Financial Data and Key Metrics - Gross profit for Q3 2024 was 1.5 billion, compared to 2.31 billion, representing 14% YoY growth [12] - Adjusted operating income and adjusted EBITDA reached their highest quarterly levels ever, both in dollar terms and margin basis [11] - The company expects to achieve Rule of 40 by 2026, with mid-teens gross profit growth and mid-20% adjusted operating income margin [16] Business Line Performance - Square GPV growth improved in recent months, with double-digit growth in Global GPV and higher YoY growth in the U.S. in October [13] - Cash App showed strong momentum in gross profit and improved attach rates on paycheck deposits [13] - Square's order platform rollout and new features like pre-authorization are driving growth, with a new enhanced Square for restaurants' POS experience being tested [19] - Cash App is transforming 24 million Cash App Cards into a better alternative to credit cards with the launch of Afterpay on Cash App Card [21] Market Performance - U.S. GPV growth improved by a couple of percentage points in October compared to Q3's 4.9% growth, while international growth remained strong at 20% [24] - The company expects GPV growth to improve in 2025, ending the year at a meaningfully higher growth rate than 2024 [17] Strategy and Industry Competition - The company is focused on increasing access to lending products like Square Loans, Afterpay, Buy Now Pay Later, and Cash App Borrow through better technology, transparency, and simplicity [9] - Investments in go-to-market strategies, including sales and marketing, are expected to drive growth into 2025 [15] - The company is leveraging partnerships and product innovations to enhance customer acquisition and retention, particularly in international markets [20] Management Commentary on Operating Environment and Future Outlook - The company expects strong gross profit growth in 2025, driven by broad momentum across Block, with initiatives compounding through the year [16] - Management is committed to expanding margins on an adjusted operating income basis in 2025, although the pace of expansion may slow due to investments in growth opportunities [18] - The company assumes a stable macro-environment for its 2025 guidance, based on current business momentum and product innovations [19] Other Important Information - The company is testing a new and enhanced Square for restaurants' POS experience, with plans to make it available to all sellers in 2025 [19] - Cash App is leaning into go-to-market spend to drive paycheck deposit actives in 2025, focusing on performance marketing, brand awareness, and incentives [21] Q&A Summary Question: Square GPV growth acceleration in the U.S. [23] - Answer: The company expects modestly improved GPV growth in Q4 2024 and further acceleration in 2025, driven by same-store growth and customer acquisition trends [24][25] Question: Local in-market sales strategy and expansion plans [32] - Answer: The company is ramping field sales hiring and improving sales team productivity, with plans to continue hiring into 2025 [35][36] Question: Impact of fintech regulation and Cash App growth sustainability [40] - Answer: The company is focused on building stronger systems and leveraging technology to stay ahead of regulatory requirements, with strong growth expected for Cash App in 2025 [41][42][45] Question: Timing-related impacts on Q4 gross profit [48] - Answer: Certain partner benefits and Cash App Borrow expansion were delayed to 2025, impacting Q4 gross profit growth by about 3 points [48][49] Question: Cash App user growth and ARPU trends [54] - Answer: The company is focusing on engagement and product adoption, with ARPU growing 16% YoY to $75 in Q3 2024 [56][57] Question: Long-term strategy for lending products [59] - Answer: Lending products are seen as a key differentiator for both Square and Cash App, driving retention and acquisition through technology, transparency, and simplicity [60][61][62] Question: Marketing and incentives for Cash App [67] - Answer: The company is scaling go-to-market efforts, including performance marketing and incentives, to drive awareness and adoption of Cash App's financial services products [68][69][72] Question: Bitcoin strategy and regulatory clarity [75] - Answer: The company is focused on making Bitcoin more accessible, secure, and usable, with mining and Cash App exchange being key areas of focus [76][77][80] Question: OpEx efficiency and go-to-market investments [85] - Answer: The company sees opportunities for further efficiency gains in personnel expenses, structural costs, and corporate overhead, while investing in high-return go-to-market initiatives [86][87][88] Question: GPV growth trends and expectations [91] - Answer: The company expects modest GPV growth improvement in Q4 2024, with further acceleration in 2025 driven by product initiatives and customer acquisition [92][93] Question: Afterpay on Cash Card rollout and early learnings [96] - Answer: The company is being methodical in rolling out Afterpay on Cash Card, with initial testing showing encouraging results and plans to expand eligibility and conversion over time [97][99] Question: Cash App monetization trends [102] - Answer: Cash App Card, Borrow, and Buy Now Pay Later are driving strong monetization, with interchange expected to grow as direct deposit adoption increases [103][104][105]
BLOCK(SQ) - 2024 Q3 - Earnings Call Transcript