Block Nears $5 Billion in Revenue

Buoyed by Cash App, services, and a move up market Block Inc., parent of Square and Afterpay, generated nearly $5 billion in first-quarter revenue, a 25% increase from $4 billion in the same quarter a year ago.

Its transaction-based revenue of $1.42 billion was a 15% increase from $1.29 billion last year while subscription and services-based revenue ballooned 42% to $1.37 billion from $959.6 million in the 2022 first quarter.

Cash App was singled out for its role that saw its revenue jump to $3.27 billion in the first quarter, up 32.9% from $2.46 billion in the corresponding quarter a year ago. Cash App Savings debuted in January, which helped provide another financial service with the Cash App ecosystem. 

Cash App had 53 million monthly active users in March, up 15.2% year-over-year, Amrita Ahuja, Block chief operating officer and chief financial officer, told analysts during a call Thursday. In March 2022, the tally was 46 million. That was driven, in part, by marketing and acquisition tools and high product adoption over time, Ahuja said. Cash App Card use also blossomed, now accounting for 38% of monthly active Cash App users, up from 33% in March 2022.

Block continues to develop the Cash App ecosystem to make it more enticing with users, such as adding benefits for consumers that deposit recurring paychecks to the Cash App Card. It had 2 million active direct deposit users in March with deposits totaling $2.5 billion, a 69% increase year-over-year.

Like savings and the card, other services may find a home in the Cash App product set. “All of our products within Cash App are from looking at these adjacencies,” Jack Dorsey, Block founder and chief executive, responded to an analyst inquiry. The peer-to-peer payments component of Cash App has a base-level utility to it that helps make it an “easy way to get into the app and our ecosystem,” Dorsey said. 

Within the Square ecosystem, evidence of Block’s turn to gaining larger merchants shows up with 38% of its Square gross payment volume attributed to mid-market merchants, up from 35% in the 2022 first quarter and up from 30% in the 2021 first quarter.

“We believe we are less than 1% penetrated in the large seller opportunity in the U.S. alone,” Ahuja said. To get more of these merchants, Block redesigned the Square Web site to change the primary call to action to contact sales and to create a vertical experience for restaurants, retail, and beauty merchants. Though it’s early, Ahuja said, the moves have strengthened Square’s overall acquisition and lead generation goals.

In April, Square launched nearly 100 updates that includes a test of Square Subscriptions and an integration with OpenTable, the restaurant reservation service.

Square also launched Tap to Pay for Android in six markets in the quarter, joining its already available Tap to Pay on iPhone service.