Slide 1: Q4 2023 Investor Presentation
Q4 2023 Investor Presentation investors.block.xyz
Slide 2: Forward-looking statements
BLOCK 2 Forward-looking statements This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements can be identified by words such as “anti
Slide 3: Growth at scale
BLOCK 3 Growth at scale Strong year-over-year gross profit growth and >40% 5-year CAGR 2018 and 2019 performance excludes gross profit from Caviar, which was sold in 2019. Please see Appendix for non-GAAP reconciliations. Corporate & Other includes emerging initiatives and intersegment eliminations. I
Slide 4: Focus on improving profitability
BLOCK 4 Focus on improving profitability Operating Income (Loss) Net Income (Loss)* *attribute to common stockholders Margins above are all calculated as a percent of gross profit. In 2023, Other income, net included a remeasurement gain on our bitcoin investment of $207 million upon adoption of the n
Slide 5: Focus on improving profitability
BLOCK 5 Focus on improving profitability Adjusted Operating Adjusted EBITDA Income (Loss) Margins above are all calculated as a percent of gross profit. Reconciliations of non-GAAP financial measures used in this letter to their nearest GAAP equivalents are provided at the end of this presentation.
Slide 6: Market Opportunity
BLOCK MARKET OPPORTUNITY → Market Opportunity
Slide 7: We have expanded our addressable market over time and are less than 5% penetrated
BLOCK MARKET OPPORTUNITY → 7 We have expanded our addressable $130B market over time and are less than 5% 2023 penetrated today 2020 $100B 2023 $75B 2020 $60B 2017 $60B 2017 2015 2015 2010 Cash App Square Please see Appendix and slides 8 through 11 for a description of how we calculate our market op
Slide 8: Square represents a ~$130B gross profit opportunity
BLOCK MARKET OPPORTUNITY → 8 SQUARE Square represents a ~$130B gross profit opportunity $ 89 B+ $ 17 B+ $ 25 B+ 130 $ + U.S. Commerce U.S. Banking International B Integrated Payments Square Loans Opportunity Integrated Payments Software Financial Services Software Financial Services Sources: Square i
Slide 9: With SMB and mid-market sellers representing an attractive target opportunity
BLOCK MARKET OPPORTUNITY → 9 SQUARE With SMB and mid-market sellers representing an attractive target opportunity Seller Size U.S. Sellers U.S. Gross Receipts (Gross Receipts) Enterprise $100M+ 25K $9.2T $20M – $100M 51K $12.0T Mid-Market $1M – $20M 1.0M $4.0T SMB $250K – $1M 2.9M $1.4T Micro <$250K
Slide 10: Less than 1% penetrated in the mid-market segment today
BLOCK MARKET OPPORTUNITY → 10 SQUARE Less than 1% penetrated in the mid-market segment today 2023 gross receipts as % of addressable opportunity 0.5% 13% 5% Micro SMB Mid-Market Sources: Square internal company data from 2022, adjusted for inflation through 2023, 2017 U.S. Census, U.S. Bureau of Labo
Slide 11: Cash App represents a ~$75B gross profit opportunity in the U.S.
BLOCK MARKET OPPORTUNITY → 11 CASH APP Cash App represents a ~$75B gross profit opportunity in the U.S. $ 29 + $ 45 + $ 3 + 75 + B B B $ Community (P2P) Financial Services Bitcoin B (Consumer Trading) Opportunity Business accounts Cash App Card Instant Deposit Buying and selling bitcoin Sources: Cash
Slide 12: Opportunity to expand on strong growth with digital natives
BLOCK MARKET OPPORTUNITY → 12 CASH APP Opportunity to expand ~260M Potential Customers on strong growth with digital natives U.S. Age Mean Cash App Cash App Population Income % of Monthly Actives % of Inflows Generation Z ~56M 13 – 25 $39K 38% 28% Millennials ~72M 26 – 41 $85K 35% 42% Generation X ~6
Slide 13: Reaching less than 20% of the U.S. population today
BLOCK MARKET OPPORTUNITY → 13 CASH APP Reaching less than 20% of the U.S. population today Cash App monthly actives with demographic data (% of U.S. population) 34% 25% 15% 6% Gen Z Millennials Gen X Baby Boomers Represents Cash App monthly actives as of December 31, 2023 as a percentage of the U.S.
Slide 14: Square Ecosystem
BLOCK SQUARE ECOSYSTEM → Square Ecosystem
Slide 15: The Square solution
BLOCK SQUARE ECOSYSTEM The Square Gam solution A cohesive ecosystem of integrated software, hardware, and financial services @ Square Capability First-Party Offering Third-Party Partner Commerce Kitchen Display System (Instagram } WooCommerce (insurance checker \ “Guideine ) ( Feed . 7shifts ) ( a c
Slide 16: Multi year transformation: Gross profit by product area
BLOCK SQUARE ECOSYSTEM → 16 SQUARE % of Total Product Square Area YoY Multi year transformation Gross Profit Growth Gross profit by product area 20% 30% 60 % 17% ~ of gross profit in Q4 2023 2% generated from software & integrated payments and banking Hardware gross profit losses are not presented for a
Slide 17: Multi year transformation: Gross profit mix by ecosystem adoption
BLOCK SQUARE ECOSYSTEM → 17 SQUARE Multi year transformation Gross profit mix by ecosystem adoption (# of monetized products that a seller uses) > 50 % of gross profit from sellers that use 4 or more monetized products Includes only monetized products and excludes hardware devices. Bundle products tre
Slide 18: Square sellers represent a diverse range of industries
BLOCK SQUARE ECOSYSTEM → 18 SQUARE Square sellers represent a diverse range of industries % of Square Gross Payment Volume (GPV) by industry in 2023
Slide 19: Positive dollar-based retention has led to recurring revenue streams
BLOCK SQUARE ECOSYSTEM → 19 SQUARE Positive dollar-based retention has led to recurring revenue streams Gross Profit by Cohort In 2023, Square cohorts in aggregate achieved positive gross profit retention when compared to 2022, driven by strength from our software and banking products For definition of
Slide 20: Global expansion
BLOCK SQUARE ECOSYSTEM → 20 SQUARE Global expansion Gross profit from international markets increasing as a % of overall Square gross profit 46 % 4 - year CAGR
Slide 21: Upmarket progress
BLOCK SQUARE ECOSYSTEM → 21 SQUARE Upmarket progress Gross profit by seller size 40 % Gross profit from mid-market sellers in Q4 2023 We determine seller size based on annualized GPV during the applicable quarter. A mid-market seller generates more than $500,000 in annualized GPV.
Slide 22: Cash App Ecosystem
BLOCK CASH APP ECOSYSTEM → Cash App Ecosystem
Slide 23: Our services work together cohesively to build the Cash App ecosystem
BLOCK CASH APP ECOSYSTEM → 23 CASH APP Inflows Our services work together cohesively to build the Cash Paper Checks Direct Deposit Cash-In Taxes App ecosystem Paper Money P2P Deposit BTC Balance Outflows Instant Deposit ATM BTC P2P Cash App Card Stocks Revenue streams
Slide 24: We instrument and operate Cash App's business through our inflows framework
BLOCK CASH APP ECOSYSTEM → 24 CASH APP We instrument and operate Cash App’s business through our inflows framework Actives: 56 million x Q4 2023 gross profit Inflows per active: $1,137 = ex-BNPL: x $942 million Monetization rate: 1.48% Actives, inflows per active and monetization rate do not include con
Slide 25: Growth across a diversity of services and revenue streams
BLOCK CASH APP ECOSYSTEM → 25 CASH APP % of Total Product We have driven growth Cash App Gross Profit Area YoY Growth 7% across a diversity of services and revenue streams 17% 28% Gross profit by product area 38% 7% 60% 38% 59% 13% 8% 8% 41% 29% 15% As presented here, Bitcoin equals gross profit from b
Slide 26: We have driven greater weekly and daily engagement
BLOCK CASH APP ECOSYSTEM → 26 CASH APP We have driven greater weekly and daily engagement ~ 56 M monthly actives in December 2023 ~ 37 M weekly actives on average in December 2023 (~2 in 3 monthly actives) ~ 15 M daily actives on average in December 2023 (~1 in 4 monthly actives) For definition of Ca
Slide 27: Total inflows have increased 22% year-over-year
BLOCK CASH APP ECOSYSTEM → 27 CASH APP Total inflows have increased 22% year-over-year
Slide 28: Product adoption has driven greater inflows and monetization
BLOCK CASH APP ECOSYSTEM → 28 CASH APP Product adoption has driven greater inflows and monetization Inflows multiplier by product actives For definition of Cash App “active” please see Appendix. Represents monthly actives in December 2023 and total inflows for Q4 2023, except for Cash App Taxes actives
Slide 29: Broad-based utility with Cash App Card through everyday purchases
BLOCK CASH APP ECOSYSTEM → 29 CASH APP Consumers have found broad-based utility with Cash App Card through everyday purchases Cash App Card spend at top 250 merchants in 2023 Gas & Auto includes convenience store spending at relevant gas stations.
Slide 30: Strong gross profit retention has led to recurring revenue streams
BLOCK CASH APP ECOSYSTEM → 30 CASH APP Strong gross profit retention has led to recurring revenue streams Gross Profit by Cohort Our Cash App ecosystem has achieved positive annual gross profit retention in aggregate and for each annual cohort For definition of Cash App “gross profit retention” please se
Slide 31: Cash App Card monthly actives have grown as a % of overall actives
BLOCK CASH APP ECOSYSTEM → 31 CASH APP Cash App Card monthly actives 23M have grown as a % of overall Cash App actives over time 19M 14M 41% 38% 31%
Slide 32: Actives Scale Across Cash App Product Areas
BLOCK CASH APP ECOSYSTEM → 32 Actives Scale Across Cash App Product Areas 2M 3M 3M Cash App Borrow 23M Cash App Card Monthly Paycheck Deposit Cash App Pay Monthly Monthly Actives Actives Monthly Actives Actives Data as of December 2023. Please see Appendix for a definition of Cash App actives.
Slide 33: We focus on driving healthy consumer behavior and repeat engagement
BLOCK AFTERPAY → 33 AFTERPAY We focus on driving healthy consumer behavior and repeat engagement 1% > 95 % 96 % 98 % risk loss on Afterpay of Afterpay GMV comes of all installments of all purchases consumer receivables from returning customers were paid on time incurred no late fees Data for the qua
Slide 34: Growing global consumer and seller base
BLOCK AFTERPAY → 34 AFTERPAY Growing global consumer and seller base 24M +7 % YoY 348K +41 % YoY Afterpay active consumers Afterpay active sellers “Afterpay active consumers” and “Afterpay active sellers” are as of December 31, 2023. Please see Appendix for more detailed definitions of each.
Slide 35: Appendix
BLOCK Appendix
Slide 36: 2024 Full Year Guidance
BLOCK 36 2024 Full Year Guidance Our primary objective in 2024 is to deliver an improvement from the Rule of 29 we achieved in 2023, on a combined company basis. To achieve this, we have put forward an initial guidance that we intend to exceed, by at least one point of outperformance during the year
Slide 37: Q1 2024 Guidance
BLOCK 37 Q1 2024 Guidance In the first quarter of 2024, we expect to deliver $2.00 billion to $2.02 billion of gross profit and $225 million to $245 million of Adjusted Operating Income Q1 2024 Gross profit $2.00 billion to $2.02 billion YoY growth (midpoint) 17% Adjusted EBITDA $570M to $590M % Margin
Slide 38: Appendix: market opportunity definitions
BLOCK 38 Appendix Slide 8 Slide 11 “U.S. Commerce” gross profit opportunity is a combination of U.S. Payments, U.S. ACH, “Community (P2P)” gross profit opportunity is calculated based on the approximate gross and SaaS opportunities. U.S. Payments opportunity is calculated by aggregating the gross profi
Slide 39: Appendix: definitions
BLOCK 39 Appendix Slide 19 Slide 24 Slide 25 Square “gross profit retention” is calculated as the “Transacting active” or “active” is a Cash App account that Cash App “cohort” represents the new actives onboarded to year-over-year gross profit growth of all existing quarterly has at least one financial
Slide 40: Appendix: Afterpay definitions
BLOCK 40 Appendix Slide 34 “Afterpay active sellers” are defined as having processed at least one transaction in the last 12 months and is measured on a per channel basis. “Afterpay active consumers” are defined as having transacted at least once in the last 12 months.
Slide 41: Reconciliations (unaudited): Adjusted EBITDA
BLOCK 41 Reconciliations (unaudited) Adjusted EBITDA (in thousands)
Slide 42: Reconciliations (unaudited): Adjusted Operating Income
BLOCK 42 Reconciliations (unaudited) Adjusted Operating Income (in thousands)
Slide 43: Reconciliations (unaudited): Square Gross Profit Ex-PPP
BLOCK 43 Reconciliations (unaudited) Square Gross Profit Ex-PPP (in thousands)
Slide 44: Reconciliations (unaudited): Square International Gross Profit
BLOCK 44 Reconciliations (unaudited) Square International Gross Profit (in thousands)
Slide 45: Reconciliations (unaudited): Square Banking Gross Profit ex-PPP
BLOCK 45 Reconciliations (unaudited) Square Gross Profit from Banking ex-PPP (in thousands)
Slide 46: Reconciliations (unaudited): Key Metric Margins
BLOCK 46 Reconciliations (unaudited) Key Metric Margins (in thousands)
Slide 47: Reconciliations: Square gross profit excluding hardware
BLOCK 47 Reconciliations Square gross profit excluding hardware (in thousands) ($ in thousands) 2019 2020 2021 2022 2023 Square gross profit 1,390,427 1,507,831 2,316,671 2,706,901 3,128,654 Less: Hardware contribution to Square gross profit (51,880) (52,688) (75,506) (122,577) (110,472) Square gross p