Block, Inc. Q4 FY2024 earnings call

• Jack Dorsey mentioned the company expanded from a payments tool to a full commerce platform, enhanced Cash App's financial services, and restructured the organization. - Amrita Ahuja highlighted 2024 gross profit growth at scale, improved efficiency, Square GPV growth in Q4, Cash App paycheck deposit actives growth, significant increase in profitability and operating leverage, and discussed 2025 guidance. - Emphasized reconfiguration and reorganization of the company for rapid acceleration in 2025, including an AI assistant for engineers (codename goose), improved go-to-market clarity, prioritized road map across the company, and focus on neighborhood network strategy, AI automation, open source innovation, and Bitcoin infrastructure.

In 2024, Block achieved $8.89 billion in gross profit, representing an 18% year-over-year growth. Square's gross profit was up 15% and Cash App's was up 21%. Square GPV grew 10% year-over-year in the fourth quarter with U.S. same-store sales growth increasing 200 basis points sequentially to 6.9%. Cash App's paycheck deposit actives reached 2.5 million in December, growing 25% year-over-year. Adjusted EBITDA was $3.03 billion, up 69% YOY, adjusted operating income was $1.61 billion, a more than 4.5 times increase YOY, and adjusted free cash flow was $2.07 billion for the 12 months ending December, compared to $515 million a year ago. Block achieved 36.5% on a Rule of 40 basis in 2024, up 7 points from the prior year.

• Expect strong gross profit growth of at least 15% YOY or at least $10.22 billion in gross profit for 2025, maintaining guidance despite FX headwinds. - First quarter expected to be the low point for gross profit growth and adjusted operating income. - Anticipate more pronounced acceleration in Cash App with Borrow, Afterpay on Cash App Card, and marketing investments. - Square's TPV and gross profit to improve through retention and acquisition, with ramped marketing investments. - Expect adjusted operating income of $2.1 billion or approximately 21% margin, expanding 240 basis points YOY. - Aim to exit 2025 at a Rule of 40 run rate and achieve targeted Rule of 40 in 2026.

• Forward-looking statements are subject to risks and uncertainties, actual results could differ materially. - FX rates could be a headwind, and macro environment uncertainties may impact results.

Q: What proof points are focused on to gauge progress on execution in 2025?

A: Jack Dorsey mentioned development velocity, how quickly the company can move, ship things, and see impact. An example is the AI assistant 'codename goose' built by a small team in months.

Q: Talk about 2025 Square GPV growth components?

A: Amrita Ahuja said it's driven by same-store sales growth, retention, new cohort size, and annualization of last year's cohort. Acceleration in Q4 was from same-store growth in food and beverage and retail, and 2025 expects GPV to accelerate with product and go-to-market initiatives.

Q: Thoughts on Proto, the open bitcoin mining system?

A: Jack Dorsey said it's a massive opportunity, the market is large, customers want other options, manufacturing chips now, and 2025 could see unexpected upside.

Q: What's needed for Cash App MAUs to grow again?

A: Amrita Ahuja said there's significant long-term opportunity, deliberate decisions in the near term led to 57 million monthly actives, investments in compliance, support, risk, leading to engagement and unit economics benefits.

Q: Gross profit guide by segment for Q1 and full year?

A: Amrita Ahuja said Q1 expected to be lower, but gross profit growth to ramp through the year with Cash App's acceleration more pronounced.

Q: Feedback on enhanced Square for Restaurant point-of-sale experience?

A: Jack Dorsey said getting good feedback, features like bar tabs working as they close gaps in competitors' offerings.

Q: Strength in Afterpay and profitability of Cash App Card with Afterpay?

A: Amrita Ahuja said they determine eligibility for Afterpay on Cash App Card, excited about compounding growth, risk loss is an important investment area, and Afterpay on Cash App Card launch has strong attach rates in beta.