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Competition among point-of-sale system providers shows no signs of weakening among two top companies. Square, the acquiring arm of Block Inc., reported a 13% increase in its payment volume for the first quarter, while competitor Toast Inc. says its gross payment volume rose 22% year-over-year.
Square’s first-quarter performance comes on an overall 8.2% increase in gross payment volume. Block cited independent sales organizations as a contributor to the growth. “Beyond field sales, early results from over 140 independent sales organizations (ISO) partnerships exceeded our expectations, with over 200% quarter-over-quarter growth in the number of new sellers coming onto Square from ISO partners in Q1,” Block says in a shareholder letter.
In 2024, Block said it would evaluate opening a sales channel via ISOs, something it tried when the company was founded in 2009, but withdrew when it saw no success.
Volume in Block’s other major operating unit, Cash App, reached $55 billion, up 18%. With just over $6 billion in revenue, Block recorded a $172-million operating loss for the quarter, compared to a positive $329 million a year ago.
In related news, Toast says its gross payment volume in the quarter totaled $51.3 billion, a 22% year-over-year bump. Its total number of locations increased 22% to 171,000.
Revenue for the quarter totaled $1.63 billion, up 22%, while net income more than doubled, to $126 million. Traditionally an in-store POS system provider, Toast in April said it is expanding its services into restaurant drive-through lanes.
Also in the quarter, Toast launched Toast IQ Grow, an updated version of a prior service meant to help merchants with marketing, payroll, inventory, and operations management.
Toast has high hopes for Toast IQ, which responds to natural-language prompts from users, allows retailers to see which items are selling, which are running low, and where margin opportunities lie. In inventory management, for example, retailers can ask the app “what items need restocking this week?” and see data on which items are nearing depletion, out of stock, or have been inactive for 30 days.
“Our advantage here is structural,” Aman Narang, Toast chief executive, told analysts during a call to discuss the earnings Thursday. “The data that powers these functions, what guests order, how often and when they visit, how much our customers spend on labor and inventory, how the business is performing, already lives in Toast.
“That data has been built up over 14 years; every new location and transaction makes it more valuable. Every agent we deploy deepens the value we can deliver for our customers. This advantage is already showing up in the product. Toast IQ has 40,000 weekly active locations and growing,” Narang said, according to an Investing.com transcript.
