BLOCK(SQ) - 2025 Q2 - Quarterly Results

Shareholder Letter Q2 2025 Performance Overview Block reported strong Q2 2025 performance with 14% gross profit growth, driven by accelerated Square and Cash App results Q2 2025 Key Financial Highlights | Metric | Value | YoY Growth | | :--- | :--- | :--- | | Gross Profit | $2.54B | +14% | | Cash App Gross Profit | $1.50B | +16% | | Square Gross Profit | $1.03B | +11% | | Operating Income | $484M | - | | Adjusted Operating Income | $550M | - | | Net Income | $538M | - | | Adjusted EBITDA | $891M | - | - The company reports strong Q2 performance with Square GPV growing 10% YoY and Cash App gross profit growing 16% YoY[3] - Shipping velocity has accelerated, exemplified by the rollout of 'Pools' on Cash App just four months after development began[3] Cash App Strategy & Unique Assets Cash App aims to be a next-gen financial operating system, integrating P2P, commerce, banking, and bitcoin capabilities - Cash App's strategy is to build a comprehensive financial operating system by expanding its ecosystem across P2P, commerce, banking, and bitcoin capabilities[4][5] - Younger customers are a key demographic, with users under 25 showing a 40% higher Cash App Card attach rate compared to the rest of the customer base[4] Peer-to-Peer (P2P) Network The P2P network, processing $218 billion annually, remains Cash App's efficient core for customer acquisition - The P2P network processed $218 billion in volume over the last 12 months and serves as a highly efficient customer acquisition channel[12][13] - A new product, 'Pools', was introduced in July to facilitate group expense sharing and is expected to expand access to new customers[12] Commerce Solutions Cash App's commerce network generated $183 billion in spending volume, with ongoing enhancements like 'Cash Local' - The commerce network, including Cash App Card and Afterpay, generated $183 billion in spending volume over the past 12 months, growing 16% YoY[14] - Upcoming initiatives include personalized offers on Cash App Card, auto-selection of rewards, and the expansion of 'Cash Local' to help small businesses build deeper customer relationships[15][16] Banking Functionality Cash App is deepening banking engagement, with Borrow origination volume growing 95% YoY to an annualized $18 billion - Borrow origination volume grew 95% YoY, reaching an annualized $18 billion in Q2[17] - As of June, Cash App had 2.7 million paycheck deposit actives. However, broader definitions of banking activity (e.g., spending $500+/month) would increase the number of banking actives to 8 million, growing 16% YoY[19] Bitcoin Integration Block continues investing in bitcoin accessibility, with Cash App users transacting over $58 billion - Cash App users have bought and sold over $58 billion in bitcoin, demonstrating significant adoption[21] - The company is enabling Square sellers to accept bitcoin payments, aiming to provide more financial management options for both sellers and consumers[21][22] Business Highlights Square Segment Highlights Square focuses on seller growth through new products like Handheld and AI, expanded go-to-market strategies, and upmarket penetration - Launched new products including Square Handheld for operational efficiency and Square AI to provide sellers with data-driven answers to business questions[25][26] - Expanding go-to-market efforts by increasing hiring for its field sales team, scaling telesales, and signing new independent sales organization (ISO) partners[28][31] - Gaining traction with upmarket sellers, signing multi-location clients like Colectivo Coffee, Shane's Rib Shack, Live Nation Canada, and Midwest Vision Partners[29][30] Cash App Segment Highlights Cash App drives network growth and engagement through product innovation, capturing the teen demographic, and scaling commerce - Started rolling out 'Pools', a group P2P product, to simplify shared expenses and attract new users to the platform[32] - Focusing on the next generation, Cash App has 5 million monthly active sponsored teen accounts, with nearly 80% being Cash App Card actives[35] - Commerce capabilities are scaling, with Cash App Pay volume growing 2x YoY in Q2. Afterpay also launched the Afterpay Media Network (AMN) in Australia to provide targeted marketing for merchants[38][39] Financial Discussion Overall Financial Performance (Q2 2025) The company delivered strong Q2 results with 14% YoY gross profit growth and expanded Adjusted Operating Income margins, raising full-year guidance - Gross profit growth accelerated to 14% year over year, outperforming guidance[42][43] - Profitability improved across all key measures, with operating income at $484 million and Adjusted Operating Income at $550 million[43] - Full-year 2025 guidance was raised to $10.17 billion in gross profit (+14% YoY) and $2.03 billion in Adjusted Operating Income (20% margin)[43] Block Financial Metrics Block's gross profit grew 14% YoY to $2.54 billion in Q2 2025, with significant improvements in operating income and EPS Block Financial Metrics (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | YoY Growth | | :--- | :--- | :--- | :--- | | Gross Profit | $2,537M | $2,233M | 14% | | Operating Income | $484M | $307M | 58% | | Adjusted Operating Income | $550M | $399M | 38% | | Diluted EPS | $0.87 | $0.31 | 181% | | Adjusted Diluted EPS | $0.62 | $0.47 | 32% | Square Segment Financials Square's gross profit grew 11% YoY to $1.03 billion in Q2, driven by 10% GPV growth, strong international and vertical performance Square Financials (Q2 2025) | Metric | Q2 2025 Value | YoY Growth | | :--- | :--- | :--- | | Gross Profit | $1,027M | 11% | | Total GPV | $64,248M | 10% | | International Gross Profit | $144M | 19% | | International GPV | - | 25% | - GPV from food and beverage sellers grew 15% YoY, while retail seller GPV grew 10% YoY, its strongest growth since Q1 2023[48] Cash App Segment Financials Cash App's gross profit increased 16% YoY to $1.50 billion, driven by Borrow, Card, and BNPL, with deepening monetization Cash App Operating Metrics (Q2 2025) | Metric | Q2 2025 Value | YoY Growth | | :--- | :--- | :--- | | Gross Profit | $1,501M | 16% | | Monthly Transacting Actives | 57M | 0% | | Gross Profit Per Active | $87 | 15% | | Inflows Per Active | $1,338 | 8% | | BNPL GMV | $9.11B | 17% | - The number of paycheck deposit monthly actives grew both year-over-year and quarter-over-quarter to 2.7 million[51] Operating Expenses The company demonstrated operating leverage in Q2, with product development expenses growing 2% YoY, and loan losses rising 53% YoY YoY Growth in GAAP Operating Expenses (Q2 2025) | Expense Category | YoY Growth | | :--- | :--- | | Product Development | +2% | | Sales and Marketing | +8% | | General and Administrative | -5% | | Transaction, loan, and consumer receivable losses | +53% | - Cash App marketing expenses were flat YoY, as a 50% increase in advertising and acquisition spend was offset by improvements in P2P risk loss performance[55] Profitability and EPS Block reported strong growth across key profitability metrics in Q2 2025, with operating income at $484 million and Adjusted Operating Income at $550 million Key Profitability Measures (Q2 2025) | Metric | Q2 2025 Value | | :--- | :--- | | Operating Income | $484M | | Adjusted Operating Income | $550M | | Net Income | $538M | | Adjusted Net Income | $385M | | Adjusted EBITDA | $891M | | Diluted EPS | $0.87 | | Adjusted Diluted EPS | $0.62 | Cash Flow and Capital Allocation The company actively returned capital, repurchasing 12.5 million shares for $692 million in Q2, ending with strong liquidity - Repurchased 12.5 million shares for $692 million in Q2 2025, with $1.5 billion remaining in the share repurchase authorization[59] - Ended the quarter with $8.5 billion of total liquidity, including $7.7 billion in cash and investments and $775 million available from a revolving credit facility[61] - A change in classification for certain Borrow loans to 'held-for-investment' has shifted their cash flows from the operating section to the investing section of the cash flow statement[60] Guidance Full Year 2025 Outlook Block raised its full-year 2025 guidance, expecting gross profit of $10.17 billion (+14% YoY) and Adjusted Operating Income of $2.03 billion Full Year 2025 Guidance | Metric | 2025 Guidance | Implied YoY Growth / Margin | | :--- | :--- | :--- | | Gross Profit | $10.17B | 14.4% | | Adjusted Operating Income | $2.03B | 20% Margin | - The company expects to exit 2025 with a gross profit growth rate of 19% YoY in the fourth quarter[63] Q3 2025 Outlook For Q3 2025, Block projects gross profit of $2.60 billion (+16% YoY) and Adjusted Operating Income of $460 million Q3 2025 Guidance | Metric | Q3 2025 Guidance | Implied YoY Growth / Margin | | :--- | :--- | :--- | | Gross Profit | $2.60B | 16% | | Adjusted Operating Income | $460M | 18% Margin | Appendix Key Operating Metrics and Non-GAAP Financial Measures This section defines key operating and non-GAAP financial measures like GPV, Adjusted EBITDA, and Adjusted EPS for performance comparison - Provides definitions for non-GAAP measures including Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted EPS, and Adjusted Operating Income (Loss)[76][77][79][80] - Beginning in fiscal 2025, the definition of Adjusted EPS was revised to include stock-based compensation to provide a more comprehensive view of operating performance[58] Consolidated Financial Statements This section presents unaudited condensed consolidated financial statements, including Statements of Operations, Balance Sheets, and Cash Flows - Presents the Condensed Consolidated Statements of Operations, showing detailed revenue, cost of revenue, operating expenses, and net income[84] - Includes the Condensed Consolidated Balance Sheets as of June 30, 2025, and December 31, 2024, detailing assets, liabilities, and stockholders' equity[85] - Provides the Condensed Consolidated Statements of Cash Flows, outlining cash movements from operating, investing, and financing activities[86] Segment Disclosures This section provides a breakdown of financial performance by Cash App and Square segments, detailing revenue, gross profit, and reconciliation Segment Gross Profit (Three Months Ended June 30, 2025) | Segment | Gross Profit | | :--- | :--- | | Cash App | $1,500.5M | | Square | $1,026.8M | | Corporate and Other | $9.2M | | Total | $2,536.5M | - Includes a reconciliation of total segment gross profit to the company's income before applicable income taxes[88] Non-GAAP Reconciliations This section provides detailed reconciliations of GAAP to non-GAAP financial measures, including Operating Income, Net Income, and Adjusted Free Cash Flow - Provides a reconciliation of GAAP Operating Income to non-GAAP Adjusted Operating Income[92] - Reconciles GAAP Net Income to non-GAAP Adjusted EBITDA[93] - Details the calculation of Adjusted Net Income and Adjusted EPS from GAAP Net Income[95]