Block Sees Afterpay GPV Up 30% 

Depending on where you look, it’s been a rocky earnings season for payments providers.

Not so much for Block (formerly Square) which posted results Thursday night (Feb. 24) that showed increased traction among mid-market sellers, with double-digit percentage gains in card-present and card-not-present activity — and  a further embrace of Cash App.

Shares soared 20% out of the gate Friday morning (Feb. 25).

Buy now, pay later (BNPL), of course, looms as a growth tailwind following Block’s acquisition of Afterpay at the end of last month.

The Headline Numbers 

Revenues gained 28.1%, to meet the Street at $4.1 billion. Gross payment volume (GPV) gained 44.7% to $46.3 billion, and transaction-based revenues gained 41% in the period, to $1.3 billion.

The company said that during the quarter, 37% of GPV came from mid-market sellers, up from 30% last year.  Mid-market sellers generate more than $500,000 of annualized GPV.

Bitcoin, volatile as it was, actually outpaced transaction-based top line contribution, accounting for 48% of consolidated sales. Cash App generated $1.96 billion of bitcoin revenue and $46 million of bitcoin gross profit during the fourth quarter of 2021, up 12% and 14% year over year.

And BNPL — and its activity within the Cash App for Afterpay customers — was a key focus on the conference call with analysts and in supplementals provided by the company.

In the company’s shareholder letter that accompanied earnings results, Block said that in the fourth quarter, Cash App generated revenues of $2.6 billion (up 18% year on year) gross profit of $518 million, up 37% year over year.

Cash App was a key driver of subscription and services-based revenue, which was $772 million in the fourth quarter of 2021, up 72% year over year.

The company also said that the Cash Card had reached “significant scale” in the quarter, with more than 13 million Cash Card monthly actives in December, representing more than 30% of the firm’s 44 million monthly transacting active user base (that 44 million number is up 22% year over year).

Drilling down into Cash Card spending, Block said that at its top 250 merchants in the fourth quarter, consumers Cash Card spend broke down to 21% at big box retailers, 20% at restaurants and 10% at grocery stores.

In commentary on the earnings call, CFO Amrita Ahuja said inflows (the amount of money customers pulled into their Cash App accounts) totaled $45 billion in the fourth quarter, which grew year over year and quarter over quarter even as most government disbursement programs ended by September. This represented more than $1,000 per monthly transacting active individual.

“We believe we’re still early in this cross-sell journey, especially when you think about the power of a product like Cash Card, which is still at only just over a 30% attach rate to our total active base,” said the CFO.

CEO Jack Dorsey commented that “The strongest and greatest thing about Cash App that we found is how it creates network effects.” He noted, too, that Block has seen growth in recurring paycheck deposits with volumes up two times year over year in the fourth quarter.

Cementing the Ecosystem 

As for cementing the company’s ecosystem, Square said in its materials that during 2021, 38% of the firm’s gross profit came from sellers using at least four of the company’s products, up from 10% in 2016.

And in a sign of in-store spending, the company noted in its filings that card-present GPV was up 56% year over year. CNP growth gained 27% year over year, driven primarily by growth from Square Online, Invoices, Virtual Terminal, and eCommerce API. Square Loans (formerly Square Capital) facilitated 103,000 loans in the quarter.

BNPL 

Though Afterpay did not contribute to Block’s results in the fourth quarter, management detailed the company’s metrics on the call.

Looking first at Afterpay’s growth drivers in the second half of 2021, gross merchandise volume or GMV was up 54% year over year. Revenue and gross profit each grew by approximately 53% year over year.

At the end of December, Afterpay had more than 122,000 annual active merchants, up 64% year over year, and more than 19 million annual active consumers, up 47% year over year.

Ahuja said Afterpay “saw healthy consumer repayment behavior as 98% of installments were paid on time in the second half of 2021, consistent with the first half of 2021.”

On a full-year 2021 basis, Afterpay delivered $19.7 billion in GMV, up 74% year over year, said management on the call.

Revenue growth was approximately 71% year over year, and gross profit growth was approximately 75% year over year.

Looking ahead, the company said in an update that  for the months of January and February, Square GPV is expected to be up 35% year over year. r. For the month of February, we expect Afterpay GMV growth to be between 25% and 30% year over year, with revenue growth in what management termed “a similar range.”