Block CFO & COO Amrita Ahuja on Cash App, Afterpay, and the Future of Fintech

Thank you for joining from your fabulous offerings. So much for having me here.

The thread that binds them together is our purpose, which is economic empowerment. We build tools, whether it's software or hardware, payments-oriented commerce, that empower people into the economy. We did that first with Square in our first founding moment 16 years ago. Square is the business that serves sellers and helps them start, run, and grow their business. Most of our customers are small businesses: your corner shop, your local deli. We have grown to now be a more global brand. We started with that core of payments and then built a whole ecosystem of software solutions, financial services. You can now get a loan through Square, hardware commerce systems on top of that core payments functionality. We then launched Cash App more than ten years ago, now 12 years ago, which started as a peer-to-peer transmission app on your mobile phone for someone to pay someone you know, the friend back for dinner or to pay towards a joint gift. And now, similarly, we have a whole constellation of financial services and commerce tools on top of that. You can invest money, you can buy a dollar worth of Berkshire Hathaway in Cash App, you can save money, you can deposit your paycheck, you can spend your money on our prepaid debit card which has instant rewards, a very unique offering. So we built these two at-scale ecosystems that now sit on both sides of the counter between the seller and oftentimes the buyer. There are some very unique things we can do over time. Finally, I'd also point to some of the newer, more nascent bets that we have: Tidal, which serves artists to empower them into the economy in the same way that we would with a small business, giving them the tools to reach their fans in a direct way and launch their music to various sites. We're doing more and more to serve artists through our Tidal platform. And then finally Proto, which just more recently had its launch event to announce to the world that we're looking to bring competition, reliability, greater usability to the space of Bitcoin mining, all in an effort to help make Bitcoin everyday money. So those are the four parts of our business: two that are mature at scale, two that are up and coming and we're just nurturing now.

It's a great question. We have this portfolio of businesses, so we had to think about an investment framework that could be agnostic to maturity, to growth and margin profile, to business model, because there are so many different business models and revenue streams across our different ecosystems. We came up with an investment framework that we believe is a principled approach for how we make investments, a decision-making framework around investments. It really has two metrics to it, very simple. We wanted to make it as simple and easy to understand so that not only could we communicate it to investors, but we could translate it to every single one of our employees. One is a customer-facing metric: gross profit retention. That's a measure of how existing customers grow on each of our platforms. We would have positive gross profit retention, over 100% gross profit retention if our customers are growing on our platform, net of churn, each cohort of our customers. That's something we measure each of our businesses Square, Cash App, and Tidal by. We aspire to have positive retention for our customers to be growing on our platform. The second piece of our investment framework is a measure of our own business, and it holds our management team accountable to getting the returns on the investments we're making. It's a rule of 40 framework: growth plus margin. Some businesses that are earlier in stage may grow faster and have lower margins; some businesses that are more mature may have a more steady-state growth rate but higher margins. We think this rule of 40 framework helps neutralize for things like that and gives us a more apples-to-apples comparison across all of our different businesses. So those are the two frameworks against which we measure ourselves at the Block level, as well as each of the components of our businesses.

I think we actually agree to some extent. We put our rule of 40 — typically it's measured as growth plus EBITDA margin — we actually put it as growth plus adjusted operating income margin, which includes stock-based compensation. So we put it at a higher bar for ourselves, the 40 metric. We still call it rule of 40, but we want to make sure we're not looking just at cash expenses but at ongoing expenses in our business, which include stock-based compensation. Over time, we aspire to be above rule of 40. It's not about just hitting it once; it's about achieving it year in and year out. We've set a target to achieve it by 2026, and it's not just about 2026 but the years that follow as well.

Yes. Cash App again started as peer-to-peer, but it's become so much more than that. It's becoming the money app, revolutionizing the operating system for how people manage their money. The way we're doing that is through four core pillars. First, the social network-driven aspect of money movement: the peer-to-peer part of our business. It's at scale, over $200 billion annualized over the past year in money we move on behalf of our customers to their friends, acquaintances, and connections. That's the core part that has helped us grow very efficiently within Cash App at a tenth of the customer acquisition costs of some other platforms. The second core part is commerce. Commerce is rapidly growing. The number of ways you can identify as a consumer, ways to spend your money and do it in a frictionless and easy way, ways to spend and get rewards for it, spend your stored funds or spend on Cash App Card, are growing within Cash App rapidly, addressing what the next gen wants, growing at 21% year over year. The third part is banking tools. As I said, you can save money, get a line of credit, invest your money, buy and sell Bitcoin within Cash App. That is rapidly growing as well. We have 8 million actives across our ecosystem who either deposit a paycheck in Cash App or spend $500 a month, the majority of what they would spend on a debit card, on a monthly basis now within Cash App, growing 16% year over year. The fourth pillar is Bitcoin. We have enabled millions of customers to buy and sell Bitcoin, $58 billion worth on our platform since 2018. We were really a first mover in the Bitcoin space, bringing utility, awareness, and education to Bitcoin through the years.

Well, here's the thing. Cash App is so much more than just peer-to-peer. We've built commerce and banking tools on top of this base of 57 million actives, many of whom first come to us for peer-to-peer, but we've found ways to engage them, which has driven a very strong business. As I noted, 8 million deeply engaged banking actives, with $87 in gross profit, which grew 15% year over year. Customers have more and more things to do within Cash App, well beyond the core peer-to-peer mechanism. So I actually don't think there is a pure play competitor for Cash App today.

I think it's ultimately about the value we provide across the range of products we offer. Ultimately, we hope because their friends are on Cash App, because there's more they can do, there's more connections for them on Cash App. If you look at the United States, the middle of the country and the South have deep connections for Cash App; the coastal areas have deep connections for some of our competitors. But over time, those viral loops change. One area we think we can truly be disruptive, not only from a peer-to-peer perspective but also commerce and banking, is with the next generation: teens. This is a significant level of growth for us. We already have 5 million sponsored teen accounts on our platform. They are far more engaged than the overall base of customers. 80% of them have a Cash App Card, that prepaid debit card; 25% use Cash App Pay with stored funds at enterprise merchants like Lyft or Domino's. These are very engaged next-gen customers who are going to become the earners and spenders of the future. I think that's a big part of how we grow even more above and beyond the 57 million monthly actives we have today.

Absolutely. This is one of the beauties of running multiple businesses. We see that trend in Square too: when customers take four or more products, their retention and stickiness on our platform increases meaningfully. We see that with Cash App too. We've seen over half of our teen sponsored accounts, when they reach the age of 18, go on to graduate to a full-fledged Cash App account. We think that number will go up over time as we offer more ways to move your money around, save, and spend within Cash App. These teen accounts are incredibly engaged on our platform already. When a customer takes on, for instance, Cash App Borrow — a meaningful product that helps customers bridge smoother cash flows from pay period to pay period — we see that their retention across the rest of the Cash App ecosystem increases, and they end up doing more across all of Cash App. So we do see it as an ecosystem where one product can benefit another. As we think about growing with the next generation, with teens, we want to make sure we have all the tools for how they are thinking about managing their money for the future.

I would say it was slow at first, and now we are hitting our stride. It's been three and a half years, and we now have a meaningful integration earlier this year between Cash App and Afterpay. Consumers within Cash App now have the ability to pay in four on the Cash App Card or to get visibility to Afterpay merchants within Cash App. You will see us do even more with Afterpay and Cash App in the future. This newest product, which enables you to pay in four on a transaction you've made on Cash App Card, is growing incredibly quickly. We just launched it earlier this year, and we already have crossed the million account, million user milestone. Again, these customers who use these sorts of products become even more engaged across the rest of Cash App. As I spoke about earlier, some of our competitors are very strong on the coasts of the United States and with higher-income demographics. Actually, Afterpay is very strong on the coasts and with higher-income demographics, a very complementary demographic to Cash App. So the more we bring Afterpay into Cash App, the more opportunity we have to bring more customers into Cash App.

We have used AI and machine learning really since the inception of our business as a form of more efficient underwriting. First, to enable sellers to get access to credit card payments. Many sellers were missing that core functionality and were therefore missing sales until Square came along and revolutionized the industry. Now we use AI on the back end as we think about eligibility and limits we set in duration for loans, whether it's BNPL, Cash App Borrow, or Square Loans. Those are the three core lending products we have across Block. It's not generative AI, and it's not necessarily linked to commerce — the lending products are not necessarily linked to 'you made this purchase here, so you're ready for a loan there.' But it is about that customer's cash flows, their livelihood. Are they direct depositing with us? Do we see the regularity of their inflows and outflows? We actually have far better data, more comprehensive and real-time data, than the traditional credit scoring companies have, which is why we think we are able to uniquely underwrite customers in a way that expands access. If you look at the same risk rating for a given customer, we are able to underwrite them at 30% plus higher rates than a company like VantageScore. We know that 50 million Americans have thin credit files today; they're not yet able to get access to a credit card or a line of credit, and the alternatives are predatory things like payday lending and pawnshops. What we're able to offer them is far less expensive and more transparent in the fee structure. That ultimately is based on our technology, our AI and machine learning underwriting models, that is able to responsibly expand access to important mechanisms of financial growth like access to credit. That's something we'll be doing more of. On the other side of it, enabling commerce using AI, I think we're just at the beginning. There could be more to come, but of course we'll do that responsibly from a privacy and data perspective.

I think there is more potential ahead of us, but we have plenty of growth with the sorts of loans we've got today, which are relatively short in duration. You can think of them more as working capital. This younger generation, Gen Z and millennials, are moving away from traditional forms of credit, from credit cards, because they get you into a revolving debt spiral with interest rates that are hard to claw out of. With Afterpay, buy now pay later, with a Square Loan, with Cash App Borrow, if you don't make a repayment, we don't give you another loan. We don't get people entrapped into debt cycles. We're very transparent upfront about what our fee structure is. So we think the sorts of loans we offer are really the refreshed version of offering credit to the next generation. Is there a version down the road that looks longer term, like a mortgage or an auto loan or a student loan? Potentially. But I think there's plenty of growth left with what we're doing today, which is really about getting people through a given month from paycheck to paycheck, smoothing their cash flows, and enabling them to invest in themselves.

I think we are always open. We remain opportunistic. We have a very strong balance sheet, and we have the ability to do anything that we see ahead of us if an opportunity arises. But we don't feel the need. We have so many incredible brands and assets at our disposal between Cash App, Square, Afterpay, and so much growth potential. Oftentimes the harder thing is what we say no to, rather than looking for the growth opportunity. If you look across financial services and commerce, there is plenty of growth opportunity for us. Really it's about execution, making sure our teams are organized against that opportunity and moving quickly, which is where I think AI comes in for us, enabling us to prototype rapidly, get things in people's hands more quickly so we can learn and double down on the things that really resonate for customers. That's more of the focus for us as a company right now.

First of all, we believe Bitcoin has the opportunity to become the currency of the internet, to enable companies like Square and Cash App to be more global and to move at the speed of the internet. So what we thought about doing from a Bitcoin perspective is contributing to the Bitcoin ecosystem by creating more utility. We have a buy/sell feature which is incredibly accessible — you can buy a dollar worth of Bitcoin. We have a self-custody feature, Bitkey, which enables people to custody their own Bitcoin off of platforms like Cash App or Coinbase. And we have a mining solution now called Proto Rig, which is launching in the back half of this year. We already have our first customer lined up and many more to come through our pipeline. What this enables Bitcoin miners to do is have competition in a space that has been largely dominated by one company based out of China. Because of that market structure, these miners have not had access to reliable, highly efficient modular systems. We think we have a right to win here because we have a stake in a world that includes Bitcoin, we have tremendous software and hardware expertise, and because of our hardware experience at Square, we have relationships with the TSMCs of the world to be able to actually produce these high-fidelity machines. It's a big ecosystem. Today we think the TAM is $3 to $6 billion across miners who are buying these sorts of rigs. We are just getting started, and we're excited to see where this heads over the next couple quarters.

Primarily, we want to be able to serve all of them. We will start with the larger customers, and I think that's a great way for us to train our systems and get as efficient as possible. Over time, we will have more products on our roadmap that enable us to democratize mining. You could imagine that you have a space heater under your desk that is also mining Bitcoin for you at some point down the road, or that it's located somewhere else in the global South. We always take the principle at Block of starting small, testing and learning. What we're doing first is these rigs that serve more of the industrial miners. Over time, you could see this going much more broadly.

It's a really good question. Maybe one of the toughest decisions we've had to make over the past couple of years is to focus Cash App's business on the United States. We actually had some smaller bets outside of the United States and some things we were getting started, and we decided to hunker down because the opportunity to focus on bringing more of our customers in the U.S. to become more engaged and bringing more new customers in was so vast. So we retrenched a few years ago for Cash App in the United States. I think it's one that potentially could change over time, especially as you think about stablecoins as a future platform for money movements, especially globally and more efficiently at scale. That may turn out to be a no for now, and we revisit down the road.

Thank you so much.