Block Bet on BNPL, Cash App Offset Bitcoin Drag

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For Block, Square’s parent company, bitcoin has been a drag on bottom lines and Cash App has been a boon.

Block released second-quarter results that showed the company’s move to expand its ecosystem, connecting sellers and buyers, is paying off, although growth may slow.

And in June, 47 million accounts transacted on Cash App, up 18% year-on-year.

Chief Financial Officer Amrita Ahuja said on the call that “we have seen continued momentum in the food and beverage sector, which has generated the fastest gross profit growth of any square vertical on a five-year CAGR basis”.

Digging a little deeper into Cash App usage, 33% of spending is on gas and utilities, with about another third on food and groceries, with the rest spent at Big Box and priced retailers. reduced.

And as further evidence of the cementing ecosystem, she noted that when an active user has more friends and family using Cash App, “they have more reason to come back and their retention often improves.” Retention was 31 percentage points higher for active users with a network size of four or more other accounts compared to those with a network size of one.

In the wake of the Afterpay deal that closed earlier this year, the company’s BNPL platform contributed $104 million in revenue and $75 million in gross profit to Square in the second quarter of 2022.

CEO Jack Dorsey said on the call that the company is still integrating Afterpay’s “discovery capabilities” into our system and that Afterpay is “the omnichannel tool in our ecosystem” that helps sellers to develop their own sales lines.

Overall, company-wide gross payment volume reached $52.5 billion, up from $42.8 billion a year ago.

At a high level, the company said volume growth in July for Square sellers’ core business would be lower than recent growth rates, at 18% for July, where the company had seen 25% growth over the course of of the June quarter. The news helped send shares down about 6% after hours.

The significant drop in Bitcoin prices impacted revenue, overall. Bitcoin-related sales fell by more than a third to $1.8 billion. Consolidated revenue was $4.4 billion, compared to $4.7 billion in the second quarter of 2021.

The percentage of gross payment volume (GPV) tied to mid-market sellers continued to grow, reaching 39% in the last quarter, up from 35% a year ago and 27% in the second quarter of 2020.

In June, there were more than one million monthly assets using Cash App Borrow, the company said.

While the company’s Square business GPV grew 25% year-over-year in the second quarter, the company forecasts 18% growth on the metric for the month of July.

Subscription and services revenue was $1.09 billion in the second quarter of 2022, up 60% year-over-year.

Management noted on the call that Cash App Borrow is seeing momentum, with 1 million “assets” taking advantage of the short-term credit supply, with average loans under $200, repaid in about a month. month. Loss rates on loans are below 3%, according to comments on the call. Along with further comments on credit quality, management stated that 95% of BNPL loans are repaid on time.

As Dorsey told analysts, “We have a built-in network effect that’s inherently natural to use cases that we want to see continue to grow – and we’re building an ecosystem around that.”

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NEW PYMNTS SURVEY FINDS 3 IN 4 CONSUMERS HAVING HIGH DEMAND FOR SUPER APPS

About: Results from PYMNTS’ new study, “The Super App Shift: How Consumers Want To Save, Shop And Spend In The Connected Economy,” a collaboration with PayPal, analyzed responses from 9,904 consumers in Australia, Germany, UK and USA. and showed strong demand for one super multi-functional app rather than using dozens of individual apps.

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