Q2 2024 Block Inc Earnings Call

Speaker Change: Do what I should do, do what I should do Do what I should do, do what I should do

Do what I should do

Operator: Good day, ladies and gentlemen, and welcome to the Block second quarter 2024 earnings conference call.

Operator: Good day, ladies and gentlemen, and welcome to the Block second 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 second 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.

Nikhil Dixit: 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.

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

Nikhil Dixit: Hi everyone, thanks for joining our second 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: Hi, everyone. Thanks for joining our second 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 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. 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. Please take a look at our filings with the SEC for discussion of the factors that could cause our results to differ.

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. These statements are subject to risks and uncertainties. Actual results could differ materially from those contemplated by our forward-looking statements, so reported results should not be considered an indication of future performance.

Speaker Change: 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.

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. Also, note that the forward-looking statements on this call are based on information available to us as of today's date, and we disclaim any obligation to update any forward-looking statements except as required by law.

Speaker Change: 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.

Nikhil Dixit: Also, note that the forward-looking statements on this call are based on information available to us as of today's date.

Nikhil Dixit: We display any obligation to update any forward-looking statements, except as required by law.

Speaker Change: We disclaim any obligation to update any forward-looking statements except as required by law. Further discussion during this call of Cash App's banking services, refer to those offered through our bank partners.

Nikhil Dixit: Further discussion during this call of cash-apps banking services, refer to those offered through our bank partners. Within these remarks, we will also discuss metrics related to our investment framework, including the Rule of 40. With Rule of 40, we are evaluating the sum of our gross profit growth and adjusted operating income margin. Also, we will discuss certain non-GAAP financial measures during this call. Reconciliation to the most directly comparable gap financial measures are provided in the shareholder letter and our historical financial information spreadsheet on our Investor Relations website. These non-gap measures are not intended to be a substitute for our gap results.

Nikhil Dixit: For further discussion during this call of Cash App's banking services, refer to those offered through 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.

Speaker Change: Within these remarks, we will also discuss metrics related to our investment framework, including Rule of 40.

Speaker Change: With Rule of 40, we are evaluating the sum 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. These non-GAAP measures are not intended to be a substitute for our GAAP results.

Speaker Change: Also, we will discuss certain non-GAAP financial measures during this call. Reconciliations to the most directly comparable

Speaker Change: GAAP financial measures are provided in the shareholder letter and our historical financial information spreadsheet on our investor relations website.

Nikhil Dixit: Finally, this call and its entirety is being audio-webcast on our Investor Relations website.

Nikhil Dixit: 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 Namrita's opening remarks will be available on our website shortly. With that, I would like to turn it over to Jack.

Speaker Change: These non-GAAP measures are not intended to be a substitute for our GAAP results. Finally, this call in its entirety is being audio webcast on our Investor Relations website. An audio replay of this call and the transcript for Jack and Amrita's opening remarks will be available on our website shortly. With that, I would like to turn it over to Jack.

Nikhil Dixit: An audio replay of this call and the transcript for Jack Namrede's opening remarks will be available on our website shortly.

Jack Dorsey: With that, I would like to turn it over to Jack. Thank you all for joining us. I focus my shareholder letter this quarter on our good-of-market strategy for Square and our efforts to improve acquisition across sales, partnerships, marketing, and products. If you haven't yet, please read that letter for details.

Jack Dorsey: Thank you all for joining us. I focused my shareholder letter this quarter on our go-to-market strategy for Square and our efforts to improve acquisition across sales, partnerships, marketing, and product. If you haven't yet, please read that letter for details.

Jack: Thank you all for joining us. I focused my shareholder letter this quarter on our go-to-market strategy for Square and our efforts to improve acquisition across sales, partnerships, marketing, and products.

Jack Dorsey: As part of this, I'm thrilled to share that Nick Monar, the CEO and co-founder of Afterpay, will be leading a centralized sales function across Block, working across Square, Cash App, and Afterpay. Nick shaped Afterpay's high-performing sales culture, and we're excited for him to raise the bar for Square and across Block.

Jack Dorsey: As part of this, I'm thrilled to share that Nick Molnar, the CEO and co-founder of Afterpay, will be leading a centralized sales function across Block, working across Square, Cash App, and Afterpay. Nick shaped Afterpay's high-performing sales culture, and we're excited for him to raise the bar for Square and across Block. This aligns with our recent decision to reorganize our company's reporting structure by function, enabling more collaboration across our different ecosystems. This will also help our people get to true mastery of their craft and open up opportunities for mobility within the company.

Speaker Change: If you haven't yet, please read that letter for details.

Speaker Change: As part of this, I'm thrilled to share that Nick Molnar, the CEO and co-founder of Afterpay, will be leading a centralized sales function across Block, working across Square, CashApp, and Afterpay.

Speaker Change: Nick shaped Afterpay's high-performing sales culture, and we're excited for him to raise the bar for Square and Across Block.

Jack Dorsey: Disaligned with a recent decision to reorganize our company's reporting structure by function, enabling more collaboration across our different ecosystems. This will also help our people get to true mastery of their craft and open up opportunities for mobility within disciplines. We plan to execute this change this month with minimal disruption.

Speaker Change: This aligns with our recent decision to reorganize our company's reporting structure by function, enabling more collaboration across our different ecosystems.

Jack Dorsey: We plan to execute this change this month with minimal disruption. The new reporting structure does not impact our strategy, roadmaps, or financial goals. Instead, we believe it will allow us to move with greater speed, agility, and efficiency on the growth initiatives we've already discussed. Similar to prior quarters, we're going to keep our remarks brief to focus on your questions. And with that, I'll turn it over to Amrita.

Jack Dorsey: Action. The new reporting structure design impact our strategy, roadmaps, or financial goals. Instead, we believe it will allow us to move with greater speed, agility, and efficiency on the growth initiatives we've already discussed. Similar to prior quarters, we're going to keep our remarks brief to focus on your questions.

Speaker Change: We plan to execute this change this month with minimal disruption.

Speaker Change: The new reporting structure does not impact our strategy, roadmaps, or financial goals. Instead, we believe it will allow us to move with greater speed, agility, and efficiency on the growth initiatives we've already discussed.

Speaker Change: Similar to prior quarters, we're going to keep our remarks brief to focus on your questions. And with that, I'll turn it over to Amrita.

Amrita Ahuja: And with that, I'll turn it over to Amrita. Thanks, Jack. We've delivered strong results across the company during the second quarter. Growth profit was $2.23 billion, up 20% year over year. By business, Square gross profit was $923 million. Up 15% year over year. And CashUpGross Profit was $1.3 billion, up 23% year over year. Both businesses showed strengthen areas aligned to our strategies. Growth profit outperformance compared to our guidance was mostly driven by CashUp. We saw strengths across CashUpCard, CashUpBorrow, and Buy Now Pay Later. Infos for active saw healthy growth, up 10% year over year in the quarter.

Amrita Ahuja: Jack. We've delivered strong results across the company during the second quarter. Gross profit was $2.23 billion, up 20% year-over-year. By business, Square gross profit was $923 million, up 15% year-over-year, and Cash Up Ghost profit was $1.3 billion, up 23% year-over-year. Both businesses showed strengths in areas aligned to our strategy. Gross profit outperformance compared to our guidance was mostly driven by cash up. We saw strength across cash up cards, cash up borrow, and buy now pay later.

Amrita: Thanks, Jack.

Amrita: We've delivered strong results across the company during the second quarter.

Amrita Ahuja: Infos Proactive saw healthy growth, up 10% year-over-year in the quarter, and was consistent quarter-over-quarter despite coming off the first quarter's seasonal benefit of tax refunds. Square's gross profit was in line with our expectations, with strength in software and integrated payments and banking. GTV growth in the quarter was up 8% year-over-year, as strength from our markets outside the U.S. was offset by a continued moderation in U.S. same-store sales growth, consistent with broader macro data.

Amrita Ahuja: And with consistent quarter of a quarter, despite coming off the first quarter's seasonal benefit of tax refunds. Square Gross Profit was in line with our expectations, with strengths in software and integrated payments and banking. GTV growth in the quarter was up 8% year over year, as strengths from our market outside the U.S. was offset by a continued moderation in U.S. team store sales growth, consistent with broader macro data points. From a profitability perspective, we saw a significant increase on a year-over-year basis, with meaningful margin improvement due to our improved efficiency and discipline on expenses. Adjusted EBITDA was $759 million, nearly doubling year over year, and adjusted operating income was $399 million, of 16 times year over year.

Amrita Ahuja: From a profitability perspective, we saw a significant increase on a year-over-year basis with meaningful margin improvement due to our improved efficiency and discipline on expenses. Adjusted EBITDA was $759 million, nearly doubling year-over-year, and adjusted operating income was $399 million, up 16 times year-over-year. For the 12 months ending in June, adjusted free cash flow was $1.43 billion, which was up more than two times versus the prior 12 months and represented 57 percent of adjusted EBITDA, an improvement compared to the 44 percent conversion rate in the prior period.

Amrita: Adjusted EBITDA was $759 million, nearly doubling year-over-year.

Amrita Ahuja: For the 12 months ending in June, adjusted free cash flow was $1.43 billion, which was up more than two times versus the prior 12 months, and represented 57% of adjusted EBITDA, an improvement compared to the 44% conversion rate in the prior period. Our strong, profitable growth shows that our ecosystems continue to serve our customers with differentiated value, and our teams are operating with purpose and efficiency.

Speaker Change: For the 12 months ending in June , adjusted free cash flow was $1.43 billion, which was up more than two times versus the prior 12 months and represented 57% of adjusted EBITDA, an improvement compared to the 44% conversion rate in the prior period.

Amrita Ahuja: Our strong profitable growth shows that our ecosystems continue to serve our customers with differentiated value, and our teams are operating with purpose and efficiency. As Jack noted, our shift to a functional organizational structure is about deepening collaboration across our ecosystem.

Amrita: Our strong profitable growth shows that our ecosystems continue to serve our customers with differentiated value and our teams are operating with purpose and efficiency.

Amrita Ahuja: As Jack noted, our shift to a functional organizational structure is about deepening collaboration across our ecosystems. What doesn't change is our commitment to our long-term target of achieving more LaFourty in 2026, and our reporting of gross profit by business segment. We'll also continue to hold our leaders accountable to our existing product roadmap and go-to-market timelines.

Amrita: As Jack noted, our shift to a functional organizational structure is about deepening collaboration across our ecosystems.

Amrita Ahuja: What won't change is our commitment to our long-term target of achieving Rule of 40 in 2026, and our reporting of gross profit by business segment will also continue to hold our leaders accountable for our existing product roadmap and go to market timely. Turning to our expectations for the remainder of the year, we are raising our full-year 2024 guidance for both gross profit and profitability, reflecting not only outperformance in the second quarter but also increased expectations for the remainder of the year.

Jack: What doesn't change is our commitment to our long-term target of achieving Rule of 40 in 2026.

Jack: and our reporting of gross profit by business segment.

Speaker Change: We'll also continue to hold our leaders accountable to our existing product roadmap and go-to-market timelines.

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, reflecting not only outperformance in the second quarter but also increased expectations for the remainder of the year. For full year 2024, we are now expecting gross profit of at least $8.89 billion, or 18% growth year over year. This reflects our strong top-line momentum as we head into the back half of the year. We expect Cash App to deliver strong gross profit growth in the back half of the year, with gross expected to moderate only slightly from the second quarter's 23%, even as we fully lap the benefit from improvements to our structural costs in the second half.

Amrita Ahuja: For full year 2024, we are now expecting gross profit of at least $8.89 billion, or 18% growth year over year. This reflects our strong top line momentum as we head into the back half of the year.

Speaker Change: Turning to our expectations for the remainder of the year, we are raising our full year 2024 guidance for both gross profit and profitability, reflecting not only outperformance in the second quarter, but also increased expectations for the remainder of the year.

Jack: For full year 2024, we are now expecting gross profit of at least $8.89 billion or 18% growth year over year.

Amrita Ahuja: We expect Cash App to deliver strong gross profit growth in the back half of the year, with growth expected to moderate only slightly from the second quarter's 23%, even as we fully lap the benefit from improvements to our structural costs in the second half. For Square, we expect year-over-year gross profit growth for the back half of the year to be relatively in line with the second quarter's growth rate. We remain focused on cross-selling banking and software further into our seller base and optimizing our processing value chain.

Amrita Ahuja: For Square, we expect year-over-year growth profit growth for the back half of the year to be relatively in line with the second quarter's growth rate. We remain focused on cross-selling banking and software further into our seller base and optimizing our processing value chain. In the back half of the year, we expect a GPV growth to be relatively stable, although we are mindful of the backdrop for consumer discretionary spending continues to be dynamic. Our focus is on the things we can control. Including executing against our product strategy and the go-to-market approach Jack outlined in his letter.

Amrita Ahuja: In the back half of the year, we expected GPV growth to be relatively stable, although we are mindful of the backdrop for consumer discretionary spending which continues to be dynamic. Our focus is on the things we can control, including executing against our product strategy and the go-to-market approach Jack outlined in his letter. Over the past year, our discipline on operating expenses has driven significant operating leverage in our business. While we do not share segment-adjusted operating income, we wanted to share a view of the business-level profit margins we expect to see.

Amrita Ahuja: Over the past year, our discipline on operating expenses has driven significant operating leverage in our business.

Jack: Over the past year, our discipline on operating expenses has driven significant operating leverage in our business.

Amrita Ahuja: While we do not share segment-adjusted operating income, we wanted to share a view of the business-level profit margins we expect this year. For 2024, we expect each of Cash App and Square's adjusted operating income margins to be in the high team's range. Delivering meaningful improvement in the underlying profitability of these businesses each of the last two years. Across both ecosystems, our efforts are centered on initiatives that improve our product and go-to-market velocity, and which we expect to benefit us into 2025. For Cash App, we continue to round out the features that support our bank-to-base strategy and are starting to increase marketing investment behind them.

Jack: While we do not share segment-adjusted operating income, we wanted to share a view of the business-level profit margins we expect this year.

Amrita Ahuja: For 2024, we expect each of Cash App and Square's adjusted operating income margins to be in the high teens range, delivering meaningful improvement in the underlying profitability of these businesses each of the last two years. Across both ecosystems, our efforts are centered on initiatives that improve our product and go-to-market velocity, and which we expect to benefit us into 2025. For Cash App, we continue to round out the features that support our bank-to-base strategy and are starting to increase marketing investment behind this.

Jack: For 2024, we expect each of Cash App and Square's adjusted operating income margins to be in the high-teens range, delivering meaningful improvement in the underlying profitability of these businesses each of the last two years.

Jack: Across both ecosystems our efforts are centered on initiatives that improve our product and go-to-market velocity and which we expect to benefit us into 2025.

Amrita Ahuja: For Square, we're excited about our partnership strategy and planned product launches post completion of the order's migration work this summer. Sellers will start to see our single point or single point of sale app before year end, which will be a significant unlock for simplifying our value proposition. From a profitability perspective, we are now expecting at least $1.44 billion in adjusted operating income in 2024. Or 16% margins on gross profit, with efficiency initiatives underway to improve our structural costs and corporate overhead. This also reflects plans for a step-up in sales and marketing in the back half for both Square and Cash App as we invest behind the strong unit economics and margins in each business to drive growth into 2025.

Amrita Ahuja: For Square, we're excited about our partnership strategy and planned product launches post-completion of the orders migration work this summer. Sellers will start to see our single point-of-sale app before year-end, which will be a significant unlock for simplifying our value proposition. From a profitability perspective, we are now expecting at least $1.44 billion in adjusted operating income in 2024, or 16% margins on gross profit, with efficiency initiatives underway to improve our structural costs and corporate overhead.

Jack: For Square, we're excited about our partnership strategy and planned product launches post-completion of the orders migration work this summer.

Jack: or 16% margins on gross profit, with efficiency initiatives underway to improve our structural costs and corporate overhead.

Amrita Ahuja: This also reflects plans for a step up in sales and marketing in the back half for both Square and Cash App, as we invest behind the strong unit economics and margins in each business to drive growth into 2025. Our updated guidance now implies a Rule of 35 for full year 2024, a significant improvement compared to 2023 and progressing us towards our goal of achieving Rule of 40 in 2026. Finally, as our margins and free cash flow generation have improved, we also plan to return more capital to shareholders.

Jack: This also reflects plans for a step up in sales and marketing in the back half for both Square and Cash App as we invest behind the strong unit economics and margins in each business to drive growth into 2025.

Amrita Ahuja: Our updated guidance now implies rule of 35 for full year 2024, a significant improvement compared to 2023 and progressing us toward our goal of achieving Rule of 40 in 2026.

Amrita Ahuja: Finally, as our margins and free cash flow generation have improved, we also plan to return more capital to shareholders. We very recently completed our inaugural $1 billion share repurchase authorization. And today, we're excited to announce an incremental $3 billion share repurchase program.

Amrita Ahuja: We very recently completed our inaugural $1 billion share repurchase authorization, and today we're excited to announce an incremental $3 billion share repurchase program. With that, I'll now turn it back to the operator to start the Q&A portion of the call.

Operator: With that, we'll now turn it back to the operator to start the Q&A portion of the call. Thank you.

Operator: Thank you, and 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.

Operator: And we will now begin the question-and-answer session. If you have dialed in and would 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. If you are called upon to ask your question and are 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. To be able to take as many questions as possible, we do ask that you please limit yourself to one question.

Speaker Change: Thank you. And 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.

Speaker Change: 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.

Operator: To be able to take as many questions as possible, we do ask that you please limit yourself to one question. Again, it is star one if you would like to join the queue. And your first question comes from the line of Tianjin Huang with J.P. Morgan. Your line is open.

Jack: To be able to take as many questions as possible, we do ask that you please limit yourself to one question.

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

Tinjin Line: And your first question comes from the line of Tinjin Line with JP Morgan. Your line is open.

Speaker Change: Again, it is star 1 if you would like to join the queue. And your first question comes from the line of Tin Jin Hwang with J.P. Morgan. Your line is open.

Tinjin Line: Thanks a lot, great result, Chair. I like the go-to-market discussion in the letter here, Jack, and definitely excited for Nick to lead sales.

Tianjin Huang: Thanks a lot. I got great results here.

Speaker Change: Thanks a lot. Great results here. I like the go-to-market discussion in the letter here, Jack, and definitely excited for Nick to lead sales. I want to ask you, Jack, just curious, what inspired this shift to a

Jack Dorsey: I want to ask you, Jack, just curious, what inspired this shift to a functional work structure? Why now, what outcomes do you, or should we expect from the change in the short term, is it more collaborative products or is it just more products? And what are the risks? Because whenever you think about these kinds of changes, always worry about the risks, and I'm sure you have some guardrails in place, so anything you could share would be terrific. Thanks. Yep.

Tianjin Huang: I like the go-to-market discussion in the letter here, Jack, and I'm definitely excited for Nick to lead sales. I want to ask you, Jack, just curious, what inspired this shift to a... Functional Organizational Structure? Why now? What outcomes do you or should we expect from the change in the short to midterm?

Jack Dorsey: Is it more collaborative products? Or is it just more products? And what are the risks? Because whenever we think about these kind of changes, we always worry about the risks. And I'm sure you have some guardrails in place. So anything you could share with me, Thank you.

Speaker Change: expect from the change in the short to mid-term? Is it more collaborative products or is it just more products and what are the risks?

Speaker Change: Whenever I think about these kind of changes, I always worry about the risks, and I'm sure you have some guardrails in place, so anything you can share would be great.

Jack Dorsey: Yeah, the short answer to the question is it will result in much better technology, much better design, and ultimately much better product. We, I want us to be able to move much, much faster with newer technologies such as all the AI models, all the open source AI models that you're seeing come to market, really level the playing field force, and by seeing that technology through the lens of an engineering and design and product, organized company versus trying to manage us across different business units. It means we can move much better and much faster. We, you know, we do have multiple business units right now.

Jack Dorsey: Yeah, the short answer to the question is, it'll result in much better technology, much better design, and ultimately, a much better product. We, I want us to be able to move much, much faster with newer technologies, such as All the AI models, all the all the open source AI models that you're seeing come to market really level the playing field for us. And by seeing that technology through the lens of an engineering and design and product organization versus trying to manage this across different business units, it means we can move much better and much faster.

Speaker Change: Be terrific. Thanks.

Speaker Change: Yep.

Speaker Change: Yeah, the short answer to the question is it'll result in much better technology, much better design.

Speaker Change: and ultimately much better products.

Speaker Change: And by seeing that technology through the lens of an engineering and design and product organized company versus trying to manage this across different business units, it means we can move much better and much faster.

Jack Dorsey: [inaudible] We, we, you know, we do have multiple business units. Right now, they represent multiple brands, and multiple customers. Obviously, as we've been talking about for some time, we believe our superpower is combining these, and I believe strongly that this model will allow us a lot more flexibility and also the collaboration that you mentioned, but the real benefit, I believe, is more of a focus on better technology and better design and better products through engineering design and product being at the top of the company, and obviously, centralizing sales, and really providing a tangible change and shift to In terms of risk, we've tried to mitigate a bunch of the risks by changing, starting with only the reporting structure.

Speaker Change: We do have multiple business units right now. They represent multiple brands, multiple customers.

Jack Dorsey: They represent multiple brands, multiple customers.

Jack Dorsey: Obviously, as we've been talking about for some time, we believe our superpowers combining these, and I believe strongly that this model will allow us a lot more flexibility and also the collaboration that you mentioned. But the real benefit, I believe, is more of a focus on better technology, and better design, and better products through engineering, design, and product being at the top of the company. And obviously centralizing sales and really providing a tangible change and shift to how we think about squares, go to market, complete a lot of the work we've been doing on the product side.

Speaker Change: Obviously, as we've been talking about for some time, we believe our superpower is combining these.

Speaker Change: And I believe strongly that this model will allow us a lot more flexibility and also the collaboration that you mentioned, but

Speaker Change: The real benefit, I believe, is more of a focus on better technology and better design and better products through engineering design and product being at the top of the company.

Speaker Change: and obviously centralizing sales.

Speaker Change: and really providing a tangible change and shift to how we think about squares go-to-market.

Speaker Change: completes a lot of the work we've been doing on the on the product side.

Jack Dorsey: So I'm really excited about that. In terms of risk, we've tried to mitigate a bunch of the risk by changing, starting with only the reporting structure. So block before this move, every single business unit was functionally organized. So what this is effectively doing is just removing that business unit lead structure, appointing a new functional lead, and going. So most of the company will not notice a change at all, but it means that we can start really focusing on our disciplines and up leveling and raising the bar on our talent. And execution, again, from that technology and design lens.

Speaker Change: So I'm really excited about that. In terms of risk, we've tried to mitigate a bunch of the risk by changing

Jack Dorsey: So Block, before this move, every single business unit was functionally organized. So what this is effectively doing is just removing that business unit lead, structure, appointing a new functional lead, and going. So most of the company will not notice a change at all. But it means that we can start really focusing on our disciplines and up-leveling and raising the bar on our talent and execution, again, from that technology and design lens.

Speaker Change: Starting with only the reporting structure.

Speaker Change: So what this is effectively doing is just removing that business unit lead.

Speaker Change: Structure, appointing a new functional lead, and going. So most of the company will not notice a change at all.

Speaker Change: But it means that we can start really focusing on our disciplines and up-leveling and raising the bar on our talent and execution, again, from that technology and design lens.

Jack Dorsey: So I think we've mitigated the risk. We're not changing any of our goals. We're not changing. Our assignments to products and projects that people have over time, as we build confidence around those things, we will evolve our operating model and just how we work together. But right now this is just a reporting shift, so we can really focus on our disciplines and improve them greatly, which will have all the desired outcomes that we want. So I think with this move in particular, there's very little risk because we're holding ourselves accountable to the goals that we put out before us.

Jack Dorsey: So I think we've mitigated the risk. We're not changing any of our goals. We're not changing; we are assignments to products and projects that people have. Over time, as we build confidence around those things, we will evolve our operating model and just how we work together. But right now, this is just a reporting shift so we can really focus on our disciplines and improve them greatly, which will have all the desired outcomes that we want. So I think with this move, in particular, there's very little risk because we're holding ourselves accountable to the goals that we put out before us.

Speaker Change: Over time as we build confidence

Speaker Change: around those things.

Speaker Change: We will evolve our operating model and just how we work together.

Speaker Change: But right now, this is just a reporting shift so we can really focus on our disciplines and improve them greatly, which will have all the desired outcomes that we want. So, I think with this move in particular, there's very little risk because we're holding ourselves accountable to the goals that we put out before us.

Tianjin Huang: I think we're good now, thanks.

Tinjin Line: I'll have to hear it. Thanks.

Speaker Change: Glad to hear it. Thanks.

Timothy Chiodo: And your next question comes from the line of Timothy Chiodo with UPS. Your line is open. Great. Thank you for taking the question.

Operator: And your next question comes from the line of Timothy Chiodo with UPS. Your line is open.

Speaker Change: And your next question comes from the line of Timothy Chiodo with UPS. Your line is open.

Timothy Chiodo: Great, thank you for taking the question. I really want to dig in on the US GDP trends within seller. So two factors that have impacted growth in the recent past have been discretionary spend, which you called out earlier, particularly the 2021 and 22 cohorts. And also, there's been the weakness in the MKE, which was in the shareholder letter. But looking ahead, you have a combination of easing comps, you have the pre-auth and product work done, you have Salesforce hiring ahead, and you mentioned a reinvestment in marketing and distribution partnerships.

Timothy Chiodo: I really want to dig in on the US GPV trends within Cellar. So two factors that had impacted growth in the recent past have been discretionary spend, which you called out earlier, particularly you called out earlier, the 2021 and 22 cohorts, and also there's been the weakness in the MKE, which was in the shareholder letter. But looking ahead, you have a combination of easing comps, you have the pre-auth and product work done, you have sales force hiring ahead, you mentioned reinvestment in marketing, distribution partnerships; granted, many of these factors are more 2025 or 2026 drivers. But with that in mind, maybe you could touch a little bit on or expand upon the second half GPV expectations and then somehow these initiatives would be more supported for next year.

Timothy Kyoto: Great. Thank you for taking the question. I really want to dig in on the U.S. GPB trends within Seller.

Timothy Kyoto: Two factors that have impacted growth in the recent past have been discretionary spend, which you called out earlier, particularly you called out earlier the 2021 and 22 cohorts. And also there's been the weakness in the MKE, which was in the shareholder letter.

Speaker Change: But looking ahead, you have a combination of ease and comp, you have the pre-auth and product work done.

Speaker Change: You have Salesforce hiring ahead. You mentioned a reinvestment in marketing, distribution partnerships.

Timothy Chiodo: Granted, many of these factors are more 2025 or 2026 drivers, but with that in mind, maybe you could touch a little bit on or expand upon the second half GDPB expectations, and then somehow, these initiatives would be more supportive for next year.

Speaker Change: Granted, many of these factors are more 2025 or 2026 drivers, but with that in mind, maybe you could touch a little bit on or expand upon the second half GPB expectations, and then somehow these initiatives would be more supportive for next year. Thanks a lot.

Jack Dorsey: Thanks a lot.

Timothy Chiodo: Thanks a lot.

Jack Dorsey: Yeah, I can start with this, and then Rita can follow up. I think we now have a perfect storm brewing for Square. We spent the past few months really focused on organizing the product priorities, simplifying our product approach, and making sure that we have a much more cohesive, understandable, and intuitive system. We're looking at every single aspect of our offering, from onboarding and acquisition to our dashboard where sellers are introduced to new products, to the products themselves or hardware, how we think about marketing, everything has been investigated and evolved, including, as we've been talking about our orders and migration, the platform unlocking features that bring us to parity and beyond our competitors.

Jack Dorsey: Yeah, I can start with this, and then Amrita can follow up. I think we now have a perfect storm brewing for Square. We've spent the past few months really focused on organizing the product priorities. Simplifying our product approach, making sure that we have a much more cohesive and understandable and intuitive system. We're looking at every single aspect of our offering, from onboarding and acquisition to our dashboard where sellers are introduced to new products, to the products themselves, our hardware, and how we think about marketing.

Speaker Change: I can start with this and then Amrita can follow up.

Speaker Change: I think we we now have a perfect storm brewing for Square. We've spent the past few months really focused on organizing the product priorities.

Amrita: Making sure that we have a much more cohesive and understandable and intuitive system. We're looking at every single aspect of

Amrita: Our offering, from onboarding and acquisition to our dashboard where sellers are introduced to new products.

Speaker Change: to the products themselves, our hardware.

Jack Dorsey: Everything has been investigated and evolved, including, as we've been talking about, our order migration, the platform, unlocking features that bring us to parity and beyond our competitors. And now that we are centralizing sales under Nick, I feel like we have a tangible solution to that. So all the pieces are now set. I do think the majority of them will come together closer to the end of this year, so the end of summer to the end of the year, and really manifest next year.

Speaker Change: and Evolved, including, as we've been talking about, our orders migration, the platform, unlocking features that bring us to parity and beyond our competitors.

Jack Dorsey: And now that we are centralizing sales under Nick, I feel like we have a tangible solution to that. So all the pieces are now set. I do think the majority of them come together at the closer to the end of this year, so the end of summer to the end of the year and really manifest next year. And I think all these changes compound into something that I'm really excited about, much better foundation for us and gives us an opportunity to truly compete with our peers in a way that we haven't for years. So I'm pretty confident about all the moves.

Nik: And now that we are centralizing sales under Nick, I feel like we have a tangible solution to that. So all the pieces are now set.

Nik: I do think, you know, the majority of them come together at the, you know, closer to the end of this year, you know, so the end of summer to the end of the year, and really manifest next year.

Jack Dorsey: And I think all these changes compound into something that I'm really excited about, a much better foundation for us, and gives us an opportunity to truly compete with our peers in a way that we haven't done for years. Um, so I'm pretty confident about all the moves. I think we've executed them in the right way... Crowdy, like really focusing on onboarding and products first and foremost, so we get that acquisition and retention of our sellers, making sure that we have a rock-solid and reliable platform that offers all the features that we see with our peers, and then improving our go-to-market, including newer initiatives like field sales that our peers have used quite effectively, but with a weaker product, in my So, having the strength on all of those, I think we're shaped up for really, really good outcomes going forward.

Amrita Ahuja: I think we've executed them in the right priority, like really focusing on onboarding and products first and foremost, but we get that acquisition and retaining our sellers, making sure that we have a rock solid and reliable platform that offers all the features that we see with our peers. and then improving our go-to-market, including newer initiatives like field sales that our peers have used quite effectively. But with a weaker product in my mind, so that we have the strength on all of those, I think we're shake up for really, really good outcomes going forward.

Nik: So, I'm pretty confident about all the moves. I think we've...

Nik: We've executed them in the right priority, like really focusing on onboarding and products, first and foremost, so we get that acquisition and retaining our sellers, making sure that we have a rock-solid and reliable platform that offers all the features that we see with our peers.

Nik: and then improving our go-to-market, including newer initiatives like field sales.

Nik: that our peers have used quite effectively, but with a weaker product in my mind.

Amrita Ahuja: And Tim, I'll just add some color as well with respect to GPV trend lines that we're seeing. For the second quarter, GPV was up 8% year of year, which is a slight moderation from the 9% year of year growth rate that we saw in the first quarter. And as we look towards the back half of the year, we expect to see stability in that GPV growth rate compared to what we saw in the second quarter. As I noted earlier, when you unpack some of what's going on, there is a very consistent trend line with both what we've called out over the past couple of quarters, as well as what we're seeing externally.

Amrita Ahuja: And Tim, I'll just add some color as well, with respect to the GPV trend lines that we're seeing. For the second quarter, you know, GPV was up 8% year over year, which is a slight moderation from the 9% year over year growth rate that we saw in the first quarter. And as we look towards the back half of the year, we expect to see stability in that GPV growth rate compared to what we saw in the second quarter. As I noted earlier,

Nik: Really, really good outcomes going forward.

Nik: And Tim, I'll just add some color as well with respect to GPV trend lines that we're seeing.

Tim: For the second quarter, you know, GPV was up 8% year-over-year, which is a slight moderation from the 9% year-over-year growth rate that we saw in the first quarter.

Speaker Change: And as we look towards the back half of the year, we expect to see stability in that GPV growth rate compared to what we saw in the second quarter, as I noted earlier.

Amrita Ahuja: When you unpack some of what's going on, there are very consistent trend lines with both what we've called out over the past couple of quarters, as well as what we're seeing externally. We're seeing relatively consistent trends from a churn and customer acquisition standpoint, with more of the moderation coming from same store growth or GPV per seller, which continue to moderate a bit on a year over year basis. And we've seen many other companies note similar softness from a discretionary consumer spend perspective, as we look at external data points showing a dynamic macro backdrop, whether it's slower new business formations or industry-specific data across the verticals that we serve.

Nik: When you unpack some of what's going on there, it is very consistent trend lines with both what we've called out over the past couple of quarters, as well as what we're seeing externally.

Amrita Ahuja: We're seeing relatively consistent trends from a turn and customer acquisition standpoint, with more than moderation coming from same store growth or GPV per seller, which continue to moderate a bit on a year of your basis. And we've seen many other companies, no similar softness from a discretionary consumer spend perspective. You know, as we look at external data points showing a dynamic macro backdrop, whether it's slower new business formations or industry specific data across the market.

Nik: We're seeing relatively consistent trends from a churn and customer acquisition standpoint.

Nik: And we've seen many other companies note similar softness from a discretionary consumer spend perspective, you know, as we look at external data points, showing a dynamic macro backdrop, whether it's slower new business formations or industry specific data across the verticals that we serve.

Amrita Ahuja: That's the verticals that we serve. Now, with that backdrop, we have still been able to grow the Square business strongly from a growth profit perspective of 15% growth in the second quarter. And with outside's growth in the areas that we are really strategically inflecting, whether it's a vertical points of sale, which grew 21% on a growth profit basis in the second quarter. Or banking products, which grew 27%, or international markets, which grew 34%, each of those areas showing strong product market fit with those customers that we're serving. And so what we're focused on more than anything at this point, as Jack noted, is what we can control, which is improving GPV growth and ultimately gross traffic growth by investing across partnerships, ramping our marketing spend, simplifying our onboarding tools, and launching new products.

Amrita Ahuja: Now, with that backdrop, we have still been able to grow the square business strongly from a gross profit perspective of 15% growth in the second quarter. And with outsized growth in the areas that we are really strategically inflecting, whether it's vertical points of sale, which grew 21% on a gross profit basis in the second quarter, or banking products, which grew 27%, or international markets, which grew 34%. Each of those areas is showing strong product market fit with those customers that we're serving.

Nik: Now, with that backdrop, we have still been able to grow the Square business strongly from a gross profit perspective, a 15% growth in the second quarter, and with outsized growth in the areas that we are really strategically inflecting, whether it's our vertical points of sale.

Nik: which grew 21% on a gross profit basis in the second quarter, or banking products which grew 27%, or international markets which grew 34%.

Nik: Each of those areas showing strong product market fit with those customers that we're serving.

Amrita Ahuja: And so what we're focused on more than anything at this point, as Jack noted, is what we can control, which is improving GPV growth and ultimately gross profit growth by investing across partnerships, ramping our marketing spend, simplifying our onboarding tools, and launching new products.

Nik: And so what we're focused on, more than anything, at this point, as Jack noted, is what we can control, which is improving GPV growth and ultimately gross traffic growth by investing across partnerships, ramping our marketing spend, simplifying our onboarding tools, and launching new products.

Amrita Ahuja: Thank you, Jack. Thank you, Emerda.

Timothy Chiodo: Thank you, Jack. Thank you, Amrita.

Operator: And your next question comes from the line of Darrin Peller with Wolf Research. Your line is open.

Darren Peller: And your next question comes from the line of Darren Peller with Wolf Research. Your line is open. Hey guys, thanks. Nice job. You know, I want to touch on the incremental distribution partners you called out, like US Food. Obviously, those are clear ads, and material could be material. I think you talked about 40% coverage of the restaurant space.

Nik: Thank you, Jack. Thank you, Amrita.

Darrin Peller: Hey guys, thanks. Nice job.

Darrin Peller: You know, I want to touch on the incremental distribution partners you called out, like US Food, and obviously, those are clear ads, and material could be material. I think you talked about 40% coverage of the restaurant space. If you could just expand on this a little bit more, what the potential is for it, how it could contribute to actual GPV potentially over time, how does this fit into the roadmap and timeline in your strategy? Then maybe just any other types of partnerships we could expect on the horizon, whether it's domestic or international. Seems like a nice, nice addition.

Speaker Change: I want to touch on the incremental distribution partners you called out, like U.S. Food. Obviously, those are clear ads and material, could be material. I think you talked about 40 percent coverage of the restaurant space.

Darren Peller: If you could just expand on this a little bit more, what the potential is for it, what how it could contribute to actual GPV potentially over time. How does this fit into the roadmap and timeline and your strategy.

Jack Dorsey: But then maybe just any other types of partners, which we can expect on the horizon, whether it's domestic or internationally, seems like a nice nice addition. Yeah, so, you know, we've, as I said, we've been reconsidering everything, including how we think about partnerships. We've got a lot of questions about this in the past. West. We're investing in three types of partners: vertical and specific industries like Food and Beverage, horizontal that have more broad reach across geographies and business types, and then looking at third-party sales organizations. In terms of food, as we mentioned in a show, we've made a lot of progress, especially around food and beverages, and we signed for serving to our partners up to 40% of the restaurants in the United States, which is a pretty sizable trunk, and we have a strong pipeline of both vertical and horizontal partners in the US.

Jack Dorsey: Um, so, uh, you know we've As I said, we've been reconsidering everything, including how we think about partnerships. We've gotten a lot of questions about this in the past.

Speaker Change: As I said, we've been reconsidering everything, including how we think about partnerships. We've gotten a lot of questions about this in the past.

Jack Dorsey: We're investing in three types of partners, vertical in specific industries like food and beverage, horizontal that have a more broad reach across geographies and business types, and then looking at third-party sales organizations. In terms of food, as we mentioned in the shareholder letter, we've made a lot of progress, especially around food and beverages, and we signed U.S. Foods, and that means we're serving up to 40% of the restaurants in the United States, which is, you know, a pretty sizable trunk.

Jack Dorsey: And we have a strong pipeline of both vertical and horizontal partners in the U.S. Internationally, we're doing a lot more, especially around bank partnerships. So, outside of the U.S., the bank partnership angle is working quite well, and we're working to sign more. And also, internationally, we're exploring third-party sales as well. It's just a much easier approach than what we're currently seeing in the U.S. and where we think we're going to get the most impact in the U.S.

Jack Dorsey: International, we're doing a lot more, especially around bank partnerships. So outside of the US, the bank partnership angle is working quite well, and we're working to sign more. Also, internationally we're exploring third-party sales as well. It's just a much easier approach than what we're currently seeing in the US and where we think we're going to get the most impact in the United States.

Speaker Change: Working to sign more and also internationally we're exploring third-party sales as well.

Jack Dorsey: That's great. Thanks, Jack.

Darrin Peller: That's great. Thanks, Jack.

Ken Sikoski: And your next question comes from the line of Ken Sikoski with Autonomous Research. Your line is open. Hey, good afternoon. Thanks for taking the question. Direct deposit has been a focus for the company for some time. I don't think I saw it in the letter, but I think we're still at a few million recurring paycheck direct depositors. One of your main competitors has called it 45 million direct depositors.

Operator: Your next question comes from the line of Ken Suchoski with Autonomous Research. Your line is open.

Kenneth Suchoski: Hey, good afternoon. Thanks for taking the time to ask the question. Direct deposit has been a focus for the company for some time. I don't think I saw it in the letter, but I think we're still at a few million recurring paycheck direct depositors. One of your main competitors has called it four to five million direct depositors. What's it going to take to push this number meaningfully higher? What's working, what's not working, and is there any way to think about the adoption curve for direct depositors and the visibility you have into that?

Speaker Change: Hey, good afternoon. Thanks for taking the question. Direct deposit has been a focus for the company for some time. I don't think I saw it in the letter, but I think we're still at a few million recurring paycheck direct depositors.

Jack Dorsey: Thanks so much.

Speaker Change: One of your main competitors has, call it, 4 to 5 million direct depositors. What's it going to take to push this number meaningfully higher? What's working? What's not working? And is there any way to think about the adoption curve around direct depositors and the visibility you have into that? Thanks so much.

Ken Sikoski: What's it going to take to push this number meaningfully higher? What's working? What's not working? And is there any way to think about the adoption curve around direct depositors and the visibility you have into that?

Ken Sikoski: Thanks so much.

Jack Dorsey: Yeah, I can start and I really can follow up. There's three main ways that we believe we will drive direct deposit, and this is all captured in our bank-to-base strategy, which we referenced in an earlier earnings letter. The first is packaging. The second is around marketing, and the third is products. I'll start with packaging. We want to make sure that the benefits of depositing your paycheck is super clear in the app. So one of the things we're doing is those who deposit $300 each month get access to free overdraft coverage up to a certain amount of 4.5% savings yield, priority phone support, which is really important, and free in our GKM withdrawals in addition to early access to the paycheck.

Jack Dorsey: Yeah, I can start, and Amrita can follow up. But there are three main ways that we believe we will drive direct composite, and this is all captured in our bank debate strategy, which we referenced in an earlier earnings letter. The first is packaging, the second is around marketing, and the third is products. I'll start with packaging.

Speaker Change: Yeah I can start and Amrita can follow up but there's three main ways that we we believe we will drive direct deposit and this is all

Amrita: Captured in our Bank to Base Strategy, which we referenced in an earlier earnings letter. The first is packaging, the second is around marketing, and the third is products. I'll start with packaging. We want to make sure that the benefits of depositing your paycheck is super clear in the app.

Jack Dorsey: We want to make sure that the benefits of depositing your paycheck are super clear in the app. So one of the things we're doing is those who deposit $300 each month get access to free overdraft coverage up to a certain amount of 4.5% savings yield.

Amrita: So, one of the things we're doing is those who deposit $300 each month...

Amrita: Get access to free overdraft coverage up to a certain amount, 4.5% savings yield, priority phone support, which is really important, and free in-network ATM withdrawals, in addition to early access to the paycheck.

Jack Dorsey: Priority phone support, which is really important, and free in-network ATM withdrawals, in addition to early access to the paycheck. So making sure that those incentives are clear. Marketing is another one. We're investing in the back half of the year as we've been further refining our strategy based on the impact that we're seeing. Again, the incentives matter here.

Amrita Ahuja: So making sure that those incentives are clear. Marketing is another one. We're investing in the back half year as we've been further refining our strategy based on the impact that we're seeing. Again, like the incentives matter here. So, with deep expertise and peer-to-peer referrals and cash-up credit boost, we're starting to test this past quarter and seeing some strong results around our marketing and just like marketing those incentives. Devices, and we're cross-selling direct deposit through in-app messages as well. And then finally in products, we want to add spending insights to the cash-up card so customers can make more informed financial decisions, improving our web experience to look at balances and review statements.

Amrita: So making sure that those incentives are clear.

Amrita: Marketing is another one. We're investing in the back half here as we've been further refining our strategy based on the impact that we're seeing.

Jack Dorsey: So we have deep expertise in peer-to-peer referrals and cash-up cards with boost. We're starting a test this past quarter and seeing some strong results around our marketing and, just like marketing those incentives, we're cross-selling direct deposit through in-app messages as well. And then, finally, in products, we want to add spending insights to the Cash App card so customers can make more informed financial decisions, and improve our web experience to look at balances and review statements.

Amrita: Again, like, the incentives matter here, so we have...

Amrita: And we're cross-selling direct deposit through in-app messages as well.

Amrita: And then finally, in products, we want to add spending insights to the Cash App Card so customers can make more informed decisions.

Amrita: Financial Decisions.

Amrita Ahuja: That's what a lot of our customers expect from their bank, and they should expect it from Cash-Up as well. And then integrating commerce by expanding by now-paid later on the cash-up card later this year. These are ways that people can make their money work more for them and reasons why they just want to direct deposit their entire paycheck to Cash-Up, that they have much better utility. So that's how we think about driving it.

Amrita: Improving our web experience to look at balances and review statements. That's what a lot of our customers expect.

Jack Dorsey: That's what a lot of our customers expect from their bank, and they should expect it from Cash App as well. And then integrating commerce by expanding Buy Now Pay Later on the Cash App card later this year. These are all ways that people can make their money work more for them and reasons why they just want to direct deposit their entire paycheck into Cash App so that they have a much better utility. So that's how we think about driving it. And, again, it all goes back to the bank-to-base strategy. I'm going to let Amrita follow up. Yeah, can I just add that, you know, we're

Amrita: Direct Deposit, their entire paycheck to cash up, so that they have much better utility. So that's how we think about driving it, and again, it all goes back to the bank-to-base strategy. I'm going to let Amrita follow up.

Amrita Ahuja: And again, it all goes back to the bank, bank-to-base strategy, General Ed, and Rita Fowell. Yeah, can I just add that, you know, we're really holding ourselves accountable to two metrics as we assess our performance against our bank-to-base strategy, which, of course, is just about making cash-up or customers' primary financial tool. The near-term metric is inflows per active. The medium to longer-term metric is around paycheck deposit active. So looking at each of those with inflows per active, we've had strong momentum on engagement through the first half of this year. In both the first quarter and second quarter, we saw double-digit growth and inflows per active behind strengths in our banking products, specifically with Cash-Up card and Cash-Up borrow.

Amrita Ahuja: Yeah, can I just add that we're really holding ourselves accountable to two metrics as we assess our performance against our bank-to-base strategy, which, of course, is just about making cash our customers' primary financial tool. The near-term metric is inflows per active. The medium- to longer-term metric is around paycheck deposit actives.

Amrita: Primary Financial Tool. The near-term metric is inflows per active. The medium- to longer-term metric is around paycheck deposit actives.

Operator: So looking at each of those, with inflows per active, we've had strong momentum on engagement through the first half of this year. In both the first quarter and second quarter, we saw double-digit growth in inflows per active behind strength in our banking product, specifically with Cash App Card and Cash App Borrow. With Card, we've seen this product as oftentimes our customers' first entry point into banking with Cash App. And as the utility of Cash App grows, ultimately, we see a greater portion of inflows from those customers.

Amrita: So looking at each of those, with Inflows Proactive, we've had strong momentum on engagement through the first half of this year. In both the first quarter and second quarter, we saw double-digit growth in Inflows Proactive behind strength in our banking products.

Amrita Ahuja: With card, we've seen this product as oftentimes our customers' first entry point into banking with cash-ups. And as utility grows, ultimately, we see a greater portion of inflows from those customers. With cash-up borrow, this provides customers with access to small-dollar credit, kind of like working capital, which is really key. We've seen to winning that primary banking relationship. So continuing to drive engagement and adoption of these key financial services products is ultimately leading to stronger engagement and stronger inflows per active. On the second metric, PayTech direct deposit active. This is a longer-term strategy. One that we've really clarified throughout the first part of this year, and as Jack noted, have already made a bunch of progress across packaging, marketing, and product features.

Amrita: specifically with Cash App Card and Cash App Borrow. With Card, we saw, you know, we've seen this product is oftentimes our customers' first entry point into banking with Cash App.

Operator: With Cash at Borrow, this provides customers with access to small-dollar credit, kind of like working capital, which is really key, we've seen, to winning that primary banking relationship. So, continuing to drive engagement and adoption of these key financial services products is ultimately leading to stronger engagement and stronger inflows per active customer. On the second metric, paycheck direct deposit actives, this is a longer-term strategy, one that we've really clarified throughout the first part of this year, and as Jack noted, we have already made a bunch of progress across packaging, marketing, and product features.

Amrita: With Cash That Borrow, this provides customers with access to small-dollar credit, kind of like working capital, which is really key, we've seen, to winning that primary banking relationship. So, continuing to drive engagement and adoption of these key financial services products is ultimately leading to stronger engagement and stronger inflows per active.

Amrita Ahuja: But that, two million or so, PayTech deposit active was largely driven organically. And that number has continued to increase quarter of a quarter and year of a year as we've increased the penetration of into our cash-up card active base even through the second quarter. And as you heard from Jack, there's more to come growth from a product and go-to-market perspective that we think drives focus not only to our overall banking products, but also ultimately to the long-term goal of earning their PayTech.

Amrita: A bunch of progress across packaging, marketing, and product features, but that two million or so paycheck deposit actives

Amrita: was largely driven organically.

Amrita: And that number has continued to increase quarter over quarter and year over year as we've increased the penetration into our Cash App Card active base, even through the second quarter.

Operator: And as you heard from Jack, there's more to come, both from a product and go-to-market perspective that we think drives focus not only on our overall banking products but also ultimately to the long-term goal of earning their paycheck. Great. Thanks so much. And your next question comes from the line of Jason Kupferberg with Bank of America. Your line is open. Hi, guys.

Amrita: And as you heard from Jack, there's more to come, both from a product and go-to-market perspective that we think drives focus not only to our overall banking products, but also ultimately to the long-term goal of earning their paycheck.

Amrita Ahuja: Great.

Amrita Ahuja: Thanks so much.

Jason Cooperberg: And your next question comes from the line of Jason Cooperberg with Bank of America.

Operator: And your next question comes from the line of Jason Kupferberg with Bank of America. Your line is open. Hi guys.

Speaker Change: Great, thanks so much.

Speaker Change: And your next question comes from the line of Jason Kupferberg with Bank of America. Your line is open.

Jason Cooperberg: Your line is open.

Jason Cooperberg: Hi guys. So lots of balls in the air as Square had gone through a lot of it. I'm curious as you look ahead to 2025, which of these newer products and go-to-market initiatives are really best positioned ultimately to move the needle on GPV growth. If you have the highlight, maybe the top of a couple of our shops. Yeah, I think the most important thing is our platform and making sure that we have something that's reliable. We did take a bunch of hits in the past when our service went down. So this we are up for our sellers constantly, and we're not taking time away from their business.

Jason Kupferberg: Which of these newer products and go-to-market initiatives are really best positioned, ultimately, to move the needle on GPV growth, if you had to highlight maybe the top couple or so?

Jack Dorsey: I think, you know, the most important thing is our platform and making sure that we have something that's reliable. We did take a bunch of hits in the past when our service went down, so this is our number one priority.

Speaker Change: Yeah, um...

Speaker Change: and making sure that we have something that's reliable. We did take a bunch of hits in the past when our service went down.

Jack Dorsey: We want to make sure that we are up for our sellers constantly, and we're not taking time away from their business. That's not just about keeping our servers up; it's also providing features that allow them to work offline, even when their Wi-Fi is down, so they can still make the sale. Order migration is something we've been talking about. This is.

Speaker Change: So this is the number one priority. We want to make sure that we are up for our sellers constantly, and we're not taking time away from their business. That's not just about keeping our servers up.

Jack Dorsey: That's not just about keeping our servers up. It's also providing creatures that allows them to work offline, even when their Wi-Fi is down, so they can still make the sale. Orders migration is something we've been talking about. This is migrating our system to a newer framework so that we can add features like pre-offs and deposits and other things. The kiosk that we just launched, the Square kiosk is built on the same platform. So we do have this up, and we will scale it to the rest of our features by the end of the summer. So all that's on track.

Jason Kupferberg: It's also providing features that allows them to work offline, even when their Wi-Fi is down, so they can still make the sale. Orders migration is something we've been talking about.

Jason Kupferberg: migrating our system to a newer framework so that we can add features

Jack Dorsey: [inaudible] like pre-auth and deposits and other things. The kiosk that we just launched, the Squared kiosk, is built on the same platform. So we do have this up, and we'll scale it to the rest of our features by the end of the summer. So all that's on track.

Jason Kupferberg: Like pre-auths and deposits and...

Jason Kupferberg: and other things.

Jason Kupferberg: The kiosk that we just launched, the Square kiosk, is built on the same platform, so we do have this up.

Jack Dorsey: The pre-op capabilities that are being tested today through bar tabs with select sellers. And all this means we can serve a wider range of sellers, more bars, full-service restaurants, service sellers, and omni-channel retailers. Onboarding has been a big focus for us, as we mentioned in the shareholder letter. It took over 10 minutes, in most cases, like 20 minutes and 30 steps, just to sign up for Square, and we got that down to four.

Jason Kupferberg: And we'll scale it to the rest of our features.

Jack Dorsey: The pre-off capabilities that are being tested today through barcaps with select sellers, and all this means we can serve a wider range of sellers, more bars, full service restaurants, service sellers, and omnichannel retailers. Onboarding has been a big focus for us, as we mentioned in the shareholder letter. It took over 10 minutes in most cases, like 20 minutes and 30 steps, just to sign up for Square, and we got that down to four. That means that people can see the dashboard right away, and they can see the full breadth of everything that we offer, all of our products, and they can start attaching to those products and turning them on. But most importantly, they get a feel of what Square is, and much easier to commit to it after you feel it.

Jason Kupferberg: By the end of the summer. So all that's on track the pre-op capabilities that are being tested today through bar tabs with select sellers And all this means we can serve a wider range of sellers more bars full-service restaurants service sellers and omni-channel retailers

Jason Kupferberg: Onboarding has been a big focus for us. As we mentioned in the in the shareholder letter, it took over 10 minutes, in most cases like 20 minutes and 30 steps, just to sign up for Square, and we got that down to four.

Jack Dorsey: And that means that people can see the dashboard right away, and they can see the full breadth of everything that we offer, all of our products, and they can start attaching to those products, and turning them on. But most importantly, they get a feel for what Square is, and it's much easier to commit to it after you feel it.

Jason Kupferberg: And that means that people can see the dashboard right away, and they can see the full breadth of everything that we offer, all of our products, and they can start attaching to those products.

Jason Kupferberg: and turning them on but most importantly they get a feel of what Square is and much easier to commit to it after you feel it.

Jack Dorsey: And the single app is one thing I'm really excited about. We have four or five apps in the App Store. We're going to bring that down to one.

Jack Dorsey: The single app is one thing I'm really excited about. We have four or five apps in the App Store. We're going to bring that down to one. That really eases our go-to-market because all we have to say is download Square in the App Store or Google Play, and the Apple customizes itself based on your preferences and based on how you use it and based on your role at the particular business that you're in. So we're using much better technology to personalize our experiences on the apps and do our hardware and do the dashboard itself. So, as I said before, I think we have a perfect storm.

Jason Kupferberg: And the single app is one thing I'm really excited about. We have four or five apps in the App Store. We're gonna bring that down to one. That really eases our go-to-market because all we have to say is download Square in the App Store or Google Play.

Jack Dorsey: That really eases our go-to-market because all we have to say is download Square in the App Store or Google Play, and the app will customize itself based on your preferences and based on how you use it and based on your role at the particular business that you're in. So we're using much better technology to personalize our experiences on the apps and through our hardware and through the dashboard itself. So, as I said before, I think we have a perfect storm.

Jason Kupferberg: and the app will customize itself.

Jason Kupferberg: Based on your preferences, and based on how you use it, and based on your role at the particular business that you're in, so we're

Jason Kupferberg: Using much better technology to personalize.

Speaker Change: Our experiences on the apps and through our hardware.

Speaker Change: and through the dashboard itself. So as I said before, I think we have a perfect storm. We've been focusing on product and acquisition and retaining folks.

Jack Dorsey: We've been focusing on product and acquisition and retaining folks. We have a much stronger answer as we centralize sales across the entire company. And we have one go-to-market strategy with a leader who's done some amazing things on the after-pay side, and all these things will compound into a lot of the outcomes that we've been wanting to see for some time and, I think, put us in a lead against a lot of our peers.

Jack Dorsey: We've been focusing on product and acquisition and retaining folks. We have a much stronger answer as we centralize sales across the entire company, and we have one go-to-market strategy with a leader who's done some amazing things on the app to pay side, and all these things will compound into a lot of outcomes that we've been wanting to see for some time, and I think put us in a lead against a lot of our peers.

Jason Kupferberg: We have, you know, a much stronger answer as we centralize sales across the entire company. And we have, you know, one go-to-market strategy with a leader who's done some amazing things on the after-pay side.

Jason Kupferberg: And all these things will compound into a lot of the outcomes that, you know, we've been wanting to see for some time and I think put us in a lead against a lot of our peers.

Ramsey El Asal: Andrew, our next question comes from the line of Ramsey El Asal from Barclays. Your line is open. Hi, Jack, and I'm Rita. Thanks a lot for taking my question this evening. I wanted to follow up on some of your responses around the order's migration and re-platforming project, and could you hope to think through the incremental sort of market opportunity that it opens for you guys? And maybe also comment on the sale strategy to sell in the new capabilities. Will you be leveraging inside sales or crop sale or how do you kind of proactively get that to market, you know, expeditiously?

Operator: And your next question comes from the line of Ramsey El-Effel from Barclays. Your line is open. Hi, Jack and Amrita. Thanks a lot.

Speaker Change: Thank you.

Operator: Hi Jack and Amrita. Thanks a lot for taking my question this evening. I wanted to follow up on some of your responses around the orders migration and re-platforming project, and could you help us think through the incremental sort of market opportunity that it opens for you guys? And maybe also comment on the sales strategy to sell on the new capabilities. Will you be leveraging inside sales or cross-selling? Or how do you kind of proactively get that to market expeditiously? I can kick off on that. Thank you. Go ahead, Jeff.

Speaker Change: Hi, Jack and Amrita. Thanks a lot for taking my question this evening. I wanted to

Speaker Change: Follow up on some of your responses around the Orders, Migration, and Replatforming project.

Speaker Change: Could you help us think through the incremental sort of market opportunity that it opens for you guys, and maybe also comment on the sales strategy to sell in the new capabilities. Will you be leveraging inside sales or cross-sell, or how do you kind of proactively get that to market, you know, expeditiously?

Jack Dorsey: I can take offline. Go ahead, Jack. I can start on this. I think the most important thing about the order's migration is that we have a much more flexible and reliable platform with which to build on top. And it doesn't lock up a bunch of features that bring us to parity and beyond with our peers, especially in food and beverage. So, as I said before, stuff like pre-auth and bar tabs, and there's a whole host of features that have been blocked on this work. But ultimately, it's not just about those particular features. It's about a much greater development velocity because we have a much more stable, much more cohesive, and much more enabling platform that allows us to really move a lot faster, but also build better products.

Jack Dorsey: I can start on this. I think the most important thing about the Orders Migration is that we have a much more flexible and reliable platform with which to build on top, and it does unlock a bunch of features that bring us to parity and beyond with our peers, especially in food and beverage. So, as I said before, stuff like pre-auth and bar tabs, and there's a whole host of features that have been locked into this work.

Speaker Change: I can, I can turn this.

Speaker Change: So, as I said before, stuff like pre-auth and bar tabs, and there's a whole host of features.

Jack Dorsey: But ultimately, it's not just about those particular features; it's about a much greater development velocity because we have a much more stable, much more cohesive, and much more enabling platform that allows us to really move a lot faster, but also build better products. Product has always been our strength, and I would state that our product is far above product quality. It's far above the majority of our competitors. Where we have been weaker in the past is how we mirror that with our go-to-market strategy and just updating our approach there, especially given what our competitors have done.

Speaker Change: that has been blocked on this work.

Jack Dorsey: And product has always been our strength. And I would say that our product is far above the majority, product quality, as far above the majority of our compoters.

Jack Dorsey: Where we have been weaker in the past is how we near that with our go-to-market strategy and just updating our approach there, especially given what our competitors have done. Acquisition has been tough because we just put way too many steps in front of sellers. So all of these are either launched or about to be launched. And the fact gets us back to a square that I think becomes a leader for sellers again in a way that we haven't seen in quite some time. Yeah, Ramvi, I can add just a bit of color, maybe to help bring it to life a little bit, how important the order's migration is for us.

Jack Dorsey: Acquisition has been tough because we just put way too many steps in front of sellers. So all of these are either launched or about to be launched. And, you know, that gets us back to a square that I think will become a leader for sellers again in a way that we haven't seen in quite some time.

Speaker Change: Acquisition has been has been tough because we just put way too many steps in front of in front of sellers So all of these are either launched or about to be launched

Speaker Change: And that gets us back to a square that I think becomes a leader for sellers again in a way that we haven't seen in quite some time.

Amrita Ahuja: Yeah, Ramsey, I can add just a bit of color, maybe to help bring it to life a little bit, how important the orders migration is for us. You know, ultimately, the orders migration moves us from a payment-oriented platform to a sales-oriented platform. Almost all of our products assume that a single payment is at the heart of a sale, but as we know, commerce has grown far more complex than that.

Speaker Change: Yeah, Ramsey, I can add just a bit of color maybe to help bring it to life a little bit, what the, how important the orders migration is for us, you know, ultimately the orders migration moves us from a payment oriented platform towards a sales oriented platform.

Jack Dorsey: Ultimately, the order's migration moves us from a payment-oriented platform towards a sales-oriented platform. Almost all of our products assume a single payment was at the heart of a sale, but as we know, commerce has grown far more complex than that. Just to give you a couple examples, if you order online and pick up a store, the order and the payment might be separate events. If you go to a full-service restaurant and place an order, the order and payment again, maybe separate events. If a customer buys five items from an e-commerce seller and wants to return two, you need to have separate logic for the cart between the order and the payment for each item.

Amrita Ahuja: Just to give you a couple examples, if you order online and pick it up in store, the order and the payment might be separate events. If you go to a full service restaurant and place an order, the order and payment, again, might be separate events. If a customer buys five items from an e-commerce seller and wants to return them, you need to have separate logic for the cart between the order and the payment for each item.

Ramsey: Just to give you a couple examples, if you order online and pick up in store, the order and the payment might be separate events.

Amrita Ahuja: For example, if you're a services seller that needs a deposit before starting a project, that project or order is the core of your business and enables, once we shift to the orders migration, multiple payments for that project. So what it enables our sellers to do is be able to sell more anywhere, anyhow, more flexibly, help them run more efficiently, give them time back, and empower them with data to better serve their customers.

Amrita Ahuja: You know, final example, if you're a service with seller that needs a deposit before starting a project, that project or order is a quarter of your business and enables, you know, once we shift to the order's migration, enable multiple payments for that project. But what it enables our sellers to do is be able to sell more anywhere, any how, more flexibly, help them run more efficiently, give them time back, and empower them with the data to better serve their customers. It unlocked the most recently our kiosk product launch, which is something that we know is really important again for the food and beverage space, where sellers that want to sell via kiosk, drive through the other forms of checkout, need to open in order, which exists throughout the sale and in many cases exist long.

Amrita Ahuja: It unlocked just recently our kiosk product launch, which is something that we know is really important, again, for the food and beverage space, where sellers that want to sell via kiosk, drive-through, and other forms of checkout need to open an order, which exists throughout the sale and, in many cases, exists long after the buyer has consumed the goods or services. So those are just some examples of the sorts of things across really all verticals, food and beverage services, retail, that our orders migration helps unlock.

Ramsey: where sellers that want to sell via kiosk, drive-throughs, other forms of checkout need to open an order which exists throughout the sale and in many cases exists long after the buyer has consumed the goods or services.

Amrita Ahuja: After the buyer has consumed the goods or services. So those are just some examples of the sorts of things across really all verticals: food and beverage services, retail, that orders migration helps unlock.

Ramsey: So those are just some examples of the sorts of things across really all verticals, food and beverage services, retail, that our orders migration helps unlock.

Amrita Ahuja: Thank you very much.

Amrita Ahuja: Appreciate it.

Operator: And your next question comes from the line of Harshita Rawat with Bernstein. Your line is open.

Amrita Ahuja: Thank you very much. I appreciate it. And your next question comes from the line of Harshita Rawat.

Harshita Rawat: And your next question comes from the line of Harshita Rawat with Bernstein. Your line is open. Hi, good afternoon. Can you give us some more color? Some color on the cool sign to take you? How do you think about the opportunity within Bitcoin line? How do you? Thank you.

Speaker Change: Thank you very much. Appreciate it.

Speaker Change: Hi, good afternoon. Can you give us some more color, some color on the code scientifically? How do you think about the opportunity within Bitcoin mining hardware? Thank you.

Harshita Rawat: Uh, yeah, happy to. This is, um...

Jack Dorsey: Yeah, happy to. This is. I think this is a massive opportunity for us that this is a super concentrated industry with one main provider. And that is a bit more. Bitmain. We spend a lot of time talking to Bitmain's customers. All the feedback was extremely consistent. The number one concern is reliability. Bitmain produces mining chips and rigs that fail a lot. The second was around being able to customize into minus particular solutions. This is why we decided to make the chip and also build this in the open source in an open source way so that our customers can actually design their systems around any part of our system that they wish.

Jack Dorsey: I think this is a massive opportunity for us. This is a super-concentrated industry with one main provider, and that is Bitmain. We spent a lot of time talking to Bitmeans customers, and all the feedback was... extremely consistent.

Jack Dorsey: The number one concern is reliability, that Maine produces mining chips and rigs that fail a lot. The second concern is around... being able to customize it to Miner's particular solutions. This is why we decided to make the chip and also build this in an open source way, so that our customers can actually design their systems around any part of our system that they wish, or can buy a full mining rig from us.

Jack Dorsey: We're working by a full mining rig from us. And then second, our third is being just a lot more transparent around pricing. And all three of those things are what mattered most to miners and our customers. In addition, we're one of the few companies in the world that have access to a three nanometer fed. Bitmain is producing chips that are six nanometers. So we can build a far better product that's far more reliable, far more open and configurable. And this is super attractive to every single miner that we've talked to. And you're seeing the result of that within one of the deals we just announced, and we have a very strong pipeline behind it as well.

Jack Dorsey: And then third, we're just a lot more transparent around pricing. And all three of those things are what mattered most to miners and our customers. In addition, we're one of the few companies in the world that have access to a 3 nanometer fab. Bitmain is producing chips that are 6 nanometers.

Jack Dorsey: So we can build a far better product that's far more reliable, far more open, and configurable, and this is super attractive to every single miner that we've talked to. And you're seeing the result of that in one of the deals we just announced. And we have a very strong pipeline behind it as well. So I'm fully confident and have no doubt that this is gonna be a significant business for us, and we're going to take a majority of the market share.

Jack Dorsey: Bitmain is producing chips that are 6 nanometer.

Jack Dorsey: That's far more reliable.

Jack Dorsey: Far more open and configurable.

Jack Dorsey: So I'm fully confident and have no doubt that this is going to be a significant business for us. And we're going to take a majority of the market share. Thank you.

Speaker Change: I'm fully confident and have no doubt that this is going to be a significant business for us, and we're going to take a majority of the market share.

Operator: And your next question comes from the line of Lafitani Soteriou with MST. Your line is open.

La Futani Sotirio: And your next question comes from the line of La Futani Sotirio with MSP. Your line is open. Kevin.

Speaker Change: Thank you.

Operator: And your next question comes from the line of Lafitani Soteriou with MST. Your line is open.

Amrita Ahuja: Hi, everyone. Great to see the up to three billion reload of the Share Repurchase Program. Can you talk to the capital intensity of Cash App and Square? And is it changing as the product makes shifts? Thanks for the question.

Lafitani Soteriou: Hi everyone. Great to see the up to $3 billion reload of the share repurchase program. Can you talk about the capital intensity of Cash App and Square? And is it changing as the product mix shifts?

Lafitani Soteriou: Hi everyone, great to see the up to 3 billion reload of the share repurchase program. Can you talk to the capital intensity of Cash App and Square and is it changing as the product mix shifts?

Amrita Ahuja: Thanks for the question. So first, just with respect to capital allocation, you know, to provide context level set, you know, as we progress towards being a Rule of 40 company, we expect both our margin profile to improve as well as our free cash flow generation, and what we expect to do with, as you see here with our $3 billion share repurchase authorization as a continuation of our initial billion dollar share repurchase authorization last year is to return capital to shareholders in excess of what we need to run our business.

Amrita Ahuja: So first, just with respect to capital allocation, you know, to provide context, level set, you know, as we progress towards being a rule of 40 company, we expect both our margin profile to improve as well as our free cash flow generation. And what we expect to do with, as you see here, with our three billion dollar share repurchase authorization, as a continuation of our initial billion dollar share repurchase authorization last year, is to return capital to shareholders in excess of what we need to run our business. What we need to run our business, which I think is sort of a core to your question, is obviously to support our operating expenses, where you've seen a tremendous amount of leverage from us over the past year or two across personnel, across corporate overhead expenses, across, you know, our structural unit economics in each of our businesses.

Amrita Ahuja: Thanks for the question. So first, just with respect to capital allocation, you know, to provide context level set, you know, as we progress towards being a Rule of Forty company, we expect both our margin profile to improve as well as our free cash flow generation.

Amrita Ahuja: And what we expect to do with, as you see here, with our $3 billion share repurchase authorization as a continuation of our initial $1 billion share repurchase authorization last year,

Amrita Ahuja: is to return capital to shareholders in excess of what we need to run our business.

Amrita Ahuja: What we need to run our business, which is sort of the core to your question, is obviously to support our operating expenses, where we've seen a tremendous amount of leverage from us over the past year or two, across personnel, across corporate overhead expenses, across, you know, our structural unit economics in each of our businesses. And we expect to continue that work, as you see reflected in our raised profitability guide that not only reflects the strong second quarter but also our So we continue on that journey of driving efficiency and discipline in our operating expenses.

Amrita Ahuja: What we need to run our business, which I think is sort of the core to your question, is obviously to support our operating expenses.

Amrita Ahuja: where you've seen a tremendous amount of leverage from us over the past year or two across personnel, across corporate overhead expenses, across, you know, our structural unit economics in each of our businesses.

Amrita Ahuja: And we expect to continue to that work. As you see, reflected in our raised profitability guide that not only reflects the strong second quarter, but also our improved expectations for the back half of the year. So we continue to, on that journey of driving efficiency and discipline in our operating expenses. The second piece of obviously what our balance sheet covers from a business operations standpoint is some of the lending originations related to our core lending products, which include obviously Square loan, where we sell the vast majority of those loans off to investors, our Afterpay buy now pay later product and our Cash App borrow product.

Amrita Ahuja: And we expect to continue that work, as you see reflected in our raised profitability guide that not only reflects the strong second quarter, but also our improved expectations for the back half of the year.

Amrita Ahuja: So we continue on that journey of driving efficiency and discipline in our operating expenses.

Amrita Ahuja: The second piece of obviously what our balance sheet covers from a business operation standpoint is some of the lending originations related to our core lending products, which include obviously Square Loan, where we sell the vast majority of those loans off to investors, our Afterpay Buy Now Pay Later product, and our Cash Up Borrow product. Both of those two products are typically very small in size, you know, $100 to $200 loans on average, and they turn 15 times a year with a very simplified repayment mechanism.

Amrita Ahuja: The second piece of, obviously, what our balance sheet covers from a business operations standpoint is some of the lending originations related to our core lending products.

Amrita Ahuja: which include obviously Square Loan, where we sell the vast majority of those loans off to investors.

Amrita Ahuja: our Afterpay Buy Now Pay Later product and our Cash App Borrow product. Both of those two products

Amrita Ahuja: Both of those two products are typically very small in size, you know, a hundred to two hundred dollar type loans on average, and turn 15 times a year with a very simplified repayment mechanism. So, given the short duration, given the small size, they really act like working capital for our customers, and we can efficiently turn a dollar on our balance sheet to support the growth of each of those, the strong growth that we're seeing in each of those businesses. We also, as we think, longer term, have optionality around our funding structures. As we've done with square loans, we have the potential to expand upon our investor base that we could potentially bring by now pay later and borrow to over the medium to long term.

Amrita Ahuja: are typically very small in size, you know, 100 to $200 type loans on average, and turn 15 times a year with a very simplified repayment mechanism.

Amrita Ahuja: So given the short duration, given the small size, they really act like working capital for our customers, and we can efficiently turn a dollar on our balance sheet to support the growth of each of those strong growth that we're seeing in each of those businesses. We also, as we think longer term, have optionality around our funding structures, as we've done with Square Loans. We have the potential to expand upon our investor base that we could potentially bring in now, pay later, and borrow from over the medium to long term. And really, our focus is on the very strong unit economics and risk return profiles that we've seen with both of these products to continue to make that case to investors over the long term.

Amrita Ahuja: So given the short duration, given the small size, they really act like working capital for our customers.

Amrita Ahuja: And we can efficiently turn a dollar on our balance sheet to support the growth of each of those, the strong growth that we're seeing in each of those businesses.

Amrita Ahuja: We also, as we think longer term, have optionality around our funding structures, as we've done with square loans. We have the potential

Amrita Ahuja: to expand upon our investor base that we could potentially bring, buy now, pay later and borrow to over the medium to long term.

Amrita Ahuja: And really our focus is on the very strong unit economics and risk-return profiles that we've seen with both of these products to continue to make that case to investors over the long term.

Amrita Ahuja: And really, our focus is on the very strong unit economics and risk-return profiles that we've seen with both of these products to continue to make that case to investors over the long term.

Amrita Ahuja: Chair. Jack and I summarise the capital intensity is broadly the same and that we should expect to see ongoing sharey purchase programs over time as the profitability improves as you move to roll of 40. Yeah, you know our capital allocation program is, as I said, for the foremost support the organic growth of the business and to ensure that we can also support a diverse balance sheet including some of these lending originations, some which we may sell off, and then to return access capital to shareholders, and that's what you see today with a $3 billion purchase authorization.

Amrita Ahuja: So can I summarise that the capital intensity is broadly the same and that we should expect to see ongoing share repurchase programs over time as the profitability improves as you move to the Rule of 40. Yeah, you know.

Speaker Change: So can I summarise, the capital intensity is broadly the same and that we should expect to see ongoing share repurchase programs over time as the profitability improves as you move to Rule of 40.

Amrita Ahuja: Yeah, you know, our capital allocation program is, as I said, first and foremost to support the organic growth of the business and to ensure that we can also support a diverse balance sheet, including some of these lending originations, some of which we may sell off, and then to return excess capital to shareholders. And that's what you see today with a $3 billion purchase authorization.

Amrita Ahuja: Yeah, you know our capital allocation program is, as I said, first and foremost to support the organic growth of the business.

Amrita Ahuja: and to ensure that we can also support a diverse balance sheet, including some of these lending originations, some which we may sell off, and then to return excess capital to shareholders. And that's what you see today with the $3 billion purchase authorization.

Operator: And your next question comes from the line of Dan Dolev with Mizuho. Your line is open. Oh, hi, Amrita and Jack, thank you for taking my question.

Dan Dolev: And your next question comes from the line of Dan Dolev with Nizuho; your line is open.

Operator: And your next question comes from the line of Dan Dolev with Mizuho. Your line is open. Oh, hi, Amrita and Jack. Thank you.

Operator: And your next question comes from the line of Dan Dolev with Mizuho. Your line is open.

Dan Dolev: Oh hi, I'm Rita and Jack. Thank you for taking my question this evening. Great results. I wanted to ask about cash at pay. Looks like it continues to grow. I think you mentioned volumes up seven times year-to-year, 18% quarter of a quarter.

Dan Dolev: Yep. Yeah, you're right.

Dan Dolev: Oh, hi, Amrita and Jack. Thank you for taking my question this evening. Great results. I wanted to ask about cash at pay. Looks like it continues to grow. I think you mentioned volumes up seven times year over year, 18% quarter over quarter. This seems like a huge opportunity.

Amrita Ahuja: This seems like a huge opportunity, and you maybe talk a little bit about the drivers and what to expect in the coming six to 12 months from that. Thank you. Yep. Yeah, you're right. The vine more was up more than the 7x compared to the prior year and 18% quarter of a quarter. What's driving the growth is our sales team afterpay enterprise sales team. As a June cash at pay active is from more than 80% of the scale of After Pay U.S. Actives compared to less than 25% a year ago. We're signing many large merchants.

Dan Dolev: Can you maybe talk a little bit about the dry birth and what to expect in the coming 6 to 12 months from that? Thank you.

Jack Dorsey: The volume was up more than 7x compared to the prior year and 18% quarter over quarter. What's driving the growth is our sales team, after pays our enterprise sales team. As of June, Cash Up Pay actives accounted for more than 80% of the scale of Afterpay US actives, compared to less than 25% a year ago. We're signing many large merchants. This past quarter, we added Google Play, which is a top merchant for Cash Up Card.

Jack Dorsey: Yep. Yeah, you're right. The volume was up more than 7x compared to the prior year and 18% quarter over quarter. What's driving the growth is our sales team, Afterpay's enterprise sales team.

Jack Dorsey: As of June, Cash App Pay actives for more than 80% of the scale of Afterpay US actives compared to less than 25% a year ago. We're signing many large merchants. This past quarter we added Google Play, which is a top merchant for Cash App Card.

Amrita Ahuja: This past quarter, we added Google Play, which is a top merchant for Cash App card. We're finding that merchants value cash at pay because they can access all cash up customers. Our cash at Pay Active are highly engaged and we offer competitive pricing. So the formula is working, and the sales team is doing an amazing job, and we'll continue to grow.

Jack Dorsey: And, you know, we're finding that merchants value cash up pay because they can access all Cash App customers, our Cash App 8 actives are highly engaged, and we offer competitive pricing. So the formula is working, and the sales team is doing an amazing job, and we'll continue to grow. Great, thank you so much. And your next question comes from the line of Bryan Keane with Deutsche Bank. Your line is open.

Jack Dorsey: And, you know, we're finding that merchants value cash-up pay because they can access...

Jack Dorsey: All Cash App customers, or Cash App 8 actives, are highly engaged, and we offer competitive pricing. So the formula is working, and the sales team is doing an amazing job, and we'll continue to grow.

Jack Dorsey: Great, thank you so much. And your next question comes from the line of Brian Keane with Deutsche Bank. Your line is open. Hi, thanks for thinking the question. Can you help us understand the pricing opportunities inside of the Squarespace seller, especially with some of the product acceleration, refreshers? Thinking just about pricing higher for value versus some of the pricing transparency and potentially coming in at a lower cost of ownership that you mentioned in the shareholder letter for some of the incumbents and digital peers. Yeah, I think at a very high level we have a lot of opportunity here.

Bryan Keane: Great. Thank you so much.

Jack Dorsey: And your next question comes from the line of Brian Keene with Deutsche Bank. Your line is open.

Operator: Hi, thanks for taking the call.

Bryan Keane: Hi, thanks for taking the question. Can you help us understand the pricing opportunities inside of the Square Cellar?

Speaker Change: especially with some of the product acceleration, refreshes. Thinking just about pricing higher for value versus some of the pricing transparency and potentially coming in at a lower cost of ownership that you mentioned in the shareholder letter for some of the incumbents and digital peers.

Bryan Keane: Yeah, I think at a very high level, we have a lot of opportunity here. We're seeing a lot of our peers and competitors raise their prices, and that doesn't necessarily come with a rise in quality or more products or more features.

Bryan Keane: Thanks.

Speaker Change: Yeah, I think at a very high level we have a lot of opportunity here. We're seeing a lot of our peers and competitors raise their pricing.

Jack Dorsey: We're seeing a lot of our peers and competitors raise their pricing, and that doesn't necessarily come with a raise in quality or more products or more features. So we've been spending a lot of time on our quality and our products and features. We've also been looking at simplifying how we approach pricing and how it's presented to our customers. We're right in the midst of doing a bunch of those reviews and looking at the numbers and how those might work.

Speaker Change: And that doesn't necessarily come with the...

Speaker Change: Arrays and quality or more products or more features?

Jack Dorsey: So we've been spending a lot of time on our quality and our products and features. We've also been looking at simplifying how we approach pricing and how it's presented to our customers. We're right in the midst of doing a bunch of those reviews and looking at the numbers and how those might work. I do think we can have better packaging and better bundling of our products. And we're doing that work right now.

Jack Dorsey: So we've been spending a lot of time on our quality and our products and features.

Jack Dorsey: We've also been looking at simplifying how we approach pricing and how it's presented to our customers.

Jack Dorsey: We're right in the midst of doing a bunch of those reviews

Jack Dorsey: I do think like we can have a better packaging and better bundling of our products, and we're doing that work right now, and I'm pretty excited about starting to test these things, and that will be something that we will do definitely this year. But I think we have an amazing opportunity just given what our peers are doing as well and how we're seeing them raise our pricing and opportunity for us to take a larger portion of the network and not have our pricing be an excuse. We can take that off the table. But I think the majority of it's going to come from really looking at simplifying and getting people in as soon as possible so they can see the full extent of our ecosystem and the value that it brings with much simpler pricing going forward.

Jack Dorsey: and how those might work.

Jack Dorsey: I do think we can have better packaging and better bundling.

Jack Dorsey: of our products, and we're doing that work right now.

Jack Dorsey: And I'm pretty excited about starting to test these things, and that will definitely be something that we do this year. But I think we have an amazing opportunity just given what our peers are doing as well and how we're seeing them raise their prices and the opportunity for us to take a larger portion of the network and not have our pricing be an excuse. We can take that off the table, but I think the majority of it's going to come from really looking at simplifying and getting people in as soon as possible. So they can see the full extent of our ecosystem and the value that it brings with much simpler pricing going forward.

Jack Dorsey: And I'm pretty excited about starting to test these things. And that will be something that we will do, definitely this year. But I think we have a...

Jack Dorsey: An amazing opportunity just given what our peers are doing as well and and and how we're we're seeing them raise our pricing and Opportunity for us to take a larger

Jack Dorsey: portion of the network and not have our pricing be an excuse, we can take that off the table. But I think the majority of it is going to come from...

Jack Dorsey: really looking at simplifying and getting people in as soon as possible so they can see the full extent of our ecosystem and the value that it brings with much simpler pricing going forward.

Jack Dorsey: Thank you so much.

Operator: And we will now take our last question from Will Nance with Goldman Sachs. Your line is open. I appreciate you squeezing me in here. I wanted to ask a question on the Cash App monthly access this quarter. I think there was a comment in the shareholder letter about some enhancements made to promote a healthier ecosystem as well as a strategic pullback and marketing spend. So maybe you could kind of elaborate on what's driving those and maybe specifically on some of the enhancements that you made. Appreciate it. And thanks for the question. Sure. Thanks, Will. So in June, we ended a quarter with 57 million monthly active in Cash App, which was a growth of 5% over a year, similar to the growth rate that we saw earlier in the year as well.

Bryan Keane: Got it. Thanks so much. And we will now take our last question from Will Nance on Goldman Sachs. Your line is open.

Will Nance: Got it. Thanks so much.

Bryan Keane: And we will now take our last question from Will Nance with Goldman Sachs. Your line is open.

Operator: I appreciate you squeezing me in here.

Will Nance: Hey, appreciate you squeezing me in here. I wanted to ask a question on the Cash App monthly actives this quarter. I think there was a comment in the shareholder letter about some enhancements made to promote a healthier ecosystem as well as a strategic pullback in marketing spend. So maybe you could kind of elaborate on what's driving those and maybe specifically on some of the enhancements that you made. Appreciate it and thanks for taking the question.

Will Nance: Sure. Thanks, Will.

Will Nance: Sure, thanks Will.

Speaker Change: So in June, we ended the quarter with 57 million monthly actives in Cash App, which was a growth of 5% year-over-year, similar to the growth rate that we saw earlier in the year as well.

Will Nance: We see a really compelling opportunity here to drive active growth for consumers in the US with less than $150,000 in household income. That represents 80% of the US today. And so there's significant opportunity to continue to gain market share. Some of the enhancements that we called out specifically in the shareholder letter are really to drive our continued focus on promoting a healthy ecosystem. So include changes to the onboarding flow, which can, you know, among other things, give us a better understanding of our customers, enable access to more products and higher limits for those customers, and also helps create opportunities for cross-gallowing.

Amrita Ahuja: So in June, we ended the quarter with 57 million monthly active users in Cash App, which was a growth of 5% year-over-year, similar to the growth rate that we saw earlier in the year as well. We see a really compelling opportunity here to drive active growth for consumers in the US with less than $150,000 in household income. That represents 80% of the US today.

Amrita Ahuja: We see a really compelling opportunity here to drive active growth for consumers in the U.S. with less than a hundred and fifty thousand dollars in household income. That represents 80% of the U.S. today and so there's significant opportunity to continue to gain market share.

Amrita Ahuja: And so there's significant opportunity to continue to gain market share. Some of the enhancements that we called out specifically in the shareholder letter are really to drive our continued focus on promoting a healthy ecosystem. So, changes to the onboarding flow, which can, you know, among other things, give us a better understanding of our customers, enable access to more products and higher limits for those customers, and also helps create opportunities for cross-selling. We're continuing to see strong engagement as we make some of these changes.

Amrita Ahuja: Some of the enhancements that we called out specifically in the shareholder letter are really to drive our continued focus on promoting a healthy ecosystem.

Amrita Ahuja: So it includes changes to the onboarding flow, which can, you know, among other things, give us a better understanding of our customers, enable access to more products and higher limits for those customers, and also helps create opportunities for cross-selling.

Amrita Ahuja: We're continuing to see strong engagement as we make some of these changes. You know, we really have focused on driving deeper engagement across our financial services and commerce products for our customers. And you see that evidence by the strong growth of the influence per active, which grew, as I noted earlier, 10% year over year. From a marketing perspective, we've been fairly disciplined in marketing as we refined our bank-to-base strategy in the first half of the year.

Amrita Ahuja: We're continuing to see strong engagement as we make some of these changes. You know, we really have focused on driving deeper engagement across our financial services and commerce products for our customers. And you see that evidenced by the strong growth of the inflows per active, which grew, as I noted earlier, 10% year over year.

Amrita Ahuja: You know, we really have focused on driving deeper engagement across our financial services and commerce products for our customers, and you see that evidenced by the strong growth of the inflows per active user, which grew, as I noted earlier, 10% year over year. From a marketing perspective, we've been fairly disciplined in marketing as we refined our bank-to-base strategy in the first half of the year, and we're now ready and planning to ramp up spend in the back half of the year on various campaigns.

Amrita Ahuja: From a marketing perspective, we've been fairly disciplined in marketing as we refined our bank-to-base strategy in the first half of the year, and we're now ready and planning to ramp spend in the back half of the year on various campaigns.

Amrita Ahuja: We're now ready and planning to ramp spend in the back half of the year on various campaigns. And you heard about some of those earlier, as we talked about, our bank-to-base strategy are engaging our customers in our banking products and ultimately earning their paycheck. You know, as we think about the opportunity ahead, we see significant opportunity to continue to grow across our base of potential customers in the United States. We know cash-up resonates strongly with Gen Z and millennials. Those customers, those demographics make up nearly three-quarters of our active base. And we think there's plenty of room to grow because we estimate we're only 34% penetrated in the Gen Z segment and 25% penetrated in the millennial segment.

Amrita Ahuja: And you heard about some of those earlier, as we talked about our bank-to-base strategy or engaging our customers in our banking products and ultimately earning their paycheck. You know, as we think about the opportunity ahead, we see a significant opportunity to continue to grow across our base of potential customers in the United States. We know Cash App resonates strongly with Gen Z and millennials; those customers, those demographics make up nearly three quarters of our active base.

Amrita Ahuja: And you heard about some of those earlier as we talked about our bank-based strategy or engaging our customers in our banking products and ultimately earning their paycheck.

Amrita Ahuja: And we think there's plenty of room to grow because we estimate we're only 34% penetrated in the Gen Z segment and 25% penetrated in the millennial segment. So as we look at the long term, we see an opportunity to continue to grow our active potential base of customers for Cash App.

Amrita Ahuja: As we think about the opportunity ahead, we see significant opportunity to continue to grow across a base of potential customers in the United States. We know Cash App resonates strongly with Gen Z and Millennials.

Amrita Ahuja: Those customers, those demographics, make up nearly three-quarters of our active base.

Amrita Ahuja: And we think there's plenty of room to grow because we estimate we're only 34% penetrated in the Gen Z segment and 25% penetrated in the millennial segment. So as we look at the long term, we see an opportunity to continue to grow our active potential base of customers.

Amrita Ahuja: So, as we look at the long term, we see an opportunity to continue to grow our active potential base of customers for cash-ups. Appreciate it. Thank you.

Amrita Ahuja: for Cash App.

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

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

Speaker Change: Appreciate it. Thanks, guys.

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

Speaker Change: Boyfriend, do what I said