash card is a strong example of a product that has driven engagement both for spend on the card itself as well as and the broader ecosystem. We reached more than 10 million monthly actives and March of which $7 million transacted and given week on average cash.

Cash card has also been an entry point and the other products and our platform as card active adopted nearly twice the number of products and non card Act and the first quarter.

And secondly wanted to touch on the importance of inflows or the amount of money pulled into cash app.

And we facilitate inflows and a variety of ways and they have been a primary driver of cash out gross profit.

<unk> inflows are correlated to consumer spending power and <unk>.

And the power of our customers increases may have pulled more funds into cash app to use across our ecosystem.

And as in March and inflows into cash and increased 55% month over month cash up top priority. This year is strengthening its foundation, making it easier for customers to bring funds in the ecosystem.

Moving to first quarter profitability adjusted EBITDA of $236 million was primarily driven by strong topline growth late in the quarter for both seller and cash app as well as the $29 million release and existing transaction loss provisions related to our solar business and the fourth quarter of 2020.

And we've seen loss rates come and more favorably than expected.

Next we wanted to share with you trends for both ecosystems and April.

And we expect gross profit per our seller ecosystem to grow by more than 135% year over year and cash app by approximately 130% year over year and April.

We expect year over year gross profit growth rate to moderate from April through the remainder of the second quarter as growth comparisons get tougher and May and June.

Given the variability and monthly trends on a year over year basis, we think that's using two year compound annual growth rates or CAGR from 2019 to 2021 to better reflect underlying growth trends per seller, we've seen and more consistent growth rate on a two year basis, and sellers' gross profit CAGR with more than 25% and <unk>.

<unk>, which was a slight improvement compared to the first quarter.

Free cash off the to your gross profit CAGR was down slightly from 142% and the first quarter to approximately 130% in April we.

And we believe our customers had greater spending power from government funds, which drove an uplift and and closed in March and we have since seen and normalization with inflows down 16% and April compared to March during these periods of elevated and close customers have found greater utility and our ecosystem and adopted more products, which we believe will.

Ultimately drive more inflows into cash up longer term.

Turning lastly to where we're focusing our investments and 2021 on the back of our strong momentum profitability and encouraging early returns on investment.

We intend on increasing our investments to grow our business. During the remainder of 2021, we now expect to invest one to $1 1 billion and non-GAAP operating expenses, excluding risk loss and 2021, which is an income which is an increase of $200 million compared with the prior range and represents growth of 50.

Percent year over year at the midpoint.

We intend on distributing this investment across our seller and cash app ecosystems as well as title, which is not included in our prior guidance and.

In summary, with our strong start to 2021, we remain focused on disciplined investing to drive long term growth, we see meaningful opportunities to continue expanding reach of our ecosystems and reaching new customers around the world I will now turn it back to the operator to start the Q&A portion of the call.

To ask a question simply press star one on your telephone keypad again that is star one to ask a question. We do ask that you work with.

That you only ask one question per person.

Levels and we're looking at that sort of two year retention trend to normalize for the impact is of COVID-19 or looking from 19 to 21 and and March and April of this year G. T V from our existing cohorts was nearly back to their 2019 level. Remember. This is a notable improvement from you know last year.

And when the world and sort of Discombobulated and and our G. P. V. Your attention was down and about 40 per cent and improved to down 10% and the back half last year and we're now seeing back to very close to where they were and 2019 and on a gross profit database and it's actually seen positive attention for the first time since the force.

Quarter of 2019.

So what we're seeing there again is very much due to both strength and reopening as well as.

And the new cohorts of that that we're bringing on our most recent cohorts from 2019, and 18 are showing better retention compared to older cohorts, we think partly attributable to the greater mix of of larger and more omnichannel sellers and in fact to your point about investments and Q1, our newly acquired.

2020 cohorts and.

And you to show a strong gross profit contributions pacing ahead of prior cohorts on a dollar basis and sure.

Or getting the most gross profit of of among any annual cohort and Q1, we think that's a strong early indicator for healthy retention and his cohorts.

Uhm.

From a stimulus perspective, you can certainly see that play out with respect to the inflows dynamic that we talked about and cash shop, where we saw 55 per cent inflows step up month over month from February and March with.

A smaller step down and April 16 per cent step down fill it and Ella elevated level, but beginning to normalize as they see those stimulus funds run through our customers accounts.

And then from and investment perspective again, some other investments that we've made it into our business, we see playing out now and and Q1, where and our cellar business are nucor at our customers and Q1, plus strong growth on a year over year basis trending there's a similar payback 15, historically and last year around five quarters.

And with cash up the investments that we're making here or a combination of bringing customers in as well as engaging our current customers and those engagement trends as we called out earlier are very strong and lived in a cash up ecosystem, our strongest level of transactions per month at.

18 times per customer and the quarter of 40 per cent on a per customer basis. You know, it's really an indication of of the investments that we make to make our customers aware of the broader product ecosystem and it's because of these early returns that we want to continue to lean and on your investments throughout the remainder of there.

And stuff. Thank you.

Our next question is from Lisa L S with Martha maintenance and.

Good afternoon, and good cause it's up here. So this quarter you highlighted the integration of square loyalty into cash App, which is one of the first explicit connections between the two ecosystems and can keep made can you just talk a bit about what other types of integration you're looking at making beats.

And the <unk> to ecosystems and sort of how you thinking about the goals their meaning focused on user growth engagement growth more monetization, you know and proving undergoing funding mixed any additional color there would be helpful. Thank you.

Yeah and she of course, you from so you know we think one of our Super <unk>.

Oh don't normally do love and ecosystem, all the sore throat.

Multiple vertical day once per wheels, or other viruses and ketchup and.

Or go over time is to realize more of his crutches.

A lot of connections, but you probably don't hear withdrawal and journal so everything and rebuild on this other folks we can utilize internally him Lee ketchup phone and vice versa, and that's allowed us to move much faster with both of those systems because fundamentally rehab sure sure those instructor so.

And you'll be external sudden and we also have your external customer base and cannot change.

Loyalty square loyalty and ketchup is a great example of the.

You know this is.

As you look at our ecosystem as you look at how can I ask her to do since you look at Bruce you can imagine many other connections around the from.

We think square loyalty as in touch with a really big one because we have so many customers visiting square sellers utilize and loyalty programs and and integrating religious and catch up and making sure that.

And people understand that we can.

And offer this allows us to build on those network effects with a rope and ketchup itself. So ultimately we're looking for the right connections of expense from a customer perspective and.

And I can see more and more task or would you say the square fellers and we want to drive more we have a lot of that control.

And and just have to make decisions around to those we learn what sports best and what's most critical so we're going to continue to look for opportunities here, there's a ton and as we and he was the system and title you can you can imagine even more you can and.

And even more connections between all three ecosystems resort makes that acquisitions were compelling force. So this is this is.

The big part of our pieces around and build a new vehicle systems and the first place we'd be good with with this one but having multiple that can actually and Orthodox all under the same purposes and is quite powerful and I think those are ya.

Terrific. Thank you.

<unk>.

Our next question is from Kamala Allison owner of five or vendors.

Hi, Thanks for having me I'm Kamala elephant honor of fiber in Santa Cruz, California will use the number of times square products to help run a brick and mortar and online shops.

And my question is at the smaller mom and pop retailer My business has benefited greatly from a variety of square solutions, including Square Register and square online and and.

Square continues to position itself as a champion for small businesses I'm wondering what the companies fish and as for helping businesses like mine was a market and compete against larger retailers.

Yeah first first question and thank you.

Thank you for trusting us and unusual and.

This is exactly the reason we started we found from so many small sellers, Microsoft and people, who are considering opening a business and the first place.

What they lacked or where simple tools, we started with a simple stores, just enabling cookbooks, a credit cards and the first place which 12.

12 years ago was not easy as a small business and as payment from this more and more of a classic and became really critical not just to accept credit cards, but actually to knock Mr. Sales. So our goal here is to build based system that scales with the business, we don't want to be upper balance on your business.

And I think one of the proof points and that's what we do have larger solos, we do have larger retold retailers here and square and a lot of those I've actually grown with us.

And Ah start large they've grown and.

They've they've used us and you know as we've gone and from them and I'll have like neutrals better. So there's everything that we do and or tools is meant to scale to whatever your ambition and asleep and it'll sound.

It's smaller some some might be much larger multilocation book.

Multi country, we can handle all that.

Uhm square Capital's a big part of this we we look deeply and what a small business needs and we didn't give them too much and and certainly didn't think of them less and what they needed and and too.

And transparent and Sarah way, what's really important and make it easier.

And especially during last year, when and P. C. P came out we have more than 80000 and sellers.

Access 1.4 billion and P. C P funding.

So every totally make.

Is designed and in order to help a seller make more sales and.

And compete on a level playing field and.

And wherever you feel we're missing or we'd have a gap. Please let us know and we'll we'll move to Texas very fast but.

And we'll definitely here for.

<unk> like yours, and and helping you gross set your ambition.

Awesome well I appreciate everything your doing thank you.

Thank you.

And your next question is from Darren pillar with all free research.

Hey, Thanks, guys free job through all these but if we could.

Just look into the cellar gross and especially as he pretty much and from you know cash has been a big driver of last year. It looks like cellar. Just go ahead and use your accounts or more importantly, the other one girl try and you were saying and some of your door a book.

Growth in your areas picking up speed and like international.

And then when we're looking at it and be on international idea comment on me and what that can be for you guys going forward beyond pandemic can you just touch on the trends are seeing those those areas and then and how those three and to the growth of the file of this business. Maybe later this year and it's and ask him and beyond.

And what day, you order it Oh, Yeah, Hey, there and thanks for the question. So I'll I'll read off here and with a couple of and a couple of key points that can.

Orient you on on how we're doing and what we're seeing so far and some of the key drivers and of course, it and called out between international Uhm, Omnichannel and E Commerce and and gross from some of the mid market colors will receive no traction you know and international some of what we're saying, particularly in the past few months and it and turned the first corner is really and.

Courage, Inc, Uhm and that's coming on the back of closing the product parity tap and he's had between nine and international markets and the last and you know what that bleeding to now is outside's grow with gross profit and the first quarter up nearly 80 per cent you're over here now about 8% and cellar gross profit and total even weighted the tastes and.

Periodic lock down and saw it and certain market and.

And and Q1 and and that close and you can buy continued mix of the acquisition of and market sellers as well as Sarah recovery and and person activity towards the end of the quarter with a free openings and we've seen that continue and the and the April and again and some of the key markets and let me see there between Australia and U K in particular.

And where are we seen he was strong growth as well as stepped up investments and we're now seeing investments that we make and go to market and these international markets trending relatively in line with a payback very efficient payback, let me see any worse now and take a lot of that again comes back to having greater products that and <unk>.

And your product parody and the international markets and.

Now more than ever and will continue to scale. The crock software the financial services offerings, and our sales and marketing sense, why we Wanna lean and from and Omnichannel perspective, as well we've continued to see growth even with the return to positive growth and card present volume and the first quarter and.

And we continue to see the Omnichannel volume the online volume and card not present, you know with the online volume growth and over 50 per cent again, and the first quarter consistent with the average goes over the past couple of years and we see the increased importance here of of our and.

<unk> the address you know <unk> and.

Unable are sellers to address their buyers to multiple channels and.

And then from them and pocket perspective, and we're also continuing to see and attraction that we think will continue to be a source of growth for us and and.

This quarter and gross from that 30 per cent of our cellar G. P. V that comes from and market. You know those colors are going and more than two exarate of the overall cellar business day from 43 per cent and the first quarter.

And that's why we want to continue to lean and across the investments, we're making and product where that's where you see the vertical software and the developer platform really address and more complex needs that larger sellers have as well as the investments from making and marketing and sales and intention is to double the sales came this here to increase our outbound outreach to reach even more.

More larger sellers and to continue our investments and marketing across awareness marketing and product specific campaigns, let me know or target and to larger sellers.

[noise] truly awful and just get to see the wrong way, you guys and and thanks again.

And Karen.

Our next question, it's a and Timothy Yoda with credit Suisse.

Thanks, a lot and I'd like to dig into the cash up inflows topic, you were talking about that a little bit during the prepared remarks, specifically payroll direct deposit clearly wanted the more important drivers there and you could talk about some of the tactics you've been taking to increase that penetration but of course. It goes beyond that there are many other ways to drive and flows would it be.

And the debit card spend transfer pier Pier trade and maybe you could talk a little bit about those as well and other helping to try those and plus.

Okay.

Yeah, I'll I'll pick us off.

So so direct deposit and we named a top priority for clothes to cash on him.

Here and we can put in the vehicle crashes all the extra in touch with some Susan.

So a lot of her work recently has been making <unk> other much more visible and they.

And and for furniture and those because we.

We.

And so we can we can help with those.

So simple as one of our tougher other and 2021 and just making sure foundation and serve all these cases and the system and.

So we're investing a lot and the infrastructure automation square complaints too low grade or funds and dirty ecosystem. This is.

A really big one and allowing customer did it for money and to catch up and new ways. Several funding methods, which costs that doesn't offer customers. A day. So we're going to continue to to evaluate credit card and I was also big mixed on this as soon as we get to focus on those and clothes from from attached.

Perspective as well.

And let me just add a couple of dining Florida fence on the credit card and point a quick follow up which is very related to this.

Given the strength.

Our next time, you guys from pay Christian from the city.

And.

Oh. Thank you good evening nice acceleration check I'm, hoping to did a little bit more into squares investment rationale for acquiring title.

How how should investors think about I guess synergy realisation with with the brand and.

And how do you envision what the early integration efforts might look like with square his existing ecosystems.

Thank you.

Yeah take credit question and I know from.

The other questions around this or or a super excited about this work because we get the brought and.

How we build a tools for an entirely new set.

Audience and that such as artists and musicians. If you look at the space, obviously, there's a ton of competition and training, but there's not a really great.

Not a really great effort around all day stools and.

And what <unk>.

Oh, Sweet we had going into this deal was we want to make sure that like.

Everything that we learn from hoping a seller.

And with very simple tools and order participate in the economy and.

Green too and artist because we solve a ton of parallels between four and.

A new emerging artist has to go through the long term novartis and what a small business actually both of them they're very similar.

And we're going to start with the most critical needs and we have a big on V day roadmap and you all should be seeing some some updates from some of those from the days.

We're we're going to focus on those simple critical artist tools and the way that we know how and really provide a platform for August to try and two first Wednesday want to release their work and.

And we are focused on a more emerging we're focused on on the more and long tail.

Because that is a pattern and the father and his work.

For us with the celebration, but as you know and if you see and a business.

We have handled from a a large sellers and the world and we expect to be able to provide the same sort of took tools and explore.

<unk> for the large service and the world as well and Unfortunately, we have some of the love each other and the world and the steel and also on our board to have been through the entire industry understands what day notice needs and understand what the new emerging August needs and and how to really build a service.

And what they love and really is giving back to them and to their career. So that was there was a thesis behind the deal we're gonna move Super fast and we're really excited about doing the work and.

I I imagine with some of the releases and we will be putting out.

And the next year and you will see the same pillows and we can.

Thank you.

Okay, and we have a question from Timothy Kyoto with credit Suisse.

Oh, Thank you and and I appreciate that yeah.

Yeah. It was just it was the quick follow up there. So Jack you were mentioning about about the progress and payroll direct deposit and all the many other ways to 100 and force come into the cash after ecosystem. The brief follow up with just that is it fair to assume that given all of the strength and those inflows that be cash up marketing spend for this year it could be a little bit more heavily skewed towards.

Discretionary or what we call offensive customer acquisition spend relative to the non discretionary peer to peer funding and some of the other portions of the costs.

Hey, <unk> just to pick up on your question and since I know it kind of got cut off before I wanted to also lean and on the on your prior question, which is around and direct deposit and putting that in context of inflows and.

You know with direct deposit we've seen encouraging recent progress as Jack was speaking through with March being our highest number of overall direct deposit active and our first time accents and its pros traherne die you know government.

And government funding from paycheck deposits and tax refund, although we do believe that there is still very early and this ramp and we clearly benefited from government disbursements and the month of March.

Yeah, we as you noted it does give us an opportunity and let me see these higher and whether they are from direct deposit customers or from other influenced sources, which by the way were much higher six times higher than direct deposit sources and amount of March.

B C and it was elevated levels of inflows and asked me seem more engaged customers and.

We generally see higher product adoption engagement and lifetime value and that and then unlocks the opportunity for us to invest and a business and more and deliberate ways to the second part of your question and so we do see and opportunity here and and continue to lean and to the growth and and step up and we see and and cash that business overall.

But I do want to just make sure that we clarify and inflows that there are multiple ways to and clothes money and for money and a cash shop right and you have peer to peer transfer your cash and your bank account and it automatically or one time, you know at a at a time or mm per direct deposit and it's through the broader and glove gross and flows.

That we see an opportunity to continue to invest and and see hierarchize over time.

Great well. Thank you so much for taking that and the follow up and thank you for letting me back and.

And our next question is from her <unk> <unk>, what what Bernstein.

Hi, Good afternoon. Thank you for taking my question and I I want to ask about crypto and you've been involved and bits going from Virginia, and neon and the analyses day, and suggesting a majority of and the menu and now interested and tiptoed significantly more versus a year ago are you looking to expand.

And into crypto beyond it's going by and says and on a somewhat related note. What do you want to think about C. V V C's and square, but that should go into that later thank you.

Okay. So uhm, just and just a reminder from contacts and white like the claim and and why we believe and.

And the service this is the right path gross.

We received the coin of.

Potential they'll have a native currency and.

And we want to further that as much as we can and.

And a lot of our work.

Really lines up to that we you know, we started with buying and selling of decline and cash up.

And what we've done soon including open source development and that'll be it.

Square Crypto Coppa, which is open source foundation for crypto patterns to protect the community.

And.

And a lot of are a lot of our related work around come and loving as well with C. P. R.

All around and making sure the theater and can realize and later currency because it is so fundamental two businesses on me and and so fundamental to our business Jenny.

Generally so our focus first and foremost is an enabling and this is gonna be a long term purpose.

On the enabling bitcoin even to currency is removes a bunch of fortune for our business and <unk> and creates more up to you is pretty and on the compiler around the world and and.

And you should see more of activity from us over a year towards towards the school. So.

And we do think that because it is the important one to focus on and.

And that's what we're focused on.

And I would and Hershey that when you look at some of that product innovation that we have for our cash up customers with respect and bitcoin and.

Sure thing that we can uniquely and too do we think clearly differentiate for us and it was.

The intersection and multiple products and each other and whether it with the bitcoin Booth that you saw last quarter or it's now peer to peer bitcoin and while you have the ability to you know friends can send each other bitcoin all share cash shop, very seamlessly and these are things that cash at can uniquely due to serve our customers and we think that's part and.

The reason and we've been able to drive awareness more broadly with a claim with our strongest acquisition is new bitcoin active and the first quarter and.

And and gross and volume per customer and which we also saw and the first corner and those are the compounding benefits that get up to the.

Course that we've seen here now and $75 million and gross profit and the first quarter up 11 X near over here.

Great. Thank you.

And your next question is from Ramsey L S O with Barclays.

Hi, Thanks for taking my question.

I wanted to follow up on and title, so understanding and and appreciating that the tools for her to sit you're working on can you comment on plans or or thinking around using titled to drive engagement for consumer users of the cash up and very exclusive content or integration into cash at.

And I guess, just just to kind of a bolt on it and what's your view on acquiring or developing other non financial services assets to kind of deep and the consumer relationships. It's just the first step and a new direction or was just kind of a one off.

Yeah. So.

And I forgot to mentioned and my answer like you know just the.

Another big reason Lee.

What's the title and the first place was because we see such a uhm intersection between one and.

Our customer base and cash up and general culture and music.

And what were signs and and and title. Obviously, so we think there's a tunnel connection points between gossip and title work Super excited to explore those hopefully you'll see some of those.

Manifests this year, let me think.

We do we do believe we have an opportunity here to drive engagement around a lot of tools.

And my find and our celebrates and a lot of experienced and you will find and and catch up and you can imagine some of the more obvious ones did you see your artist currently struggle with but we can make a very very easy and it's not just about training or Avenue.

There's there's a lot to broader ecosystem, where where artists get paid inclusive of merchandise and ticketing and and all these other things. So there's a lot of potential we just wanted to make sure that we're doing the most critical things first and we we want to make sure that we're known as the place for artists too.

Uhm first and foremost and then really tell that with the incredible listen and experienced and San experience to bring the fans closer and cash.

Sharp as an incredible way.

For us to do that because of the surface area.

And and just the people that were survey was the cash up so uhm and it made sense on so many dimensions.

To us internally and.

You know work force out of the show off instructions as we go forward to share.

Great. Thank you.

And our next question is from Josh back with K B E N.

Thank you so much for taking the question I wanted to ask you about the seller business and it seems like square for restaurants and square for retail.

And maybe is inflicting and.

I know that about half of the <unk> colors are adopting those those products or have them or are you. Just uhm square. So are you see maybe like and accelerated displacement of legacy systems do you feel like you're perhaps getting better awareness for.

Or new business formation, maybe just public and pack a little bit the make and make you shouldn't be having here.

I think it's a bit of all of those things and you mentioned.

We're certainly disbursing, obviously system speaking people.

One and upgrade and and we saw and a lot of that and 2022, the COVID-19, where the legacy systems would not allow for online sales and enjoy your other business here does the majority of their transactions offline.

Last year and they're forced to go online and we're just made it super easy cause I really do that and and and.

As things where you can go.

And go back and and have a good mix now another day. They open their eyes towards was possible at all and you know we found and the past and a lot of sellers time.

To be a little bit a little bit slow to adopt newer technologies because what they have is working and we just wanted to check out your way and they chose okay and for your body and thank yous can get right into it and and go and we certainly benefited from that.

Definitely.

And we definitely see and businesses.

<unk> radical as well and we just mentioned on this call before but you know we received restaurants become retailers and retailers Sarah food and we'll see more of that is more reopening services.

Service businesses become retailers as well and vice versa. So we because we cover all verticals, we can allow for that blending where the seller does not to think about it at all they can just focus on what they're trying to build and and a customer base.

And then I would say like you know the the fact that we do have a much broader ecosystem and then most will now interest according to sail.

<unk>, we want people money as well, we you know, we we have see around and and motorists. We built him uhm, we've integrations pick us up and.

And the more of those that we make easy the less the seller has to do with themselves. If you if you visit and <unk> or a small cellar the amount of system day to hook together in order to interest you those businesses and saying so we take all that work we put into one website went out.

And people can just you know immediately.

Focus on their customers and journal attention to grow and your business and.

And that's and that's real so taken.

Taking taking all of that friction away from folks so they'll take and.

It can focus on most beautiful.

Can use to be a contemporary ranch gross.

And Josh Uhm.

Thing here is is rapid growth with a restaurant and retail product and Q1 annualized gross profit from the sellers, who used those products is $140 million, which doubled on a year and for your based just remember and Q1, where we still had a portion of the corner, where many sellers were only partially able to be and bid.

And it uhm, but half of that came from these restaurant and detailed products and have to Jack point came from other products across the ecosystem. We know that these products and tracked sellers with more complex needs and we can serve them and other ways over time, but we still think it's early here and that's why we wanted to scale these products for.

Are there and that's part of the reason, we want to continue to invest and marketing and sales to increase the awareness about our capabilities here.

That makes sense really nice momentum and thank you both.

Our next question is from Bryan King with Deutsche Bank.

Hi, guys. Thanks for taking my question I wanted to ask about the impressive growth of of cash up and April cash up gross profit things up 130 per cent. Despite if I remember correctly. It was a tough comp from last year that had picked up on so.

Trying to think about the the the growth rate of that business as we go forward and.

And you know potentially cash up gross profit per user as we go through 2021. Thanks so much.

Sure how can I help out and so you're right with April and we saw strong growth both on a year from your basis and on a two year kanger basis cash upgrade approximately 130 per cent and do the strong underlying trends frankly that we're seeing and our business and many of which you can talk to him and we've talked about between engagement you know.

And approximately 40 per cent year over year with March reaching all time highs and turned the transaction per customer and as well as in terms of spending power and it comes back to and clothes just comes back to our customers ability.

And bring money and a cash app and use it and the ways to benefit them with growing utility on our last one and we didn't see obviously and and talk from government disbursements and March here, where we saw a significant increase and and both our customer spending power and and and flows into cash app or info for a 55 per cent month over month and Mark.

<unk> and and moderated a bit and equal with and put it down on a month and for a month based it's about 16 per cent, but still at that elevated bubble and April as well as March and you know when we look forward, we do now and that our customers spending power is gonna continue to be influenced by things like you know the macro landscape.

And as well as obviously government and programs.

And the current can you spell and most recent programs has different elements and then the prior ones last year. So it may look different animato from month basis, you know and and what we saw last year as an example dogs and.

And program is roughly happy amount of unemployment insurance benefits and last year, but we do have new element to this program around the child tax credit and unemployment tax credit. So we don't fully know what the impact of those elements will be to our customer spending power and therefore.

And clothes, but we would expect to see some moderation given the tougher concert as you pointed out money and your for your basis again, you know the pace and the magnitude of that and normalization is gonna depend on how our customers use their funds ultimately and again as part of the reason that were and where you know, suggesting that can look at the two year cankers going.

Four day normalize for some of that and you're over a year you know changes as and go throughout the year and then of course longer term, what we're focused on with cash app is being able to reach more customers and drive engagement, which ultimately overtime, they think tried and clothes and to the.

HM.

Great Congrats on the results.

Thanks.

And your next question is from Arena Tomorrow with Evercore ISI.

Good evening and thanks for taking my question I think my two months, you've added and number you are based rewards and particularly cranky and I'm curious to better understand how can I be he'd be towards has had an impact on your engagement and gross profit for you Sir.

They're pretty incredible so you know Bruce does help us reach new cash card customers and and and Christine Silvia that a person and it's very rare for per card like that.

Something not instantaneous, but but more importantly controllable.

Anyone can go to be up and just choose whatever fits whatever they're about to do so I hear about two and a restaurant and you might get the <unk> 20th shut off the here about getting a lift you might see that there's cause the pet store to buy some dog food you might assume that so it's we want to make it cheaper.

Super flexible and that's.

Square I think the magic price and it and you know various bruce different explorations and and decor.

And.

Thanks to them. So there's a discovery aspect to it is relative.

And what is new and and and one day. Please comes up and and this all goes back to you know what we continue to build within the cash huh.

And increasingly based cash.

Cash card.

Investing bitcoin all of these things provide more network effects force. So people may come in because they received a payment from and a family member of their friends, Hey down and.

They can see the free.

We felt decor and and they can bite the claim and some of the according to their friends, who doesn't have a up yet get it and then they see day, we haven't birthdays and so on and so forth. So we want to build a three other services that are relevant to the audience for trying to serve and are also critical to them.

And do it in one place where they don't have to really go anywhere else just like a salary because that's when they don't have to work anything else up and I'll have to download and any other apps.

And do all the things that people want to do and in this day and.

And this doesn't moment.

From one App and will continue to add more and more of those pictures to boost is.

And we still considered to be fairly early from the capabilities that we're going to enable.

And it has a pretty exciting.

Very helpful. Thank you.

And your next question is from Dan dull with Mizuno.

Okay, great quarter, Thanks for taking my question.

And can you please talk a little bit about the new products that are coming out you know I know that there's been a a new product that was a beta and.

Can we get a sense of the timing for those and and whether or not.

You would expect them and.

Thank you very much.

I'm sorry, what was the first part of your.

And maybe a product.

Sorry, Jacqueline and there's a mood for.

Gotcha.

Yeah definitely the the pay day lending low APR product.

So you know we have a lot of experience services and loving and.

This is one of the benefits like everything that we do with them cellar, we learn a lot from and read it to make sense, we can translate to catch up.

It's a pretty incredible opportunity around learning to individuals.

We are currently experiments and with a small group of customers and small amounts again like one of those things and work for square capital is.

So has went to a bank they would be offered a minimum of $25000 and $20000 and it was just not it's way too much they needed $5000 to buy a new salon Sarah.

So we we we really focused on my feet actual needs.

And through that we saw massive growth within square capital and we're doing that we have the same approach with London.

Uhm and cash up like what are the actual needs and.

And how is it best served within the cash huh.

So to this day to that that's the question and we're trying to to answer restarted with a with a small nominal amount and and as we as we get feedback and as we understand goodbye criticism and.

And housework and you will <unk>.

And we'll make further decisions and and roller lots more people, but you.

Right now we're so we're so money mode and as as we get more of those four will make you more country and <unk>.

I have a calendar.

Got it and Dan and could maybe just answer and it sort of higher level question of a roadmap for cash and you know I would also encourage you to think about what's unique about cash shop, and what me feel really differentiates.

Both of our ecosystems busy intersections of multiple products at once from a consumer standpoint, and it says connections between various products that can sometimes drive differentiation unique value and and cash that's K network effects and the intersection of peer to peer with day coin tries network effects from.

Both the intersection and Booze will direct deposit tried to awareness and and I think that those sorts of intersections are key areas for exploration for cash that going forward and even independent and a new product launches and similarly, as Jack and speaking about earlier and a carpet a foundational and.

Presents that were making the cash apple enable us to reach broader and demographics of customers going forward and so there are multiple growth factors that can play out here that involved product improvements that may not be necessarily related to specific product launches. So those are of course and that works as well.

Okay, and thank you and may be stuff.

And that's all the time, we have today for questions on and I was trying to call back over to the company for closing remarks.

Thank you for joining our first quarter earnings call and 2021, and and we will see you on a Michelle and Nicole.

Thank you again for joining US today. This does conclude today's conference call you may now disconnect.

Everyone else has left the call.