Slide 1: Investor Update
DATA T HR O UGH 20 19 YE AR EN D Investor Update Market Opportunity and Historical Unit Economics
Slide 2: Cautionary statement
Cautionary statement This document 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, which statements involve substantial risks and uncertainties. All statements other t
Slide 3: We are growing two significant ecosystems
We are growing two significant ecosystems Seller Cash App SQUARE FOR RESTAURANTS DEVELOPER SQUARE BITCOIN CASH PLATFORM (API) FOR RETAIL CARD VIRTUAL CUSTOMER TERMINAL ENGAGEMENT MANAGED POINT P2P PAYMENTS OF SALE SQUARE PAYROLL DIRECT DEPOSIT BOOST CARD E-COMMERCE INVOICES CAPITAL APPOINTMENTS STOC
Slide 4: Strong growth at scale: 40% five-year CAGR
Gross Profit Seller Gross Profit Cash App Gross Profit $458M $195M Strong growth at scale 40% five-year CAGR $47M $5M $345M $564M $777M $1,072M $1,390M 2015 2016 2017 2018 2019 Caviar gross profit has been excluded for all periods. CAGR represents the compound annual growth rate from 2015 to 2019. 4
Slide 5: While also driving profitable growth
While also driving profitable growth Net Income (Loss) Adjusted EBITDA Excluding Gain on Sale of Caviar and Revaluation of Equity Investment in Eventbrite $417 $14 ($63) $139 ($180) ($41) 2015 2017 2019 2015 2017 2019 Net income (loss) excludes gain on sale of Caviar and revaluation of equity invest
Slide 6: Total Addressable Market
Total Addressable Market
Slide 7: Addressing significant market opportunities
Addressing significant market opportunities SEL LE RS INDIVIDUAL S $ 100B+ $ 60B+ 7
Slide 8: Seller ecosystem represents a $85B+ opportunity in the U.S.
Seller ecosystem represents a $85B+ opportunity in the U.S. 20M BUSI NE SSE S $ 6T GRO SS RECEIPTS 85B+ $ U. S . TAM OPPORTUN ITY Sources: 2012 U.S. Census, U.S. Bureau of Labor Statistics 8 For further information on how we calculate number of "Businesses", "Gross Receipts", and the "U.S. TAM Oppor
Slide 9: Seller ecosystem represents a $85B+ opportunity in the U.S.
Seller ecosystem represents a $85B+ opportunity in the U.S. $85 B+ OP PORTUN ITY $ 39B + $ 30B + $ 12B + $ 5B TRA NSAC TION SOFT WARE SQ UARE CAPITAL FIN ANCIAL PROF I T SE RVICES Sources: Square internal company data, 2012 U.S. Census, FDIC, Goldman Sachs—Future of Finance, Mastercard 2019-2020 U.S
Slide 10: …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 TRANSACTION $ PROF IT IN CU RR ENT NE W MARKE TS INTE RNATION AL MARKE TS + + U. S . R EVENUE OPPORTUNITY TODAY NEW PROD UCTS E XPAND FURTHER AND USE CAS ES UPMARKET Sources: The Nilson Report (Issue #1
Slide 11: Significant opportunities in serving larger sellers
Significant opportunities in serving larger sellers Seller Size U.S. Sellers U.S. Gross Sales 23K Enterprise $100M+ $6.2T $20M-$100M 43K $1.3T Mid Market Additional $1M-$20M 879K $3.0T Area of Focus beyond Micro SMB $250K-$1M 2.7M $1.2T <$250K $446B Micro 15.3M Sources: 2012 U.S. Census, U.S. Bureau
Slide 12: 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 SENDI NG $ 2T SPEND ING $ 3T INVESTING Sources: Square internal company data, U.S. Census, International Monetary Fund: “Shadow Economies Around the World: What Did We
Slide 13: Cash App ecosystem represents a $60B+ revenue opportunity in the U.S.
Cash App ecosystem represents a $60B+ revenue opportunity in the U.S. $60 B+ OP PORTUN ITY $ 20B + $ 41B + $ 2B SENDING SPEND ING INVESTING Sources: Square internal company data, The Nilson Report (Issue #1166), Visa USA Interchange Reimbursement Fees, CoinMetrics 13 For further information on how w
Slide 14: With multiple vectors for future growth
With multiple vectors for future growth > 60B Medium-Term Long-Term $ + NEW PROD UCTS AND USE CAS ES + NE W MARKE TS CASH A PP REVENUE OPPORTUNITY TODAY 14
Slide 15: Significant runway to grow share in each ecosystem
Significant runway to grow share in each ecosystem Seller Cash App <3% <2% PENETRATED OF $ 10 0B + PEN ETRATED OF $6 0B + OPPORTUNIT Y OPPORTUN ITY Penetration within each of the Seller and Cash App ecosystems is calculated based on the sum of 2019 transaction-based gross profit, bitcoin gross profi
Slide 16: Seller Unit Economics
FIN ANCI AL S Seller Unit Economics
Slide 17: Broad portfolio of products with multiple monetization levers
Broad portfolio of products with multiple monetization levers Subscription and Transaction-based Hardware services SI D ECA R PAY MENTS POS App with payments usage only Invoices, Virtual Terminal, Developer, APIs/SDKs, Third Party Apps SOF T WA R E AND Square for Retail, Restaurants, Appointments, S
Slide 18: Evolving mix to software, integrated payments, and financial services
Seller Gross Profit by Product Category Sidecar payments Software & integrated payments Capital Instant Transfer & Square Card Evolving mix to software, integrated payments, and financial services 2016 2017 2018 2019 Seller gross profit mix does not include hardware gross profit losses. 18
Slide 19: Grew both our seller base and gross profit per seller
Grew both our seller base and gross profit per seller Active Sellers Gross Profit per Seller 1.7X 2.3X 2015 2017 2019 2015 2017 2019 Active sellers are defined as making more than 5 payments over the last four quarters. Seller gross profit is the gross profit for our Seller ecosystem and does not in
Slide 20: Initial quarterly sales and marketing spend to acquire a cohort
Initial quarterly sales and marketing spend to acquire a cohort of Q1 2015 Cohort customers Sales and Marketing Expense ($32M) Q1 Q2 Q3 Q4 Q1 2015 2016 Sales and marketing shown above represents "Seller Go-to-Market Spend" in Q1 2015, as defined on slide 25. A seller cohort represents the new seller
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 IN C UMUL ATIVE GROSS $33M PROFIT IN FOU R QUARTE RS ($32M) Q1 Q2 Q3 Q4 Q1 2015 2016 Sales and marketing shown above represents "Seller Go-to-Market Spend" in
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 IN C UMUL ATIVE GROSS PROFI T IN FIVE YEARS ($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 represent
Slide 23: We have seen strong returns on investments
Q1 2015 Cohort >5x R OI AFTE R 6 F IVE YE ARS 5 4 We have seen strong returns on investments ROI 3 on our go-to-market spend 2 1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Quarters after joining Return on investment (ROI) is calculated by dividing cumulative cohort transaction-based profit of
Slide 24: Efficient paybacks and positive retention have driven strong customer lifetime value
6 5 4 Efficient paybacks and positive retention have ROI 3 driven strong customer lifetime value and 2 return on investment 1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Quarters after joining Quarterly cohorts shown are from Q1 2014 to Q4 2019. 24
Slide 25: Maintained payback period even as we have grown larger sellers
Maintained payback period even as we have grown larger sellers Seller 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 $265M Q4 Q4 Q4 Q4 Q4 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Payback period on g
Slide 26: Positive dollar-based retention has led to recurring revenue streams
Positive dollar-based retention has led to recurring revenue streams Gross Profit by Cohort 2019 Cohort 2018 Positive gross profit retention for 2017 every quarterly and annual cohort since 2012 2016 2015 2014 2013 Pre-2013 Cohort 2012 2013 2014 2015 2016 2017 2018 2019 Gross profit retention rate i
Slide 27: Grown Capital volume while maintaining loan loss rates below 4%
Grown Capital volume while maintaining loan loss rates below 4% Origination Volume Core Flex Loan Loss Rate $2.3B 4% $1.6B $1.2B $0.8B 0% 2016 2017 2018 2019 2016 2017 2018 2019 27
Slide 28: Square Capital has multiple unique attributes
Square Capital has multiple unique attributes PRO PRI ETARY DATA Holistic view of the seller through real-time payments and behavioral data CONTI N U OUS ASSESSMENT Eligibility and loan performance continuously assessed using machine learning FIRST POS ITION IN PAYMENT Starting point in payment hier
Slide 29: Cash Unit Economics
FIN ANCI AL S Cash Unit Economics
Slide 30: Broad portfolio of products with multiple monetization levers
Broad portfolio of products with multiple monetization levers Subscription and Engagement Drivers Revenue Stream Transaction-based Bitcoin services Instant Deposit SE N DI N G MONE Y Peer-to-Peer Cash for Business Credit Card funding Boost (rewards) Cash Card interchange SP EN DI N G MONE Y Stored b
Slide 31: Cash App Revenue Model
Cash App Revenue Model CAS H APP RE V E N UE AC T I VE C US TO M E R S (# ) RE VE NUE P ER C USTOME R ($) PR ODUCT ACQ UI SI T I O N RE T ENTI ON W IN BACK EN GAGEM EN T M ON ETIZATION AD OP TION 31
Slide 32: We have driven growth across a diversity of services
Revenue Streams Sending Spending Investing We have driven growth across a diversity of services and revenue streams 2015 2016 2017 2018 2019 Sending equals revenue from Instant Deposit, Cash for Business, and P2P transactions funded with a credit card. Spending equals revenue from interchange on Cas
Slide 33: Our network of monthly transacting actives has increased
Monthly Transacting Actives 24M Our network of monthly transacting actives has increased 15M 3x over the past three years 7M 1M 3M DEC 2015 DEC 2016 DEC 2017 DEC 2018 DEC 2019 A monthly transacting active is defined as a Cash App customer who has one cash inflow or outflow during a given monthly per
Slide 34: Driving daily engagement
Driving daily engagement Daily to Monthly Transacting Actives Ratio BOO ST BITCO IN STO CKS Daily transacting actives grew INVESTING 80% year-over-year in Q4 2019, faster than monthly transacting DI RECT actives DEPOS IT P2P CASH CARD JAN JAN JAN JAN 2014 2016 2018 2020 34
Slide 35: Revenue per customer has increased 2x since 2017
Revenue per customer has increased 2x since 2017 Cash App revenue per Monthly Transacting Active (excluding bitcoin) $40 $ 30 AN NUALI ZED REVENUE PE R $30 $20 ACTI VE C US TOMER $10 $0 DEC DEC DEC DEC DEC 2015 2016 2017 2018 2019 Revenue per active Cash App customer is calculated based on Cash App
Slide 36: Initial monthly marketing spend to acquire a cohort
Initial monthly marketing spend to acquire a cohort of June 2017 Cohort customers Acquisition spend $1.6M ($1.4M) JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN 2017 2018 June 2017 acquisition spend uses the average monthly spend for 2017 to adjust for timing of spend during the year, and is re
Slide 37: 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 IN C UMUL ATIVE COHORT VAR IABLE P ROF I T A FT ER TWELVE MONTHS ($1.4M) JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN 2017 2018 June 2017 acquisition spen
Slide 38: ...and continued to grow thereafter
…and continued to grow thereafter June 2017 Cohort Acquisition spend Cumulative Cohort Variable Profit $7.7M $ 7.7M IN C UMUL ATIVE COHORT VAR IABLE P ROF I T A F TER 2. 5 YEA RS ($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 spe
Slide 39: We have seen strong returns on investments
>5x June 2017 Cohort 6 R OI AFTE R 2 . 5 YE AR S 4 We have seen strong returns on investments ROI on our acquisition spend 2 0 1 10 20 30 Months Return on investment (ROI) is calculated by dividing a given Cash App monthly cohort’s cumulative variable profit by acquisition spend for the initial mont
Slide 40: Efficient paybacks and positive retention have driven strong customer lifetime value
6 4 Efficient paybacks and positive retention have ROI driven strong customer lifetime value and 2 return on investment 0 1 10 20 30 Months Return on investment (ROI) is calculated by dividing a given Cash App monthly cohort’s cumulative variable profit by acquisition spend for the initial month whe
Slide 41: Strong cohort economics with positive gross profit retention
Gross Profit 2019 Cohort Strong cohort 2018 economics with positive gross profit retention 2017 2016 2015 Pre-2015 Cohort 2016 2017 2018 2019 Annual gross profit retention is calculated as the year-over-year gross profit growth of an annual Cash App customer cohort, excluding contra revenue and inte
Slide 42: Over 50% of Cash App's quarterly actives generated revenue in Q4 2019
Over 50% of Cash App's quarterly actives generated Monetization of Active Customers revenue in Q4 2019 100 0 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2016 2017 2018 2019 A monetized Cash App customer generates positive aggregate transaction-based profit, subscription and services-based revenue,
Slide 43: Graduating customers to Cash Card can drive meaningful uplift in revenue
Cohort Revenue Mix Before and After Cash Card January 2019 Cohort Cash Card, Bitcoin, & Other Revenue Instant Deposit Graduating customers to Cash 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 44: Engagement with additional products has driven higher customer lifetime value
Engagement with additional products has driven higher customer lifetime value DIRECT DE POSIT CASH CARD PEER-TO-PE ER STOCKS BO OST BITCOIN 44
Slide 45: Multiple differentiators across Seller and Cash App ecosystems
• Strong aspirational brands with word-of-mouth • Remarkable products with rapid development and improvements Multiple • Elegant design to enable self-serve experience differentiators across Seller and Cash App • Integrated and scalable technology platform ecosystems • Scaled acquisition with strong
Slide 46: square.com/investors
square.com/investors
Slide 47: Appendix
Appendix Footnotes and GAAP Reconciliation
Slide 48: Definitions
Definitions Slide 8: “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 49: Definitions
Definitions Slide 12: “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 50: Adjusted EBITDA—Reconciliation to GAAP
Adjusted EBITDA—Reconciliation to GAAP Twelve Months Ended Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, 2015 2016 2017 2018 2019 (in thousands) (unaudited) NET INCOME (LOSS) ($179,817) ($171,590) ($62,813) ($38,453) $375,446 STARBUCKS TRANSACTION-BASED REVENUE (142,283) (78,903) — — — STARBUCKS TRANSACTI
Slide 51: Adjusted EBITDA—Reconciliation to GAAP
Adjusted EBITDA—Reconciliation to GAAP Adjusted EBITDA is a non-GAAP financial measure that represents our net income (loss), adjusted to eliminate the effect of Starbucks transaction-based revenue and Starbucks transaction-based costs, before interest income and expense, provision or benefit for in
Slide 52: Net income excluding Caviar gain on sale and revaluation of equity investment in Eventbrite—Reconciliation
Net income excluding Caviar gain on sale and revaluation of equity investment in Eventbrite—Reconciliation to GAAP Twelve Months Ended Dec 31, 2019 (in thousands) (unaudited) NET INCOME $375,446 GAIN ON SALE OF ASSET GROUP (373,445) LOSS ON REVALUATION OF EQUITY INVESTMENT 12,326 NET INCOME EXCLUDIN
Slide 53: 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