Goldman Sachs Communacopia + Tech Conf 2025: Block (SQ) CFO on Growth, Cash App, Square Dist., and Fin. Outlook

Key Takeaways

TL;DR: Block signaled high confidence in 2H25 GP and margin acceleration. Key drivers: product velocity, improved Square/Cash App dist., ongoing mix shift to larger/international sellers, rapid scale/strong econ for Cash App Borrow, primary banking ARPU >3x base, and early signs that new hardware/Proto mining rigs can diversify rev. Mgmt flagged sustained ROI focus in channel build, risk controls in lending, and SFS as a lever for new products/efficiency.

1. Fin. Guidance & Execution

• Strong 2H25 Guide:
  • "Very confident" in delivering 2H guide: exit Q4 w/ +19% growth, 20% adj. OP margin.
  • GP growth to accelerate in Q3/Q4, even net of higher risk loss from Cash App Borrow.
• Lending Risk Mgmt:
  • Mgmt addressed investor concern: Cash App Borrow ramp won't pressure profitability/asset quality. "Accelerate growth … even net of risk loss."
  • Underwriting/repayment "steady/healthy" across Square Loans, Cash App Borrow, BNPL.

2. Square Ecosystem (Seller Biz)

• Dist. & GTM Velocity:
  • Customer acq. via multiple channels up sharply: Q2 "strongest $ base new vol. ever," "highest growth rate since 2021."
  • Sales channel new vol. +20%+ 1H, targeting 40%+ exit 2025 (still minority vs. self-onboard).
• GPV Trends:
  • Q2 GPV growth accel.: 7% in Q1 → 10% in Q2. Key verticals (F&B, retail) strong resilience/retention.
  • Q2 churn lowest since mid-2023.
• Partnership/Channel Build:
  • Partnerships driving "higher/larger leads above targets" (US Foods, Sysco, SalonCentric, T-Mobile, ISOs now in US).
  • Field/telesales channels: high ROI, "marginal investments … not diminishing in returns," more to come but ROI discipline emphasized.
• GP to GPV Spread / Take Rate:
  • Processing partner renegotiation: ~2%p headwind (est. $80mn annualized), offset by op. flexibility/liquidating req. cash reserves.
  • Mix shift to larger/international sellers = lower take rate, but mgmt focused on absolute variable profit dollars, "maintain[ing] pricing power/cross-sell … 30+ products into seller base."
• Brand & Product:
  • Square brand refresh ("Square Releases" next month), new hardware (Square Handheld), "transformational" Square Online features.
  • Square AI launch = further product diff. investment.

3. Cash App: Growth, Banking, Lending

• Primary Banking:
  • Direct deposit actives surge: "300k YTD in July" vs "500k for all 2024."
  • Focus on 'primary banking actives': (paycheck deposit or $500/mo spend) now 8mn users (+16% YoY), ARPU $250+ (vs $87 base), "40 txns/mo" = daily usage.
  • 40% of base earns nontraditional wages; expanding benefits (overdraft, ATM fee waivers) to "primary banking" not just paycheck-ACH.
• MAU & Inflows:
  • MAU, inflows/active, network density = top focus: "Jack/Owen/org fully focused on Cash App MAU growth."
  • Viral features (Cash App Pools, Tap to Pay for Cash for Biz) to grow peer connections/out-of-network funds.
  • July's Cash In campaign: brand/product expansion, ARPU build via Cash App Card (26mn MAU).
• Lending (Cash App Borrow):
  • 1H25 origination doubled: "$18bn annualized run rate," 6mn MAU.
  • High-turn, small-ticket (avg. $100–$150, <4wks, 15–17 turns/yr), "annualized net margin ~24%" (target 20%+).
  • Ramp into 20+ new states in 2H25 via SFS, more profit/control: "Extremely deliberate ramp into new cohorts."
  • Underwriting: proprietary models approve 38% more (same loss) vs. VantageScore.