Slide 1: Q4 2022 Investor Presentation
Q4 2022 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: We've grown our ecosystems and expanded the audiences we serve
BLOCK 3 Tap to Pay on iPhone Shifts Tableside Ordering Square Messages We’ve grown our Ireland Subscriptions API France ecosystems and expanded Spain BNPL as payment method the audiences we serve Square for Restaurants Reader SDK Square Installments Square for Restaurants Reader SDK Square Installme
Slide 4: Strong growth at scale
BLOCK 4 Strong growth at scale Gross Profit >45% CAGR over the past five years The amounts above exclude gross profit from Caviar, which was sold in 2019. Compound annual growth rate (CAGR) represents the compound annual gross profit growth rate from 2017 to 2022. Please see Appendix for non-GAAP and ot
Slide 5: Market Opportunity
BLOCK MARKET OPPORTUNITY → Market Opportunity
Slide 6: We have expanded our addressable market over time and are less than 5% penetrated
BLOCK MARKET OPPORTUNITY → 6 We have expanded our addressable $125B market over time and are less than 5% 2022 penetrated today 2020 $100B 2022 $75B 2020 $60B 2017 $60B 2017 2015 2015 2010 Cash App Square Please see Appendix and slides 7 to 14 for a description of how we calculate our market opportu
Slide 7: Square represents a ~$125B gross profit opportunity
BLOCK MARKET OPPORTUNITY → 7 SQUARE Square represents a ~$125B gross profit opportunity $ 86 B+ $ 16 B+ $ 25 B+ U.S. Commerce U.S. Banking International $ 125 + B Opportunity Integrated Payments Square Loans Integrated Payments Software Financial Services Software Financial Services Sources: Square i
Slide 8: With SMB and mid-market sellers representing an attractive target opportunity
BLOCK MARKET OPPORTUNITY → 8 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 $9.1T $20M – $100M 51K $1.9T Mid-Market $1M – $20M 1.0M $4.0T SMB $250K – $1M 2.9M $1.4T Micro <$250K
Slide 9: Less than 1% penetrated in the mid-market segment today
BLOCK MARKET OPPORTUNITY → 9 SQUARE Less than 1% penetrated in the mid-market segment today 2022 gross receipts as % of addressable opportunity 0.5% 12% 4% Micro SMB Mid-Market Sources: Square internal company data, 2017 U.S. Census, U.S. Bureau of Labor Statistics. Seller sizes from the U.S. Census
Slide 10: Multiple strategies to expand addressable market
BLOCK MARKET OPPORTUNITY → 10 SQUARE Multiple strategies to expand Global expansion addressable market Financial services Growing upmarket Enhancing omnichannel capabilities $ 125 B+ Circles are illustrative of opportunities to expand addressable market, but are not proportional or to scale.
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 + $ 43 + $ 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 37% 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) 26% 19% 12% 4% Gen Z Millennials Gen X Baby Boomers Represents Cash App monthly actives as of December 31, 2022 as a percentage of the U.S.
Slide 14: Multiple strategies to expand our addressable market
BLOCK MARKET OPPORTUNITY → 14 CASH APP Multiple strategies to expand our Global addressable market Bitcoin Credit Commerce Engagement $ 75 B+ Circles are illustrative of opportunities to expand addressable market, but are not proportional or to scale.
Slide 15: Investing in emerging ecosystems with meaningful long-term potential
BLOCK MARKET OPPORTUNITY → 15 TIDAL BITCOIN Investing in emerging ecosystems with meaningful long-term potential Creators Consumers Bitcoin Developers Bitcoin Bitcoin TIDAL TBD Spiral Wallet Mining
Slide 16: Square Ecosystem
BLOCK SQUARE ECOSYSTEM → Square Ecosystem
Slide 17: The Square solution
BLOCK SQUARE ECOSYSTEM → 17 SQUARE Staff Crew Timecards Payroll Team Mgmt Customers The Square solution A cohesive ecosystem Next Insurance WhenIWork Schedulicity TipJar Guideline Simply Insured On-Demand Delivery Seller-Powered Delivery of integrated software, hardware, and financial 7Shifts Homebas
Slide 18: Multi year transformation: Gross profit by product area
BLOCK SQUARE ECOSYSTEM → 18 SQUARE % of Total Product Square Area YoY Multi year transformation Gross Profit Growth Gross profit by product area 20% 43% 75 57% 18% % ~ 23% 4% of gross profit in 2022 generated from software & integrated payments and banking Excludes contributions from our BNPL platform
Slide 19: Gross profit mix by ecosystem adoption
BLOCK SQUARE ECOSYSTEM → 19 SQUARE Multi year transformation Gross profit mix by ecosystem adoption (# of monetized products that a seller uses) 40 > % of gross profit from sellers that use 4 or more monetized products Includes only monetized products and excludes hardware devices. Bundle products tre
Slide 20: Square sellers represent a diverse range of industries
BLOCK SQUARE ECOSYSTEM → 20 SQUARE Square sellers represent a diverse range of industries % of Square Gross Payment Volume (GPV) by industry in 2022
Slide 21: Efficient paybacks and positive retention have driven strong customer lifetime value
BLOCK SQUARE ECOSYSTEM → 21 SQUARE Efficient paybacks and positive retention have driven strong customer lifetime value and return on investment ≥ 3 X Square cohorts onboarded prior to 2021 have achieved or are pacing towards an estimated return on investment of 3x or greater over four years For defin
Slide 22: Positive dollar-based retention has led to recurring revenue streams
BLOCK SQUARE ECOSYSTEM → 22 SQUARE Positive dollar-based retention has led to recurring revenue streams Gross Profit by Cohort Positive gross profit retention for each annual cohort from 2012 to 2022 For definition of Square “gross profit retention” please see Appendix. As of December 31, 2022, each of
Slide 23: Product adoption can enhance cohort economics
BLOCK SQUARE ECOSYSTEM → 23 SQUARE Product adoption can enhance cohort Estimated annual gross profit based on an actual Square seller economics Gross profit could increase by an estimated 3.5x as a seller adopts more products and expands into new channels Seller example: Gross profit opportunity for an
Slide 24: Growing omnichannel
BLOCK SQUARE ECOSYSTEM → 24 SQUARE Growing omnichannel Gross profit from omnichannel sellers 45 > % omnichannel seller gross profit CAGR over the past five years Omnichannel seller is defined as a seller who has taken both an in-person payment and an online channel payment in a given quarter. Annual val
Slide 25: Global expansion
BLOCK SQUARE ECOSYSTEM → 25 SQUARE Global expansion Gross profit from international markets 60 > % international gross profit CAGR over the past five years Excludes contributions from our BNPL platform and hardware gross profit losses. We view hardware as an acquisition tool and not a profit center for o
Slide 26: Upmarket progress
BLOCK SQUARE ECOSYSTEM → 26 SQUARE Upmarket progress Gross profit from larger sellers 45 > % >$500K seller gross profit CAGR over the past five years Seller size defined as annualized GPV based on the last quarter of the applicable year. Gross profit excludes contributions from our BNPL platform and hard
Slide 27: Cash App Ecosystem
BLOCK CASH APP ECOSYSTEM → Cash App Ecosystem
Slide 28: Our services work together cohesively to build the Cash App ecosystem
BLOCK CASH APP ECOSYSTEM → 28 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 29: We instrument and operate Cash App's business through our inflows framework
BLOCK CASH APP ECOSYSTEM → 29 CASH APP We instrument and operate Cash App’s business through our inflows framework Actives: 51 million x Gross profit: Inflows per active: $1,048 = $750 million x Monetization rate: 1.39% Excludes contributions from our BNPL platform. Actives reflects monthly actives in D
Slide 30: We have driven growth across a diversity of services and revenue streams
BLOCK CASH APP ECOSYSTEM → 30 % of Total Product CASH APP Cash App Area YoY Gross Profit Growth We have driven growth 7% (9)% across a diversity of services and revenue streams Gross profit by product area 38% 71% 13% 12% 41% 14% Excludes contributions from our BNPL platform. Crypto equals gross profit
Slide 31: We have driven greater weekly and daily engagement
BLOCK CASH APP ECOSYSTEM → 31 CASH APP We have driven greater weekly and daily engagement ~ 51 M monthly actives in December 2022 ~ 33 M weekly actives on average in December 2022 (~2 in 3 monthly actives) ~ 13 M daily actives on average in December 2022 (~1 in 4 monthly actives) For definition of Ca
Slide 32: Total inflows have increased 20x since 2017
BLOCK CASH APP ECOSYSTEM → 32 CASH APP Total inflows have increased 20x since 2017 Excludes contributions from our BNPL platform.
Slide 33: With a number of levers to grow and monetize inflows
BLOCK CASH APP ECOSYSTEM → 33 CASH APP With a number of levers to grow and monetize inflows Inflows framework drivers of gross profit growth over time For definition of Cash App “active” please see Appendix. Excludes contributions form our BNPL platform. Monetization rate on inflows represents gross profi
Slide 34: Product adoption has driven greater inflows and monetization
BLOCK CASH APP ECOSYSTEM → 34 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 2022 and total inflows for Q4 2022, except for Cash App Taxes actives
Slide 35: Consumers have found broad-based utility with Cash App Card
BLOCK CASH APP ECOSYSTEM → 35 CASH APP Consumers have found broad-based utility with Cash App Card through everyday purchases Cash App Card spend at top 250 merchants in 2022 Gas & Auto includes convenience store spending at relevant gas stations.
Slide 36: Acquisition cost of $10 or less on average is a fraction of industry benchmarks
BLOCK CASH APP ECOSYSTEM → 36 CASH APP Acquisition cost of $10 or less on average is a fraction of industry benchmarks Cash App’s average $300 - $600 acquisition cost vs. industry $30 - $50 $10 Source: Internal Cash App data, Unifimoney article: “A No CAC Bank?”, and competitor transcripts. Reflects C
Slide 37: Cash App sales and marketing includes acquisition spend and non-discretionary expenses
BLOCK CASH APP ECOSYSTEM → 37 CASH APP Cash App sales and marketing includes acquisition spend Cash App sales and and various non-discretionary marketing expense (2022) expenses 22% Acquisition spend we use to calculate our cost of acquisition of $10 or less on average 69% P2P expenses we deduct fro
Slide 38: Efficient paybacks and positive retention have driven strong customer lifetime value
BLOCK CASH APP ECOSYSTEM → 38 CASH APP Efficient paybacks and positive retention have driven strong customer lifetime value and return on investment ≥ 6 X Cash App cohorts onboarded prior to 2021 have achieved a return on investment of 6x or greater over three years For definition of Cash App “return
Slide 39: Strong gross profit retention has led to recurring revenue streams
BLOCK CASH APP ECOSYSTEM → 39 CASH APP Strong gross profit retention has led to recurring revenue streams Gross Profit by Cohort Positive gross profit retention for each annual cohort from 2017 to 2022 For definition of Cash App “gross profit retention” please see Appendix. Each of our annual Cash App co
Slide 40: Product adoption can enhance cohort economics
BLOCK CASH APP ECOSYSTEM → 40 CASH APP Product adoption can enhance Annual gross profit for an ideal Cash App active cohort economics Annual gross profit for an active could increase by >10x as an active adopts more products and expands share of wallet Illustrative Cash App active example: Gross profit
Slide 41: Investing in seven key development pillars
BLOCK CASH APP ECOSYSTEM → 41 CASH APP Investing in seven key development pillars → Community → Financial Services → Crypto → Operating System → Trust → Commerce → Global
Slide 42: Afterpay: Connecting the Square and Cash App Ecosystems
BLOCK AFTERPAY → Afterpay: Connecting the Square and Cash App Ecosystems
Slide 43: Afterpay is a connection between Block's ecosystem of ecosystems
BLOCK AFTERPAY → 43 AFTERPAY Afterpay is a connection between Block’s ecosystem of ecosystems >240k Afterpay active sellers >4M AfterPay Building Stronger >80M Incremental sales connections Square and growth through commerce engagement Cash App active sellers and payments and frequency annual active
Slide 44: Our integration priorities
BLOCK AFTERPAY → 44 AFTERPAY Our integration priorities Live in Market Medium-Term Underway Longer-Term → Afterpay and Square → Expose Square sellers to → Expand Square’s enterprise integration for online Cash App annual actives and presence, cross-sell commerce and in-person transactions Afterpay a
Slide 45: We focus on driving healthy consumer behavior and repeat engagement
BLOCK AFTERPAY → 45 AFTERPAY We focus on driving healthy consumer behavior and repeat engagement 1% > 90 % 95 % 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 46: Appendix
BLOCK Appendix
Slide 47: Our investment framework
BLOCK 47 Our investment framework Block and each ecosystem must show a believable path to Gross Profit Retention of over 100% and Rule of 40 on Adjusted Operating Income over the long-term 100 40 % % > Gross Profit Gross Profit Growth + Adjusted Operating Retention Income Margin (% of Gross Profit) Adju
Slide 48: Our ecosystems become more powerful as we build connections between them
BLOCK 48 Our ecosystems become more powerful as we build connections between them
Slide 49: Appendix
BLOCK 49 Appendix Slide 7 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 50: Appendix
BLOCK 50 Appendix Slide 21 Slide 31 Slide 38 Square “Return on investment (ROI)” measures the “Transacting active” or “active” is a Cash App account that Cash App “cohort” represents the new actives onboarded to effectiveness of sales and marketing spend. ROI is calculated has at least one financial
Slide 51: Appendix
BLOCK 51 Appendix Slide 43 Slide 44 Slide 45 “Square active sellers” are defined as processing more than “Lead generation” is a referral for an Afterpay seller, such as a “Risk loss” or Losses on Consumer Receivables for Afterpay 5 payments over the last four quarters. search, click, or purchase with
Slide 52: Reconciliations
BLOCK 52 Reconciliations Discussion of financial results excluding Caviar (in thousands) ($ in thousands) 2015 2016 2017 2018 2019 2020 2021 2022 Total gross profit 345,195 576,038 839,306 1,303,700 1,889,685 2,733,409 4,419,823 5,991,892 Less: Caviar contribution to total gross profit (462) 6,967 15,5
Slide 53: Reconciliations
BLOCK 53 Reconciliations Discussion of Square financial results excluding hardware, Starbucks, and our BNPL Platform (in thousands) ($ in thousands) 2015 2016 2017 2018 2019 2020 2021 2022 Square gross profit 345,283 564,022 776,633 1,072,496 1,390,427 1,507,831 2,316,671 3,000,978 Less: Hardware cont
Slide 54: Reconciliations
BLOCK 54 Reconciliations Discussion of Square financial results excluding our BNPL Platform (in thousands) ($ in thousands) 2015 2016 2017 2018 2019 2020 2021 2022 Square gross profit 345,283 564,022 776,633 1,072,496 1,390,427 1,507,831 2,316,671 3,000,978 Less: BNPL Platform contribution to Square g
Slide 55: Reconciliations
BLOCK 55 Reconciliations Discussion of Cash App financial results excluding our BNPL Platform (in thousands) ($ in thousands) 2017 2018 2019 2020 2021 2022 Cash App gross profit 47,096 194,835 457,668 1,225,578 2,070,847 2,950,967 Less: BNPL Platform contribution to Cash App gross profit 294,076 Cash A