Block, Inc. · NYSE:XYZ
Block — Investor Presentation (December 2021)
44 slides from Block's investor presentation, December 2021
Slide 1: Q4 2021 Investor Presentation
Q4 2021 Investor Presentation investors.block.xyz
Slide 2: Cautionary statement
Cautionary statement This document contains forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact could be deemed forward-looking, including, but not limited to, sta
Slide 3: We are growing two significant ecosystems
We are growing two significant ecosystems 3
Slide 4: Strong growth at scale >50% six-year CAGR
Strong growth at scale Gross Profit >50% six-year CAGR Square Gross Profit Cash App Gross Profit $2,071M $1,226M $458M $195M $47M $5M $345M $564M $777M $1,072M $1,390M $1,508M $2,317M 2015 2016 2017 2018 2019 2020 2021 Caviar gross profit has been excluded for all periods. CAGR represents the compou
Slide 5: Addressing significant market opportunities…
Addressing significant market opportunities… S E L LE R S IN D IV ID UALS $ $ 100B+ 60B+ …with significant runway to grow share in each ecosystem <3% P E N E T R AT E D O F $1 0 0 B + <5% PEN ETR AT ED OF $ 6 0B + O P P O RT U N I T Y OPPORTUN I TY Penetration within each of the Square and Cash App
Slide 6: Total Addressable Market
Total Addressable Market
Slide 7: Square ecosystem represents a $85B+ opportunity in the U.S.
Square ecosystem represents a $85B+ opportunity in the U.S. ~20M BU SI NE SS ES $ 6T G RO S S R E CE IPTS $ 85B+ U.S . TAM OPPORTUN I TY Sources: 2012 U.S. Census, U.S. Bureau of Labor Statistics 7 For further information on how we calculate number of "Businesses", "Gross Receipts", and the "U.S. TA
Slide 8: Square ecosystem represents a $85B+ opportunity in the U.S.
Square ecosystem represents a $85B+ opportunity in the U.S. $8 5B+ OPPORTUNITY $ 39B T RAN SACTI ON + $ 30B S O F T WA R E + $ 12B S QUAR E LOANS + $ 5B FIN AN C IA L PR OF I T S ERVI CE S Sources: Block internal company data, 2012 U.S. Census, FDIC, Goldman Sachs—Future of Finance, Mastercard 2019-
Slide 9: …and $100B+ opportunity with multiple vectors for future growth
…and $100B+ opportunity with multiple vectors for future growth Medium-Term Long-Term > 85B $16 B TRANSACTI ON $ PROF IT IN CURRENT INTE RNATIONA L NEW MARKETS MARKE TS + + U.S. R EV EN UE OP PO RTU NI T Y TODAY NEW PRO DUCTS EXPAND FURTHER AND US E CASES UPMARKET Sources: The Nilson Report (Issue #
Slide 10: Significant opportunities in serving larger sellers
Significant opportunities in serving larger sellers SELL ER SIZ E U.S. S EL LER S U. S. G RO SS SA LE S 23K ENTERPR ISE $ 1 00M+ $ 6.2 T $2 0 M - $ 1 0 0 M 43 K $ 1.3T MI D M A R KE T A D D I T I O NA L A R EA O F $1 M - $ 20 M 879 K $ 3.0 T FOCUS B E YO N D MI CR O SMB $2 5 0 K- $ 1 M 2 .7M $ 1.2T
Slide 11: Cash App ecosystem has a large opportunity in consumer financial services
Cash App ecosystem has a large opportunity in consumer financial services: $9 trillion in addressable volume in the U.S. alone $ 4T S END I N G $ 2T S P E N D IN G $ 3T IN VEST I NG Sources: Block internal company data, U.S. Census, International Monetary Fund: “Shadow Economies Around the World: Wh
Slide 12: Cash App ecosystem represents a $60B+ revenue opportunity in the U.S.
Cash App ecosystem represents a $60B+ revenue opportunity in the U.S. $6 0B+ OPPORTUNITY $ 20B S END IN G + $ 41B S P E N D IN G + $ 2B IN VESTI NG Sources: Block internal company data, The Nilson Report (Issue #1166), Visa USA Interchange Reimbursement Fees, CoinMetrics 12 For further information o
Slide 13: With multiple vectors for future growth
With multiple vectors for future growth > 60B Medium-Term Long-Term $ NE W PR ODUCTS + AND USE CASES + NEW MARKETS CASH A PP R EV ENU E OP PO RTU NI T Y TODAY 13
Slide 14: Multiple differentiators across Square and Cash App ecosystems
• Strong aspirational brands with word-of-mouth • Remarkable products with rapid development and improvements Multiple di erentiators • Elegant design to enable self-serve experience across Square and • Integrated and scalable technology platform Cash App ecosystems • Scaled acquisition with strong
Slide 15: Square Ecosystem
Square Ecosystem
Slide 16: Square is building a unique ecosystem of products and services
Square is building a unique ecosystem of products and services As sellers and individuals use more services, their activity with Square increases, reinforcing our recurring revenue model. MANAGED PAYMENTS POS + BUSINESS TOOLS VERTICAL SPECIFIC SOFTWARE FINANCIAL SERVICES Payments Services Access to
Slide 17: Evolving mix to software, integrated payments, and financial services
Evolving mix to Square Gross Profit by Product Category software, integrated Sidecar payments Software & integrated payments Financial Services payments, and financial services 2016 2017 2018 2019 2020 2021 Square gross profit mix does not include hardware gross profit losses. We view hardware as an
Slide 18: A platform for developers to meet sellers' needs
A platform for developers to meet sellers’ needs E-COM M ER CE THIRD-PARTY APPS IN-HOU SE Integrate Square on websites, Integrate Square with third-party Integrate Square into a seller’s enabling sellers to manage o line and apps and back-o ice solutions that specialized POS to accept payments and o
Slide 19: Scalable go-to-market strategy…
Scalable go-to-market strategy… RETAIL BRAND MARKETING SAL ES PARTNERS RETENTION DISTRIBUTIO N We lead with a strong We focus on direct and Our direct sales and Square hardware products We work with third- We take a systematic brand. Our high NPS of scalable marketing account management are availabl
Slide 20: Why Square wins: Unique assets, difficult to copy, and at scale
Why Square wins: Unique assets, di icult to copy, and at scale F OCU S ON TEC H NO LOGY A N D DE SIGN Integrated, end-to-end: hardware, software, payments, and data B RE A DT H O F M AN AGED PAYME NTS Comprehensive, full-service o ering that helps sellers manage the entire payment life cycle D I FF
Slide 21: Profit exceeded initial sales and marketing in four quarters
Profit exceeded initial sales and marketing in four quarters Q1 2015 Cohort Sales and Marketing Expense Cumulative Cohort Gross Profit $33M $ 33M I N CUMU LAT I VE G R OSS P RO FIT IN F OUR QUART E RS ($32M) Q1 Q2 Q3 Q4 Q1 2015 2016 Sales and marketing shown above represents “Square Go-to-Market Spe
Slide 22: ...and continued to grow thereafter
...and continued to grow thereafter Q1 2015 Cohort Sales and Marketing Expense Cumulative Cohort Gross Profit $172M $ 172M I N CUM UL ATI VE G R OSS P R OF IT IN FI VE Y EA R S ($32M) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2015 2016 2017 2018 2019 Sales and marketing shown above
Slide 23: Efficient paybacks and positive retention have driven strong customer lifetime value
E icient paybacks 6x and positive 5x retention have driven strong 4x customer lifetime value and return on ROI 3x investment 2x 1x 0x 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Quarters after joining Each line represents a quarterly cohort from the first quarter of 2012 to the third quarter of 2021. 23
Slide 24: Maintained payback period even as we have grown larger sellers
Maintained payback period even as we have grown larger sellers Square Go-to-Market Spend Growing GPV from Larger Sellers Payback period $125K–$500K Annualized GPV >$500K Annualized GPV 5 4 3 Quarters 2 1 $122M $122M $265M $588M Q4 Q4 Q4 Q4 Q4 Q4 Q4 2015 2016 2017 2018 2019 2020 2021 2015 2016 2017 2
Slide 25: Strong gross profit retention has led to recurring revenue streams
Strong gross profit Gross Profit by Cohort retention has led to 2021 Cohort recurring revenue 2020 streams Positive gross profit retention for every cohort from 2012 to 2021 2019 2018 Pre-2018 Cohort 2018 2019 2020 2021 Gross profit retention rate is calculated as the year-over-year gross profit gro
Slide 26: We have seen meaningful product adoption from our sellers
We have seen Gross Profit Mix by Number of Products Used meaningful product Sidecar payments Software & integrated payments Financial Services adoption from our sellers 4+ Products In 2021, 38% of Square gross profit came from sellers using 4+ 3 Products products, compared to 10% five years ago 2 Pr
Slide 27: Cash App Ecosystem
Cash App Ecosystem
Slide 28: Why Cash App wins: differentiated platform to send, spend, store and invest
Why Cash App wins: di erentiated platform allow customers to easily send, spend, store and now invest money STR ONG NE T WO RK E FFE CTS More than 44 million monthly transacting actives in December E NGAGE M ENT More than 13 million monthly Cash Card actives in December, representing 31% of our mont
Slide 29: Cash App Revenue Model
Cash App Revenue Model CASH AP P REVEN U E ACTI V E C USTOME RS ( #) R EV EN UE PER CUSTOMER ($) P R OD UCT ACQUI SI TIO N R ET E N T I O N W IN BAC K EN GAG EM E NT M ON ET IZAT ION AD OPT ION 29
Slide 30: We have driven growth across a diversity of services and revenue streams
We have driven Gross Profit by Category Sending Spending Investing growth across a diversity of services and revenue streams 2015 2016 2017 2018 2019 2020 2021 Sending equals gross profit from Instant Deposit, Cash for Business, and P2P transactions funded with a credit card. Spending equals gross p
Slide 31: Our network of monthly transacting actives has increased 3x
Our network of Monthly Transacting Actives monthly transacting 36M 44M actives has increased 3x over 36M the past three years 24M 15M 7M 1M 3M DEC 2015 DEC 2016 DEC 2017 DEC 2018 DEC 2019 DEC 2020 DEC 2021 A transacting active is a Cash App account that has at least one financial transaction using a
Slide 32: Profit exceeded acquisition spend in less than 12 months
Profit exceeded acquisition spend in less than 12 months June 2017 Cohort Acquisition spend Cumulative Cohort Variable Profit $1.6M $ 1.6M I N CUM UL ATI VE C OH ORT VAR IABL E PR OFI T AFTE R TW ELVE MON TH S ($1.4M) JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN 2017 2018 June 2017 acquisitio
Slide 33: …and continued to grow thereafter
…and continued to grow thereafter June 2017 Cohort Acquisition spend Cumulative Cohort Variable Profit $7.7M $ 7.7M I N CU MU L ATI VE COH ORT VAR IABLE PR OF I T AF TE R 2 .5 YEAR S ($1.4M) JUN AUG OCT DEC FEB APR JUN AUG OCT DEC FEB APR JUN AUG OCT DEC FEB 2017 2018 2019 2020 June 2017 acquisition
Slide 34: Efficient paybacks and positive retention have driven strong customer lifetime value
E icient paybacks 15x 2017 2018 2019 2020 2021 and positive retention have driven strong 10x customer lifetime value and return on ROI v investment 5x 0x 0 6 12 18 24 30 Months after joining Z Return on investment, or payback, is calculated by taking a given Cash App monthly cohort’s cumulative vari
Slide 35: Strong gross profit retention has led to recurring revenue streams
Strong gross profit Gross Profit by Cohort retention has led to recurring revenue 2021 Cohort streams 2020 2019 >125% gross profit retention for each annual cohort over the past four years 2018 Pre-2018 Cohort 2018 2019 2020 2021 Cash App annual gross profit retention is calculated as the year-over-
Slide 36: Graduating customers to Cash Card can drive meaningful uplift in revenue
Graduating Cohort Revenue Mix Before and After Cash Card January 2019 Cohort customers to Cash Cash Card, Bitcoin, & Other Revenue Instant Deposit Card can drive meaningful uplift in revenue Before adopting Cash Card (6 mos.) After adopting Cash Card (6 mos.) Cohort revenue mix is based on the cohor
Slide 37: Engagement with additional products has driven higher customer lifetime value
Engagement with additional products has driven higher customer lifetime value DIRECT D EPOSI T CAS H CARD PEER-TO- PEER STOCKS BO OST BITCOIN 37
Slide 38: investors.block.xyz
investors.block.xyz
Slide 39: Appendix
Appendix Footnotes
Slide 40: Broad portfolio of Square products with multiple monetization levers
Broad portfolio of Square products with multiple monetization levers Transaction-based Subscription and services Hardware S I DECAR PAYM E NTS POS App with payments usage only Invoices, Virtual Terminal, Developer, APIs/SDKs, Third Party Apps S OFTWA RE AND I NTE GRAT ED Square for Retail, Restauran
Slide 41: Broad portfolio of Cash App products with multiple monetization levers
Broad portfolio of Cash App products with multiple monetization levers Engagement Drivers Revenue Stream Transaction-based Subscription and services Bitcoin Peer-to-Peer Instant Deposit S EN DING M ONEY (fiat, bitcoin, stocks) Cash for Business Credit Card funding Boost (rewards) Cash Card interchan
Slide 42: Definitions
Definitions Slide 7: “Businesses” in the US is based on employer and non-employer firms with less than $100 million in annual gross receipts in select industry verticals based on 2012 U.S. Census data. “Businesses" also assumes a 3% share for Square of the estimated number of informal economy busine
Slide 43: Definitions
Definitions Slide 11: “Sending” volume opportunity is the sum of estimated P2P and micro-merchants volume opportunities. “P2P volume opportunity” is calculated based on U.S. Census data on adult population as of 2018 multiplied by estimated monthly P2P volumes per individual, which is the sum of Cas
Slide 44: Discussion of financial results excluding Caviar
Discussion of financial results excluding Caviar Three Months Ended Mar 31, Jun 30, Sep 30, Dec 31, Mar 31, Jun 30, Sep 30, Dec 31, 2018 2018 2018 2018 2019 2019 2019 2019 TOTAL NET REVENUE $668,603 $814,938 $882,108 $932,528 $959,359 $1,174,238 $1,266,474 $1,313,429 LESS: CAVIAR CONTRIBUTION TO TOT