For Block, the parent company of Square, buy now, pay later (BNPL) is already paying off.
Head Jack Dorsey and Chief Financial Officer Amrita Ahuja told analysts that the firm’s latest results indicate that BNPL — in the wake of its January acquisition of Afterpay — is helping generate repeat consumer transactions and increased conversion for sellers.
“We’re just getting started in integrating Afterpay and Cash App,” Dorsey said on an earnings call with analysts. “We plan to make BNPL available for in-person payments, soon, as well.”
Dorsey noted that though it is “extremely early into the integration, this is the biggest thing that our company has ever done.”
With a nod to the fact that, in his own words, “We do see a lot of our competitors taking advantage of the fact that we’ve had this integration,” Dorsey told analysts that “the reason that we acquired this company in the first place is to connect these two ecosystems.”
Those two ecosystems, of course, are comprised of the core audience of sellers (the traditional Square operations) and the Cash App business.
In integrating Afterpay’s BNPL functionality with Square Online and eCommerce API in the U.S. and Australia, roughly 13,000 Square merchants adopted and processed BNPL sales through the first quarter.
That activity grew Afterpay active sellers by 10%, according to the company. Overall, Afterpay contributed $65 million of revenue in the first quarter of 2022.
In the wake of the Afterpay deal, Ahuja said there are 144,000 merchants on the company’s platform reaching 20 million consumers — and with a nod to credit quality, the loss rate is slightly above 1%, with 95% of payments being made on time.
The BNPL tailwinds came as the company said that first quarter, overall, company-wide transaction-based revenue was $1.2 billion in the first quarter of 2022, up 28% year over year.
The company processed $43.5 billion in gross payment volume (GPV) in the first quarter of 2022, up 31% year over year. The company said that the percentage of its GPV tied to mid-market sellers came to 35% in the most recent quarter, up from 23% a year ago.
According to management commentary in the company’s disclosures, those trends continued in April, where GPV was up 29% year over year.
Supplemental materials released by the company also show that more than 10 million Cash App accounts have bought bitcoin since the product was introduced, which led to $2.5 billion in overall Cash App revenue in the period.
Related: Block Sees Afterpay GPV Up 30%
Card Present Gains Ground
Drilling down into some granular detail on the payments themselves, card-present GPV “achieved strong growth in the first quarter,” up 41% year over year. Meanwhile, card-not-present GPV was up 21% year over year — driven in part by Square Online, Invoices, Virtual Terminal and eCommerce API.
During commentary on the conference call, Ahuja said that the company logged its strongest monthly engagement on Cash App in March, as “monthly actives” transacted 21x in the month, “driven by strong adoption of our banking product, including Cash App Card.”
Direct deposit has also been growing, said Ahuja, and there has been strength in recurring paycheck deposits, which were up more than 2.5x year over year in March. In that month, the company reached about 1.5 million direct deposit monthly active users.
She noted that with Square Savings, mid-market sellers were twice as likely to fund their Square savings accounts soon after opening, compared to the average seller. Even larger sellers are under-served by traditional financial institutions, she said, presenting new opportunities for Square.
Dorsey added, “What sets us apart from any other company, whether they be focused on sellers, individuals or buy now, pay later, is that we have all of this in one ecosystem.”