Q1 2023 Block Inc Earnings Call

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Speaker 1: Coming and again, and and again her come, and again, and and again her coming.

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Speaker 2: Good day, Ladies and gentlemen, and welcome to the block first quarter 2023 earnings conference call.

Good day, ladies and gentlemen, and welcome to the block first quarter 2023 earnings Conference call I would now like to turn the call over to your host Nikhil Dixit head of Investor Relations. Please go ahead.

Speaker 2: I would now like to turn the call over to your host, nikeil digit, Head of Investor Relations. Please go ahead.

Speaker 3: By everyone. Thanks for joining our first quarter 2023 earnings call. We have Jack and amida with us today. We will begin this call with some short remarks before opening the call directly to your questions.

Hi, everyone. Thanks for joining our first quarter 2023 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.

Speaker 3: During QA, we will take questions from our customers, in addition to questions from conference call participants.

Speaker 3: We would also like to remind everyone that we will be making forward-looking statements on this call. All statements other than statements of historical fact could be deemed to be forward-looking. These forward-looking statements include discussions of our outlook and guidance, as well as our long-term targets and goals, and we may decide to shift our priorities, move away from these targets and goals at any timethese statements are subject to risks and uncertainties.

We would also like to remind everyone that we will be making forward looking statements on this call all statements other than statements of historical fact could be deemed to be forward. Looking. These forward looking statements include discussions of our outlook and guidance as well as our long term targets and goals and we may decide to shift our priorities move away from these.

Targets in gold at anytime.

These statements are subject to risks and uncertainties 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.

Speaker 3: 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.

Speaker 3: Please take a look at our filings with the SEC for a discussion of the factors that could cause our results to differ.

Please take a look at our filings with the SEC for a discussion of the factors that could cause our results to differ.

Speaker 3: 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 lawduring this call, we will provide preliminary estimates of gross profit growth and GMD performance for the month of April . These represent our current estimates for April performance, as we have not yet finalized our financial statements for the month of April and our monthly results are not subject to interim review by our auditors.

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 estimates of gross profit growth in <unk> performance or the month of April . These represent our current estimates for April performance as we have not yet finalized our financial statements for them up with April and our monthly results are not subject to interim review by our auditors as a result actual AP.

Speaker 3: As a result, actual April results may differ from these estimates and may not be reflective of performance for the full second quarter.

<unk> results may differ from these estimates and may not be reflective of our performance for the full second quarter.

Speaker 3: Moreover, this financial information has been prepared solely on the basis of currently available information by, and is the responsibility of management. This preliminary financial information has not been reviewed or audited by our independent public accounting firm. This preliminary financial information is not a comprehensive statement of our financial results for April or the second quarter.

Moreover, this financial information has been prepared solely on the basis of <unk>.

Available information by and is the responsibility of management.

Preliminary financial information has not been reviewed or audited by our independent public accounting firm.

This preliminary financial information is not a comprehensive statement of our financial results for April or the second quarter.

Speaker 3: We will also discuss combined company gross profit during this call. Block combined company gross profit asmes we acquired our BNPL platform on January first 2022 and includes a 51 million gross profit contribution from our BNPL platform for the month of January thousand and 22 for purpose of comparison. Fourth quarter: combined company gross profit assumes a hundred and 85 million contribution to block gross profit from our BNPL platform in the fourth quarter of 2021, as if we acquired our BNPL platform on October first 2021.

We will also discuss combined company gross profit during this call.

Block combined company gross profit assumes we acquired our be NPL platform on January one 2022 and includes a $51 million gross profit contribution from our B NPL platform for the month of January 2022.

For purposes of comparison fourth quarter combined company gross profit assumes a $185 million contribution to block gross profit from our B NPL platform in the fourth quarter of 2021 as if we acquired our be NPL platform on October one 2021.

Speaker 3: Also we will discuss certain non-GAAP financial measures during this call. Reconciliations to the most directly comparable GAAP financial measures are provided in the shareholder letter, historical financial information spreadsheet and Investor Day materials on our Investor Relations website. These non-GAAP measures are not intended to be a substitute for our GAAP results.

Also we will discuss certain non-GAAP financial measures. During this call reconciliations to the most directly comparable GAAP financial measures are provided in the shareholder letter historical financial information spreadsheet and Investor day materials on our Investor Relations website.

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

Speaker 3: Finally this call in its entirety is being audio webcast on our Investor Relations website. An audio replay of this call and the transcript for Jack and amrida's opening remarks will be available on our website shortly. With that, I would like to turn it over to Jack.

Finally, this call in its entirety is being audio webcast on our Investor Relations website, an audio replay of this call and the transcript for Jack and Amrita is opening remarks will be available on our website shortly with that I would like to turn it over to Jack.

Speaker 4: Thank you all for joining us. Last quarter we shared our investment framework going forward. As a reminder, our framework can be articulated in a single sentance.

Thank you all for joining us.

Last quarter, we shared our investment framework going forward.

Minder, our framework can be articulated in a single sentence.

Speaker 4: Block in each ecosystem must show a lievable path to gross profit retention of over 100% and rule of 40 on adjusted operating income.

And each ecosystem must show a political paths to gross profit retention of over 100% and.

And rule of 40 on adjusted operating income.

Speaker 4: The principles that led us to this framework were: number 1- ensure our investments are focused on customer retention and growth. Number 2- account for ongoing costs of the business, including stock-based compensation. And number 3- utilizede industry standard conventions that are simple to communicate and understand.

Principles that led us to this framework, where number one ensure our investments are focused on customer retention and growth.

Number two account for ongoing cost of the business, including stock based compensation and number three utilized industry standard conventions that are simple to communicate and understand.

Speaker 4: We will not be distracted from living up these principles and building our business according to this framework.

We will not be distracted from living up to these principles and building our business. According to this framework.

Speaker 4: popply season. Our challenges ahead, including many out of our control.

Obviously, there are challenges ahead, including many out of our control.

Speaker 4: I wanted to spend a moment talking about those here where how we're thinking about meeting that and then hand it over to Amrita to discuss our quarter.

I wanted to spend a moment talking about those who are aware of how we're thinking about meeting them.

And then hand, it over to Amrita to discuss our quarter.

Speaker 4: I'll start with the macro challenges and then the prevailing trends we can use to advantage our customers and us.

I'll start with the macro challenges and then the prevailing trends, we can use to advantage our customers and us.

Speaker 4: There are three macro challenges affecting all businesses now and over the long term.

There are three macro challenges affecting all businesses now and over the long term.

Speaker 4: Number one constant state of global Cris.

Number one constant state of global crisis.

Speaker 4: Number 2: regulatory fragmentation.

To regulatory fragmentation.

Speaker 4: Number 3: global financial system shifts.

Number three global financial system shifts.

Speaker 4: The North seems to be moving from one global prices to the next and suffering from an overwhelming amount of information which is causing people and organizations of all sizes to be distracted and reactive to the moment.

The world seems to be moving from one global prices.

The next and suffering from an overwhelming amount of information, which is causing people in organizations of all sizes to be distracted and reactive to the moment.

Speaker 4: From COVID-19 to inflation, to the war in Ukraine, to bank failures, the number of things we all need to pay attention to grows unbounded.

From Covid to inflation to the war in Ukraine, The bank failures, the number of things, we all need to pay attention to gross unbounded.

Speaker 4: Throughout the time. We want to remain focused and not reactive to any one particular moment in time.

Throughout this time, we want to remain focused and not reactive to any one particular moment in time.

Speaker 4: This is easier said than done, but it's something that underlies everything we do. Ensuring our long-term view guides all of our actions, especially those we take in the short term.

This is easier said than done, but its something that underlies everything we do ensuring our long term view guides all of our actions, especially those we take in the short term.

Speaker 4: At the same time, regulators around the world are coming up with slightly or entirely different answers to problems facing their citizens.

At the same time regulators around the world are coming up with slightly or entirely different answers to problems facing their citizens.

Speaker 4: Instead of having global standards, we end up with rules which are different for every market, effectively slowing the pace of bellment.

Instead of having global standards, we end up with rules, which are different for every market effectively slowing the pace of development.

Speaker 4: While this might be a good thing for each market, and makes it very challenging to grow a global Internet business, especially for smaller companies.

While this might be a good thing for each market. It makes it very challenging to grow our global internet business, especially for smaller companies.

Speaker 4: Part of our job will be to help our customers navigate this complexity by taking it on ourselves.

Part of our job will be to help our customers navigate this complexity by taking it on ourselves.

Speaker 4: Finally there have been numerous challenges to the global financial system, and it's experiencing some significant shifts.

Finally, there have been numerous challenges to the global financial system, and it's experiencing some significant shifts.

Speaker 4: From new global reserve currency candidates. Centralization of banks through failure smaller ones to adoption of central bank digital currencies with entirely new capabilities.

From New Global reserve currency candidates centralization of banks through failure of smaller ones to adoption of central bank digital currencies with entirely new capabilities.

Speaker 4: These all affectctor core business and are all trends we need to navigate carefully.

These all affect our core business and are all trends, we need to navigate carefully.

Speaker 4: I'm confident we will, as we see and acknowledge them early. We want to be proactive in our approach and not just react when it's too late, when there are a few technology trends that I believe will help us do just that.

I'm confident we will as we see an acknowledged them early we.

We want to be proactive in our approach and not just react when it's too late when.

And there are a few technology trends that I believe will help us do just that.

Speaker 4: Where three trends we're focused on. Number one is artificial imtoerers, number two is open protocols and number three is the global stft.

<unk> trends, we're focused on number one is artificial intelligence.

<unk> is open protocols.

Three is the global stuff.

Speaker 4: Consider how many times you ve heard the term AI or gptt in the earnings calls just this quarter versus all quarters in history prior.

Considering how many times you've heard the term AI or GPT and the earnings call. It's just this quarter versus all quarters in history prior.

Speaker 4: This trend seems to be moving faster than anyone can comprehend or get a handle on.

This trend seems to be moving faster than anyone can comprehend or get a handle on.

Speaker 4: Everyone feels like they're on their back foot and struggling to catch up.

Everyone feels like they are on their back foot and struggling to catch up.

Speaker 4: Utilizing machine learning is something we've always employed a block, and the recent acceleration in availability of tools is something we're eager to implement across all of our products and services.

Utilizing machine learning is something we've always employed a block and a recent acceleration in availability of tools, it's something we're eager to implement across all of our products and services.

Speaker 4: We see this first as a way to create efficiencies both internally and for our customers.

We see this first as a way to create efficiencies both internally and for our customers.

Speaker 4: And we see many opportunities to apply these technologies to create entirely new features for our customers.

And we see many opportunities to apply these technologies to create entirely new features for our customers.

Speaker 4: More and more effort in the world will ship to creative endeavors as AI continues to automate mechanical tasks away, and we believe we are well positioned for that shift with our strategy for artists. On title.

More and more effort in the world will ship to creative endeavors as AI continues to automate mechanical task away.

And we believe we are well positioned for that ships with our strategy for artist on title.

Speaker 4: Open protocols represent another fork in the road moment for people and companies.

Open protocols represent another fork in the road moment for people and companies.

Speaker 4: Bitcoin noster, blue sky web five and others are all working to level the ply fields for competition.

Bitcoin Noster Blue Sky Web five and others are all working to level, the playing field for competition to give individuals and organizations entirely new capabilities.

Speaker 4: And give individuals and organizations entirely new capabilities.

Speaker 4: I believe this trend is growing as fast as AI. We'll have kitss as a large impact and may even help address some of the harms in acquents.

I believe this trend is growing as fast as AI.

We will have just as large an impact and may even help address some of the harms AI presents.

Speaker 4: We are in brriefing this early So we can figure how to best contribute to these protocols and build valuable businesses on top of them.

We are embracing this early so we can figure out how to best contribute to these protocols and build valuable businesses on top of them.

Speaker 4: This isn't just about centralization versus decentralization.

This isn't just about centralization versus decentralization.

Speaker 4: If these protocols are even remotely successful, they will present the customer base far larger than any. one company can create a loan.

Protocols are even remotely successful they will present, a customer base far larger than any one company can create alone.

Speaker 4: And there is good precedent for this happening again. We're get to weed the e-mail and the overall Internet for proof.

And there's good precedent for this happening again.

The web E mail and the overall Internet foolproof.

Speaker 4: We have a number of efforts towards this trend, including our Bitcoin wallet, minor Bitcoin exchange spiral and tvd.

We have a number of efforts towards this trends, including our bitcoin wallet minor bitcoin exchange spiral and TBD.

Speaker 4: If we consider where the Internet population will grow the fastest, we must look at the so-called global South countries within Africa, Latin America, Asia and Oceana, where most of humanity resides.

If we consider where the internet population will grow the fastest we must look at the so called global <unk>.

Countries within Africa, Latin America, Asia and Oceana.

We're most of humanity resides.

Speaker 4: This region is adopting open protocols faster than Western countries because the use cases they provide are increasingly becoming a necessity, such as money ribons.

This region is adopting open protocols faster than western countries, because the use cases, they provide are increasingly becoming a necessity such as money ribbons.

Speaker 4: We are accussing the focus on these markets because we believe the total addressable market over time is bigger than anything, work hardly in.

We are choosing to focus on these markets because we believe the total addressable market over time is bigger than anything we're currently in.

Speaker 4: The assumption you have to make here, of course, is that nearly everyone in these markets has access to the Internet, which is a credible one to make of the next decade.

The assumption you have to make here of course is that nearly everyone. In these markets has access to the Internet, which is incredible wanted to make over the next decade.

Speaker 4: We have already started this work in earnest and with our partnership between tvd and yellow card, to enable feia on and off-amps in 16 African countries.

We have already started this work in earnest and with our partnership between CBD and yellow card to enable the on and off ramps in 16 African countries.

Speaker 4: Open protocols and focused dayai solutions will help us to move even faster and in a way that's complementary to the businesses that already exist within these markets and the ones starting up in the future.

Often protocols and focused AI solutions will help us to move even faster and in a way that is complementary to the businesses that already exist within these markets.

One is starting up in the future.

Speaker 4: I realize this is a lot of kickken, but I want to make sure you, you all, had the context for how we will be driving our road maps and businesses in the future.

I realize this is a lot to kick in but I wanted to make sure you all have the context for how we will be driving our roadmaps and businesses in the future.

Speaker 4: With our investment framework, we will have the right accountability as we look to grow blocks many ecosystems together.

With our investment framework, we will have the right accountability as we look to grow blocks many ecosystems together.

Speaker 4: Together is the key word here, as our real value comes from our multiple ecosystems working to positively reinforce one another and provide resiliency through challenging times.

Together is the key word here is a real value comes from our multiple ecosystems working to positively reinforce one another and provide resiliency through challenging times I couldnt be more excited about what's ahead and how we are positioned as a company to grow over to Amrita.

Speaker 4: I couldn't be more excited about, with ahead and how we're positioned as a company to grow over D rea.

Speaker 5: Thanks Jack. You've now heard three of the longer-term trends we are prioritizing in the coming years to expand our market opportunity and help advance our ecosystems.

Thanks, Jack you've now heard three of the longer term trends, we are prioritizing in the coming years.

Spanned our market opportunity and help advance our ecosystems.

Speaker 5: As we pursue these opportunities, we'll continue our day-to-day focus on serving our customers, operating with discipline and driving long-term profitable growth at scale.

As we pursue these opportunities we will continue our day to day focus on serving our customers operating with discipline and driving long term profitable growth at scale.

Speaker 5: There are three topics related to our more recent performance that I'd like to cover today: first, an overview of our strong first quarter results. Second, trends seen across our business in April . And third, a look at our investments through the.

There are three topics related to our more recent performance that I'd like to cover today.

First an overview of our strong first quarter results.

Second trends, we've seen across our business Nathan.

Third a look at our investments to the remainder of the year.

Speaker 6: Under the year.

Speaker 5: In the first quarter we delivered strong growth across our ecosystems, with gross profit of $1.71 billion, up 32% year-over-year. On a combined company basis, gross profit grew 27% year-over-year in the first quarter, up from 21% in the prior quarter.

In the first quarter, we delivered strong growth across our ecosystem with gross profit of $1 seven 1 billion up 32% year over year.

On a combined company basis gross profit grew 27% year over year in the first quarter.

Up from 21% in the prior quarter.

Speaker 5: We delivered adjusted EBITDA of $368 million during the quarter, an increase from $195 million in the prior year period.

We delivered adjusted EBITDA of $368 million during the quarter and increased from $195 million in the prior year period.

Speaker 5: Adjusted operating income, which includes expenses related to stock-based compensation and depreciation and amortization, was $51 million in the first quarter, up from a $42 million loss in the prior year period.

Adjusted operating income, which includes expenses related to stock based compensation and depreciation and amortization was $51 million in the first quarter up from $42 million loss in the prior year period.

Speaker 5: We also continued to diversify our monetization streams across our ecosystems.

We also continued to diversify our monetization streams across our ecosystems.

Speaker 5: In the first quarter we had 14 revenue streams across Square and cashup that generated $1 million or more in annualized gross profit, up from 11 a year ago.

In the first quarter, we had 14 revenue streams across square and cash app that generated $100 million or more in annualized gross profit up from 11 a year ago.

Speaker 5: Let's get into each ecosystem.

Let's get into each ecosystem cash that generated $931 million of gross profit in the first quarter, an increase of 49% year over year.

Speaker 5: Cash up generated $931 million of gross profit in the first quarter, an increase of 49% year-over-year.

Speaker 5: On a combined company basis. Cash up gross profit grew 43% year-over-year, up from 39% in the prior quarter.

On a combined company basis cash up gross profit grew 43% year over year up from 39% in the prior quarter.

Speaker 5: We delivered year-over-year growth across each component of our in flows framework, active inflows, peractive and monetization rate. We reached 53 million monthly transacting active remarks, an increase of 17% year-over-year.

We delivered year over year growth across each component of our insurance framework active inflows proactive and monetization rate.

We reached 53 million monthly transacting actives remarks, an increase of 17% year over year.

Speaker 5: Inflow per transacting active averaged $1.136 thousand in the first quarter, up 8% year-over-year, and quarter quarter and overall inflows into cash up toilled $61 billion, up 27% year-over-year.

Inflows prior transacting accurate averaged $1136 in the first quarter up 8% year over year and quarter over quarter.

And overall inflows into cash up totaled 61 billion up 27% year over year.

Speaker 5: We remain focused on driving growth and inclos proactive by growing product adoption, diversifying ways in which people can bring our money into cash up, and investing in areas that strengthen trust and cash AP.

We remain focused on driving growth and inflows cracking by growing product adoption diversifying the ways in which people can bring their money into cash and investing in areas that strengthen trust in cash app.

Speaker 5: Monetization rate was 1%, excluding gross profit contributions from our vnpl platform.

Monetization rate was 141% excluding gross profit contributions from RMB NPL platform.

Speaker 5: Up from 1% in the first quarter of 2022, benefiting from growth in monetized products and pricing changes implemented in 2022.

Up from $1, one 9% in the first quarter of 2022 benefiting from growth in monetize products and pricing changes implemented in 2022.

Speaker 5: On a quarter-over. A quarter basis monetization rate was up slightly from 1% in the fourth quarter, including a modest benefit from interest income.

On a quarter over quarter basis monetization rate was up slightly from 139% in the fourth quarter, including a modest benefit from interest income.

Speaker 5: Our financial services products are a key driver of inflows in the cash-up and help us build retentive relationships with our active, particularly cash-up card.

Our financial services products are a key driver of inflows into cash App and help us build retention relationships with our Atkins, particularly cash App card.

Speaker 5: In March there were two million monthly cash-up card actives, up 34% year-.over-year- an average spend per active increase on a year-over-year and quarter-over-quarter basis.

In March there were $20 million monthly cash up quite active up 34% year over year and average spend per active increased on a year over year and quarter over quarter basis.

Speaker 5: In March we had two million monthly direct deposit- ACS one-tenth the scale of cash-up card monthly active.

In March we had 2 million monthly direct deposit actives, one must scale of cash up card monthly active.

Speaker 5: In particular, Paycheck deposits continued to increase as a percentage of overall inflows.

In particular pay check deposits continue to increase as a percentage of overall inflows.

Speaker 5: Totaling two and a half billion dollars in March were $3 billion on an annualized basis.

Totaling $2 $5 billion in March or $30 billion on an annualized basis.

Speaker 5: These Paycheck deposits grew 69% year-over-year- two and a half times as fast as overall inflows in the cash UPP. We've driven adoption for direct deposit actives through unique boost and more recently we've introduced free in network ATM withdrawal for those receiving their Paycheck and cash UPP.

These pay cheque deposits grew 69% year over year to five times as fast as overall inflows the cash app.

We've driven adoption for direct deposit active through unique boots and more recently, we've introduced free and network ATM withdrawals for those receiving their pay checks and cash app.

Speaker 5: We also launched savings on cash up earlier this year, which was a top requested feature amongst our customers.

We also launched savings on cash App earlier, this year, which was the top requested feature amongst our customers.

Speaker 5: This gives customers a simple and flexible way to manage money and easily set aside funds as a separate paving balance.

This gives customers is simple and flexible way to manage money and easily set aside funds as a separate savings balance.

Speaker 5: Since it launched in January , more than three million savings doves added tonunds to their savings balance as of the end of April .

Since it launched in January more than $3 million savings actions added tons for their savings balance as of the end of April .

Speaker 5: Square generated $77 million of gross profit in the first quarter, an increase of 16% year-over-year. On a combined company basis, square gross profit was up 12% year-over-year and further, excluding gross profit from PP loan forgiveness, square combined company gross profit grew 21% in the first quarter, up from 16% in the prior quarter.

Square generated $770 million of gross profit in the first quarter, an increase of 16% year over year on a combined company basis square gross profit was up 12% year over year and further excluding gross profit from PPP loan forgiveness square combined company gross profit included <unk>.

1% in the first quarter up from 16% in the prior quarter.

Speaker 5: Looking at the drivers of square's first quarter performance. First, we continue to drive growth in software and integrated payments, with growth gross profit from these products up 19% year-over-year.

Looking at the drivers of squares first quarter performance first we continue to drive growth in software and integrated payments.

With gross profit from these products up 19% year over year.

Speaker 5: Within this, we've seen strong momentum from our vertical point-of-sale offerings across retail restaurants and appointments, where gross profit was up 42% year-over-year in aggregate.

Within this we've seen strong momentum from our vertical point of sale offerings across retail restaurants and appointment <unk>.

Gross profit was up 42% year over year in aggregate by.

Speaker 5: By channel. Gross profit from in-person channels grew faster than our online channels, as we've seen online growth rates to normalize compared to pandemic levels.

By channel gross profit from in person channels grew faster than our online channels as we've seen online growth rates normalized compared to pandemic level.

Speaker 5: Second we continue to grow with larger sellers. Gross profit from mid-market sellers was also up 19% year-over-year. We remain focused on driving acquisition of larger sellers across our three key verticals of restaurants, retail and duty and our software offerings for those verticals.

Second we continue to grow with larger sellers gross profit from mid market sellers was also up 19% year over year, we remain focused on driving acquisition of larger sellers across our three key verticals of restaurants retail and duty and.

In our software offerings for those articles, we recently introduced vertical specific home pages on our website that offer customized experiences with sellers.

Speaker 5: We recently introduced vertical specific homepages on our website that offer customized experiences to sellers. The updated website funnels demand to our sales team, which we are also verticalizing in order to further support our go-to-market efforts.

Updated web site funnels demand to our sales team, which we are also verticalizing in order to further support our go to market efforts.

Speaker 5: Third we continued to expand globally. Gross profit in our international markets outpaced overall square gross profit a 29% year-over-year, excluding contributions from our BNPL platform.

Third we continue to expand globally gross profit in our international markets outpaced overall square gross profit up 29% year over year, excluding contributions from RMB NPL platform.

Speaker 5: We remain focused on square's top strategic priorities of omniichannel software, upmarket and global, and have been orienting our road maps and investments towards these areas of meaningful growth in recent years.

We remain focused on squares top strategic priorities of Omnichannel software upmarket and global and had been orienting, our roadmaps and investments towards these areas of meaningful growth in recent years.

Speaker 5: These priorities have helped us proactively evolve our business mix from our route inside, car payments or transactions were sellers and turn an amount on a key pad and hit charge.

These priorities have helped us proactively evolve our business mix from our roots in sidecar payments or transactions, where sellers enter an amount on a keypad and hit charge.

Speaker 5: Towards software and integrated payments which enable us to create more retentive long-term relationships with sellers. As a result, square gross profit implied car pments grew 5% year-over-year and represented 21% of square gross profit during the first quarter, down from 30% of two years ago. We intend for the mix of squares business related to side car payments to continue to decline over time as sidecar cases are no also well serged by peer-to-peure solutions such as cash for business within our cash up ecosystem.

<unk> software and integrated teams, which enable us to create more retentive long term relationships with sellers as a result squares gross profit from quite car payments grew 5% year over year and represented 21% of square gross profit during the first quarter down from 30% two years ago.

We intend for the mix of squares business related to sidecar payments to continue to decline overtime. As sidecar use cases are now also well served by peer to peer solution such as cash for business within our cash app ecosystem.

Speaker 5: Finally our BNPL platform generated $5.6 billion in dmb in the first quarter and increased of 18% year-over-year, inclusive of January 2022, volumes.

Finally, our the NPL platform generated $5 $6 billion in DMD in the first quarter, an increase of 18% year over year inclusive of January 2022, Williams losses on consumer receivables were 0.7% of <unk>, an improvement year over year and quarter over quarter.

Speaker 5: Losses on consumer receivables were zero- 1% of gmv- and improvement year-over-year and quarter-over-quarter.

Speaker 5: Next an update on April trends.

Next an update on April trends for the month of April we expect total gross profit growth of 24% year over year.

Speaker 5: For the month of April we expect total gross profit growth of 24% year-over-year, which we expect to remain relatively consistent for the second quarter.

Which we expect to remain relatively consistent for the second quarter.

Speaker 5: Looking at the dynamics of each ecosystem. For the month of April , we expect cash out gross profit to grow 35% year-over-year, a moderation compared to 43% combined company growth in the first quarter, as we have lacked the benefit of pricing changes made in the first quarter of 2020 -two.

Looking at the dynamics of each ecosystem for the month of April we expect cash up gross profit to grow 35% year over year, a moderation compared to 43% combined company growth in the first quarter as we have lapped the benefit of pricing changes made in the first quarter of 2022.

Speaker 5: We expect square gross profit to grow 14% year-over-year in equal compared to 12% combined company growth during the first quarter. As we lap, the more meaningful PPP benefits from the first quarter of 2020. -two and.

We expect square gross profit to grow 14% year over year in April compared to 12% combined company growth during the first quarter as we lap the more meaningful PPP benefits from the first quarter of 2022.

Speaker 5: Excluding PPP, combined company gross profit for Square is expected to be up 16% year-over-year in April , consistent with the fourth quarter's 16% growth and moderating compared to the first quarters- 21% growth. While first quarter growth benefited from lapping omacron in the prior year period, April trends were in line with the fourth quarter, which was when we started to see a moderation and processing volume growth, particularly in discretionary verticals.

Excluding PPP combined company gross profit for square is expected to be up 16% year over year in April consistent with the fourth quarter's 16% growth and moderating compared to the first quarter's 21% growth.

While first quarter growth benefited from lapping omicron in the prior year period April trends were in line with the fourth quarter, which is when we started to see a moderation in processing volume growth, particularly in discretionary verticals.

Speaker 5: For our bmpl platform. We expect year-over-year GMV growth of 20% in April and improvement from 18% in the first quarter.

For our <unk> platform, we expect year over year <unk> growth of 20% in April an improvement from 18% in the first quarter.

Speaker 5: Turning to our expectations for the remainder of the year.

Turning to our expectations for the remainder of the year.

Speaker 5: Given the gross profit momentum in our business during the first quarter, we are increasing our expectations for profitability this year. We expect to deliver adjusted EBITDA of $1.3599999999999997 billion and adjusted operating loss of $115 million for the full year 2023. this primarily incorporates stronger top line outperformance during the first quarter as we intend on shifting some expenses that we had intended for the first quarter to later in the year.

Given the gross profit momentum in our business during the first quarter, we are increasing our expectations for profitability. This year, we expect to deliver adjusted EBITDA of $1 36 billion and adjusted operating loss of $115 million for the full year 2023, this primarily incorporate stronger topline outperformance during.

In the first quarter as we intend on shifting some expenses that we had intended to the first quarter to later in the year.

Speaker 5: We remain focused on operating with efficiency in 2023, driving operating leverage across hiring, sales and marketing and corporate overhead.

We remain focused on operating with efficiency in 2023, driving operating leverage across hiring sales and marketing and corporate overhead.

Speaker 5: For the full year. We continue to expect margin improvement year-over-year on both an adjusted EBITDA and adjusted operating income basis.

For the full year, we continue to expect margin improvement year over year on both an adjusted EBIDTA and adjusted operating income basis.

Speaker 5: Shifting to share-based compensation. Last year, in the second quarter, our share-based compensation expenenses increased by $47 million quarter-over-quarter, when excluding a onetime SEC expense of $66 million related to the acquisition of Afterpay recognized in the first quarter of 2022. We expect a similar quarter-over-quarter increase in the second quarter of this year.

<unk> the share based compensation last year in the second quarter, our share based compensation expenses increased by $47 million quarter over quarter, when excluding a onetime SBC expense of $66 million related to the acquisition of after pay recognized in the first quarter of 2022.

We expect a similar quarter over quarter increase in the second quarter of this year.

Speaker 5: This remains an area on which we are focused and expect to drive greater leverage over time.

This remains an area on which we are focused and expect to drive greater leverage over time.

Speaker 5: I'll now turn it back to the operator to start the QA portion of the call.

I'll now turn it back to the operator to start the Q&A portion of the call.

Speaker 2: The floor is now open for your questions. To ask your question at this time, please press our one on your telephone.

The floor is now open for your questions to ask a question at this time. Please press star one on your telephone keypad, if at any point you'd like to withdraw from the queue. Please press star one again.

Speaker 2: Ad if, at any point, you'd like to withdraw from the cue, please press ST one again.

Speaker 2: We ask that you limit yourself to one question, Please.

You limit yourself to one question. Please we will now take a moment to compile a roster.

Speaker 2: We'll now take a moment to Kamala roster.

Speaker 2: Our first question comes from a line of kingjin Wang from JP Morgan. Please proceed.

Our first question comes from the line of Tien Tsin Huang from Jpmorgan. Please proceed.

Speaker 2: Your line is open, sir. Please go ahead.

Your line is open Sir please go ahead.

Speaker 7: Hi great thanks hope you could hear me okay I appreciate your opening comments Jack on constant Cris and your thoughts on long term trends here but want to ask about the the near term if you don't mind because we've fielded a lot of questions on the short report earlier and now give a lot of questions on terminmo and the banking system I'm curious if these it's call challenges change your near term term priorities or strategy in any way in 2023 and one I also ask us from a risk management standpoint how do you think ask about benchmarking your investments and governance and compliance and things of that nature versus pierce thanks.

Hi, great. Thanks, I Hope you can hear me Okay. I appreciate your opening comments Jack on constant crisis, and your thoughts on long term trend here, but wanted to ask about the near term. If you don't mind, because we fielded a lot of questions on the short report earlier and now you have a lot of questions on terminal in the banking system. So I'm curious if these.

Call them challenges change your near term priorities our strategy in any way in 2023, and one also ask just from a risk management standpoint.

How do you think about benchmarking.

Benchmarking your investments in governance, and compliance and things of that nature versus peers.

Yes.

<unk>.

Speaker 4: So I'll take think the first of this question. I would say that we stand by our, our response to the sure report. We will not be distracted from our strategy, from our priatvisations. We have pretty compelling ahead of us and every one of our ecosystems and we as, as I said my opening remarks, that think is really important to focus as much as possible on on that, despite what's happening around and macro, as you mentioned, there's a lot happening obviously in the financial industry and finance larger and being able to acknowledges, take them in account and make sure that we're building appropriately according to what our customers need and what our customers want in growing that customer base is a most important and because we also want to make sure that we continue to build trust talked about before, trust cerned and, in many ways, through transparency, through reliability dependability, and that is all something that we, we are, we're not, we're not given, and that comes over time and allowed to have to be focused on how our customers ultimately trust us our, our partners, including our banking banking partners, and our regulatory regulators trust us as well.

So I'll take the I'll take the first part of this question.

I would say that we standby our our response.

Two the short report.

We will not be distracted from our strategy from our propositions.

We have a pretty compelling roadmap ahead of us and every one of our.

Our ecosystems.

And as I said in the.

In my opening remarks, we think it's really important to us.

Because as much as possible on on that despite what's happening around in macro and as you mentioned, there's a lot happening obviously in the financial industry.

And finance.

Finance larger and.

And being able to acknowledges take them into account to make sure that we're.

Building appropriately according to what our customers need and what our customers want.

And growing our customer base is the most important thing to US. We also want to make sure that we continue to build trust.

And as I've talked about before trust is earned in many ways through transparency through reliability.

Dependability.

That is all something that we are we're not we're not given and then it comes over time and a lot of that has to be focused on our customers Ultimately trust us.

Our partners, including our banking banking partners and our regulatory.

Regulators Trust us as well. So this is a significant focus for us and always has been it has to be as you as you do anything in the financial space, certainly always been part of our mindset and our.

Speaker 4: So this is a significant focus for us and always has been, has to be, as you, as you do anything in the financial space, certainly always been part of our, our rightset and our questionction. And turn it over to I M right to talk about benchmar, ING against peers and more broading investment.

<unk> and turn it over to Amrita and just talk about benchmarking against peers.

More broadly investment.

Speaker 5: Yeah I think, to a question ion. You know block operates a business that is highly regulated. In our goal that ultimately to expand access to the economy through intuitive financial products and order to do that, we must maintain a culture of compliance and responsible risk management, including through investment in programs, processes controlled and teams with deep compliance expertise.

Yeah. Thanks for the question Tien Tsin.

<unk> operates a business that is highly regulated and our goal is ultimately to expand access to the economy through intuitive financial products in order to do that we must maintain a culture of compliance and responsible risk management.

<unk> investment in programs processes controls and teams with deep compliance expertise prioritizing compliance ultimately helps us drive trust with our customers with regulators and external partners and that enables us to then develop innovative products responsibly.

Speaker 5: Prioritizing compliance ultimately helps us drive trust to their customers, with regulators and external partners, and that enables us to then develop innovative products responsibly.

Speaker 5: We have significant grown our investment and compliance over the last few years. At a company level, we expect to invest approximately $16 million in compliance in 2023, which represents an increase in our investment dollars of more than five times since 2020, outpacing OpEx growth by approximately two times during that same period. Specifically, within cash up, the pace of growth on compliance investment has been even faster than that.

We have significantly grown our investment in compliance over the last few years at a company level, we expect to invest approximately $160 million in compliance in 2023.

Which represents an increase in our investment dollars are more than five times since 2020, outpacing opex growth by approximately two times during that same period, specifically within cash off the pace of growth on compliance investment has been even faster than that.

Speaker 5: You know, with regards to how you might benchmarks, that other companies may calculate compliance investment differently, So it can be hard to benchmark across companies. What we include in these figures is investments that go towards personnel, as well as software and dreling, amongst other areas, to support our program. These dedicated compliance resources support our business unit and our customers that our business unit serve and ultimately provide oversight across the ecosystem.

With regard to how you might benchmark that other companies may calculate compliance investment differently. So it can be hard to benchmark across companies. What we include in these figures is investments that go towards personnel as well as software and tooling amongst other areas to support our program.

These dedicated compliance resources support our business units and our customers that our business units serve and ultimately provide oversight across the ecosystem.

Speaker 5: Maybe just to very quickly handle. Also asked about banking- sort of banking Cris in our partner ecosystem. Look, we benefit from having a diverse ecosystem of products and services with dise business model, as you heard now, with 14 revenue streams, that $1 million or more in gross profit, up from 11 a year ago- across our, our products and our partners.

Maybe just a very quickly handle you also asked about banking sort of banking crisis in our partner ecosystem look we benefit from having a diverse ecosystem of products and services with diverse business model that you've heard now with 14.

Revenue streams at a $100 million or more in gross profit up from 11, a year ago.

Across all our products and our partners. We are always focused on building redundancies wherever we can in addition to assessing potential future risks.

Speaker 8: We are always focused on building redundancies wherever we can, in addition to assessing potential future risks.

Speaker 5: So we have a diverse set of products and we build redundancies where we can and we have a transparent approach to our partnership, as we always have.

So we have a diverse set of products and we build redundancies, where we can and we have a transparent.

Our approach to our partnership as we always have.

Speaker 9: Perfect.

Perfect.

Speaker 2: Our next question comes from the line of Tim Kyoto, from credit suweet.

Our next question comes from the line of Tim Chiodo from Credit Suisse. Please proceed.

Speaker 2: Please proceed.

Speaker 10: Great Thank you everyone. I want to touch on the verticalized offerings and retail, restaurant and beauty. They are the key to moving up market. There were a focus at the Investor Day, another in the letter and you touched on it earlier. But specifically for those 3, if you could talk a little bit about the investment you've made behind the product specifically and then on the distribution.

Great. Thank you everyone I wanted to touch on the vertical offerings and retail restaurants and beauty. They are the key to moving up market. There. We're focused at the Investor day I know they are in the letter and you touched on it earlier, but specifically for those three if you could talk a little bit about the investment you've made behind the products specifically and then on the distribution you mentioned the call to action.

Speaker 10: You mentioned the call to action on the website and how that's changed and drove more leads for the larger sellers, but maybe you could also talk about maybe the next steps around the feat on the Street sales people that will also support the vertical offerings.

And on the website and how that's changed and drove more leads for the larger sellers, but maybe you could also talk about maybe the next steps around the feet on the street salespeople that will also support the vertical offerings.

Speaker 4: If Al surface up. So a key differentiator to ourremind isour ecosystem of tools, and it's not just about anyone particulargrow vertical, but how everything works together. Ultimately, we have over 30 products, including some vertical specics, software and a developer platform which have. Our customers don't find the tools they need in our platform, that can always build their own or higher developer to do the same.

Yes.

I'll start this off so.

The key differentiator to remind us.

Our ecosystem.

Tools.

Not just about any one particular vertical but how everything works together ultimately.

We have over 30 products, including some vertical specific software and a developer platform which is.

Our customers don't find the tools they need and our platform. They can always build their owner or developer to do the same.

Speaker 4: And we also see, you know, because of that, we see a lot of growth in up market because we provide flexibility for folks in terms of our vertical software. Our solutions addressing key verticals of restaurants, return beauty allows to serve much more complex sellers with very specific needs, which again goes back to that flexibility point, and the strength of very co system in the developer platform continues to be stronger and stronger as we with forward in terms of just the investment behind products that I can talk about like grow market, actually a little bit.

And we also see.

Because of that we see a lot of.

Growth.

In upmarket, because we provide flexibility for folks.

In terms of our vertical software our solutions addressing key verticals, the restaurants retail and beauty glass to serve.

Much more complex sellers with very specific niche, which again goes back to that flexibility point and on the strength of our ecosystem.

And the developer platform continues to be stronger and stronger as we move.

Look forward.

In terms of.

Just the investment behind.

Products that I can talk about like.

Go to market actually a little bit we are constantly looking for refinements for how we think about rolling these tools out.

Speaker 4: We we're constantly looking for refinements for how we think about rolling these tools out, including the website and that first time to someone C square that is inclusive of sales, inclusive both our direct marketing and something that is never done in terms of having a final point. It's just a constant iteration and we're really excited that we take a psure look at how to improve this and make it better.

Including the web site.

And the first time, Mr. Muncie square. This is inclusive of sales. This is inclusive of our direct marketing.

And this is something that.

We've never done in terms of having a final point, it's just a constant iteration and we're really excited to always take a press look at how to improve this and make it better.

Speaker 11: All add to just a couple of data points to help frame up the response So in the first quarter you know as we look at this broad set of mid market sellers that we can serve and the specific solutions we see outsidezed growth in those areas around vertical points of sale and developer solutions the mid market sellers overall 19% year over year in the first quarter outpacing are blended square gross profit growth rate of 16% and our strong growth in our vertical points of sale growing at 42% year over year with gross profit growth from our developer R will also outpacing or.

And Tim just a couple of data points to help.

Can frame up the response, so in the first quarter.

As we look at this a broad set of mid market sellers that we can serve and the specific solutions, we see outsized growth in those areas around vertical points of sale and develop our solutions to mid market sellers overall up 19% year over year in the first quarter are outpacing our blend.

Square gross profit growth rate of 16%.

Strong growth in our vertical points of sale growing at 42% year over year with gross profit growth from our developer tool also outpacing overall square gross profit growth.

Speaker 5: Overall square gross profit growth.

Speaker 5: This is a large townam that we're addressing here with upmarket and whether vertical point of sale. We believe that we're less than 1% penetrated in the larger seller opportunity just in the? U us, based on gross receipts alone, which is why we're making the investments and ddoing the hard work of verticalizing our sales force and our go-to-market efforts.

This is a large tam that we're addressing here with upmarket and with a vertical point of sale. We believe that were less than 1% penetrated in the larger seller opportunity just in the U S. Based on gross receipts alone, which is why we're making the investments and doing the hard work on Verticalizing our salesforce.

And our go to market efforts.

Speaker 11: So to contextualize that a little bit, we've pulled back meaningfully on square sales and market sales marketing investments year-over-year as we optimize channel mix and refine our operations in the first quarter and we're seeing positive growth in acquisition, even as we've pulled back on spend.

So to contextualize that a little bit.

Pulled back meaningfully on square sales in market sales and marketing investments year over year, as we optimize channel mix and refine our operations in the first quarter and we're seeing positive growth and acquisition, even as we've pulled back on spend.

Speaker 5: Within sales. The works that we've been doing is continuing to shift to a verticalized, software-led sales team. We've now implemented this with our U's inbound sales team, which is verticalized, and over the next two quarters we'll gr be doing that with our U's outbound sales team.

Within sales the work that we've been doing is continuing to shift to a vertical wise software led sales team.

Now implemented this with our U S inbound sales team, which is verticalizing over the next two quarters, we'll be doing that with our U S. Outbound sales team. It's early here, but we're seeing encouraging improvement in the efficiency and productivity of our sales reps.

Speaker 5: It's early here, but we're seeing an encouraging improvement in the efficiency and productivity of our sales reps.

Speaker 5: From a website perspective, we recently redesign the Square website, allowing our sellers to select vertical specific experiences, cater to the products needed to run their businesses and to direct sellers to our sales team, making it easier for both existing and perspective sellers to contact support. And again, it's early, but we've seen strength in overall acquisition as well as newly generation.

From a website perspective, we recently redesigned the square website, allowing our sellers to select vertical specific experiences cater to the products needed to run their businesses.

And to direct sellers to our sales team, making it easier for both existing and prospective sellers to contact support and again, it's early but we've seen strength in overall acquisition as well as new lead generation for sales since introducing our new homepage. These are long term initiatives that we're continuing to work on and we.

Speaker 5: For sales since Red.

Speaker 12: Using our new homepage. These are long term initiatives that we're continuing to work on and we expect them to drive results over the coming years as we continue that work.

Expect them to drive results over the coming years as we continue that work.

Speaker 10: Thank you, Jack area.

Thank you Jack and Amrita.

Speaker 2: We have Dan chapmanand doawling in to ask a question. Your next question comes from a line of Dan Chapman. Please proceed.

We have Dan Chapman Darwinian to ask your question. Your next question comes from the line of Dan Chapman. Please proceed.

Speaker 2: Hi Jack, Thank you for taking my question.

Hi, Jack Thank you for taking my question.

Speaker 2: My name is Dan, of course, and I use Square to run operations for a couple of businesses: a craft beer pizza restaurant we call aww Wander, and a hundred five year old movie theater called the manlea cinema.

My name is Dan of course, and I use square to run operations for a couple of businesses.

Craft beer and Pizza restaurant recall, EW wander and 105 year old movie theater called the mainly of cinema.

Speaker 2: I've been a square seller for about six years now and I currently use square point-of-sale square, on line, gift cards, loyalty and a few others.

<unk> been a square seller for about six years now and I currently use square point of sale square airline gift cards loyalty and a few others.

Speaker 2: When the pandemic struck, we are forced to quickly pivot our business model and set up an online store within two days, and I always credit Square for giving us the tools we needed to be flexible in the moment.

When the pandemic struck were forced to quickly pivot our business model and set up an online store within two days and I always credit square for giving us the tools, we need to be flexible in a moment.

Speaker 2: Now business owners like myself must adapt again as we face economic uncertainty.

Now a business owners like myself must adapt again as we face economic uncertainty.

Speaker 2: My question is: how can small business build resilience and really set ourselves off for success in this current climate?

My question is how can small business.

Build resilience and really set ourselves up for success in this current climate.

Speaker 4: And I think you, Thank you for you and square think you to the question spen in time of this would I would say that the biggest thought and I've learned, building our business is just be important. So having really good, clear data about how your business is doing and making sure that you can compir that and kind of look for patterns elsewhere, whether those the patterns within your own community, your town, your city, against other competitorers- to me that's the only way to really inform decisions you order to the create we learning, especially and and more challenging times, making sure that, like you, are looking for opportunities to convert more customers to, to recuring and know ways to get them to keep going back and constantly spons to you, which again continues to seem to get harder right now.

Got it. Thank you. Thank you for using square and thank you for the question I'm spending some time with us.

I would say the biggest lesson I've learned.

Building our business is just the importance of.

Kevin.

Good and clear data.

How are your business is doing and making sure that you.

Compare that and kind of look for patterns elsewhere.

Does the patterns within your own community or town.

City.

Against other competitors.

To me, that's the only way to really inform decisions in order to create resilience, especially in more challenging times.

Making sure that you are looking for opportunities to convert more customers to to recurring.

And.

Ways to get them to keep coming back and we're constantly sponsored which again.

Can use to seem to get harder right now but.

Speaker 4: But I think there's a general trend and I think the trend will continue to more and more local and less and less about global answers and I think small businesses are sort up extremely well for that and know we're really happy to support every way that we can that effort and and that trend and hopefully you know you know we're doing the right work by making sure that our tools just work together and you Don' really to think much about adding entirely new system on my customer relationship management- it we re subscriptions or, you know, moving to all line business.

I think there's a general trend and I think the trend will continue to more and more local.

And less and less about global answers.

Small businesses are set up extremely well.

We're really happy to support them.

Everywhere that we can.

That effort and that trend in.

And hopefully.

We're doing great work by making sure of it.

Our tools just work together and you don't really have to think much about adding an entirely new system customer relationship management.

Subscriptions are.

Moving to an online business.

Speaker 13: You just press a button, it's done to. You can really focus on the core fundamentals of your bus by looking at the, at the data and making inform judgments on. So will continue to the group or dashwork where hopefully you're seeinga lot of those metrics and information and and and need more and more actions and activities that you can make based on that play.

Press the button.

So that you can really focus on the core fundamentals of your business.

By looking at the data and making informed judgments around it. So we will continue to improve our dashboard, where hopefully youre seeing a lot of those metrics and information.

And enable more and more actions and activities that you can make based on that.

And Clinton Bill.

Speaker 2: That's great advice. Thank you, really appreciate it.

That's great advice. Thank you really appreciate it.

Speaker 14: Thank you.

Thank you.

Speaker 2: Our next question comes from line of Lisa eis from mopt nthanson. Please proceed.

Our next question comes from the line of Lisa Ellis from Moffett Nathanson. Please proceed.

Speaker 15: Good afternoon. Thank for taicking my question. I want to focus in on cash gross profit growth. There you said I on a combined company basis, up 42%, again up to 39% and four Q, So an acceleration, another quarter of earreally extraordinary growth. Can you just help disaggregate a little bit where you're really seeing that acceleration and growth and how you're thinking about the sustainability of it going forward, for example, continuing to diversify cash revenues dreams, et ceterathankyou.

Hey, good afternoon. Thanks for taking my question I wanted to focus in on cash App gross profit growth. There you said on a combined company basis up 42% again.

Up from 39%. Unfortunately, so an acceleration in another quarter of really extraordinary growth can.

Can you just help disaggregate, a little bit where you're really seeing that acceleration in growth and how you're thinking about the sustainability of it going forward for example, continuing to diversify cash app's revenue streams et cetera. Thank you.

Speaker 5: Thanks so much for the question. We saw I can start us off here. I would look at packing cash ups performance according to our inflow framework, where we have seen strong growth in each of the three variables that ultimately ladder up to gross profit, whether it active inimpos, per active monetization rate. So if we look at Q1 growth, monthly transvacting active were fifty three million in March, up 17% year-overyear-year.

Thanks, So much for the question Lisa can start us off here.

I would look at unpacking cash ups performance. According to our inflows framework, where we have seen strong growth in each of the three variables that ultimately ladder up to gross profit, whether it's active and closed per active or monetization rate. So if we look at Q1 growth.

Monthly transacting actives were 53 million in March up.

17% year over year, and this is really driven by both the virality of our peer to peer network effects as well as.

Speaker 16: This is really driven by both the verality of our peer to peure network effects as well as increasing focus on leveraging marketing and acquisition tool to drive qualified new customers and higher product adoption. Over time. We've been targeting using marketing due to and higher value audiences. We will also remaining disciplined in how we deploy those funds to ultimately see returns.

Increasing focus on leveraging marketing and acquisition tool to drive quad.

Qualified in customers and higher product adoption over time, we've been targeting using marketing new and higher value audiences. While also remaining disciplined in how we deploy those funds to ultimately see returns.

Speaker 5: From an inflows proactive perspectve at a thousand 136 in the first quarter. This is an increase of 8% both on a year over year and quarter over quarter basis, where we've been encouraged by the healthy trends we see here. The key drivers of inflows peractive are really around product adoption, where we continue to see strong adoption of products like cash up card, now reaching thirty- 8% of those monthly transacting active, that two million cash up card customers active in our March time frame and with strong growth in spend per cart cash up card active as well, underpinning that, the overall inflows that we see growing in the overall cash up ecosystem.

From an inflows practice perspective.

1136 in the first quarter. This is an increase of 8% both on a year over year and quarter over quarter basis, where we've been encouraged by the healthy trends we see here.

The key drivers of inflows proactive are really around product adoption, where we continue to see strong adoption of products like cash up cards, now, reaching 38% of those monthly transacting actives at $20 million cash card customers.

Active in our March timeframe.

And with strong growth in spend per cash upcard active as well underpinning that the overall inflows that we see growing in the overall cash app ecosystem. So this product adoption on critical products like cash up cards.

Speaker 6: So this products adoption on critical products like cash up card leads to greater activity on our platforms, stronger engagement ultimately inlow as proactive.

Leads to greater activity on our platform is stronger engagement and ultimately inflows practice.

Speaker 5: Another Ke piece of that is driving increasing the ways in which customers can inflow their funds into cash AP over time, which can lead to incremental volumes, as we've seen in the past, for example, where things like our paper money inflow channel. Finally, on inflowence per active, a key driver that will be mindful of as we move forward is that is the mix shift of our customer base as we target a younger audience and the success with Gen Z or where their families product, there could actually be some pressure on flows proactive over time as those customers are likely to have lower inflows proactive earlier in their financial journey, but we'd expect to see that grow over time as they become the earners and spenders of the future.

Another key piece of that is driving increasing the ways in which customers can inflow their funds into cash app over time, which can lead to incremental volumes as we've seen in the past for example, with things like our paper money inflow channel.

Finally on inflows proactive a key driver of that will be mindful of as we move forward is that is the mix shift of our customer base as we target a younger audience and see success with Gen Z or with our families product there could actually be some pressure on the inflows proactive over time as those customers are likely to have lower inflows practice earlier.

And their financial journey, but we would expect to see that grow over time as they become the earners and spenders of the future.

Speaker 5: Even with that mix shift, we've continued to see strong growth on growth on inflows peractive.

Even with that mix shift we've continued to see strong growth on a gross an enclosed proactive.

Speaker 5: And then the third key driver of course for cash up is monetizvation rate, which also grew strongly year-over-year given the pricing changes and, more moderately, quarter of quarter, on the back of interest income benefits. Ultimately, as we look forward, as you noted in the first quarter, combined company growth rate of about 33% for cash up. What we saw in April , or expect to see April , was about a 35% year-over-year growth rate.

And then the third key driver of course for cash App as monetization rate, which also grew strongly year over year, given the pricing changes and more moderately quarter over quarter on the back of some interest income benefits.

Ultimately as we look forward as you noted in the first quarter combined company growth rate of about 43% for cash ups. What we saw in April or expect to see in April was about a 35% year over year growth rate. This is as we expected and as we shared on our last earnings call now that were lapping pricing changes.

Speaker 17: This is as we expected and as we shared on our last earnings call, now that we're lapping pricing changes that we instituted in the first quarter of 2022, but still strong growth at 35% year-over-year in April . Final thing to note here is, of course, margin expansion for the cash up business. Again, as we noted last Qu quarter, we expected to see this year cash up to not on the growth strongly, but continue to see operating leverage in the cash up margin as we continue to operate our business with disciplined and continue on the path that we've been on for a few years now with cash up in growing or margins.

That we instituted in the first quarter of 2022, but still strong growth at 35% year over year in April final thing to note here is of course margin expansion for the cash App business again, as we noted last quarter we have.

Expect to see this year cash up to not only grow strongly but continue to see operating leverage in.

The cash op margin as we continue to operate our business with discipline and continue on the path that we've been on for a few years now with cash app and growing our margins.

Speaker 18: Thank you.

Thank you.

Speaker 2: Our next question comes from an alline of garren paller from Wolf research. Please proceed.

Our next question comes from the line of Darrin Peller from Wolfe Research. Please proceed.

Speaker 19: Hey that guys like C PV growth was obviously strong in the quarter and it was. It was good to see the spread versus the industry hold up well. I think you talked about 14% gross profit growth into April , first square. If there's any comments you can give us on volume growth into April or pay first to 17%, that be really helpful. And then, more importantly then, just revisiting the key drivers of the GP V in the seller or the square business overall differentiation and this sustainability international obviously was up over 40%.

Hey, Thanks, guys.

For CTV growth was obviously strong in the quarter and it was it was good to see the spread versus the industry to hold up well.

I think you've talked about 14% gross profit growth into April 1st square.

Theres any comments you can give us on volume growth and to your brother.

First the 17%.

That'd be really helpful. And then more importantly than just revisiting the key driver.

Of the <unk> and the seller or the square business overall differentiation in this sustainability International obviously was up.

Over 40%. So maybe you can comment on that together with E com and some of the other drivers that we've been seeing in your view of sustainability.

Speaker 20: So maybe you can comment on that, together with the e com and some of the other drivers that we've been seeing, and your view of sustainability.

Speaker 19: Thanks you again, guys.

Hey, guys.

Speaker 11: Thank you. The question there all start a saw. So you know, look overall as we think about the health of the ecosystem, I or more to gross profit and G P V as we look at our performance. When we start there, with gross profit in April at 16% year over year, this is on an X T P basis for comparison purposes. The comparable figure was 21% in Q1, where obviously we had a more favorable comp related to ommacron in the prior year, and then the Q4 comparable X T P P was 16% on a combined company basis.

Thanks for the question Darrin I'll start us off.

So look overall as we think about the health of the ecosystem idle R&D more to gross profit and <unk>.

If we look at our performance, let me start there with gross profit.

In April at 16% year over year. This is on an ex PPP basis for comparison purposes.

The comparable figure was 21% in Q1, where obviously, we had a more favorable comp related to armor crowd in the prior year.

Then.

Q4 comparable ex PPP was 16% on a combined company basis, so that trend in April it.

Speaker 12: So that trend in April looks very consistent with the trend that we saw Q4 from a gross profit perspective on a combined company basis, X T P P and really unpacking some of the trend, what we see is gross in the areas where we are strategically oriented: software and integrated payments versus side car- you know our vertical points of sale- and even in Q1 we saw outsized gross and in person versus online channels, albeit omni channel more broadly, the key focus for us.

Looks very consistent with the trend that we saw in Q4 from a gross profit perspective on a combined company basis ex PPP and really unpack in some of the trends that we see is growth in the areas, where we are strategically oriented software and integrated payments versus sidecar or vertical.

Point of sale.

And even in Q1, we saw outsized growth in in person versus online channels, albeit omnichannel more broadly the key focus for US. We've also seen strength from our banking ecosystem with loans ex PPP instant deposit and square card outpacing overall square gross profit growth.

Speaker 12: We've also seen strength from our banking ecosystem with loan-s X P P P in the deposit and square card out Ting overall square gross profit growth.

Speaker 16: Now when we look at the overall sort of growth rates in terms of key verticals we have seen some moderation as we noted since that mid Q4 mid November time frame across certain discretionary vertical food in beverage and retail churn has been relatively stable where we've seen a bit of pressure is on the processing volume that existing sellers similorder to transit we noted.

Now when we look at the overall sort of.

Growth rates in terms of.

Key verticals, we have seen some moderation as we noted.

Since that mid Q4 mid November timeframe.

Cross certain discretionary verticals food and beverage and retail churn has been relatively stable, where we've seen a bit of pressure is on the processing volumes at existing seller similar to the trends that we noted.

Speaker 12: Back in February .

In February <unk>.

Speaker 5: Because of the breadth of the overall square ecosystem. We have resilience because we serve multiple verticals, multiple types of customers increasingly at market and obviously, multiple revenue streams across multiple products.

Cause of the breadth of the overall square ecosystem, we have resilience because we serve multiple verticals multiple types of customers increasingly upmarket and obviously multiple.

Business revenue streams across multiple products.

Speaker 5: And then maybe to address your international question, we have also seen some strong growth and international xbnpl. We grew 11 to ix- it was about 11% of square gross profit and xdn PL group 20% - your rear outpieing overall square gross profit growth. We're really taking sort of a product led, product centric approach to our global expansion where again, the key differentiator is the breadth and integration and the cohesion of our ecosystem, and so our priority continues to be driving product parity in these markets and, as we bring new markets, new product to bear, look to global global launches of those products increasingly So.

And then maybe to address your international question.

We have also seen some strong growth in international ex the NPL. We grew a 11 person kit mix. It was about 11% of squares gross profit and equity NPL grew 28% year over year outpacing overall square gross profit growth, we're really taking sort of a product led product centric approach.

Our global expansion.

There again, the key differentiator is the breadth.

And the integration and the completion of our ecosystem.

And so our priority continues to be driving product parity in these markets and as we bring new markets new products to bear looks to global.

Global launches of those products increasingly so in the first quarter, we had square loyalty and square for restaurants in Japan.

Speaker 8: In the first quarter we had square loyalty and quare for restaurants in Japan and we've also had tap to pay launches over the past couple of months across Android and iPhone and U's. So more to come. Here and again, our key focus is on these top three strategic priorities in driving the square business forward.

And we've also had tap to pay launches over the past couple of months across Android and iPhone in the U S. So more to come here and again, our key focus is on these top three strategic priorities in driving the square business forward.

Speaker 19: nurston. Thanks, hdick.

Understood.

Thanks, Amit.

Speaker 2: Our next question comes from a line of Harshita raha from bernsteinplease.

Our next question comes from the line of harsh SITA robot from Bernstein. Please proceed.

Speaker 21: For seed.

Hi, Good afternoon can you talk about recession sensitivity across the different businesses.

Speaker 22: Good afternoon. Can you talk about recession sensitivity across the different businesses? So, on the Square side, how should we think about exposure to business foundation consumer discretionary spend? And then on the cash shap side, are you more exposed to unemployment trends? You consume spending trends, given the demographic sw? And then, just in the follow-up, can you also touch on credit businesses and the sensitivity there to enproach cycle?

Square side, how should we think about exposure to net business foundation consumer discretionary spend.

And then on the cash App side are you more exposed to unemployment trends and consumer spending trends given the demographic skew.

And then just as a follow up can you answer that youre going to credit businesses and the sensitivity there to credit cycle. Thank you.

Speaker 11: Sure I, thanks to the question, sha. Let me start with saying: first, you know, the works that we do to broaden our ecosystem is, you know, bearing fruit in the diversity of our revenue streams. Now, in the first quarter, 14 revenue streams at $1 million or more in annualized gross profit across cash up and square, cash up with six and square with 7, along with the and P L as well, and so each of our ecosystem is doing the work to, to broaden our products that can serve our customers in on certain time, and doing that increasingly at scale.

Sure. Thanks for the question Hershey.

Let me start with saying first.

<unk>.

Well the work that we do to broaden our ecosystem is bearing fruit and the diversity of our revenue streams now in the first quarter 14 revenue stream at a $100 million or more in annualized gross profit.

Across cash App in square cash out with six.

Square with seven along with the NPL as well.

And so each of our ecosystem is doing the work to broaden our product set that can serve our customers in uncertain times and doing that increasingly at scale.

Speaker 5: You know it was that we were at 11 revenue stream a year ago. So we ve we've grown three new ones while continuing to grow our currently at scale revenue stream, S. And I think this is really important as we think about our ecosystems, driving resiliency to on certain times and when we look at engagement on our platforms, we re we're also seeing that grow through these certain times is cash up, as I noted earlier, growth across each of the various components of in flows and particularly with cash up card, we get to see both discretionary spend and non discretionary spend and 2022 nearly a third of spend on cash up card was for grocery gas, auto utility, etce.

We were at 11 revenue streams.

A year ago. So we've got three new ones.

Continuing to grow our currently at scale revenue streams and I think this is really important as we think about our ecosystems driving resiliency.

Through uncertain times.

And when we look at engagement on our platforms, where we're also seeing that grow through these uncertain times with cash up as I noted earlier growth across each of the various components of inflows and particular with cash up card, we get to see both discretionary spend and non discretionary spend in 2020 to nearly a third of spend on cash App card.

Speaker 12: And with spend per active average SP proactive for cash up card growing both year over year and quarter quorter. So clearly we see through that signals around consumer spend and discretionary and non discretionary income, along with signals around the strong engagement on our platform. From a square perspective you, we have an ecosystem- now 30 plus products- that helps to drive those retentive relationships and, as we see we shared last quarter, as more customers take on more of our products that we see meaningful improvement and retention over time.

For grocery gas auto utilities et cetera.

And with spend per active average spend per active for cash app card growing both year over year and quarter over quarter. So clearly we see through that.

Signals around consumer spend and discretionary and non discretionary income along with signals around the strong engagement on our platform from a square perspective, and we have an ecosystem now 30, plus products that helps to drive those retentive relationship and as we see we shared last quarter is more.

Customers take on more of our products that we see a meaningful improvement and retention over time, so our focus there being on continuing to drive.

Speaker 8: So our focus there being on continuing to drive product adoption and the breadth of our ecosystem, which drives retention and overall growth for us ultimately, the signals that we can read in real time across our key indicators, across both our consumer ecosystem and our Seller ecosystem, is what enables us to be able to be agile to the environment and move quickly, addressing our customer needs as well as our business and how we're able to react.

Product adoption and the breadth of our ecosystem, which drives retention and overall growth for ultimately the signals that we can read in real time across our key indicators across both our consumer ecosystem in our seller ecosystem is what enables us to be able to be agile to the environment.

And move quickly.

Addressing our customer needs as well as our own business and how we're able to react from.

Speaker 11: From the lending product perspective. Look, and I think our core products share some attributes that make them fairly unique in in a in an uncertain macro environment. First, we take a very data driven approach. Our risk and underwriting models are updated in real time based on a broad side of customer data, both about individual that individual customer, as well as millions of other customers like them.

From a lending product perspective look.

Our core products share some attributes that make some fairly unique in a in a in an uncertain macro environment first we take a very data driven approach our risk and underwriting models.

Our updated.

In real time based on a broad set of customer data, both about individual that individual customer as well as millions of other customers like them.

Speaker 8: And in fact, some of our core lending products, like cash up borrow and square loans, are offered to customers based on specific eligibility criteria, where we determine those eligibility criteria.

And in fact, some of our core lending products like cash that borrow in square loans are offered to customers based on specific eligibility criteria, where we determine those eligibility criteria.

Speaker 8: There's also unique structures to these products where we design our products really simplified access to capital. They're often short and duration and have simplified repayment processes. That's part of the reason that we've seen healthy repayment behavior across each of these different lending types and, as we noted with Afterpay, actually saw an improvement and gross loss as a percent of receivables in Q1, quarter of quarter and year over year.

There's also unique structure to these products, where we design our products really simplify access to capital and they're often shortened duration and have simplified repayment processes.

Part of the reason that we've seen healthy repayment behavior across each of these different lending types and as we noted with after pay actually saw an improvement in gross loss as a percent of receivables in Q1.

Quarter over quarter and year over year, and finally, we see strong repeat usage historically, we've seen strong adoption from these customers with increasing frequency. These are customers, who we know well and have a history of repayment and have ability therefore to better underwrite. So we think those unique attributes of these products that really serve as work.

Speaker 16: And finally, we see strong repeat usage. Historically we've seen strong adoption from these customers with increasing frequency. These are customers we know well and have a history of repayment and have a ability therefore to better underwrite. So we think those unique attributes of these products that really serve as working capital to our customers are important to knowte during uncertain kinds like this.

<unk> capital to our customers.

Are important to note during uncertain times like this.

Speaker 23: Thank.

Thank you.

Speaker 2: Our next question comes from bran lineup: Ramsey El assault from barclay. Please proceed.

Our next question comes from a Brian line of Ramsey El <unk> from Barclays. Please proceed.

Speaker 24: Hi Thank you for taking my question. I wanted to ask about the cash app, the savings product, and just wondering if you could comment on just how that product fits into the overall cash app value proposition. And I also just givevenit your latest thoughts on the product road map and cash app in terms of what types of other adjacent financial services you you might contemplate adding or what looks most attractive from here.

Hi, Thank you for taking my question.

I wanted to ask about the cash app the savings product and.

Just wondering if you could comment on just how that product fits into the overall cash that value proposition.

And also just give us your latest thoughts on the product roadmap and cash App in terms of what types of other adjacent financial services, you might contemplate, adding or what looks most attractive from here.

Speaker 4: Yes just just some context. For of 1: earlier this year we launch our savings product to customers to hold a separate savings bance within cash up, and we've heard from our community that they want more tools for budgeting and money management. So this is where they K come and it allows our customers to easily set in track towards financial goals and they can easily add money to the savings count using their cash up balance linked at a card to wor through roundups on purchases with with the cash upcur.

Yes.

Some context for everyone earlier this year, we launched or savings product to our customers to hold a separate savings bonds within cash flow.

And we've heard from our community that they want more tools for budgeting and money management. This is where that came from.

It allows our customers to easily set and track towards financial goals.

It can easily add money to the savings kind of using your cash balance linked debit card or through roundup.

On purchases with our with the Tulsa crude.

Speaker 4: So far. It's one of our fastest cing products and what early would wereseeive the IT's a feature other can drive a lot more inclosed into our ecosystem over time. But in April we had more than three million actis that have added funds to their savings zones account and more than half or saving through round ups on cash up court. So this is a another strong example our products across our ecosystems can reinforce one another and actually build well another.

So far it's one of our fastest growing products and while early we see the.

A feature that can drive a lot more inflows into our ecosystem overtime.

But in April we had more than 3 million actives.

It funds to their savings bonds account.

More than half for savings through Roundups casual occurred.

Another strong example of our products across our ecosystems can reinforce one another.

<unk> built.

Sure.

Are you asking more about the general product roadmap for test shopper.

Speaker 25: Are you? Are you asking more about the general pro broad run for cash up or within savings course or in general just other adjacent financial services that might look attractive or any kind of color ininteractive, the general product rightad map more so than just specifically withinthat sav, ings? I think.

With some savings in particular two square feet.

More in general just other adjacent financial services.

That might look attractive or any kind of color in terms of the general product roadmap more so than just specifically within savings yeah. Thanks.

Speaker 4: yeaha, all of all of our products is in kashaup are.

Yes.

All of our all of our products with some ketchup R. R from looking at these Adjacencies and we started with.

Speaker 14: From looking at these adjacentciesason and we started with the most, the most viral, with the greatest network effective interest period of AR.

The most of our work with the greatest network effect interest group here.

Speaker 14: And you know that is a base leveour utility that has a lot of value for tons of people, easiest way to get into the app, into our ecosystem. But you know, as we look at what our customers are doing and what products that are adopting and what they're more importantly trying to do, that's where our new product ideas come and and I think our strength is really simplifying something that was traditionally fairly complex and something that are easy to take: our purchase taxes, for instance.

You know.

That is a base level of utility.

There's a lot of value for tons of people easiest way to get into.

The outcome into our ecosystem.

As we look at what our customers are doing and what products, they're adopting and what theyre more importantly, trying to do and that's where our new productivity has come in.

I think our strength is really simple find something that was traditionally fairly complex and it's something that's very easy to come our approach to taxes for instance.

Speaker 4: So you know we'll continue to look for more of those and you know we reduce see behaviors today that are interesting, but a big part of our focus at the moment is making sure that, like the products that we do have, are easily cessible and conneactually actually spread and really focused on providing more opportunities from discover and from that little search icon at the bottom of your, your cash up.

So we'll continue to look for more of those.

We do see behaviors today that are interesting.

But a big part of our focus at the moment it is making sure that the products that we do have.

Are easily accessible and can actually spread and really focused on providing more opportunities from discover.

And from that little searched icon at the bottom of your of your cash flow. This is going to be a launch pad for much of the <unk>.

Speaker 4: This is going to be a launch thatad for much of the cash up ecosystem and certainly is the way to bring in in full bearing the acup pay acquisition that we've made. But it allows us to get more.

So it becomes system and certainly as a way to bring in.

And full bearing.

The <unk> acquisition that we made but it allows us to get more.

Speaker 14: Potentially daily usage, as people can find things not just online but also around them. That then touches on every one of our financial products and really brings to life to those adjacenes. So there's a lot of work to do with their just to strengthen those connections and to make sure that we're building something that's robust and we can continue.

Potentially daily usage as people can find things mattress online, but also around from that.

Touches on every one of our financial products.

And really bring to life those adjacencies. So theres a lot of work to do there just to strengthen those connections.

Make sure that we're building something that's robust and we can continue to add more and more new products and new features.

Speaker 13: Add more, more new products and more new features.

Speaker 23: Thank you, Thank you.

Thank you.

Thank you.

Yeah.

Speaker 2: Our next question comes ned in a line of Michael ING from Goldman Sachs. Please proseeed.

Our next question comes from the line of Michael <unk> from Goldman Sachs. Please proceed.

Speaker 10: Hey good afternoon. Thank you very much for the question. Just about OpEx. First, opeics came in a little bit better than guidance in the quarter. I was just wondering if you could talk about any areas of efficiencies that you may have benefited from in the quarter or timing elements that might impact how OpEx is recognized through for the year. And then, second you, could you just talk about how you're viewing full year OpEx growth, any notable areas of investing, investing you're making for the year, and whether there are any change in OpEx plans relative to last quarter.

Hey, good afternoon. Thank you very much for the question I was just about Opex.

First opex came in a little bit better than guidance in the quarter. I was just wondering if you could talk about any areas of efficiencies that you may have benefited from in the quarter are timing elements that might impact how opex is recognized throughout the year.

And second could you just talk about how youre viewing full your opex growth.

Any notable areas of investing investing youre, making for the year and whether there are any change in opex plans relative to last quarter. Thank you.

Speaker 26: Thank you.

Speaker 8: My thanks for the question. Let me start actually was talking about the full year and our view on profitability for the year, and then we can kind of slicing dice OpEx in Q1 to look. Of course, our our goal is always is investing responsibly to deliver profitable growth and for the full year we're raising our profit targets to one point three. Six billion on adjusted EBITDA, more than 35% growth year over over year and one hundred fifteen million adjusted o I loss with improving margins on both.

Hey, Mike. Thanks for the question, let me start actually was talking about the full year and our view on profitability for the year and then we can kind of slice and dice opex from Q1.

To look of course, our goal as always is investing responsibly to deliver profitable growth.

And for the full year, we're raising our profit targets.

To 136 billion on adjusted EBITDA, no more than 35% growth year over year and $115 million adjusted NOI loss with improving margins on both.

Speaker 27: This primarily- this out look primarily- reflects our strong gross profit growth during the first quarter. On the exptense side, we're deferring some of the investment that we'had intended for Q1 to later in the year. Longer term, the investments that we're making should follow our path to deliver rule of 40 on an adjusted OI basis longer term.

Primarily this outlook primarily reflects our strong gross profit growth during the first quarter on the expense side. We are deferring some of the investments that we had intended for Q1 to later in the year.

Longer term the investments that we're making should follow our path to deliver a rule of 40 on an adjusted Oi basis longer term.

Speaker 8: givenin the returns that we see.

Given the returns that we see.

Speaker 5: As we think about what underpins the works that we're doing the investments that we're making as I noted earlier we continue to expect cash up margins to expand this in the trend that we've seen this quarter and a continuation of improving profitability over the last few years while we expect square margins which are already healthy to more consistent year-over-year and we intend to hold of these targets in the midst of macro uncertainty if we see grow slow will pull back on our planned expenses the key areas of leverage that we think about across the year are similar to what we noted last quarter which is hiring as we see strengths in the business will react to cordt ingly but we are deliberately slowing the pace of hiring as we shared last quarter expect to increase headcount in the approximately 10% year-over-year range and sales and marketing to increase at a much slower rate than the 25% gth we saw in 2020 two.

As we think about what underpins the work that we're doing the investments that we're making as I noted earlier, we continue to expect cash that margin to expand isn't the trend that you've seen this quarter and a continuation of improving profitability over the last few years, while we expect square margins, which are already healthy to me more consistent.

Year over year.

And we intend to hold these targets in the midst of macro uncertainty if we see growth slow we'll pull back on our planned expenses.

Key areas of leverage that we think about across the year or similar to what we noted last quarter, which is hiring as we see strength in the business will react accordingly, but we are deliberately slowing the pace of hiring as we shared last quarter expect to increased head count and the approximately 10% year over year range in sales in <unk>.

Marketing to increase at a much slower rate than the 25% growth we saw in 2022.

Speaker 8: Now to unpack some of the quarter quarterly variations. For the second quarter, we expect EBITDA to be lower than within the normalized rate that you saw in Q1, as in pride in our guidance, given the timing of expenses during the year.

Now to unpack some of the quarter quarterly variations for the second quarter, we expect EBITDA to be lower than you know.

The normalized rate that you saw in Q1 as implied in our guidance given the timing of expenses during the year.

Speaker 8: And that then brings me to sort of the operating expense growth that we saw in the first quarter, which came in about six million change lower than what we had included in our guidance.

And that then brings me to sort of operating expense growth that we saw in the first quarter.

Which came in about 60 million and change lower than what we had included in our guidance.

Speaker 5: And it was really broad-based across our key areas of investment. So sales and marketing was relatively flat. Year-over-year cash-up sales and marketing expenses were up 9%, driven by an increase in peer-topeer processing costs, peer-to-peer transaction losses and cardissuance cost. But the rest of sales and marketing was down year-over-year.

And it was really broad based across our key areas of investment so sales and marketing was relatively flat year over year cash up sales and marketing expenses were up 9% driven by an increase in peer to peer processing costs.

Peer to peer transaction losses, and card issuance costs, but the rest of the sales and marketing was down year over year product development grew primary driver here is our teams and our personnel costs related to engineering data science and design.

Speaker 11: Product development grew- primary driver here is our teams and our personnel costs related to engineering, data science and design- and then gna down slightly year-over-year, but excluding certain onetime exexpenses related to the Afterpay. Acquisition also grew year veyear with investments, human resources, compliance and customer support personnel.

And then G&A down slightly year over year, but excluding certain one time expenses related to the after pay acquisition also grew year over year with investments in human resources compliance and customer support personnel.

Speaker 11: Risk also grew over-year, but we also now have a full quarter of Afterpay in our book this year versus last year. So these are kind of the key elements that we're focused on operating with discipline across our business, and we'll continue to do that through the year.

Risk also grew year over year.

But we also now have a full quarter of after pay in our books this year versus last year.

So these are kind of the key elements that we're focused on operating with discipline across our business and.

And we will continue to do that through the year.

Speaker 4: Does thanks. Some' very clear, Thank you.

Okay. Thanks, that's very clear thank you.

Speaker 28: Al right, we'll now take our last question. Our final question comes from the line of Trevor Williams.

Alright, we will now take our last question final question comes from the line of Trevor Williams from Jefferies. Please proceed.

Speaker 2: From Jeffrey, Please proceed.

Speaker 29: Npl folded in amrida with the xbnpl monetization rate you gave for Cash App, we were backing into just over 14 million of BNPL gross profit for the first quarter. If you could just comment on that number and then anything you can share on BNPL gross profit growth within the 24% combined company growth for April would be great.

NPL folded in Amrita with DXP NPL monetization rate you gave for cash App, we were backing into just over $140 million of BNP L. Gross profit for the first quarter. If you could just comment on that number.

And then anything you can share on be NPL gross profit growth within the 24% combined company growth for April would be great. Thanks.

Speaker 16: Did you havev a cut out in the first part of your question? Do do I take your question to be primarily around sizing the performance for the NPL for the quarter?

Hey, Trevor it cut out in the first part of your question do.

Do I do I take your question to be primarily around sizing the performance for the NPL for the quarter.

Speaker 29: Yes BNPL in Q1 and then if you could parse out the BNPL growth within the 24% for April .

Yes, the NPL in Q1, and then if you could parse out the BNP growth within the 24% for April .

Speaker 8: Sure you look. I think we'll orient here to the volume-based metrics that we provided earlier, which is 18% GMV growth. In the first quarter GMV continue to grow faster. The gross profit in the first quarter gives mixed shift to enterprise, sellers and newer markets. So gross profit growth was- was below this. But we expect GMV to growth in the April , in the month of April , to be up from what we saw in the first quarter: 20% versus the 18% in the first quarter.

Sure.

Look I think we will Orient here too the volume based metrics that we provided earlier, which is 18% <unk> growth in the first quarter.

<unk> continue to grow faster than gross profit in the first quarter, given the mix shift to enterprise sellers and newer markets. So gross profit growth was was below that.

But we expect <unk> growth in the April and the month of April to be up from what we saw in the first quarter, 20% versus the 18% in the first quarter.

Speaker 5: We're encouraged by what we see here, which is a continued growth and high quality customer acquisition, with repeat engagement and healthy repayment rates. We seen 98% of purchases not encourring late fees and 95% of installment paid on time, consistent with what we've shared in the past. And, of course, we continue our work of integrating after pay with our Square and cash up ecosystems, this combined scale of which we believe will be a true different differentiator for us within cash UPP, unlocking commerce with a discover tabs to drive increased engagement and, when within square, launching B N PL in person and online, where we've seen encurcouraging reallyly adoption.

We're encouraged by what we see here, which is continued growth in high quality customer acquisition with repeat engagement and healthy repayment rates.

We see 98% of purchases.

Incurring late fees and 95% of installments paid on time consistent with what we've shared in the past.

And of course, we continue our work of integrating after pay with our square and cash App ecosystems combined scale of which we believe will be a true differentiator for us within cash App unlocking commerce with the discover tab.

To drive increased engagement and within square launching the NPL in person and online where.

Where we've seen encouraging early adoption.

Speaker 8: We're focused here on using that combined base across our ecosystems to build a strong pipeline of new merchants and to continue attracting new customers', new consumers, to our BNPL platform.

We're focused here on using that combined base across our ecosystems to build a strong pipeline of new merchants and to continue attracting.

New customers, new consumers to our be NPL platform.

Speaker 30: Ok thanks.

Okay. Thanks.

Speaker 31: Ladies and gentlemen, Thank you for participating in today's program. This does conclude the program. You may all disconnect.

Ladies and gentlemen, thank you for participating in today's program. This does conclude the program you may all disconnect.

Speaker 32: tex.

Thanks.

Speaker 33: ladiessome.

Ladies and.