Q1 2024 Block Inc Earnings Call

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Operator: Good day, ladies and gentlemen, and welcome to the Block First Quarter 2024 Earnings Conference Call. Today's call will be 45 minutes, and I would now like to turn the call over to your host, Nikhil Dixit, Head of Investor Relations. Please go ahead.

Good day, ladies and gentlemen, and welcome to the block first quarter 'twenty 'twenty four earnings conference call.

Operator: Today's call will be 45 minutes and I would now like to turn the call over to your host Nikhil Dixit head of Investor Relations. Please go ahead.

Nikhil Dixit: Hi, everyone. Thanks for joining our first quarter 2024 earnings call. We have Jack and Amrita with us today.

Nikhil Dixit: Hi, everyone. Thanks for joining our first quarter 2024 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 conference call participants.

Nikhil Dixit: 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 conference call participants. 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, strategy, and guidance, as well as our long-term targets and goals. We may decide to shift our priorities or move away from these targets and goals at any time.

Nikhil Dixit: I'd 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 if our outlook strategy and guidance as well as our long term targets and goals, we may decide to shift our priorities or move away from these targets and goals at anytime.

Nikhil Dixit: These statements are subject to risks and uncertainties. Since actual results could differ materially from those contemplated by our forward-looking statements, reported results should not be considered an indication of future performance. Please take a look at our filings with the FCC for a discussion of the factors that could cause our results to differ. Also note that the forward-looking statements on this call are based on information available to us as of today's date. We disclaim any obligation to update any forward-looking statements, except as required by law.

Nikhil Dixit: 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 an indication of future performance.

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

Nikhil Dixit: 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.

Nikhil Dixit: Further discussion during this call on cash app banking services referred to those offered by our bank partners. Within these remarks, we will also discuss metrics related to our investment framework, including Rule of 40. With Rule of 40, we are evaluating the sum of our gross profit growth and adjusted operating income margin.

Nikhil Dixit: Further discussion during this call of catch ups banking services referred to those offered by our bank partners.

Nikhil Dixit: Within these remarks, we will also discuss metrics related to our investment framework, including rule of 40 with rule of 40, we are evaluating some of our gross profit growth and adjusted operating income margin.

Nikhil Dixit: 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 and our historical financial information spreadsheet on our investor relations website. Finally, this call in its entirety is being webcast on our Investor Relations website. An audio replay of this call and the transcript of Jack and Amrita's opening remarks will be available on our website shortly. With that, I would like to turn it over to

Nikhil Dixit: 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 and our historical financial information spreadsheet on our Investor Relations website. These non-GAAP measures are not intended to be a substitute for our GAAP results.

Nikhil Dixit: 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.

Jack Dorsey: Thank you all for joining us. In the last two quarters, I focused my shareholder letter on our priorities for Square and Cash App to become one of the top providers of banking services. This quarter, my letter was focused on the bitcoin strategy. If you haven't yet, please read that letter for details. Before Amrita talks about her performance, there was a news report yesterday I wanted to address directly. In general, these sorts of stories can lack full content.

Nikhil Dixit: Thank you all for joining us for the last two quarters I focus my shareholder letter on their price for square and cash up strategy to become one of the top providers of banking services.

Jack Dorsey: This quarter My letter was focused on the bitcoin strategy. If you haven't yet please read out later for details.

Jack Dorsey: Before I read it talks about our performance there was a news report yesterday I wanted to address directly.

Jack Dorsey: In general these sorts of stories can lack full context.

Jack Dorsey: First, we do not believe that there are any new investigations in the block, but rather that these reports relate to the existing inquiry by the DOJ that we've previously disclosed. Second, there was critical information omitted from the article when it was first published in 2022.

Jack Dorsey: First we do not believe that there are any new investigation into block, but rather that these reports related to the existing inquiry by the Doj that we've previously disclosed.

Jack Dorsey: Second there is critical information omitted from the article when it was first published.

Jack Dorsey: In 2022.

Jack Dorsey: Our Compliance Engineering Risk Team, who proactively investigates threats, identified signals that led us to conduct a thorough review of transactions potentially associated with sanctioned countries. We voluntarily reported these to the Office of Foreign Assets Control, OFAC, where we were transparent with them, and we stand by the scope of the transactions that were included in the report. OPAC then issued us a no action letter in which they determined no further investigation or action was needed at the time.

Jack Dorsey: Our complaints engineering risk team, who proactively investigate threats identified signals that lead us to conduct a thorough review of transactions potentially associated with sanctioned countries. We.

Jack Dorsey: We voluntarily reported these to the office of foreign assets control effect, where we were we were transparent with them and we stand by the scope of the transactions that we're including in the <unk>.

Jack Dorsey: Included in the report.

Jack Dorsey: <unk> issued us a no action letter in which state determined no further investigation or action was needed at the time this.

Jack Dorsey: This is how the process is supposed to work, and this outcome was not originally included in the article. Third, as it relates to preventing terrorist financing via Bitcoin, we have a robust control environment in place to mitigate exposure from adverse. For instance, we use industry-leading blockchain analytics firms to screen transactions in real time. We also maintain some of the most restrictive limits in the industry for on-chain bitcoin withdrawals, which are deliberately calibrated to prevent bad activity.

Jack Dorsey: This is how the process is supposed to work and this outcome was originally not originally included in the article.

Jack Dorsey: Third as it relates to preventing terrorist financing via bitcoin, we've robust control environment in place to mitigate exposure from adversaries.

Jack Dorsey: For instance, we use industry, leading blockchain analytics firms to screen transactions in real time.

Jack Dorsey: We also maintained some of the most restrictive limits in the industry for on chain Bitcoin withdrawals, which are deliberately calibrated to prevent that activity.

Jack Dorsey: And, of course, we require identity verification for customers engaging with our Bitcoin products and file suspicious activity reports when warranted, which is an important contributor to keeping the broader financial ecosystem safe and secure. We take compliance seriously at Block. Our culture of compliance is foundational to our work. We have a radically transparent culture that supports it. Employees are empowered to raise issues through multiple channels, including directly to me or anonymously through our whistleblower hotline.

Jack Dorsey: And of course, we would require identity verification for customers engaging with their bitcoin products and final suspicious activity reports when warranted, which is an important contributor to keeping the broader financial ecosystem safe and secure.

Jack Dorsey: We take compliance CRC a block a culture of compliance is foundational to our work we are a radically transparent culture that supports this.

Jack Dorsey: Employees are empowered to raise issues through multiple channels, including directly to me or anonymously through our whistleblower hotline.

Jack Dorsey: We continuously improve our compliance program based on a number of different inputs, including self-identified issues, audits, and guidance from our regulators. Adversaries have always tried and will continue to try to exploit the global financial system. No company is perfect at preventing them, but our work is to constantly be steps ahead of their attacks through better use of technology. This includes leveraging industry-leading machine learning models and product controls aimed at detecting and preventing bad activity in real time. It's an ongoing part of our business, and it always will be. And with that, I'll turn it over to Amrita to talk about the quarter.

Jack Dorsey: We continuously improve our compliance program based on the number of different inputs, including self identified issues audits and guidance from our regulators.

Amrita: The series have always and will continue to try to exploit the global financial system. No company is perfect at preventing us.

Amrita: Our work is to constantly be steps ahead of their tax through better use of technology. This includes leveraging industry, leading machine learning models and product controls aimed at detecting and preventing bad activity in real time.

Amrita: And always on part of our business and it always will be.

Jack Dorsey: And with that I'll turn it over to Amrita to talk about the quarter.

Amrita Ahuja: Thanks, Jack. I'll keep my remarks brief as we've included information on our performance and guidance in the financial discussion of our shareholder letter. We delivered strong results across the company during the first quarter. Gross profit was $2.09 billion, up 22% year over year, consistent with the fourth quarter. Adjusted EBITDA was $705 million, nearly doubling year over year, and adjusted operating income was $364 million, up seven times year over year. By business, Cash App's gross profit was $1.26 billion, up 25% year over year, and Square's gross profit was $820 million, up 19% year over year.

Amrita: Thanks, Jack I'll keep my remarks brief as we've included information on our performance and guidance in our financial discussion of our shareholder letter we.

Amrita Ahuja: We delivered strong results across the company during the first quarter.

Amrita Ahuja: Gross profit was $2 9 billion up 22% year over year consistent with the fourth quarter.

Amrita Ahuja: Adjusted EBITDA was $705 million nearly doubling year over year and adjusted operating income was $364 million up seven times year over year.

Amrita Ahuja: By business <unk> gross profit was $1, two 6 billion up 25% year over year.

Amrita Ahuja: <unk> gross profit was $820 million up 19% year over year.

Amrita Ahuja: Gross profit outperformance compared to our guidance was mostly driven by cash app. We saw strength across Buy Now Pay Later, Bitcoin, Cash App Borrow, and Cash App Card, where we had 24 million monthly active users. Inflows per active were up 11% year over year in the quarter for our highest growth since the fourth quarter of 2021. Square's GPV growth in the quarter was in line with our expectations, as we saw continued moderation in same-store sales growth. However, this was more than offset by strong attach rates on our broader ecosystem of software and banking products.

Amrita Ahuja: Gross profit outperformance compared to our guidance with mostly driven by cash out we saw strength across buy now pay later bitcoin cash that borrow in ketchup cars, where we had 24 million monthly actives.

Amrita Ahuja: Fluids proactive, we're up 11% year over year in the quarter for our highest growth since the fourth quarter of 2021.

Amrita Ahuja: We're in CTV growth in the quarter was in line with our expectations. As we saw continued moderation in same store sales growth.

Amrita Ahuja: This was more than offset by strong attach rates on our broader ecosystem of software and banking products.

Amrita Ahuja: Our profitability improved as we showed discipline across a range of expenses, ending the quarter below our 12,000 person cap and achieving leverage on corporate overhead for the 12 months. Ending in March, adjusted free cash flow was $1.1 billion, up more than two and a half times compared to the prior 12 months, and represented 50% of adjusted EBITDA, an improvement compared to the 36% conversion rate in the prior period. Turning to our expectations for the remainder of the year, we are raising our full-year 2024 guidance for both growth profit and profitability, not only reflecting the Q1 outperformance but also reflecting our higher expectations for the remainder of the year.

Amrita Ahuja: Our profitability improved as we showed discipline across a range of expenses ending the quarter below our 12000 person cap and achieving leverage on corporate overhead expenses.

Amrita Ahuja: For the 12 months ending.

Amrita Ahuja: Ending in March adjusted free cash flow was $1 1 billion up more than two and a half times compared to the prior 12 months.

Amrita Ahuja: And represented 50% of adjusted EBITDA, an improvement compared to the 36% conversion rate in the prior period.

Amrita Ahuja: Turning to our expectations for the remainder of the year, we are raising our full year 2024 guidance for both gross profit and profitability not only reflecting the Q1 outperformance, but also reflecting our raised expectations for the remainder of the year.

Amrita Ahuja: For full year 2024, we are now expecting growth profit of at least $8.78 billion, or 17% growth year over year. We expect Cash Apps gross profit growth to moderate slightly from the first quarter's 25% as we achieve some meaningful pricing and structural cost benefits with relatively stable growth from the second quarter through fourth quarter. For Square, we expect gross profit growth to moderate from the first quarter's 19% growth rate as we experience strong banking performance and pricing changes from the prior year.

Amrita Ahuja: For full year 2024, we are now expecting gross profit of at least $8 $78 billion or 17% growth year over year.

Amrita Ahuja: We expect cash gross profit growth to moderate slightly from the first quarter was 25% as we lap some meaningful pricing and structural cost benefits with relatively stable growth from the second quarter through fourth quarter Chris.

Amrita Ahuja: For square, we expect gross profit growth to moderate from the first quarter's 19% growth rate as we lap strong banking performance and pricing changes from the prior year.

Amrita Ahuja: In the back half of the year, we expect GPV growth to be stable to improving behind more favorable same store growth comparisons with a narrowing delta between gross profit and GPV growth. We continue to focus on initiatives that improve our product velocity. These include several upcoming launches that further our strategies for Cash App and Square, most notably testing and rolling out Afterpay on Cash App Card, and for Square, completing the order migration this summer and conversion to a single app by year end.

Amrita Ahuja: In the back half of the year, we expect <unk> growth to be stable to improving behind more favorable same store growth comparisons with a narrowing delta between gross profit and G. P V growth rates.

Amrita Ahuja: We continue to focus on initiatives that improve our product philosophy. These include several upcoming launches that further our strategies for cash App and square, most notably testing and rolling out after pay on cash App card and for square completing the orders migration this summer and conversion to a single app by year end.

Amrita Ahuja: These initiatives remain on track, and we expect them to benefit our growth into 2025 and beyond. For profitability in 2024, we are now expecting at least $1.3 billion in adjusted operating income, or 15% margins on gross profit, with efficiency initiatives underway to improve our structural costs and corporate overhead. We also see opportunities to invest in the back half of the year in high-return areas like sales and marketing that can drive future growth.

Amrita Ahuja: These initiatives remain on track and we expect them to benefit our growth into 2025 and beyond.

Amrita Ahuja: For profitability in 2024, we are now expecting at least $1 3 billion and adjusted operating income or 15% margins on gross profit.

Amrita Ahuja: With efficiency initiatives underway to improve our structural costs and corporate overhead. We also see opportunities to invest in the back half of the year in high return areas like sales and marketing that can drive future growth.

Amrita Ahuja: Our updated guidance now implies a Rule of 32 for the full year 2024. This is an improvement compared to 2023 and compared to our prior guidance of at least a Rule of 29 and progresses us towards our goal of achieving a Rule of 40 in 2026. With that, I'll now turn it back to the operator to start the Q&A portion of the call.

Amrita Ahuja: Our updated guidance now implies rule of 32 for full year 2024. This is an improvement compared to 2023 and compared to our prior guidance of at least rule of 29 and progressive us towards our goal of achieving rule of 40 in 2026.

Amrita Ahuja: With that I'll now turn it back to the operator to start the Q&A portion of the call.

Speaker Change: Thank you.

Operator: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 a second time. If you are called upon to ask your question and are listening via speakerphone on your device, please pick up your handset and ensure that your phone is not on mute when asking your question.

Speaker Change: We will now begin the question and answer session. If you have dialed in and we'd like to ask a question. Please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question simply press Star one a second time.

Operator: If you are called upon to ask your question and our listening via speaker phone on your device. Please pick up your handset and ensure that your phone is not on mute when asking your question.

Operator: We ask that you. Please limit yourself to one question. So we may take as many questions as possible.

Operator: Again, it is star one if you would like to join the queue.

Operator: We ask that you please limit yourself to one question so we may take as many questions as possible. Again, it is Star 1 if you would like to join the queue. And your first question comes from Kinshin Huang at JP Morgan. Your line is open.

Speaker Change: And your first question comes from.

Kinshin Huang: Tien Tsin Huang at J P. Morgan Your line is open.

Jack Dorsey: Hi, thanks for your comments, Jack and Amrita. I wanted to follow-up on a question I asked you last quarter, and I think you mentioned that you expect much higher or faster product velocity from blocks across the board. So just wondering if you can give us a progress report on that, and are you closer to where you want to be in launching and enhancing products? I'm curious. If some of the unannounced products that you're focused on are more about entering new categories, as I call them, or are they more incremental to what you already have in place? I know a lot of investors have asked me about that. So I'll ask you. Thanks.

Kinshin Huang: Hi, Thanks for your comments, Jack and Amrita I wanted to Jack.

Jack Dorsey: Jack follow up on a question I asked last quarter and I think you had mentioned that you expect much.

Jack Dorsey: Higher faster product velocity from block across the board. So just wondering if you can give us.

Jack Dorsey: A progress report on that and are you close to where you want to be in launching and enhancing products and I'm curious.

Jack Dorsey: If some of the unannounced products that youre focused on or more about entering new categories is what I call. It or are they more incremental to what you already have in place I know a lot of investors have asked me about that so I'll ask Hugh thanks.

Jack Dorsey: Yeah, so we're focused on our development velocity in two main ways. One is making sure that we are much stronger in our engineering and design disciplines, or putting much more focus on that work. This is Unknown Attendee, Dan Dolev, Rayna Kumar, Ramsey El, Trevor Williams, Andrew Jeffrey, Kenneth Suchoski, Alexander Markgraff, Bryan Keane, making sure that we stay up for sellers and that we have ways for them to work, even if their networks fail, such as the offline mode.

Speaker Change: Yes, so we're focused on.

Jack Dorsey: Our development velocity in two main ways. One is making sure that we are we are much stronger and our engineering and design disciplines, and we're putting much more focus on that work.

Jack Dorsey: <unk>.

Jack Dorsey: But did a big change here with square just recently to reorganize the team.

Jack Dorsey: To be more focused on engineering and design.

Jack Dorsey: And we will start to seeing that play through more and more in our work and the second way. We are doing is scoping, making sure that we're focused on the most important things on the square side. The most important thing.

Jack Dorsey: I want us to focus on right now is reliability, making sure that we stay up for sellers and we have.

Jack Dorsey: It is for them to work, even if their networks, Phil such as the offline mode.

Jack Dorsey: The second most important thing is what we've talked about in the past, the focus on local and food and beverage. And there's a number of things that we're doing immediately to help not only with retention but with acquisition. Amrita mentioned a single app, which is on track to launch this year.

Jack Dorsey: The second most is what we've talked about in the past is this focus on local and food and beverage and Theres a number of things that we're doing immediately to help not only with retention, but with acquisition and Rina mentioned, a single App, which is on track to launch this year.

Jack Dorsey: So we have a very simple call to action: download Square, and you have everything you need, including all of our banking products within one app. And then onboarding is another big one. We have successfully taken our onboarding flow for Square Sellers from about 15 steps and something that took people close to 20 minutes to complete down to two steps, which takes under five minutes.

Jack Dorsey: So we have a very simple called action download square and you have everything you need including all of our banking products with them.

Jack Dorsey: We went up and.

Jack Dorsey: And then on boarding is another big one we have successfully taken our onboarding flow for square sellers from about 15 steps and something that took people close to 20 minutes to complete down to two steps and takes under five minutes and we rolled it out to a small audience and watched what they were doing.

Jack Dorsey: We rolled it out to a small audience and watched what they were doing, and we saw all positive results, some much more positive than we were expecting, so we're going to be rolling that out in the coming months. And that should have a pretty great effect on how we sign up new merchants and, most importantly, that they see more of our ecosystem, and they want to stick around. And, as we've talked about in the past, I think the best differentiator for us is the banking aspect of our ecosystem. On the square.

Jack Dorsey: We saw positive results.

Jack Dorsey: Some much more positive than we were expecting so we're going to be rolling out that in the coming months.

Jack Dorsey: And that should have a pretty great effect on how we sign up new merchants and most importantly that they see more of our ecosystem and they want to stick around and and as we've talked about in the past I think the best differentiator for for Us.

Jack Dorsey: Banking aspect of our ecosystem on the square side.

Jack Dorsey: To the second point of your question, I think both Cash App and Square are new products, of course, but there's a lot of work to get to parity with some of our competitors. There's a lot of work to put some of the features that we've had into the hands of millions, such as Afterpay on the Cash Card, which is going to continue to expand this year and something we're super excited about.

Jack Dorsey: The second point of your question I think both on.

Jack Dorsey: Both on cash App and square there are new products of course.

Jack Dorsey: So a lot of work that is more iteration, and of course, we have some newer products that we're thinking about as well. But the iteration stuff is really going to unlock a lot of new customers for us, we believe.

Unknown Attendee: Sure, sure. No, I'm looking forward to it. Thanks.

Operator: And we will take our next question from Timothy Chiodo of UBS. Your line is open.

Timothy Edward Chiodo: Great, thank you for taking the question. I want to dig in a little bit on cash app direct deposit net ads and the run rate that you might be seeing for new users. So last quarter, you mentioned that the addition of overdraft protection was helping to drive record gross ads for DD users. So I was wondering if the combination of that plus high yield savings and live phone support, and maybe some other features has really helped to maybe step up that run rate.

Timothy Edward Chiodo: So part of it is, where has the run rate gone to today? And then the second part is, if it could potentially step up further with the addition of maybe some new products around bill pay, or as you mentioned, after pay, being worked into the cash card or cash card, the NPL, as we call it. Thanks a lot. Hey Tim.

Amrita Ahuja: Hey, Ken, thanks for the question. You know, our top strategic priority, as you know, for cash app, is banking on our base, which is about bringing more financial services to our 57 million monthly active users. Banking is not a new concept to us, but it is one that we started prioritizing in a more meaningful way. Recently, in the last few years, we've been seeing organic adoption of direct deposit. Now we're focusing our efforts on driving this higher and winning that longer-term relationship with our customers. What we saw in March was that paycheck deposit actives grew on a quarter-over-quarter basis, with paycheck volumes growing faster than overall inflows.

Amrita Ahuja: And as we think about continued growth here, there are two key areas of focus. One, around the product, and second, around how we go to market with those products. From a product perspective, we're not only prioritizing table stakes features but also how we can make those offerings more compelling than what you can get at a bank. We hear our customers say they want products that allow them to bank without any worries. That's paying with checks, that's bill pay, that's a web offering.

Amrita Ahuja: And we're hearing from our customers that they want to achieve their financial goals. That's initiatives around card spending insights, around our savings initiative, around afterpay on cash up cards. From a go-to-market perspective, with all of these products, and as we bring them together, we'll be looking to package these products in a way that makes it easier for customers to discover and understand our offerings through the app. That's, again, that's bundling, that's packaging.

Amrita Ahuja: And then it's testing incentives and other ways to drive conversion. We haven't done much of that yet in terms of our go-to-market efforts with direct deposit, but you'll see us do much more of this as the futures come together in the back half of this year and into next year. You know, similar to what we've seen with cash up guard or cash up loans, it takes time. It sometimes takes several years to get these to scale to where they are today. And we think similarly with bank or base and direct deposit; it's a multi-year effort, but it's one that we have deep conviction in and are very excited about.

Operator: And we will take our next question from Darrin Peller with Wolf Research. Your line is open.

Darrin David Peller: Guys, thank you. It's great to see the ongoing improvement in EBITDA and the guidance you guys gave and now a more notable increase than we expected so far, while at the same time balancing it with growth being strong. So I guess in that context, if you can just give us a little more color on what you're identifying in terms of efficiencies now that were able to drive that uptick, and maybe what's on the horizon? What else do you see in the model that can drive further progress on efficiencies for EBITDA?

Amrita Ahuja: Hey Darrin, thanks for the question. You know, I'll start with the first quarter and then and then talk about what we're looking at for the full year. Obviously, what you saw with the first quarter was our highest profitability metrics ever and a beat at the high end of our guidance of about $119 million from an adjusted OI perspective, with, you know, again, nearly doubling in terms of EBITDA on a year-over-year basis. I think there are kind of three key things to point out. Obviously, there's continued strong growth and momentum across each of the two ecosystems, Square and Cash App, with 19% growth and 25% growth, respectively.

Amrita Ahuja: So, from an expense discipline perspective, three key things I'd call out. First is our personnel cap, which is driving the right level of sharpening our strategy and prioritization and scoping our work, as Jack mentioned. And we remained under our 12,000 person cap at the end of the first quarter.

Amrita Ahuja: Second, it's driving leverage across each of our areas of corporate overhead, whether it's T&E or professional fees, real estate, software, and data fees. And third, it's around our structural costs and continuing to focus on ways that we can improve them. I do want to note, as we called out in our shareholder letter in the first quarter, we also benefited from $52 million in out-of-period items in Q1, mostly related to the releases of risk loss provisions established in prior periods.

Amrita Ahuja: So that's an important thing to note for the first quarter. More broadly, when we look at the full year from a profitability perspective, you know, we've raised our profitability expectations on both an EBITDA and adjusted OI basis, not only for the full amount of outperformance relative to the high end of our guidance for Q1, but also an improved expectation for the remainder of the year, where we expect to keep screws tight in terms of discipline and efficiency in how we run our business, but where we also see the flow through strong incremental margins in each of our businesses as we continue to grow square and cash up strongly the remainder of the year, but also leaving room for us to invest in growth initiatives in the back half of the year that should benefit our future growth, particularly around sales and marketing. So those are the different levers that we're looking at and why we think we can drive continued profitability for the remainder of the year.

Amrita Ahuja: It's great to hear. Thanks, Amrita.

Operator: And we will take our next question from Harshita Rawat with Bernstein. Your line is open.

Harshita Rawat: Hi, good afternoon. Amrita, can you elaborate on the drivers and quarterly cadence of the gross profit growth of 17%? You gave some first-half and second-half color earlier, but just maybe talk a little bit more about that, and also about the assumptions for cash-out and Square. And then also, just as a follow-up, you know, borrow and Square loans scaled nicely over the past year or so. What determines your ability and willingness to continue to grow this revenue stream?

Amrita Ahuja: Sure. So let me start on our gross profit growth assumptions for the remainder of the year. Obviously, we've raised our full-year guidance on both gross profit and profitability. We now expect gross profit of $8.78 billion, at least $8.78 billion for the full year.

Amrita Ahuja: That equates to about 17 percent growth year over year. That reflects both the outperformance during the first quarter, mostly from cash up with a modest beat from Square, as well as improved expectations for the remainder of the year. If you look at, you know, sort of breaking that down into its component parts, we expect cash up will grow slightly faster than square this year. We are going to be lapping some of the structural cost improvements in the back half of the year.

Amrita Ahuja: And our implied guidance for the second half demonstrates, at a block level, mid-teens gross profit growth expectation with these changes around structural costs and pricing mostly behind us. Many of the key growth initiatives and strategies that we're planning, that we're hard at work on now and plan to be ramping through the back half of this year, you know, whether it's afterpay on cash up cards, orders migration, or the single app model, we expect to benefit our growth in 2025 and or less of a 2024 impact. So those are kind of that's sort of the cadence in the puts and takes around the remainder of the year.

Amrita Ahuja: I think the second question that you asked was around Borrow. We have seen strong growth on Borrow in the first quarter, with originations up more than two times year over year. This is while we've been able to scale this product responsibly with loss rates in line with what we've shared historically. This growth is primarily driven by increasing the number of loan actives while maintaining strict eligibility requirements. And not only does Borrow have strong positive unit economics on its own, you know, net of risk loss as a standalone product, but it drives a really compelling ecosystem benefit through greater inflows into cash apps that are then spent or invested across a number of different monetized products.

Amrita Ahuja: In fact, we see nearly 40% of borrow monthly actives making a transaction on the Cash App card after receiving a borrow loan. And we've seen strong conversion rates from those offered loans and repeat usage. Similar to what we see on a Square loans product or a buy now, pay later product, we see that these products are very short in duration and act as a sort of cash flow management or working capital products. So, similarly with borrow, we see repeat usage across borrower monthly actives.

Amrita Ahuja: And this is an area that, you know, we feel very strong about our machine learning and risk loss capabilities behind the growth of this product. And so we're excited to continue to keep ramping it up for our customers.

Operator: And we will take our next question from Ramsey El Assal with Barclays. Your line is open. Hi, thanks for taking my question.

Jack Dorsey: In other words, which cash card customers or how many card customers would be eligible to use the Buy Now, Pay Later capability? And also, do you have any preliminary view of what the product might look like? Will users be able to toggle between credit and debit in the app, for example? Are there any other integrations like that that you could share with us? Thanks.

Ramsey Clark El: Hi, thanks for taking my question this evening. I wanted to ask about the integration of Afterpay and Buy Now, Pay Later with the Cash App card. How should we think about sizing the opportunity?

Jack Dorsey: Yeah, I mean, we're really excited about this integration. Just some context for you all.

Jack Dorsey: We acquired Afterpay some time ago, and I would say that we forced an integration way too quickly. Now that we have fixed a bunch of those issues, the team is really executing on two main things. One is discovery, and that is within the Cash App, bringing our Cash App network and the Square Merchant Network together. So a lot of visibility around local and a lot of what we hope to achieve with the power of our combined ecosystems, both on the merchant and the seller side.

Jack Dorsey: On the other side of that is the Cash App card and how large that is, and Cash App Pay, how large that network is growing to, and putting Afterpay on top of that as well. Afterpay on the Cash App card, as I said earlier, is super exciting. We have started rolling it out. As with any product, we're looking at how people are using it, and we'll be making decisions on what it ultimately looks like when we roll it out 100% over time, based on how people perceive it, how they use it, and how they find it valuable or not valuable.

Jack Dorsey: But we think it's a really exciting idea, and it's taken us some time to get here, but we're finally here, so excited to see it roll out and for you all to be able to use it.

Amrita Ahuja: And I'll just add a couple of points of data around that, Ramsey. First, with the opportunity that we've got with bringing Afterpay to Cash App Card, this is having an already built-in audience of 24 million monthly actives who have spent more than $100 billion in total over the past year. Of course, we're going to start small, and as with any lending sort of product, start small and ramp up based on the signals that we see. Where eligible actives will be able to easily convert certain purchases into an Afterpay transaction. As Jack said, we've begun testing here already.

Amrita Ahuja: We've seen strong attach rates, and we're excited to scale this in the coming months. This brings visibility and the utility of Afterpay into Cash App much more directly than we've done so far and drives engagement around buy now, pay later, which on its own is growing nicely for us. 25% GMV growth and 32% gross profit growth in the first quarter on a year-over-year basis. And it helps merchant partners who now have access to a much bigger network of customers across the Cash App ecosystem.

Amrita Ahuja: Just the second piece, as Jack mentioned, Cash App Pay. The strength and growth of Cash App Pay wouldn't have happened if it wasn't for the enterprise sales team that Afterpay has built through the years, driving it across its network of merchants. And now, Cash App Pay is an example of a payment tool that customers can use regularly. And so we're giving customers within Cash App more and more ways that they can spend their funds, and more reasons to inflow funds into Cash App.

Amrita Ahuja: We ended the quarter, March had 4 million monthly actives across Cash App Pay, adding a million monthly actives each of the last three quarters, while GMV was up 40%, more than 40%, quarter of a quarter. So, very strong growth here. And I think more milestones towards proving out the integration between Cash App and Afterpay. Really.

Unknown Attendee: Really exciting stuff, thanks.

Operator: And we will take our next question from Trevor Williams with Jeffreys. Your line is open.

Unknown Attendee: And we will take our next question from Trevor Williams with Jeffries. Your line is open.

Trevor Ellis Williams: Great, thanks very much. I wanted to dig into seller GPV, the card not present in retail growth rates. Those have lagged overall GPV growth pretty consistently over the last few quarters. If you could just unpack what some of the dynamics have been within both of those, And then Amrita, on your comment that GPV growth could potentially accelerate in the second half, how much of that is comp driven versus potentially starting to see some benefit from some of the go-to-market changes you guys have made? Thanks again.

Trevor Ellis Williams: Great. Thanks, very much I wanted to dig into solar G. P V. The card not president in retail growth rates those have lagged overall G. P V growth pretty consistently over the last few quarters. If you could just unpack with some of the dynamics had been within both of those and then am Rita on your comment the G. P V rose could potentially accelerate.

Trevor Ellis Williams: Second half how much of that is comp driven versus potentially starting to see some benefit from some other go to market changes you guys admit thanks again.

Amrita Ahuja: Yeah, I mean, just to very directly answer the end of your question, I think most of it's likely more comp driven in terms of more favorable comps. But we've got a tremendous amount of work underway that we hope will help to shift the tide on square GPV into 2025. Now just to back up, you know, GPV in the first quarter was up 9% year over year, which was in line with our expectations that we shared on the Q4 call, again, gross profit growth ahead of that, based on the strength of our banking products and our SaaS-attached products. U.S. growth was 6% in the quarter, while non-U.S. growth was 23%, or 26% at constant currency.

Amrita Ahuja: Yeah, I mean, just a very directly answer the end of your question I think most of it's likely more <unk> in terms of the more favorable calm, but we've got a tremendous amount of work under way that we hope will tend to shift the tide on on square G. P V into 2025.

Amrita Ahuja: Now just to back up you know in the first quarter score G. P V. In the first quarter was up uhm, 9% year over year.

Amrita Ahuja: Which was in line with our expectations that we shared on the queue for a call again gross profit growth ahead of that based on the strength of our banking products and or sauce attach products.

Amrita Ahuja: U S growth was six per cent and a quarter, while non U S growth was 23% or 26 per cent in constant currency and as you noted we expect as we look ahead to <unk> to see stable to slightly improving G. P. D growth in the back half of the year, but we're not satisfied with these growth rate and we want to turn the tide.

Amrita Ahuja: And as you noted, we expect, as we look ahead, to see stable to slightly improving GPV growth in the back half of the year. But we're not satisfied with these growth rates, and we want to turn the tide. We think that increasing product velocity, as Jack shared earlier, and some of our go-to-market changes can improve growth in 2025. Specifically, I would point to order migration, which helps us with critical features for food and beverage sellers and beauty and salons, like pre-authorization at bars or deposits for services sellers.

Amrita Ahuja: <unk> thinks it increasing product philosophy is Jack shared earlier and some of our go to market changes can improve growth in 2025.

Amrita Ahuja: Specifically I would 0.2 orders migration, which helps us with critical feature is for food and beverage sellers in beauty salons like preauthorization at bars or <unk>.

Amrita Ahuja: Deposits for services sellers that work as I mentioned earlier is on track to be completed this summer or Onboarding float. We're we're reducing the friction for new sellers to join the square ecosystem from 10 plus minutes.

Amrita Ahuja: That work, as I mentioned earlier, is on track to be completed this summer. Or onboarding flows, where we're reducing the friction for new sellers to join the Square ecosystem from 10-plus minutes to a much faster and intuitive onboarding experience. We began testing that new onboarding flow with quick service restaurant sellers.

Amrita Ahuja: To a much more faster and intuitive onboarding experience, we began testing that new onboarding flow with quick service restaurants sellers and as Jack noted those results are encouraging so we'll be rolling it out to our other verticals in July.

Amrita Ahuja: And as Jack noted, those results are encouraging, so we'll be rolling it out to our other verticals in July. And then contracts. You know, as we think about our go-to-market strategy, our sales team and the tools that we give them are critical to be able to reach sellers with more complex needs. And we rolled out contracts in the second half of 2023. And what we saw from December to March was that the number of US sales wins that had contracts attached more than doubled.

Amrita Ahuja: And then contracts you know as we think about our go to market motion our sales team and the tools that we give them are critical to be able to reach the sellers with more complex needs and we rolled out contracts in the first second half of 23 and what we saw from December to March.

Amrita Ahuja: It's early, but we're also seeing cohort retention improvement when contracts are deployed. So we believe that there's more that we can do here as these products and features come together to lean into go to market, especially in the back half of the year and into the future to improve the trend lines that we see across GPD.

Amrita Ahuja: Was it the number of U S sales wind that had contracts attached more than doubled it's early but we're also seeing cohort retention improvement when contracts are deployed so we believe that there's more that we can do here as these products and features come together to lean in to go to market, especially in the back half of the year and into the future to improve.

Amrita Ahuja: Move the trend lines that you see across G. P D.

Amrita Ahuja: We will take our next question from Andrew Bauch with Wells Fargo. Your line is open.

Amrita Ahuja: Can we will take our next question from Andrew Bach with Wells Fargo. Your line is open.

Operator: Hi, thanks for taking the question. I just wanted to expand on what you just said there around the go-to-market strategies and the improved product velocity. And maybe you could help us understand what the value proposition of contracts really unlocks for you guys. And, you know, maybe we can just layer that into some of the expanded franchise capabilities that you discussed. I mean, the Tzatziki's MetaRating chain, like that's a win for Square that we haven't seen of that magnitude in the past. Yeah.

Andrew Thomas Bauch: Hi, Thanks for taking my question I just wanted to expand on would you just said there around the go to market strategies and the improved product philosophy [noise].

Operator: Maybe if you could help us understand what the value proposition of contracts no really unlocked for you guys and you know maybe we can just layer that into some of the expanded franchise capabilities that you discuss this.

Operator: <unk> battery Jane like pets.

Speaker Change: First square.

Operator: <unk> magazine in the past.

Operator: Yeah.

Jack Dorsey: Well, just to start on contracts, since you pointed out, this is something we were against for many years in our funding because we saw what a lot of people were doing to small merchants or locking them into these pretty predatory contracts. And we still see some of our peers do that today.

Operator: With just a straight and <unk> would you put it this is something we were against for many years.

Jack Dorsey: Cause we.

Jack Dorsey: We saw a lot of people were doing to small merchants or locking them into.

Jack Dorsey: Susan pretty predatory contracts.

Jack Dorsey:

Jack Dorsey: And we'd still see someone who appears to go Tonight, we took a slightly different tack.

Jack Dorsey: We took a slightly different tack on it and also have a different goal. We recognize that there are merchants who appreciate contracts because it helps them with the predictability of their costs. And it allows us to give them free hardware. So if you were to look at just one point, it would be that.

Jack Dorsey: On it and also have a different cool we recognize that there are there are merchants, who appreciated contracts because it helps them with predictability of your cost.

Jack Dorsey: And it allows us to give them free hardware.

Jack Dorsey: If you look at just one point it would it would be that.

Jack Dorsey: And from December to March, we saw the number of US sales wins with contracts attached more than double. So this is really still early for us. But we're looking, we're observing what our peers are doing, we're observing customer needs, and we want to do something that is far more attractive and much better for the seller and, therefore, for us. And it's working A big portion of what we're doing on the go-to-market side is that we're just experimenting a lot more. I think in the past, we relied a little bit too much on And when that thing didn't work, we switched to another thing.

Jack Dorsey: So this is really stove early for us, but we're we're looking were observing your order appears are doing or observing customer needs and we wanted to do something that is far more attractive.

Jack Dorsey: They're much better for the children and therefore for us.

Jack Dorsey: And it's working a big big portion of what we're doing on the mortgage is we're just experiment to me one more.

Jack Dorsey: I think in the past, we relate a little bit too much.

Jack Dorsey: One thing working.

Jack Dorsey: And when that didn't work we switched <unk>.

Jack Dorsey: Now we're, you know, we are focused on a big thing in our go-to-market, which is like really looking deeply at the product and the onboarding experience, of course, and just really focusing a lot on that, but also looking at doing experiments like field sales, like contracts, everything we've done around verticalization of our sales force. All these things come together, and some of them will work, some of them won't work, and we'll invest heavily in the ones that do.

Jack Dorsey: Now were you know.

Jack Dorsey: We are focused on.

Jack Dorsey:

Jack Dorsey: Big thing or go to market, which was like really looking deeply at the product.

Jack Dorsey: And the Onboarding experience of course, and just really focusing.

Jack Dorsey: A lot of that but also looking at doing experiments Wakefield sales contracts.

Jack Dorsey:

Jack Dorsey: Everything we've done around Brooke Burke position of our sales force all these things compound and some of them will work some of them won't work.

Jack Dorsey: We'll invest heavily in the ones that they do I think the the experimentation mindset and being much for us to recognize when something's working or not working will hope is really improving mirrored with everything that we're doing in this room.

Jack Dorsey: I think that the experimentation mindset and being much faster to recognize when something's working or not working will help us really improve it, mirroring everything that we're doing on the product side as well. Unknown AttendeeYeah, I'm sorry, on the franchise capabilities. Yes, this is an opportunity for us. We are focused a lot on food and beverage. We know there are a number of gaps that our competitors take advantage of. We're driving those cars home and fixing all of them.

Jack Dorsey: Great.

Speaker Change: Yeah, I'm, sorry on the franchise capabilities.

Jack Dorsey: Yes.

Speaker Change: This is an opportunity for us we are focused on food and beverage.

Speaker Change: A number of cups for competitors took advantage of.

Jack Dorsey:

Speaker Change: Driving those home and fixing all of them in our first goal is to get to <unk> on all the features that make us lose in food and beverage.

Jack Dorsey: And our first goal is to get to parity on all the features that make us lose in food and beverage. And then, as we get to that this year, then it's a question of really showing people the depth of our, and the breadth, I should say, of our ecosystem. And this is where banking continues to be a stronghold for us and something that will really set us apart in addition to our renewed focus on a better designed product and a better engineered product that doesn't fail.

Jack Dorsey: Then as we as we get to that this year then.

Jack Dorsey: The question is really assuring people picked up silver, Nebraska I should save.

Jack Dorsey: Banking continues to be.

Jack Dorsey: <unk> hopefully from something that really sort of support in addition to.

Speaker Change: That isn't true.

Operator: And we will take our next question from Jason Kupferberg with Bank of America. Your line is open.

Jason Alan Kupferberg: Thanks, guys. I wanted to stay here on the square side for a minute. You know, you had expected the gross profit growth to decelerate in Q1. It obviously accelerated modestly. And I think you said at a high level, you know, software and banking, obviously, were drivers there, but we're hoping you could go a little bit deeper into which specific parts of the software and banking businesses and maybe touch on international a little bit also just trying to unpack where the sources of upside surprise were, because we're certainly good numbers to see there. Thanks. Sure, maybe just to unpack.

Jason Alan Kupferberg: Oh, Thanks, guys I wanted to stay here on the square side for a minute you know you would expected biggers profit growth to decelerate in queue wanted to obviously accelerated modestly and I think you said at a high level, you know software and banking obviously, we're drivers there, but we're hoping that you could go a little bit deeper into which specific parts of of the shop.

Jason Alan Kupferberg: [noise] and banking businesses, and maybe touch on international little bit also just trying to.

Jason Alan Kupferberg: <unk> what are the sources of upside surprise work because certainly good numbers to see their thanks.

Amrita Ahuja: Sure, maybe just to unpack the drivers on the banking side. First, what we saw was first quarter banking gross profit for Square grew 36% year over year and was the key driver of Delta between gross profit and GPV growth. Unpacking that a bit more, what we saw was healthy repayment trends and strong organic volume growth driving results this quarter for banking. Score alone facilitated $1.32 billion in originations, up 17% year-over-year in the first quarter.

Speaker Change: Sure maybe just to unpack uhm the drivers on the banking side first what we saw was first quarter banking gross profit for square grew 36% year over year.

Amrita Ahuja: Instant transfer also contributed as we lap now in the second quarter some of the pricing impacts, pricing increases that we made in Q2 of last year. And then gross profit from banking products in our international markets also continued to grow as we added more and more capabilities to more geographies. The recent launches of loans in Japan in January, for instance, have exceeded, well exceeded, our initial expectations. Clearly, quick access to funds and seamless product experience are true differentiators relative to existing financing options for SMBs in Japan.

Amrita Ahuja: Some of the pricing and packs pricing increases that we made in Q2 of last year.

Amrita Ahuja: And then gross profit from banking products and or international markets also continue to grow with we add more and more capabilities to more geography's recent launches of of loans in Japan. In January for instance has exceeded well exceeded our initial expectations clearly quick access to funds.

Amrita Ahuja: In a seamless product experienced are true differentiators relative to existing financing options for S. M DS in Japan.

Amrita Ahuja: From an international perspective, in the first quarter, gross profit in markets outside the US grew 38% year over year and represented 13%. The squares gross international GPB was up 23%. We believe there is a significant long runway ahead for growth here as we're less than 1% penetrated in markets outside the US. And we've continued to see growth in our deeper vertical points of sale as well across the square ecosystem.

Amrita Ahuja: I'm, an international perspective in the first quarter gross profit and markets outside the U S can with 38% year over here and represent and 13% of squares gross gross profit International G. P. D was up 23%. We believe there is a significant long run way ahead for gross heroes were less than one per cent penetrated in markets outside the U S.

Amrita Ahuja: So each of the key strategic and focus areas for us continues to show outsized growth and will be areas that we lean into. Specifically, on vertical points of sale, gross profit from products across retail, restaurants, and appointments grew 24% year over year in the first quarter.

Amrita Ahuja: <unk> and will be areas that we that we <unk>, we lean into specifically on vertical point of sale gross profit from products across retail restaurants, an appointment grew 24 per cent here over here in the first quarter.

Speaker Change: Thanks for the details.

Amrita Ahuja: Sure.

Operator: And we will take our next question from Alex Markgraff with KBCM. Your line is open.

Speaker Change: We will take our next question from Alex Mark Ralph with K P. C. M. Your line is open.

Alexander Wexler Markgraff: Hey, thanks for taking my question. Just a couple on tax and direct deposit. Of the 40% tax actives that deposit a refund into the cash app, I'm just curious what sort of overlap there might be with existing... Payroll Direct Deposit actives, and then what exactly is entailed in sort of converting those folks that are not maybe overlapping today. And then, just as a quick follow-up, any sort of indication of inflows and growth, excluding the impact of any sort of tax refund growth.

Alexander Wexler Markgraff: Hey, Thanks for taking my question, just a couple of tax and direct deposit of the 40 per cent tax actors the deposit a refund sense of ketchup, just curious what sort of overlap there might be with existing.

Alexander Wexler Markgraff: Payroll direct deposit doctors and then what what exactly is entailed instead of converting those folks that are not.

Alexander Wexler Markgraff: Excluding the impact of any sort of tax refund growth.

Amrita Ahuja: So, as I noted, paycheck direct deposit inflows grew faster than overall inflows. So that, you know, is neutralized for the tax impact in Q1, the sort of seasonal impact in Q1.

Alexander Wexler Markgraff: So as I noted the paycheck direct deposit inflows grew faster than overall inflows. So that you know is neutralized for the tax impact in Q1, that's sort of seasonal impact in Q1 more broadly what I'd say about our tax initiative is that it it represents discovery.

Amrita Ahuja: More broadly, what I'd say about our tax initiative is that it represents a discovery capability, a discovery initiative for us in bringing our direct deposit capabilities, the ability to get your funds faster through Cash App, and put it front and center for our customers as they're getting in, you know, engaging in a deep financial services offering that we have a free one with taxes. And so as you look at the broader base of direct deposits in Q1, that's clearly larger than paycheck direct deposits alone.

Amrita Ahuja: Cable Bill at a discovery initiative for us and bringing a direct deposit capabilities the ability to get your funds faster through cash up and put it front and center for our customers as they're getting in it you know engaging in a deep financial services offering that we have a free one with taxes.

Amrita Ahuja: And so as you look at the broader base of direct deposit taking one that's clearly larger then the paycheck direct deposit alone and we saw growth in that as well.

Amrita Ahuja: And we saw growth in that as well. But really, the tax piece is about driving discovery and awareness around our broader financial services offering, including paycheck direct deposits. And it is a potential for us to convert more of those tax direct deposit customers into paycheck direct deposit customers. The much broader opportunity for us, of course, is, as I mentioned earlier, around the key initiatives that we got from a product perspective around financial services and around bringing all of those initiatives together in bundling and in pricing that's compelling to our customers.

Amrita Ahuja: But really the tax piece is about driving uhm discovery and and awareness around our broader financial services offering, including paycheck direct deposit and it is and it is a potential for us to convert more of the.

Amrita Ahuja: Tax direct deposit customers and the paycheck direct deposit customers.

Amrita Ahuja: Much broader opportunity for us of course is as I mentioned earlier around the key initiatives that we got from a product perspective around financial services and around bringing all of those initiatives together and bundling in in pricing this complaint to our customers.

Speaker Change: Great. Thank you.

Operator: And we will take our next question from John Davis with Raymond James. Your line is open. Hey, good afternoon.

Amrita Ahuja: And we will take our next question from John Davis with Raymond James Your line is open.

John Kimbrough Davis: Hey, good afternoon, Jack. I just want to touch on the recent merchant settlement with the networks, both on the surcharging side, as well as the interchange cuts and just thoughts on how that impacts the merchants in square, more specifically.

John Kimbrough Davis: Hey, good afternoon, Jack just wanted to touch on the recent emergence settlement with them networks.

John Kimbrough Davis: Charging side as well as the interchange thoughts and just thoughts on how that impacts the emergence and square more specifically.

Jack Dorsey: Sorry, which, uh, what are you talking about here? So, sorry, the...

John Kimbrough Davis: Sorry, which.

Jack Dorsey: Mhm.

Jack Dorsey: So, sorry, the merchant settlement with Visa and MasterCard on the ability to surcharge as well as the cut in interchange going into effect next year.

Jack Dorsey: Sorry, the the merchant settlement with visa Mastercard.

Jack Dorsey: On the ability to surcharge.

Jack Dorsey: Well, the <unk> and interchange.

Jack Dorsey:

Jack Dorsey: Mmm.

Jack Dorsey: I'm not, not sure. I'm not sure how to answer the question. We, I haven't, I haven't spent much time on this particular issue.

Speaker Change: I'm not sure.

Speaker Change: Oh sure I'll to answer the question.

Jack Dorsey: I do know that this is active, it is an active conversation for a lot of sellers and their customers, and different countries have different policies on this. We don't have a surcharge capability on Square right now. We are rolling that out in Australia, where it is something that most merchants do. But no other, no other comment on this.

Jack Dorsey: I as in having so much time on this particular issue I do know that it is it is an active conversation for a lot of sellers of my customers in.

Jack Dorsey: Countries.

Jack Dorsey: Oh, most merchants too.

Jack Dorsey:

Jack Dorsey: Okay.

Amrita Ahuja: Amrita, just a quick question on the sustainability of the 1,000 basis point difference and the kind of GPV growth in the square of 9% versus 19%. I know you noted square banking growth was like mid-30s for the quarter. How should we think about the relation between GPV growth and seller and GP growth throughout the balance of the year?

Amrita Ahuja: The sustainability of the thousand basis point difference and kind of G. P V grow some square of nine per cent versus 19% I know you noted square banking growth was like mid thirties for the quarter was how should we think about the relation between G. P V growth and seller and G T growth throughout the balance.

Amrita Ahuja: For the year.

Amrita Ahuja: Yeah, as I noted in the intro remarks, what we expect to see is a narrowing of the gap or the delta between gross profit growth and GPV growth. That's because we see GPV growth in the back half of the year. We expect to be stable to improving behind more favorable same-store comparisons. So that's sort of the expectation that we see for the remainder of the year, and we expect responsive growth to moderate a bit from the first quarter's 19% as we lap some of that stronger banking performance and pricing changes from the prior year.

Amrita Ahuja: Yeah as I noted in in the insurer remarked, what we expect to see is a narrowing of the gap or the delta between gross profit growth in G. P V growth.

Amrita Ahuja: That's as D. C. G. P V growth in the back half of the year, we expect to be stable to improving behind more favorable same-store comparisons.

Amrita Ahuja: So that's sort of the expectation that we see for the remainder of the year and we expect trespassed across a moderate <unk> a bit from the first quarter is 19% as we lap some of that stronger banking performance in pricing changes from a prior year, obviously all of our T initiatives, the tax and referencing related to square from the product and go to market.

Amrita Ahuja: Obviously, all of our key initiatives that Jack's been referencing related to Square from a product and go-to-market perspective, we're hard at work on, and you know, believe that those, as they hit throughout the remainder of the year, can turn the tide from a 2025 perspective.

Amrita Ahuja: Perspective, we're hard at work on and you know believe that those as they hit throughout the remainder of the year can turn the tide from the 2025 perspective.

Operator: And we will now take our final question from Bryan Keane with Deutsche Bank. Your line is open.

Amrita Ahuja: And we will now take our final question from Bryan King <unk> excuse me with Deutsche Bank. Your line is open.

Bryan Connell Keane: Hey guys, congrats on the solid results here. Just want to ask about afterpay. It's really seemed to have turned a corner with volume. Now I've been consistently growing 25% the last couple of quarters. Just maybe, at a high level, what changed for afterpay to get better, better growth. And then obviously, the gross profit growth jumped this quarter to be higher than volume. Maybe what are those drivers and the outlook there? Thank you

Bryan Connell Keane: Hey, guys. Congrats on the solid results here just wanted to ask about Afterpay, it's really seemed to have turned the corner with volume no I've been consistently grown 25 per cent. The last couple of quarters, just maybe talk high level, what's changed for after pay to get better.

Amrita Ahuja: Sure, I can start on this, which is, we saw strong growth in the quarter, as you noted, both from a GMV perspective and, even more so from a gross profit perspective, GMV being similar to our Q4 growth rate at 25%, but with gross profit at 32%, which is higher than the fourth quarter growth rate. What we saw with Afterpay was strong customer acquisition across both consumers and merchants, with growth driven by single-use payments and our gift cards offering.

Speaker Change: Sure I can I can start on this which is we saw strong growth and a quarter. As you noted both from the G. M V prospective and even more so from a gross profit perspective G. M V being similar to our queue for growth rate at 25 per cent.

Amrita Ahuja: Single-use payments is our product that allows customers across the UK, US, and Australia to shop via the Afterpay app at merchants that aren't in Afterpay's network. So a broad set of merchants, and that enables us to reach highly engaged customers through personalized merchant recommendations in the app, while also offering a flexible payment offering. And Gift Card is a product that allows eligible customers to purchase an online gift card from a variety of leading retailers and then spread it out across four payments with Afterpay.

Amrita Ahuja: And gift card is a product that allows eligible customers to purchase an online gift card from a variety of of leading retailers and then spread it out across four payments with Afterpay Uhm. After <unk> enterprise sales team also has been driving a strong pipeline of new merchant growth across all of these products are core buy now pay later products.

Amrita Ahuja: Afterpay's enterprise sales team also has been driving a strong pipeline of new merchant growth across all of these products, our core Buy Now, Pay Later products, as well as some of these newer products. Some of these newer products also do have an improved monetization rate relative to Buy Now, Pay Later. And that, I think, is some of what you're seeing come through in terms of the stronger gross profit growth. And stepping back more broadly to the first part of your question, what's changed here is, as Jack noted, we've reset on our strategy and reorganized our team.

Amrita Ahuja: As well as some of these newer products. Some of these newer products also do have approved monetization rate relative to buy now pay later than that I think is what some of what you're seeing come through in terms of the stronger gross profit growth.

Amrita Ahuja: Stepping back more broadly to the first part of your question. What's changed here is as Jack noted you know we've reset on our strategy and reorganized our team. After pay is now fully embedded in the cash up ecosystem.

Amrita Ahuja: Afterpay is now fully embedded in the Cash App ecosystem and operating at a high level of excellence between our sales team, our product-led teams, you know, and our customer-facing teams. And so we're excited to see what's ahead, not only for some of the standalone Afterpay initiatives but also the deeper integrations that we're doing with Afterpay on Cash App Card and with Cash App Pay, which is now, you know, the strong growth of which I think is very much attributable to the Afterpay team as well.

Unknown Attendee: Got it. Thanks so much.

Unknown Attendee: And operating at a high level of excellence between our sales team our product led teams you know in our customer facing teams and and so we're excited to see what's ahead not only for some of the stand alone after pay initiatives, but also the deeper integration that we're doing with after pay on cash up car.

Unknown Attendee: <unk> and with ketchup pay which is which is now you know the strong growth of which I think is very much attributable to the afterpay team as well.

Speaker Change: Got it thanks, so much.

Operator: And ladies and gentlemen, thank you for participating in today's program. This does conclude our program, and you may all now disconnect.

Speaker Change: And ladies and gentlemen, thank you for <unk> for participating in today's program.

Speaker Change: Does conclude our program and you may all know disconnect.

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Operator: E G.

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