Q1 2022 Block Inc Earnings Call
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Good day, ladies and gentlemen, and welcome to the block first.
First quarter 2022 earnings conference call.
I would now like to turn the call over to your host Nikhil Dixit head of Investor Relations. Please go ahead Sir.
Hi, everyone. Thanks for joining our first quarter 2022 earnings call, we have Jack and Amrita with US today, we will begin this call with some short remarks before opening the call directly to your questions. During Q&A, we will take questions from our customers. In addition to questions from conference call participants.
We would also like to remind everyone that we will be making forward looking statements on this call actual results could differ materially from those contemplated by our forward looking statements reported results should not be considered as an indication of future performance. Please take a look at our filings with the SEC for a discussion of the factors that could cause our results to differ.
Also note that the forward looking statements on this call are based on information available to US as of today's date, we disclaim any obligation to update any forward looking statements, except as required by law.
During this call we will provide preliminary gross profit growth results for the month of April .
These represent our current estimate for April performance as we have not yet closed our accounting financials for the month of April and our monthly results are not subject to interim review by our auditors as.
As a result actual April results may differ from these estimates.
Also we will discuss certain non-GAAP financial measures. During this call reconciliations to the most directly comparable GAAP financial financial measures are provided in the shareholder letter of our Investor Relations website. These non-GAAP measures are not intended to be a substitute for our GAAP results. Finally this call 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 and with that I would like to turn it over to Jack.
Thank you all for joining us.
We're looking forward to spending time with you all at our Investor Day on May 18, we will be able to share everything we're doing across block.
How it all connects together.
Start with a few highlights across our business from the quarter.
Ashok made a lot of progress in four areas this quarter catch up for families Trust after pay and pick one.
We continue to make it easier for customers to bring their families. The cash app ecosystem with simple and safe controls.
Introducing FDIC insurance in April on all accounts with the cash Upcard builds trust and encourages people to maintain the balance.
And fulfills a longstanding customer request.
And we're just getting started integrating apple pay in the catch up.
Where we've already seen cash up active drove more than 35000 leads to.
Two after pesos during the first quarter.
We continue to make <unk> more accessible through pressure within.
More than 10 million accounts above decline since we've started offering service.
And last month, we announced the ability to send and receive bitcoin through the Lightning network.
Transactions on the bitcoin blockchain can take as long as 10 minutes subtle, making it unusable for everyday small transactions.
Lightning fixes that making transactions instant and free through the catch up.
The catch up team built this functionality using the lightning development kit built by spiral the open source initiative, we plan to help build the bitcoin ecosystem.
The team has evaluated all other options available and ultimately chose spirals SDK since a reduce years of work to just a few months to get the future to our customers.
We also announced that anyone with an active cash upcard can automatically investor percentage of their paychecks individually with no transaction fees.
We believe steps like these increasingly usability and quickly.
All towards an open global monetary transmission network the World can trust.
For us we believe it increases the probability and velocity of serving a more global customer base.
Turning to our original ecosystem square.
We continue to build tools and services to help sellers make more sales.
In April we introduced the new square stand across all of our markets updated with modernized hardware integrated payments with no need for a separate card reader and a redesigned checkout flow that provide sellers and their customers with a more intuitive and streamlined experience.
Since we introduced the first square sand in 2009.
So as large and small run their entire business from a single place.
From in person payments to mentioning online sales deliveries and in store orders.
With the new square stand, we're offering sellers are most affordable countertop product to date.
And the commerce experience that has been updated from the ground up to reflect our sellers do business today.
Another way we are strengthening the square ecosystem is with Apple pays buy now pay later service.
This quarter, we integrated this feature to help online sellers of all sizes better compete.
In the months since introducing buy now pay later online.
The square sellers have used in process sales with Doctor base.
This integration grew.
Grew after pay seller base by an additional 10% in the quarter.
And as of today more than 20000 square sellers of process and Apple pay transaction.
We plan to make buy now pay later available for in person in person payments soon as well.
As we've talked with you all in the past calls we believe the connections between our ecosystems like square cash App are what set us apart and makes it so valuable to our customers.
After pay is a great example of this and we have many more to come.
We'll share more about this at our Investor day.
Here's the Marina.
Thanks, Jack and there are three topics I'd like to cover today.
First I will look at our performance in the first quarter of 2022.
An update on our business through April .
And third I will look at our investment to the remainder of the year.
In the first quarter, our ecosystem has delivered impressive growth with gross profit of $1 $3 billion.
Up 34% year over year.
Adjusted EBITDA was $195 million.
In February and March after take contributed $92 million of gross profit excluding that gross profit for the quarter was $1 2 billion.
25% on a year over year basis, and 45% on a three year CAGR basis.
Before getting into the results and our ecosystem I wanted to address how ascertain will flow through our financial results for square in cash App.
Given we're integrating after pay into both our square and cash App ecosystems and expect it to benefit the growth of each we decided to allocate 50% of acetate revenue and gross profit to each and square in cash App.
Recognize after pay revenue and gross profit in our subscription and services based revenue line and not in GPT are transaction profit.
Cash app generated $624 million of gross profit in the first quarter, an increase of 26% year over year and 94% on a three year CAGR basis.
Excluding $26 million of gross profit from after pay cash up gross profit was $578 million.
Up 17% year over year, and 90% on a three year CAGR basis.
Let's talk about some of the drivers first we saw our strongest monthly engagement on cash up in March as monthly active transact in 'twenty, one times on average across our ecosystem during the month.
It wasn't driven by strong adoption of our banking products, including cash card cashback card with one of our fastest growing monetization change with gross profit growth in the first quarter of more than 50% year over year. Despite strong growth in the prior year period and more than 170% growth on a three year CAGR basis.
Second we saw our highest quarterly inflows ever and the cash app with growth on both a quarter over quarter and year over year basis.
<unk> per active declined slightly on a year over year basis, given significant government disbursements in the prior year period, but increased quarter over quarter.
Direct deposit has been a growing mix of employers and leasing particular strength from recurring pay cheque deposits, which were up more than two and a half times year over year in March.
Increased adoption has been a key driver of volumes here in March we reached approximately $1 5 million direct deposit monthly active.
And while we've been increasing adoption across our monthly active base. We believe there is still so much opportunity ahead as we bring awareness charge our composite capabilities.
Square generated $661 million of gross profit an increase of 41% year over year and 30% on a three year CAGR basis.
Excluding after pay square gross profit was $615 million up 31% year over year and 27% on a three year CAGR basis.
Two factors regarding squares performance.
First we continue to grow up market and gain share among mid market sellers.
Gross profit from the mid market segment was up 47% year over year outpacing total square gross profit.
<unk> been encouraged by the adoption of our financial services products among mid market sellers, specifically with square savings in the first quarter mid market sellers were twice as likely to fund your scores savings account soon after opening compared to the average seller.
Our early traction shows that even larger sellers may be underserved by traditional financial institutions, presenting an opportunity for square to serve this segment. This segment with an integrated solution set.
Second strengthening our presence in markets outside the U S is a key part of our growth strategy and in the first quarter, we improved product parity.
Canada, we launched square loans for sellers to expand access to credit and on demand delivery, giving sellers and important omnichannel tool by a third party fulfillment options.
We also added in CRM tools in Ireland to help our sellers retain and engage customers, including after pay gross profit in our markets outside the U S represented 12% of squares gross profit.
Next we wanted to share our recent trends.
In April we expect overall company gross profit growth of approximately 30% on a year over year basis, including after pay on.
On a three year CAGR basis, we expect growth to be relatively consistent with the first quarter's 48% three year CAGR.
Three year CAGR helps normalize for the unusual growth comparisons during the pandemic.
For cash App in April we expect gross profit excluding after pay to grow by more than 15% year over year around 85% on a three year CAGR basis.
And April cash flow thought cash app saw healthy year over year growth in actives.
He goes on a year over year basis through the remainder of 2022, although expect this delta to lesson in the coming quarters.
Again, the three year <unk> in April with gross profit at 25 per cent growth in G. P. D. At 24 per cent growth were similar to one another and where I would oriented.
Turning to Afterpay in April we expect G. M V to be up 15% year over year or 70 per cent on a three year taker basis, and we expect revenue gross profit gross to come in below this driven by a knicks shift to newer markets.
On a gross profit basis. After pays GAAP results are impacted by expenses related to the amortization of intangible assets.
Which was a 9 million dollar impact of cost of sales in the first quarter and is expected to be $12 million on a quarterly basis going forward. This is not an operational expense, but rather a gas purchase price accounting adjustment for the acquisition.
Losses on consumer receivables, where 1.17 per cent of G. M D. During the first quarter, which was consistent with the second half of 2021.
We continue to see healthy consumer repayment behavior with 95 per cent of installments paid on time.
We're focused on I'm walking with combined potential with our integration. In addition to the launch of buy now pay later four square online sellers, we see a broader opportunity to bring <unk> after paid to more to more of our square ecosystem in the coming quarters.
Cash upside we've been focused on bringing the demand generation capabilities of after pay to cash apps and are in the early days of building out and broader commerce platform or early experiments have <unk> 350000 leads to after pay merchants as you heard from Jack.
Our teams have been focused on a detailed integration roadmap, which will share more about at Investor Day <unk>.
Turning out of trends for the remainder of the second quarter and full year.
As we shared on our last earnings call. We continue to believe cash up year over year gross profit growth rate, excluding afterpay will improve in the second half of the year compared to the first task.
Comparisons become more favorable as we introduce new product innovations across our commerce and financial financial services priorities.
And would the benefit from pricing adjustments in certain areas.
Also consistent with what we mentioned last quarter for the remainder of 2022, we expect cashback and square to sequentially grow gross profit each quarter throughout the year, even excluding afterpay, assuming the macro economic environment remains stable.
Through April we have not yet seen a deterioration in overall consumer spending that said, we're continuing to watch the broader macro environment.
Moving toward planned investments for the second quarter and full year 2022.
For the second quarter, we expect to increase overall non-GAAP operating expenses by $245 million compared to the first quarter or $180 million when excluding after pay.
For the full quarter of 2022, we expect to increase overall non-GAAP operating expenses by $2.1 billion compared to 2021.
This includes the after taste expected operating expense base of approximately $900 million this year.
Excluding afterpay, we expect to go over all of <unk> operating expenses by 35% year over year or $1.2 billion, which is similar to the step up from 2022 2021.
As we shared in February we expect to deliver greater adjusted EBITDA in the second half the 20th 22 compared to the first half of the year given the pacing of our investments during the year.
We're excited to talk to you in more depth at our Investor day on the 18th there's a lot to update you on since our last Investor day, five years ago around our market opportunity ecosystem strategy in business model, we can't wait to share it with you with that we'll open it up to your questions.
Q and at this time, if you wish to ask a question simply prefer one on your telephone keypad.
Ask a question please breath or one on your telephone keypad and in the interest of time. Please do limit your question to one question.
Your first question comes from the <unk> from J P. Morgan Your lines open. Please go ahead.
Thanks, so much the doctor will be all today, so I wanted to ask on after pay here and how it's performing versus.
Your expectations that made me change and now you have a few minutes. Just for example, now that you're doing it for a couple of months I heard the <unk>.
Consumers still pretty stable from what you're saying, but just curious.
So at this point.
I'll start off with we're really sorry about <unk> word Shaw extremely rude.
And do this immigration. This is the biggest thing for a company has ever done.
And you know obviously.
Definitely destructs <unk> <unk>.
<unk> perform through.
We do see a.
A lot of our competitors taking advantage of the fact that we have this immigration.
But by focusing on the fundamentals and the reason we require this company in the first place which is to connect these two ecosystems, what sorts of support from a really company.
Whether they be.
Focus on soldiers individuals.
By not be later as we know folded in one ecosystem there I'll connect together.
By making those connections for making those connections much stronger.
See a lot of power and a lot of value created for our customers.
And the solar space and also the individual space.
So we have immigrated to activate the sore throat.
We're just starting.
The casual Kid, and that's where I would control.
The future is to really look at that because for us.
Really represents discovered like I said in my opening remarks.
Misstated Ah.
35 K.
T K leads from.
From cash up two applications.
And we expect that to continue and grow and we imagine.
As time goes on.
Ketchup will be one of the best ways to discover products.
Puppies.
Businesses and globally, but also around you so everything that we have.
Both of them, so consistent with ketchup ecosystem really come to bear with this unit.
And I'll fill intention a little bit on the near term you know Jack spoke to the longterm transformational opportunity that we're going after what we see in the near term is yes. It is a competitive market. We are holding our ground you know our focus in the near term is on managing to bringing on quality customer.
Indoor platform.
Deliberately managing our loss rate and driving increased consumer frequency and we're seeing traction across each of those measures.
After pay from a customer perspective is 144000 merchants on their platform, which grew strongly or <unk>, 63% year over year 68 per cent sorry to hear over here and over 20 million annual active consumers on the platform, which grew 37% year over year.
From a lawsuit perspective, where onboarding these consumers responsibly and maintaining discipline here with a loss rate of 1.17% in the first quarter consistent with what we have in the second half of last year and 95% of the payments being made on time, obviously as you manage to last week, there's some deliberate tradeoffs are.
Making on growth, but we feel that that's the right thing to do in this environment and in terms of engaged consumers were driving increased consumer frequency, attracting consumers, who want to spend more over time and have the ability to spend more of our time.
So that's what our focus is on the near term as we build towards this longer term commerce platform together, which we believe will be so transformational.
Thank you to your next question comes from the line of 10, Kyoto from Credit Suisse. Your lines Open. Please go ahead Sir.
Great. Thanks, a lot. Thanks for taking my question also on the same theme around cash out there in the broader topic of commerce. So you mentioned this earlier Jack but we did notice that you did.
Integrating somebody after pay merchants into the discover tab and it it sounds like you're sending folks over those after paper two sides, but maybe you could talk about what that shopping experience might evolve to over time in terms of maybe purchasing or help boost it might be a part of that and as a follow up we noticed that you're in the after K filings that you mentioned a degree of merge.
Funding for boost at this point and maybe you can just give us an update on the portion of merchant funded versus Kashyap founded.
<unk> just the percentage of overall cash card transactions that are boosted I believe blacks disclosure was around five per cent or so thanks a lot.
I believe this is.
The discovery <unk> physical reasons.
We made this acquisition and and why we think of social strategic for our overall business.
<unk> the entire ketchup ecosystem all of our customers to discover products.
Sellers.
Both online and offline.
Square sellers.
And even even merchants within their neighborhood.
And.
The regeneration.
We are an important thing.
Grow fairly massively.
It also as you as you pointed out compliments well, we're pretty heartbroken.
<unk>, which is a it's a rewards program on the couch.
Perfect. So we think combining all these things, allowing for people for the first time ever and ketchup to explore all these products. All these virgins and of course, we want to make it as frictionless as possible. So you can imagine what.
That goes in terms of making like numbers very easily everything.
I'm sure you're able to do right within the app without bringing vehicle because I mean, our soldiers make more sales.
And or ketchup customers are happy because they're getting what they're one sent to me.
And I'll add 10 that the combined pitch into merchants existing afterpay sellers as well as potential new ones.
On the strength of the consumer platform that we have the combined consumer scale that we have between cash up and after K as a really compelling one.
We're we're really seeing some strong or early interest is around the pitch of buy now pay later in cash at pay Uhm and that's something again that will share more about it investor day, and then as you called out on Booth, we see an opportunity there we're not actually funding.
Funding boost through Afterpay sellers today, but we see a meaningful opportunity. There overall, we are seeing more partner funding through boost because we've been able to make the pitch about how consumers uhm learn about a new merchant or increase the frequency at a new merchant because of the boost platform, which is a very compelling unique platform as part of cash that car.
<unk>.
We haven't yet integrated the sales pitch on after pay but that is something that you see is a future strong potential on boost as well as what we're seeing on cash that pay.
Thank you for your next question comes from the line of Darren Keller from Wolf Research. Your line is open. Please go ahead.
Hey, Thanks, guys, you know you're Kashyap gross profit estimates resolved learning English.
And after getting really handling <unk> I.
I mean hearing some of the matrix you guys route around engagement monthly engagement reduce it over 20 times per month or the debit card use.
Clearly is driving a lot of that shrink and I didn't know you were talking about sequential improvement from.
Here. So if we could just dive into that a little bit and understand what's driving that behavior consumer behavior with your products. What what are the most concerned about whether it's trash out facts resorts. Other new features that gives you that much confidence.
Thanks goodness.
Sure. It. Thanks for your question Darren I can lead off here, we have seen strong growth on cashback. What you saw here in terms of the growth in the first quarter as well as leading into April with 85% growth on a three year cater basis greater than 15 per cent year over year X after pay.
Mm continues to be very strong I think a lot of it comes back to what we've shared around our inflows framework. The three key drivers of Uhm monetization women cash at first growing are active base you know as of the end of December we add 40 over $44 million monthly active we continue to grow.
That quarter over quarter in Q1 in month over month into April .
Second inflows.
We have continued to grow and we had our strongest inflows quarter ever in Q1 and that that's on the back of growing product adoption as well as growing engagement as we noted in our remarks and as you noted strongest engagement month and marched with 21 transactions during the month on average across her.
Monthly base and then finally, the third variable around monetization right. This is effectively how much we charge on the inflows that come into our system and as you know we've been able to uhm drive value across the products that we have been able to flex pricing on some of them even more recently.
Uhm cause that's the broader framework that really moves cash up where we've seen strong growth in traction even in the midst of a dynamic macroenvironment and strong health and the base of our customers on cash up you also layer on top of that that we have some newer products that are just beginning to ramp whether it's.
Reaching out to families whether it's driving inflows through direct deposit whether it's things like cash that pay or in the longer term the opportunities to build an integrated commerce platform with Afterpay, we see significant opportunity here to continue to drive growth through our cash that popcorn.
Thank you to your next question comes from Lisa Ellis for Mustard Nathan Your line is open. Please go ahead.
Thank you good afternoon. Thanks for taking my question I wanted to switch over to the.
Square business I'm looking at that international contribution that's up up.
Up to 12% of G. P C and a quarter that's up I think from 8% a year ago. Uhm you commented on some of the product rollout in Canada and Ireland.
Just taking a step back can you describe more broadly the international expansion strategy for square and.
What what do you have to do sort of differently, which countries are you're prioritizing et cetera. Just so we can kind of get a sense for how much upside we can anticipate from from the international side with square. Thank you.
Yep of course.
So global expansion remains a top priority for squirt in and also for social.
With square with regards to square, we have three approaches.
Number one we Augustine brands and product awareness to drive a broader understanding or or product capabilities to sellers within each one of the mortgage.
Number two we focus on reaching product dirty.
All of our markets and what this means is.
But we have all the products that we have the United States.
We're launching them.
Everywhere in the market. So we're currently I'm as well so the.
When square loans as in one market. It's also in all the market. So we we currently system.
So.
Q why do we won't square loans to better help Sir so those branch of Castro and.
And we also launched on demand delivery.
In Ireland, and Q1, we launched loyalty and square marketing.
And as I said in my opening remarks in April we launched on these questions are all of our markets and that is exactly what we wanted to do more of when we launched features and your products.
We go to all of our markets. We're also looking new markets services with <unk>.
In January were extended in the spring.
And we brought.
Find out later functionality to square so as in Australia.
And the U S. So invest.
Invest in a brand new product awareness focused on making sure that all of our products exist in all of our markets and then expanded new mortgages row.
Comes to socialize you know, we're pushing really hard.
As a result of Tupper.
Thank you. Your next question comes from Hershey, The robot from Bernstein. Your line is open. Please go ahead.
Thanks for taking my question I wanted to ask about lending. So if a traditional financial services are typically the goldmine for monetization, but has been a tough enough to crack.
<unk>, it's been Texan.
You just launched Nevada product Sophie users email I'll have the off to pay got it can we talk about how important is lending and the conflicts appeared laughter awkward expansion that thank you.
I'm happy to start here.
I would say that we have always felt that fast access to funds, whether it's a customer's own funds or access to credit has been a key part of our platform and I keep part of what our customers need in good time, then in uncertain times and we built a.
A lot of data a lot of heuristics machine learning around the ability to enable customers.
It's four access to those funds in a responsible way.
See we do that today on the square platform with our loan square loans product, which we were able to very quickly pause during the early days of <unk> pivot to P. P. P. And then relaunch and now with originations they're back to pre pandemic levels Uhm with continued strong resolved. Thank.
<unk> results, we've seen with respect to loss rates and repayment rate.
Uhm as you noted catch that borrowers another aspect of a loan product or credit product that we have been experimenting and ramping and one that we're also excited about uhm for the future, but obviously want to do that in a deliberate and responsible way and then of course after pay receivables or another key pieces you're <unk>.
Heard earlier, that's another one where we have seen loss rates consistent with historical ranges as.
We've onboard and things like soft credit checks and other means that.
Really responsibly onboard quality customers and as we gather data across these platforms, we have the ability to sort of uniquely underwrite a lotta these customers whether consumers and the cash up platform or sellers in this square platform Uhm. So it's a it's a key part of what we see our customers need and therefore, an opportunity for us.
US to as you know expand our Pooh as an ecosystem products that helps our customers ultimately grow and eventually use other products within the the platform as well.
Six Q. So your next question comes from the line of.
Pete Christiansen from city. Your line is open. Please go ahead.
Thank you good evening.
And I'm really you made a lot of references to e-commerce platform, bringing after paying to catch up throughout the year and it sounds like you have all the ingredients here to make it pretty strong conjectural commerce platform.
In that vein boxy, social as a potential component of before growth algorithm here.
Thank you.
Absolutely I mean.
10 minutes is inherently social.
The reason the ketchup remains in the top 10 under the App store.
Every day.
What are the benefits.
Customers and just the the very model the.
The network with <unk> <unk>.
Once you pay someone else and there's some ketchup requester actually some money.
And the person downloads and that's just at the very very base foundational later.
We think there is a lot more we think is discovered that that we have been talking about it on this call with octopus.
Another step in truth, we certainly think.
Through social networks with them.
The suicide improve.
<unk> or the sellers, obviously with some ketchup and also obviously within title, which was one of the reasons we.
Required by company as well.
Just to make sure that we are recognizing.
Payment sues inherently something that people.
Number one do at least weekly.
And is a very social thing so we wanted to make sure that we are.
Collecting that India and the architecture.
And and how we actually deliver the service to customers all around the world.
We're we're gonna talk a lot about this.
Ever industrialist and.
I'm really sorry to see you all again.
On the 18th because this is the first time in five years.
We've had a chance to really tell.
Sorry.
And a lot has changed in those five years of Christian rest of your day ketchup was barely mentioned.
I don't think you can have the slides.
So this is this is our opportunity to actually show you how we've grown musical systems.
I'm only proven we can grow one massive scale, but too.
And the real power.
Aw, how they connect and how we add new ecosystems that are serving using newer audiences and newer Audi.
Customer vicious so really starting to tell the story and can like can work to get into but absolutely.
We think the social Arizona, a really important part of what we do in the future.
Thank you for your next question comes from the line of Mike <unk> from Goldman Sachs. Your line is open. Please go ahead.
Hey, good afternoon. Thank you very much for the question I was just wondering if you could provide a little bit more color around the cash card gross profit strength in the quarter.
Was that largely driven by transacting user growth or increase spend and then separately can you just talk a little bit about the deposit trends in the quarter and your outlook. Thank you very much.
Sure happy to happy to jump in here as you heard you know we've seen strong growth on cash card in the first quarter and into April uhm in the first quarter cash card in 350 per cent year over year 170 per cent. When you look on a three year cake or basis really astounding growth as.
As customers find increased utility here as we said in the past about one in three of our monthly active within Kashyap use cash card each month as of December we had set about 13 million monthly actors obviously continue to grow since then.
And it's a part of our broader strategy in addressing customers from teams to their family members to the broader platform, where we found continued strong traction here and we have seen really broad based utility where customers are spending big box retailers discount retailers restaurants fast food grow.
<unk> everyday expenses and that utility is ultimately what drives not only new act as in the cash card, but increased utility over time on a weekly and daily basis.
We also see cash card as a product that build attached to other products.
Meaning that you're likely more likely to become a direct deposit active for instance, if you are already a cash card active and once you become a direct deposit active as as I mentioned in March we had a million and a half.
Month, a direct deposit active you you're more likely to use your cash card more frequently because you have more of your inflows coming into cash up in its top of mind for Ya Uhm. So it's still early on the trend for both of these you know for cash card as a per cent of monthly activism and direct deposit as a percent of it.
Cash card active we see a tremendous runway to increase frankly, the attached and daily utility of both.
Trauma instant deposit perspective, we continue to see traction here as well of course their use cases in which customers need the moon to their money outside of a platform you'd love for people to keep their money within the platform and use it and products like cash card, but of course, there's utility to take money outside of cash at and we continue.
<unk> you know strong growth on products like that but build a diverse are interested in building a diversified product set and and revenue streams across multiple of these products. So we're not dependent on any one until we can increase our utility for our customers.
Great. Thank you very much for the thoughts of Maria.
Your next question comes from the line of Rumsey L. S. All from Barclays. Your line is open. Please go ahead.
Hi, <unk>. Thank you so much for taking my questions. This afternoon.
Could you give us an update on the cash out strategy when it comes to international expansion and sort of when we might see cashback rolled out into new geographies. You guys are obviously actively rolling out seller and a lot of your geography. So maybe maybe any comments you can give us on timing <unk> sort of like what needs to occur from a <unk>.
<unk> organizational or compliance perspective, or any other types of challenges you need to overcome in order to kind of cleared away for that thank.
Thank you.
And as I said earlier that this remains a top priority for the for the ketchup him as well we want to make sure the services of global service. So we're serving people all around the world.
Sort of.
Two.
Two main charges there were exploring for for expansion the purchases with our products.
Such square, making sure that we bring 32 new markets. So we we launched abilities. Some funds between the rest of the UK domestic.
Instead of the growth of the UK customers and transaction frequency over the past year.
Learning a lot from their lunch and they will inform our next moves and the second is through emanate were you required a European furniture mobile.
Screen <unk>.
<unk>.
And.
<unk> also taught us a lot that will inform our next movie. So we we want to push really hard on us and there's multiple cost to do so but our goal is to make sure. The ketchup is global and we are bringing parity across all of our products to all the markets.
And the same way that we're trying to do with the square ecosystem.
After K cases, well here Ramsey helps with us in terms of getting access to consumers scale and markets.
After pay that we can then leverage is we we've been cashback and the ketchup ran to those markets.
Thank you. Your next question comes from Trevor Williams from Jeffries. Your line is open. Please go ahead.
Thank you very much for taking the question I was hoping to get an update on cash up taxes and attraction that you guys have seen to date Emery to your comment about this being the highest quarterly inflows you've seen I'm, assuming taxes as a partial contributor to that one too, but just any color on the percentage of the user base you've seen uptake from.
Any way you can isolate the tailwind to Q1 and that any expectations for kind of what the the gate into the impact could be in the second quarter as well. Thanks.
Sure Yeah, let me jump in here and give you some stats on catch up taxes Uhm as he know in January we launched are free digital tax filing service for our customers really simplifies the experience, which has historically been <unk>.
Complicated expensive unwieldy for our customers it simplifies a experienced and our customers can get their tax refund sooner if they're a direct deposit hang in the cashback and at the end of tax season, we had more than a million and a half people filing their taxes with cash that taxes, we find that these filers to catch up taxes.
More engaged with a cashback because system there are twice as likely to use paycheck deposits in the first quarter compared to the average monthly active.
And they are you know driving inflows as you noted the end of the platform.
75% of those who used cash that taxes and have a cash card account selected cash F. As their refund method uhm, we have always seen the tax season in the past has been driver of inflows for us into cash up and we've seen that again in the first quarter. It's a piece of the enclosed.
Come into cash up more broadly so I wouldn't say that that's necessarily different this quarter than in the past what we historically seen but what cash that taxes does is it helps bring awareness to our broader banking platform to the ability to direct deposit and it's a utility for our customers.
Seamless and provides value to them to the broader.
Broader integrated suite of products that we have for them, making deposits even easier.
Q. Your next question comes from Josh back from K D. C. M. Your lines open. Please go ahead.
Thank you for a particular question I wanted to ask you a little bit about the in store efforts for the appeal space. It certainly seems like there's more energy.
Could obviously it creates a much larger portion of the wallet that you can capture certainly after bad because had really good success.
With this strategy internationally.
Obviously, we become a nation of block and square you have lots of unique assets.
Officially accelerate that's just gonna be curious how important.
In store component you see for B M. P L as as a driver for that segment.
When you say, yes to what you mean.
People actually being pregnant with him Mister personal person yeah.
Yeah I got it.
I think it's a beautiful thing about our models.
Our focus on Omnichannel.
So we don't really have any boundaries.
With regards to where customers are.
So.
Africa, and a lot of <unk> services for focus traditionally of newcomers.
And we wanted to make sure that.
[noise] solutions work everywhere, whether that'd be through a phone order.
Online or offline at the store.
And the experience should be more or less the same throat. So.
I think all of these.
All these behaviors tend to ebb and flow.
You see.
Lot of activity in e-commerce and let me shoot more than.
Fine and vice versa.
We just wanted to make sure that we provide the ultimate flexibility to our soldiers.
Doesn't matter whether customers are you want to help them make the sale.
And the reason application are important to us.
Is because the buy now pay later functionality and use case.
Allows our soldiers in the commercials and it allows their customers to.
Quickly act on your decision.
A very favorable right so.
We certainly expect a lot of strength.
<unk>.
We do online and as we ramp up.
Our experiments discover Kevin.
And ketchup, obviously will see a lot more of the online activity, but we can also use that to drive people too.
Also I'm experiencing the merchants around them within the neighborhood.
I think that's really special really unique.
Hasn't been done before.
Before as far as I know in a cohesive way.
And certainly not to be two days.
Simplicity.
<unk> brings a bear with all of our services and and all of our ups.
And I'll just add to that Josh you you've heard us talk about this in the past I think last quarter to that what we see for Afterpay and they're more established markets like Australia, New Zealand you know what.
What we see there is an increasing presence across omnichannel not just online, but also in person and that omnichannel consumers consumers are using buy now pay later in person as well as online transact at higher rates than online only consumers because it's become a part of how.
They manage their cash for it has become top of mind for them in terms of how they make purchases.
And that is something that we think as Jack spoke to his unique about our platform and that there's a lot of complementarity between the square platform and the after pay platform and how we can help after pay grow with our access to millions of of sellers.
Across the U S and outside the U S. Both online and in person.
Thank you. Your next question comes from Jason.
Copper bird from Bank of America. Your line is open and please go ahead.
Thanks, guys I just wanted to come back to a couple of the April metrics, specifically the square G. P. B year over year growth in the Caf gross profit year over year growth.
Mistaken the year over year comps actually get quite a bit easier I believe in May and June relative to April levels for both those metrics. So is it reasonable to think that could accelerate off those April levels against the root beer comps during the balance of the quarter, assuming no significant macro changes.
And then just a quick housekeeping clarification on the Opex growth for the year X. After packages at 1.2 billion in my write that last quarter was 1.3, so you're you're 100 million last now thank you.
Sure. So what I would say for April is that you know you write that March and April of last year, a tough comps for us because of the significant government fund Dispersements that came about last year. That's part of why I would Orient you more of those three year cave your metrics that I was sharing for April .
When we do see.
Some more consistency between you know the the periods that we're looking at here from Q1 in the April and where you do get to normalize around some of those COVID-19 constant you're speaking to and and it's been a prior year timeframe. So again it would orient you to the three year metrics that we're seeing.
Square G. P V growth on a three year basis.
In April came in in about 24%.
<unk> gross profit X after pay coming in at about 85%.
And is still strong continued growth and again, the three year Cairo help normalize for some of the year over year. The second part of your question on Opex was really just some refinement for us based on the pacing of of the expected investments for the remainder of the year.
The reduction here is relatively minimal in the context of the broader non-GAAP opex expected investments for 2022 less than a 4% decrease as we refine these numbers and for a block X. After pay it's really just about you know, reflecting the pacing spend for some of the newer and experimental marketing channels.
Thank you and for our last question, we have Brian <unk> Deutsche Bank. Your line is open. Please go ahead.
Hey, guys. Thanks for for them in and congrats on the solid results here. The one question I had was on after pay the grocery three celebrated some off of last year's pace in April I could just talked about expect something around 15% volume growth, which is probably going to be below.
Some of the industry peer so just trying to figure out how much of that is that you guys really haven't fully rolled out integration into the product yet would expect that number to accelerate from here how much of that may be taken a more conservative risk profile given the macro environment. Thanks.
Thanks.
Sure what you know what I would say for after pay is that our focus in the near term is around you know growing our customer base, managing our loss rate and driving increase consumer frequency as I mentioned earlier and we're happy with the progress we're making on each of those pieces.
And you're right, we have not yet fully integrated or <unk>. The the vision come to life, yet across the connecting points between merchants and consumers with her square in cash that platform you hear a lot of you'll hear a lot more about that in a couple of weeks at Investor Day. We our teams are deep at work on that integrated cause.
Immerse vision.
And we have so much more to come on that which were really excited about we really think we have a differentiated offering to provide over the longterm here as we think about how our commerce platform will be different from others and we think we can be truly differentiated on non price factors. When you think about the <unk>.
<unk> scale that.
That we have across cashback and Afterpay and then when you think about the merchant scale that we have across square and after pay we believe that what we're building will be resilient and a sustainable strategy over the longterm for both sides of the ecosystem merchants and consumers, we hope to lay all.
That out for you at Investor day on the 18th.
Thank you for centers, ladies and gentlemen, thank you for participating in today's program. This concludes today's call give me I'll disconnect. Thank you.
[noise].