Block, the parent company of Square, posted earnings results illustrating the evolution of a financial services ecosystem — with Cash App at the center.
A growing number of users, management said on the most recent earnings call, are using Cash App products and services, including depositing their paychecks directly to the Cash App Card.
Earnings materials from the company show that Cash App monthly active consumers during the quarter were up year on year, and reached 53 million in March, up 17%. In March, there were 2 million direct deposit actives and paycheck deposits totaled $2.5 billion, up 69% year over year.
More Transactions and Higher Inflows
Management noted that Cash App inflows per “transacting active” were $1,136, up 8% year over year and quarter over quarter, and overall inflows were $61 billion, up 27% year over year.
In the first quarter of 2023, per the company materials, Cash App business gross payment volume (GPV) was $4.9 billion, up 24% year over year. Those transactions are related to peer-to-peer (P2P) transactions received by business accounts and include P2P payments sent via credit cards.
Drilling down into Square’s GPV, by mix of sellers, the percentage of mid-market sellers — those sellers generating more than $500,000 in annualized GPV — was 38% of the $46.2 billion in GPV logged during the quarter, up from 35% last year. Management noted on the call that the larger seller market is underpenetrated, as Square has roughly 1% market share there, as measured in the United States alone.
Card-present GPV was up 21% year over year and card-not-present GPV was up 10% year over year, the company said.
Square loans facilitated roughly 113,000 loans totaling $1.1 billion in originations, gaining 46%.
Block Chief Financial Officer Amrita Ahuja said that during the first quarter of 2023, “we had 14 revenue streams across Square and Cash App that generated $100 million or more in annualized gross profit, up from 11 a year ago … our financial services products are a key driver of inflows in Cash App and help us build retentive relationships with our active, particularly Cash App Card.”
To that end, paycheck deposits continued to increase as a contribution of overall inflows totaling $2.5 billion in March or $30 billion on an annualized basis. The launch of Savings on Cash App this year, said Ahuja, has already garnered strong adoption, with 3 million “savings active” consumers adding funds to their savings balances at the end of April.
BNPL Gains Ground Too
Ahuja noted during the call that the company’s buy now, pay later (BNPL) platform generated $5.6 billion in volumes in the first quarter, an increase of 18% year over year inclusive of January 2022 volumes.
With some detail on credit metrics, she said that the loss on consumer receivables was 0.7% of GMV, an improvement year over year and quarter over quarter. Volumes in the BNPL segment are expected to be around 20% in April, up slightly from the 18% seen during the most recent quarter.
During a question-and-answer session with analysts, and in response to queries about how turmoil in the banking system might impact the Block/Square ecosystem, Ahuja said, “across our products and our partners, we are always focused on building redundancies wherever we can in addition to assessing potential future risk. So, we have a diverse set of products, and we build redundancies where we can, and we have a transparent approach to our partnership as we always have.”
And looking ahead, said CEO Jack Dorsey on the call in discussing the potential for further penetration in the retail, restaurants and beauty verticals, “the key differentiator to our mind is our ecosystem of tools. And it’s not just about any one particular vertical but how everything works together ultimately. We have over 30 products, including some vertical-specific software. And [there’s] a developer platform, which if our customers don’t find the tools they need in our platform, [they] can always build their own or hire [a] developer to do the same.”
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