Block (Square) Aktie

All right. Thanks, everybody, for joining. My name is Tien-Tsin. I'm the payments analyst at JPMorgan. It's always a highlight for me to get to interview this guy and to get an update on Block. So before I do the formal intro, let me just read the safe harbor statement.

So during this conversation, Jack may make forward-looking statements, including about Block's preliminary expectations for its financial performance in the second quarter that are subject to certain risks and uncertainties, including changes in macroeconomic conditions. They may also speak as to certain non-GAAP metrics. Please take a look at Block's most recent filings with the SEC for a discussion of the company's risk factors and for reconciliations of non-GAAP metrics to their most directly comparable GAAP financial measure.

Further, any discussion of Block's lending and banking products refer to products that are offered through Square Financial Services or its bank partners. I read that without my glasses.

Congrats.

That's the biggest feat of the day. Jack Dorsey, Block, Head, Chairman, Co-Founder, thanks for being here with us, Jack.

Thank you.

Always look forward to the conversation. It means a lot to me. So I was thinking about how to drive this conversation, Jack. There's a lot of ways to go with it. I was thinking because you're always talking about empathy and putting yourself in the shoes of the user, the customer, the SMB, you pick it. I thought we'd start that way, if that's okay. But you talk about being an intelligence company. What does that mean? Can you talk to it in the way that you would tell a restaurant or a retailer? What is being an intelligent company mean? I'll start with that.

Yes. I think in the old world, we would deliver products. And those products would be very top-down driven and opinionated. And we'd have to bet that we're making the right choices for these products, and that's inclusive of the features we offer and the navigation and how to find them. And I think in the future, it feels more like streaming intelligence and streaming interface.

And I want to figure out how to -- like our biggest -- any company's biggest limiting factor is the road map. So if we're entering into a world where our sellers and our customers directly can build what they want, and we can make it easy to do it through our interfaces. Even if we don't have a feature, they can build a customization, they can build a feature, they can potentially even build a product right through our interface. And if we don't offer the capability to do so, that becomes our ultimate road map.

So what I would say to them is like if we have anything that's limiting you, you can just state, I want this, and it will be built for you in real time and delivered to you in real time. And it's not that far off. I think it's a this year thing, at least within our own ecosystem rather than like very, very far out, like we can do this today internally. It's just making sure that we can deliver that to our customers directly like in the interface that they know.

So the idea would be if I'm a salon and I take appointments and I've heard this before, they complain that they can't penalize customers for not coming in. So they could build a tool or a way to feed that person or to bring them in or to reschedule it. That would be the idea as simple as that, they could do it themselves.

Yes, absolutely. They can build the features they want. They can build the customizations. And this can scale from the very small like sole proprietors all the way up to the very largest customers that we have.

How about on the Cash App side? What would that look like on the Cash App side? So my kids use Cash App. It's going to become an intelligent company. What does that mean? Is it as simple as they can help manage their budgets. They can figure out what they can afford or not afford. What would that look like?

For them, I think it means like you have this protector that's constantly watching your inputs and your outflows and like everything that's going on in your life. And we can build a very rich world model around our customers, and we have that today because we had to build it for lending and for risk for Cash App. And we can be a lot more predictive about what people might do next and also what they might need next.

So we can meet them where they are immediately. And instead of us relying upon them finding a product or a feature through our navigation, we can just deliver in the conversation. So I'm a big believer that voice is the definitive interface of the future. But right now, it's very turn driven, and it's not as interactive as it should be. And I believe we need to figure that out. And like being able to talk with your money, allows you to maximize your money a lot more and even build like features or views or things that you want to see within the consumer side.

But if we have a lot of customers asking about insurance, for instance, and we don't offer it as a capability, like that becomes our road map. We can have a debate within the company, like should we offer insurance, should we offer XYZ because all of our customers are asking about this thing. And we have such higher fidelity information about what our customers actually want. Whereas in the past, we had to like test things and do A/B tests and like have a strong opinion on this particular direction. It just up-levels a bunch with like real concrete data that we can then act upon much faster.

So in terms of discovery and seeing engagement with the users, how soon could we see this, Jack? Is it months, weeks, quarters?

It's this year, like it's this year, like we're working really hard on it. Like we need to convert our company and transition into a pure like intelligence streaming company. And I don't think it's that far off. And like we don't -- the amazing thing to me is we don't have to be dependent upon the frontier labs to do this. We can use open source models, which we are like Moneybot and Managerbot are based entirely on open source models. We've optimized for speed because we think that's a differentiator because it gives time back.

We have this rich understanding of our customers, which we can be proactive around. But like our world models ultimately will be focused on not something that's LLM driven, but actually action driven. And like that's what our company needs to work through the next few phases, but also what we need to deliver to our customers.

Like you just can't do this with LLMs. And the most interesting thing about this is like the resource cost for a world model is far less, like order of magnitude less than you would need for an LLM, which is all trained on the past. Like it's all like everything in an LLM right now is just like things that happened in the past. But what we need is something that's more present-based, more real-time based and more future looking, and that's what we intend to build. And we've already built it because of, again, the risk and lending engines that we need.

Good. I know you're doing a lot of building and testing and work internally. I've been talking to your team and folks at Block. I mean, the usage of the tools are -- it's just incredible. Everybody is buzzing about it. So from an investor standpoint, Jack, I get this question a lot, right? We've all had mixed success in using some of these tools. You're placing a lot of emphasis on AI and Builderbot internally. So what can you tell investors around the guardrails that you have in place that the service and the quality, all of that good stuff is actually where you want it to be that you can roll it out as fast as you have been doing?

I think it's a framing thing more than anything else. Like if you're building assistance or advisers like you're not inherently building a a world view that protects the code base and protects the cohesion of the system and protects like our design elements and like our brand value. But if you have that sense going in of like these are -- what we need to build are protectors that are looking at everything that we're doing 24/7 and keeping us from making bad decisions or at least alerting to us where we have variation or any sorts of standard deviations from the norm.

And we get to choose like where we actually go far off and where we stay on track. I think that's the most important thing. But like it's it's a decision you make. And like we've decided that like Goose and Builderbot are going to be more of a protector role than anything else, more than an adviser and assistant, which are more throw away. If you have a protector, it's just constantly looking and ideally like meeting you where you are, helping you think about the next steps -- and it's trained exactly to do that.

And that's not easy to do if you don't have a lot of real-time data, and you don't have like super legible company. We have a benefit in that we are a remote-first company. So everything that we do, all of our meetings are recorded. We have all the transcripts for every meeting. Everyone's writing in Slack, everyone like is using Jira and GitHub and Linear and Airtable and all these things, literally, almost everything in the company is eligible and something that's readable and adjustable by intelligence that we can then use to build a predictive model around and help us think through some of the issues.

And like nearly everyone in the company is now thinking along this path. And we have 100% usage of the tools. like 100% of our population is using the tool in some way in their day-to-day. And we just like we're early with Goose and it's become a portal into our company. And this is a full agentic coding system, but it also allows you to query, have a conversation with any part of the company, any one of our systems. Everything is logged in, everything is a, like it just like works. And that is probably the best way to like change the culture towards like our job now is to align this thing. Our job is around judgment. Our job is around taste. Our job is around opinionation and like what we want to see in the world and what we want to build in the world and how it's differentiated from what others are doing.

Yes. So what this think about segueing this into -- you've been pretty visible talking about the future of work. You've spoken at a lot of different events. I know you did that podcast with [ Rollo ], and that was great. Maybe it's a good chance for you to maybe elaborate on that, if you don't mind, Jack. I thought it was really insightful. And some of the statements that you've made around the reorganization, we've heard repeated by some of the companies that even I cover, let alone broader tech. So it was quite prescient. But can you just elaborate, again, what does this mean for the future of work? And you just talked about it, right? You were on the stage with me before talking about distributed workforce, work from home, and you mentioned how everything is archived and transcribed and you have reference points to all of this. So I didn't know if that's by accident or if this all is getting to the place that you're ultimately landing, which is the future of work. How do you see it, Jack?

I think the word and the concept that matters most to us, and I think to every company before they realize it is legibility. Like how eligible is your company and the operations of your company. I think every organization is, by definition, in distributed intelligence, but all the intelligence is trapped in people's heads. And if it -- like the probability of it reaching to you through the management chain is very, very low and very lossy.

So if you just look at the history of the management chain and like the hierarchy, it's there for a reason. It's there to like route information towards like huge numbers of people. But now we have much better systems that can coordinate people and that can orchestrate people and put people at the same level of the information as anyone else. And I'm a big believer that an idea that can change our company can come from anywhere in the company.

But that's a function of like how much information, how much context any one individual has. And if they're right there with the data and right there with the decision, then it allows a lot more speed and allows us to feel the product of the future much faster and allows us to make a decision much faster. So like right now, I think we're about -- for me, we're about 5 layers deep. I would love to get that down to 2 to 3 by the end of the year.

And the ultimate path in my view, is that we move from a structure of like reporting to one of assignment. So instead of like managers having a team that they tell what to do, you're assigned to a group of potentially hundreds of individuals that you're focused on helping get to mastery of their discipline and helping them think through their career and like how to think about problems and see around corners and being strategic and just mentoring them, but you don't have to like tell them what to do. You can show them how to do it.

And in engineering last year, we moved from a world of having pure managers to the requirement that every manager must be technical and they must contribute code. And that was just one step, and we need to do that throughout the organization for all of our other disciplines as well. And we're already seeing that. I think Owen right here is probably one of our most voracious builders at the moment, and he's never engineered before this, and he's creating entirely complex systems that benefit him, that benefit his team that are thinking about like what it means like to have this hierarchy and what it means to diminish it and how to continue to scale this with these tools.

And if we have everyone in the company thinking that way and anyone can have an intent or an idea that can change the course of the company, then our probability of success is much higher because we just have more people thinking about these like creative outcomes, and we have all this customer input coming to us.

So like the probability like feel that it creates is just unlike anything I've ever seen in building systems and building companies. It's just like it's such a -- I'm so grateful for this time because it's just like something I've always wanted to do. And I've just always felt like -- and I experienced it every day that the reporting structure gets in the way of creativity. And it slows everything down, especially as you get bigger and bigger and deeper and deeper. And the sooner we all realize this as companies, the faster we can move and deliver like significant innovations to our customers.

Right. So the output, we should just think of as more product velocity, Jack? I know gross profit.

Higher quality as well. Like it's just more creativity. Like we've always been good at interface, and we've been good at like pairing capability with interface. And we've been very inventive -- like the Square reader was a new interface. The Cash Card with the customization was a new interface. Peer-to-peer with a payment pad was an interface. And it was stark and it was opinionated and it was unlike anything anyone has seen. And now it's taken for granted.

But there's new form factors, there's new mediums, there's new interfaces that today are quite -- like the chat one for me right now, how turn-based it is, is just like so crappy and such like there's so much opportunity to like reinvent that thing and make it feel a lot more human. I mean you like -- when I'm talking, you're like interrupting and like all these things, and that's natural, but like the chat interfaces and every voice interface that you experience today cannot do that because it has to translate everything back into text and then go back into a turn and wait and just like if you're interrupting it, it stops the whole chain of thinking and like goes back to a different turn.

So there's just a whole different experience that we can create and for you and your money and you and your business, I think that's the right thing because we want these intelligence to feel like you hired one of the best business managers you could for your company, your small business or your large business. and the best financial adviser and kind of friends for your -- to maximize your money and get you on track or to like hit your goals or give you new opportunities.

If it's anything but that it's going to feel just mechanical. And like there's just so much exciting stuff there that like we're building right now that I'm excited to push out to the world.

So I'm simple-minded. So if I'm thinking about quality, does that mean customization, are things going to be more customized or more tailor suited to the individual? Is that one way to think about quality?

Yes. I think this concept of product or app like just blurs out into nothing because it just becomes a stream. It just becomes a stream of like what I need in this moment to do this thing that I need to take care of, and then it dissipates into nothing again. And that's what it should be, but we just haven't had the technology to make that scale, but now we do. And we can bring it to a very broad base of customers.

Okay. Good. No, that's helpful. Always learning, Jack, that's why I love talking to you. So thinking about the two ecosystems, if you don't mind. Let's get into that. So Cash App, and I've told you this before, I feel like with Cash App, right, having empathy about your customer, I think that's one of your superpowers. And I think it's really hard, right, to gain this kind of empathy. Do you feel like there's a real point to get to where you can really differentiate from the traditional banking system. We're so accustomed to thinking about banking in a certain finite way. Has your thinking around what Cash App looks like changed here given everything we just talked about?

I think -- like I think that framing of a protector, like I'm going to work nonstop to protect your money and give you optionality to grow it and to maximize it. I think that's extremely valuable. I think it's very out of reach for most people. I think we can scale it into something real and feels amazing.

But the traditional banking relationship is one of taxation more than anything else and fees and obscurity of information to encourage bad behavior which creeps more fees. That's what our experience was when we first started Square is like the merchant was encouraged through obscurity of information to overdraft. I mean, like it was ridiculous. And just by like doing a simple thing of like your rate is 2.75% for every card changed the game for most of our sellers because they could predict what they could do with their business and what they need to do with their business.

Square loans, they would go to a bank, ask for a loan. The smallest amount a bank would give them is $25,000 at that time. They would take the $25,000 and they would spend it all, and then they're in this like doom loop of like how do I pay this back when all they needed was $1,000 to buy a new salon to double -- potentially double their business and paying back by just swiping their customers' cards and the sale felt like it wasn't alone. It was more like a stream within their business that they can just like they don't have to think about, like I just need to now sell and focus on my customers. So anywhere where this is alignment with this concept of like if we help our customers grow, we grow. And if we grow, we can serve more customers. It's just this amazing virtuous loop that I'm so proud of and happy to be in this space because we found it because there's a lot of other business models that are tax-based.

Yes. Because when I think -- I'm glad you said some of that because when I think back to Square in the beginning, and you broke the status quo of onboarding merchants, right, with instant underwriting, and that was unheard of at the time, and that's what broke that opportunity open for you on the Square side. So thinking back to Cash App and lending because, Jack, we get questions all the time from investors, right? Why is Square going to win in lending?

How can they lend better than the bank with years of all this data. But do you think of that as the same opportunity, okay, I'm going to instant underwrite a merchant with Square onboarding similar to Square Borrow or Cash App borrow or any lending product that you can break that status quo of traditional underwriting and do it your own way? ?

Yes. We just have a better model. Like we've been doing machine learning and deep learning for 16 years. And like if you really understand what a world model is, this is -- it's a customer-focused reality of like what's happening and it understands the consequence of giving like a loan or like allowing this transaction to pass or not and just constantly updating its understanding of like what these risks are and what the opportunity cost is and like what the consequence is.

So not only do I believe that we can continue to grow that and do it better than anyone else. But I believe that we can now translate these systems to all customer actions across Cash App, across Square and even across our company, where we can be a lot more predictive around what the company should be doing more of or should be doing less of and like how we think about like building our company in total.

Yes. Because even like -- you have a credit score product now, right, Jack. And investors are always saying, "Hey, let's see what happens in the down cycle on credit. Will it perform well?" Your response is you have the data. You're confident in the data, and it will live up to that. Is that the simple response?

Yes.

We'll have to go through a cycle then. we'll ask you about it. But no, the team -- the credit team that we've met have all spoken again with a lot of analytical rigor to talk about why it's going to work. Just one more on the credit side, if you don't mind. What's your vision on the Cash App credit score? I mean, thinking about traditional credit scores and people are always trying to outrun that or think about it differently. This does seem like it's a brand-new way of looking at your credit score. What's the vision behind it?

Well, the vision is like, again, it's a real-time picture. Like money is the most honest signal one can have because you can't lie about it. We see every transaction going in and out for an individual, but also a much larger base. And we see it from a seller side and we see it from a consumer side. And we can bring that to bear in terms of what that actually means and like what it means from a trustworthiness and like how you can increase those scores. And so we think there's opportunity to like distribute that through other parties or just like completely own it ourselves or like a partner. There's a bunch of paths we can take. We're just trying to figure out like what that means. But right now, like it's a very credible system. It's very predictive, and it's based on like 16 years of understanding and operations.

Yes. I'm excited about it. So I think one more, if you don't mind, just last year on stage, we talked about the shift towards user density and the importance of density. Sort of 1 year later as you're thought changed on where you're going to grab that next user from? How are you going to get that next user? What's the latest?

I think what will always attract new people is like as we consider new interface mediums and new packaging for like card formats and new interactions. We'll add all the tactical things that we need to, like, serve customer gaps, but like I think where we've been great is just truly inventing on the interface and rethinking it from the ground up.

And that's what the company now has the freedom to do because a lot of the mechanical stuff is now handled by a bunch of our systems that we built to program and to build and to really shift like our outcomes. So I feel like there's a lot more creativity in the company, again, like harkening back to our early days of when we're just like thinking like why does this need to be a rectangular like piece of plastic or metal, why can't it be something completely different?

And like why can't we why can't we focus entirely on voice? And why can't we generate UI in real time? And just questioning all the fundamentals to make sure that like we're 10 steps ahead of the expectations that people will have, including ourselves. And like this change we made in February, I think, has unlocked a bunch of that because it just kind of shook the snow globe a bit.

And so like we need to get creative again. We need to wake up. We need to like apply the technology in creative ways in the way that we did in the past of like looking at the phone, this thing that just came out and looking at its capabilities, has a headphone jack at the back of a credit card is a magnetic strip. It's a cassette tape. It's audio.

We can get the number. We can send it up to Visa Mastercard. Like there's dimensions of that, that are still yet to be manifested within our two core capability categories of finance and operations that we're really excited to like bring to life. And it's just starting, but I think we'll see a lot -- you'll be able to experience a lot like this year, which I'm very excited about.

Now creativity, I don't know Jack sitting here talking to you. I mean, creativity is -- seems like a theme you're excited about. I feel like we haven't talked about that in 15, 16 years. It does feel like that's the big unlock here that I didn't appreciate until we got up on stage. Is that fair?

Oh yes. I mean I think the durable skill for humans going forward is judgment, it's creativity, it's taste. I mean it's like putting the things together, like the -- with a lot of these models right now, if you like prompt them and then you get output and then you just treat that output as output, I think you lose a lot of the potential.

If you treat the output as input for your own creative process, like you get to see a much broader range of possibility. And it really -- like you get serendipity and you get all these like sparks that you probably would not have otherwise. That's how I use it. I just want to increase the breadth of everything that is possible, and then I can pull the thread of what I think is interesting and then keep pulling it and like keep pushing it.

And I think that's where the design discipline is going. That's definitely where engineering is going. That's where all of our disciplines that we see are going because now everyone in the organization is -- has a potential to be a builder and to leave a mark in a way that they couldn't in the past. They're not just a user. They're not a consumer anymore. They can actually put something out, produce something that they can use or someone else on the team could use. And the confidence that, that builds and the randomness that it gives the company such that like we can see new things, all that fuels creativity in my view.

Yes. No. So the output should be they're fun to watch. So we are going to take questions from the audience, by the way. I should have said that upfront. So let me just ask one more, if you don't mind, on the Square side, which is I think last year, you showed off a new terminal. You and Owen showed off a new terminal. I think we just saw the drive-through in Chicago at the Restaurant Association event. And there's so much talk about AI and software development and how that's going to change. But you've always been very focused on hardware, Jack. And I know there's questions around memory and supply and everything else. But why is hardware so important to you?

Hardware is a superpower. It changes your mindset about how you build things because the lead times are so great, and it's so complicated to get things right and to be vertically integrated in the way that we are with deep relationships with our vendors that have decades because we have a lot of people from Apple had those relationships as well, allows us to do things that others can't, like they have to contract third parties and they have third-party designers and like it doesn't really fit the software in the way that it was meant to. And like we can just be we can be laser-focused on like exactly the experience we want to have, and we can be very opinionated without compromise because we control the whole stack.

I'm really excited this year, like there will be one thing on Cash App. That's hardware related that you always see. And there'll be one thing on Square that's hardware related, which I think, completely changes the game in terms of interface and how seller thinks about operating their business and interfacing with their customers. So both are only possible because we are a hardware company, first and foremost. And everything else follows that. It's also -- it's the impression, like it's a tangible thing that feels real, I think inspires trust and allows people to like just have a different experience than they would with just pure software, which is becoming more and more throw away.

Good teaser. And I know you always value the elegance of the hardware. So thanks for answering it that way. Questions from the audience, happy to take them. We have 5 minutes left. I promise we leave time. upfront over, sorry. It's hard to see we'll try and repeat it.

I was very interested in a quick uptake on a general basis for products. And I think particularly those under 30 that opportunity in many ways other credit card I want to do some longer-term thinking about when you look at the next 5 years, about how that business develops since you're really one of the leaders there. And I'm interested to see the potential.

think the -- what we want to look at is like what is the use case? And like what are the pain points and how is the customer suffering with today's products and today's formats versus like what we could do in the future. And the idea that like we're thinking a lot about is most work today is postpaid. It's a 2-week postpayment. And how do we bridge that gap such that it feels like you're being paid in real time.

Like that's a format shift that I think is super compelling, especially to a much younger generation where everything is kind of streamed to them. And if you can imagine money being streamed in a similar sense, there's a packaging there that I think is extremely innovative, presents an entirely new interface and solves a real need that is independent of like these categories that we put them in, but more of like how do we like just like what is the customer suffering problem and like how do we address something with -- how do we address that with something like super creative -- this is exactly what we did with Square Loans all the way back in the day.

But like we just looked at like what does the seller actually need and how should they pay it back? They should not pay it back in just like one lump sum. They should pay it back in every transaction they do because it feels like a part of their business. So we're looking at the same on the consumer side. And we think there's a 10x jump from the current formats into this newer format. So we'll be exploring -- hopefully, you'll see some of that this year, but it's the one I'm most excited about. It's just like questioning the format altogether.

Jack, this is [ Brendan ] from [ Ten-Tsinsein ]. Thanks so much for doing this. You spoke about creativity as well as focus, which I feel are sort of doing strengths of your organization. So I wonder if you could share with us to what extent our creativity and focus strengths that sort of pull against or in concert with one another and how you manage and prioritize between creativity and focus on the vision?

Yes, I think it's attention, and I think it's a tension we want to build. We want a lot of people experimenting and like ideating and like just testing things. And then it's a function of like how good our judgment is and how good our taste is and how good are sense of like cohesion is.

And I think we've been very excellent on all those in the past. There's been some like mishaps, of course, but like you expect it. But we come from a very design-driven background and a lot of that is due to hardware because you can't make mistakes and it just has to feel like really, really good. And it has to feel cohesive, it has to feel tangible, it has to feel way, has to feel real and authentic.

And I think that like it's just part of our culture and people are just constantly making sure that like I'm walking through this experience and this feels super odd. And why does it feel odd and like how do we address that? And it's that healthy tension that like if we do too much of that, we're too comfortable like we're not taking enough risk. And if we're doing if we're being too risky and like we're not being cohesive, then it's going to feel terrible to people.

So there's a happy medium, but I'd rather us go to the extremes to find the balance than just like stay in the middle. And I would say like the past 3 years, we are more in the middle than we should be and not enough on the edge. But now especially this year, I feel like we're all edge and like we're finding that balance again. And that's super exciting to me. And it's from a technology and design place as well.

Excellent. I think we're out of time. Let's have a quick closing comment here, Jack. I appreciate the conversation. I always enjoy it. Any final remarks?

I think -- I don't know how many of you have actually used these tools to build anything just by a show of hands. it's like the one thing I would encourage you to do is just like go home and fire up Codec or Cloud Code or Goose and just try to get it to do something you didn't think it was capable of doing. It can be anything. It can be taking a picture of you from your laptop.

It can be like you can ask it like find all the devices I can control on my home WiFi and build me a dashboard. But just something because you're not really going to understand the shift we're going through until you feel it and you feel what these capabilities are upon us. And I don't think you'll be able to really judge the companies before you and the opportunities until you understand that and the shifts that these companies have to make fundamentally as they think about themselves as companies.

Perfect.

Awesome. Thank you all.

Thanks for the time, Jack.

Hi, everyone. Thanks for joining our first quarter 2026 call. We have Jack and Amrita with us today, along with Owen Jennings, our Business Lead; and Nick Molnar, sales and marketing lead for Block.

We will begin this call with some short remarks before opening the call to recall to your questions. During Q&A, we will take questions from conference call participants. We would also like to remind everyone that we will be making forward-looking statements on this call. All statements other than statements of historical fact could be considered to be forward looking. These forward-looking statements include discussions of our outlook, strategy and guidance as well as our long-term targets and goals. These statements are subject to risks and uncertainties, including changes in macroeconomic conditions. Actual results could differ materially from those contemplated by our forward-looking statements. Reported results should not be considered an indication of future performance.

Please take a look at our filings with the SEC for a discussion of the factors that could cause our results to differ. Also note that the forward-looking statements, including earnings guidance for 2026 discussed on this call are based on information available to us and assumptions we believe are reasonable as of today's date. We disclaim any obligation to update any forward-looking statements, except as required by law.

Further, any discussion during this call of our lending and banking products refer to products that are offered through Square Financial Services or our bank partners. Within these remarks, we will also discuss metrics related to our investment framework, including Rule of 40. With Rule of 40, we are evaluating the sum of our gross profit growth and adjusted operating income margin.

Also, we will discuss certain non-GAAP financial measures during this call. Reconciliations to the most directly comparable GAAP financial news are provided in the shareholder letter. These non-GAAP measures are not intended to be a substitute for our GAAP results.

Finally, this call in its entirety is being audio webcast on our Investor Relations website. An audio replay of this call and the transcript for Jack and Amrita's opening remarks will be available on our website shortly.

With that, I'd like to turn it over to Jack.

Thank you all for joining us. We had a strong first quarter. We exceeded our guidance and are raising our full year outlook. In my letter this quarter, I focused on how the way we operate as a company is changing and what that means for what we build for our customers. Internally, the intelligence tools we've been building are now meaningfully improving how we run the company. Velocity is increasing, quality is improving and more of our work is becoming automated. That shift is also starting to show up in our products.

Moneybot is now live across Cash App, and we're continuing to scale Managerbot, which is already available to more than 1 million sellers and on track to reach all Square sellers in June. We're seeing that when AI helps the customer take an action, they come back at much higher rates than when it only provides them with information.

We think of these as protector systems that can help understand patterns and prompt customers or sellers to act before small issues become much bigger ones. This model of proactive, action-oriented systems is differentiated because it is how people make decisions in their businesses and their financial lives and it's where we're focused. There's more detail in my letter this quarter, and I hope you get a chance to read through it all.

And with that, I'll turn it over to Amrita.

Thanks, Jack. We delivered another strong quarter, outperforming our guidance across gross profit, adjusted operating income and adjusted diluted EPS. Gross profit grew 27% year-over-year to $2.91 billion in the first quarter, driven by accelerating growth in both Cash App and Square.

Adjusted operating income increased 56% year-over-year to $728 million or 25% margin. Adjusted EBITDA reached $1 billion, and adjusted diluted EPS grew 52% year-over-year to $0.85. Each of these adjusted metrics represented all-time highs on a dollar and margin basis.

Cash App gross profit growth was 38% year-over-year in the first quarter, driven by accelerating growth in both Commerce Enablement and Financial Solutions. Cash App monthly transacting actives grew 4% year-over-year as we continue to execute on our product and go-to-market strategies to strengthen network growth.

We continue to deepen engagement across our active space with inflows per transacting active up 10% year-over-year and Primary Banking Actives growth of 18% year-over-year to $9.7 million.

In the first 4 months of the year, we profoundly expanded our product ecosystem, including the ways in which Buy Now, Pay Later functionality shows up across Cash App. We launched Afterpay Pre-Purchase, which allows eligible customers to Pay-in-Four using their cash up card, and we expanded Buy Now, Pay Later functionality to cover peer-to-peer transactions and Cash App Pay.

Moneybot is now generally available. And in the past week, we started rolling out Cash App score, making one of our foundational underwriting capabilities, more visible and actionable for customers.

Turning to Square, where gross profit and GPV growth accelerated in the first quarter to 9% and 13%, respectively. On a constant currency basis, GPV grew 11.5% year-over-year, improving across both the U.S. and internationally.

We accelerated GPV growth from food and beverage sellers to 21% year-over-year and from mid-market sellers to 22% year-over-year, both reflecting the strongest growth rates we've seen since Q1 2023.

International GPV grew 35% year-over-year or 26% on a constant currency basis. We sustained strong new volume added growth across both the U.S. and internationally, reflecting the high ROI field sales investments we made throughout 2025.

We are beginning to more meaningfully scale our independent sales organization or ISO partnerships and now have more than 140 active ISO partners who are ramping quickly.

So far this year, we launched the next generation of Square Register, our flagship countertop pencil and released dozens of new features designed to give sellers time back and help them grow their business. We expanded Square Bitcoin payments into retail and services and enabled Managerbot for over 1 million sellers.

Our strategy to connect sellers and consumers at scale is gaining traction. Neighborhoods expanded to sellers representing $320 million in annualized GPV, up 190% since December. In April alone, we added more sellers than in the product's entire prior history.

Our transformational investments in AI are reshaping both what we build and how we operate. Production code changes per engineer increased more than 2.5x from January to April, and we've seen AI expand what it means to be a builder, both for our customers and our internal operations. Production code changes made by non-engineers at Block were up nearly 60% in April compared to January.

Turning to guidance. We are raising our full year outlook for gross profit, adjusted operating income and adjusted diluted EPS, reflecting strong Q1 execution and higher expectations for the rest of the year. We now expect $12.33 billion in gross profit in 2026 or 19% year-over-year growth, up 1 percentage point from our prior expectation, along with $3.34 billion in adjusted operating income, with margin expectations also up 1 percentage point relative to our prior guide.

We expect to deliver $3.85 in adjusted diluted EPS, up 62% year-over-year. And we continue to expect to exit 2026 in a mid-teens gross profit growth rate, consistent with our long-term guidance.

For Q2, we expect gross profit of $3.04 billion or a 20% year-over-year growth; adjusted operating income of $740 million, representing 35% growth and 2 points of margin expansion year-over-year; and adjusted diluted EPS of $0.86 or 39% growth year-over-year.

So far in the second quarter, we've been encouraged by numerous metrics we track. In April, Square GPV grew 12% in constant currency, with these GPV growing 9% year-over-year and international GPV growing 25% in constant currency.

We've continued to see healthy inflows per active in monetization rates and Cash App and underwriting outcomes are in line with our expectations.

Before wrapping up and turning to questions, a few additional considerations related to our guidance and the piecing of key items throughout the year. In Q2, we intend to increase our investment in go-to-market in high ROI areas across Square and Cash App. We continue to expect low single-digit actives growth for the remainder of 2026, and we expect continued year-over-year growth in Primary Banking Actives with a slight seasonal sequential decline in Q2 versus Q1, consistent with typical seasonal trends and what we observed last year.

We continue to expect to accelerate GPV growth in 2026 versus '25. NVA growth should contribute to support GPV growth in 2026 and despite tougher comparisons for GPV growth and FX starting in the second quarter.

We saw encouraging Square gross profit growth acceleration in Q1, and we continue to expect gross profit to grow roughly in line with GPV growth in the second half of the year. In the second quarter, we expect the gap between reported gross profit growth and GPV growth to narrow relative to Q1. This is net of a few onetime elements impacting gross profit growth in both directions as we lap a network remediation payment in the second quarter of last year and as we expect a onetime tariff refund related to Square hardware to benefit gross profit.

Finally, we expect Q2 interest expense of $55 million to $60 million and full year interest expense of approximately $200 million to $210 million.

We continue to expect a mid-20% non-GAAP effective tax rate, both in the second quarter and for the full year 2026. We delivered a strong first quarter and have conviction in the path ahead. Most importantly, we are moving faster, focused on building with high-quality and delivering more for our customers.

With that, I'll turn the call back to the operator for Q&A.

[Operator Instructions] Our first question comes from the line of Tien-Tsin Huang from JPMorgan.

If you're on the line, Tien-Tsin, we can't hear you. We've got some harmonics. That's about it.

Our next question comes from the line of Darrin Peller with Wolfe. We'll come back to you, Tien-Tsin.

All right guys, can you hear me okay?

Yes.

All right. Thanks. Nice job on the quarter. It's great to see you raise the outlook for the year. So not only for the beat in the quarter, but also by more than the beat on both gross profit and operating income. If you don't mind just touching further on the areas of strength you saw in the first quarter that are informing your view on the rest of the year, maybe giving some specific examples, what are the key drivers included in this outlook and what's expected for the underlying segments, if you don't share in that as well.

Darrin, thanks for the question. We had a great start to the year here, came out of the gate strong. Obviously, you saw acceleration in gross profit growth. You saw us meaningfully beat our guidance and grew our adjusted profitability at roughly twice the rate of gross profit with discipline as we continue to invest to drive future growth. We had record margin in dollars in terms of adjusted profitability.

I think what's most important, though, in all of that from the Q1 results is that we saw broad-based underlying strength across each of our 2 ecosystems. So for Cash App, if you look from an inflows framework perspective, we saw growth on each of the key metrics from actives at 4% to inflows per active at 10% to meaningful compounding continued growth in our monetization rate. That's really a reflection of engagement across our ecosystem and for our customers across multiple products.

And so you saw that flow through in the volumes we were able to produce across each of our core verticals from consumer lending is up 82% to Commerce Enablement volumes up 18% to banking engagement with Primary Banking Actives up 18% as well.

Similarly, from a Square perspective, we were really encouraged to see not only the acceleration in GPV and also on a constant currency basis but also importantly, the plus 20% growth in each of the 3 areas of focus for us from food and beverage to mid-market to international growth. And importantly, the drivers of growth there being new volume added and net volume retention, where we saw improving net volume retention in the first quarter both year-over-year and sequential basis and continued strong growth in NVA as we bring new dollars into the platform. So those are kind of the key things that we saw driving the first quarter, Darrin. And as we look to the remainder of the year, had the confidence to raise our outlook.

So our new full year outlook here is an added point of growth to 19% and an added margin point of growth or an extra point of margin, I should say, to 27% margin.

As we look at Q2, as I noted, we've started April with continued healthy trends and strong momentum, even as we expect to borrow growth to normalize as we now begin to lap some of the very exceptional growth we've seen for Borrow over this past year. And as we go throughout the remainder of the year, I'll call it a couple of things that we're watching as we look at the second half and that we're excited about across Square and Cash App, but all of that ladders up to -- in our guidance an expectation, continued expectation that we'd exit the year in that mid-teens gross profit growth range, which is consistent with what we shared back in November at Investor Day, even as one of these big drivers of growth for us with Borrow continues to normalize throughout the remainder of the year.

The other key thing that I'd point at as we look at the back half is that we expect to see expanding margins in each of Q3 and Q4. And that's even as we step up our investment in go-to-market channels that have sort of proven high ROI for us that we'd expect to drive growth, not only in the back half but into next year.

Maybe just -- and Darrin, like a couple of the key things that we're excited about as we look at the back half for each of Square and Cash App. From a Square perspective, we're expecting to accelerate our gross profit growth in the back half pretty excited about some of the pricing and packaging initiatives, both some of the initiatives we already launched and are still in the process of expanding as well as new initiatives. And then, of course, the key drivers of compounding GPV growth continue to flow through with go-to-market channels ramping like field sales, ISO partnerships and marketing as well as continued product velocity.

And from a Cash App perspective, again, strong underlying drivers of growth there. We continue to expect low single-digit active growth as you look at the back half of the year with Cash App green continuing to drive deeper engagement for us and ramp over time as well as this broader infrastructure that we're building now around consumer lending integrated into our full product stack across the breadth of the Cash App platform, including embedded in some of the commerce vehicles that we have really just getting started on that and seeing growth continue and momentum continue into the back half.

Our next question comes from the line of Tien-Tsin Huang with JPMorgan.

Trying again. Sorry about that, guys. I just wanted to ask you, sorry. Yes. I just wanted to ask you, Jack, I just wanted to get a postmortem maybe of the reorg so far. I'd love to get your thoughts just what's worked better than expected, where you're seeing challenges or any regrets? And in the near term, beyond the cost savings and achieving guidance that you guys laid out? And what do you track in? What are you watching for what we watch for is proof points that you get into where you want to go?

Yes. I would say our expectations were extremely high. It's the only reason we were able to take the action that we took, which was fairly monumental and foundational for us. And I believe we hit all those expectations.

There is a bunch of challenges that we assumed we would come up through, but I think the most important thing is we were prepared as a team and as a company to see everything through. And we had specific principles that we wanted to guide towards around reliability, around making sure that we were committed to all of our regulatory and trust commitments and that we could continue to grow the business, and we've been able to hit all those.

I think some of the challenges in terms of just moving the company and continuing the ship resulted more in -- as we have more and more code does -- there's a bit of echo on your line. As we've been writing a lot more code without of AI agents, we have a lot more PRs. And in order to merge them in the Mainland co debase. It puts a greater burden on revs, but we've managed to figure that one out and really focus our folks on the most important aspects of that. So we can really focus on our priorities and ship much faster.

And I think the thing to expect going forward is we still have some work to do on the organization in terms of we really want a flatter organization. And that means that more of our people are closer to our customers and closer to decisions and have a lot more agency to take on the work, especially as these tool harnesses are getting more mature and more sophisticated, that allows us to make much faster decisions. That was one of the strongest outcomes of the action we took is just the speed decision making and the ability to like act on that decision through the tools.

So that's something to watch for and continue to increase our product velocity. All that matters to our customers is that we're staying ahead of their needs, and that's both on the seller side and also on the Cash App customer side throughout our ecosystem. And now that these AI tools are handling more than mundane as, and we're automating a lot more, we can focus on being a lot more creative and being a lot more innovative again and continuing to have the breadth of our ecosystems such that we can be a one-stop shop for both sellers and for individuals. And then really making sure that we're delivering intelligence as our future products, delivering intelligence on our understanding of our sellers based on our understanding of our cash of customers.

I think the concept of products and apps is changing very quickly. I think the lines are blurring and a lot of the future expectation that our customers will have is around being delivered intelligence based on a very deep understanding and that we're able to do that proactively, I think, is the thing that will set us apart from all of our competitors, and that's what we will improve this year. And Moneybot and Managerbot are just the first manifestations of that.

Our next question comes from the line of Tim Chiodo with UBS.

Great. So a common investor discussion topic is around the Cash App growth as we get into 2027 and into 2028. So basically, the rest of the medium-term guide. And we're often asked, what are some of the big drivers once in the past the states have mentioned for Cash App borrow to which we typically have an answer of at least three things. There's borrow loan sizes everything as a part of Cash App train there's the continued growth of post-purchase of the BNPL. And then more recently, as you mentioned in the prepared remarks around Pre-Purchase BNPL and then, of course, other factors.

I was hoping you could expand on some of those items that I listed and maybe others to talk about that growth drivers in '27 and really into '28.

Tim, thanks for the question. Maybe just to go back to where I started the last response as well, which is we've got a broad multivariable platform with Cash App. We're delivering value to come across multiple ways of conducting commerce and financial services. And ultimately, the thing that underpins each of those different product types is network virality, the interconnections between customers on our platform and engagement, how they use different products and how ultimately some of those products get with each other and integrate with each other. Those are the core long-term drivers growth for Cash App. And again, in Q1, as I noted, we've seen strength there in those underlying drivers from actives to inflows proactive to double-digit growth on card spend per active as well.

What we're seeing now is some of the lending products, as you noted, is that we're actually starting to embed and integrate that core capability into other Cash App products that ultimately make those products more valuable to our customers. Some examples of that, obviously, are embedding lending into peer to peer, that Buy Now, Pay Later functionality in the peer to peer, which is a differentiator for that network-driven product.

We've got Commerce Enablement, which has been a strong driver of growth for us, also integrating lending into our solutions there, whether it's Buy Now, Pay Later integrated into Cash App Card through Post-Purchase and Pre-Purchase as well as now into cash of pay.

And we've got Borrow integrated into Cash App Green, of course, is our membership program that drives greater banking activity across our platform. And it shows kind of that broader interplay of lending across commerce, across peer-to-peer across banking, all of which is underpinned by our core sort of singular platform that makes up our underwriting capability and expertise.

As we look at some of those individual products and kind of the key going forward growth drivers for lending first on Borrow, even as growth normalizes, we see opportunities to continue to scale here and scale meaningfully in a disciplined way through greater integration with Cash App Green through higher limits with some of our mature customers and established customers where we see repeated healthy and responsible behavior, and through product innovations in the core Borrow product itself, where we have a number of different variables at play still yet to explore. So we're excited about Barrow's continued growth within the Cash App ecosystem.

Secondly, we're early stage on what we think is a really massive potential for us, which is to extend Buy Now, Pay Later functionality across Cash App. You noted after pay post purchase, which is the product that we've had in market now for over a year. And we've seen that, that product has grown faster than even Borrow grew at a similar point in its life. In fact, each of our lending products has grown faster than the prior one at a similar point in life. It shows the compounding nature of the sort of knowledge that we're building up in the models that we have here.

And what's also really encouraging for us about Afterpay Post-Purchase is that the growth that we're seeing there is primarily driven by net new BNPL customers. So it means that it gives us the opportunity to expand the overall Afterpay customer base.

Pre-Purchase, as you noted, is another lever of growth. It's even earlier in its life. Only a couple of months in. We're excited by what we see in these early days, excited to ramp that into the future. And I would also urge you to think about core Afterpay and network growth, where we have, we believe, an opportunity to really reinvigorate. We saw that in Q1 with accelerated growth in core Afterpay. And we've got a lot of product initiatives to come that we think can drive future growth.

Maybe final thing I'll note here is that we think there's net new opportunities for Cash App, and some of which you've started to hear about that drive the innovation engine for the future, Cash App scored one of them, which we think helps create more informed financial behavior on our platform but also potentially meaningful monetization opportunities that expand access for our customers, too.

Our next question comes from the line of Ramsey El-Assal with Cantor Fitzgerald.

Jack, AI is really becoming the kind of predominant theme of your shareholder letters and the glue that seems to connect everything from now the back office to the back office of all the way to the front end, the consumer experience, consumer interactions, or customer interactions, I should say. Can you take a step back and give us an overview of your overarching AI strategy? And I guess, is the end state that block evolves primarily into an AI company.

Yes, I believe we do. I mean I would say that we have all been to an intelligence company. And I think the way we think about the tour services is not necessarily in these app packages that we know today, where you have traditional navigation that we wait every detail to get the pixels in the right place. But instead, we're looking at our understanding of our sellers and our Cash App customers. And we're delivering exactly what they need at the right moment. And we can be very accurate in terms of predicting what they might need based on our understanding of them in real time. And we're starting to test a lot of this in both Moneybot and Managerbot, and as we get better and better at that, we can help automate more of that.

There's -- in commerce and AI right now, there was a lot of conversation around agent commerce, and there's a lot of fairly phenomenal future forward stories that I know will be part of our reality going forward, but they're a little bit far out, but the ones that aren't the use case that does go that far out is one that sellers have to deal with every single day, which is around vendors. And you can imagine setting up agentic e-commerce and agents to purchase things on your behalf from your vendors because either on a regular basis or it's triggered by certain inventory or certain demand or certain trends happening, and that's just one example of where we can or we can intersect with a lot of these technologies and actually solve problems for customers.

We've talked a lot about goose in the past, our entire foundation is built on goose and our early move there. But internally, we've been using it in a form of what we're calling Builderbot. It allows anyone in our company to use Slack and effectively build or fix any feature they want in the service.

Now the extent of that and the feature of that is that our sellers could use that directly. If we are lacking a particular service or a future and we have the capability to deliver it, they can build a customization for themselves, and we can deliver it right into their interface. That is our goal. And to me, that's what it means to be a more intelligent-forward company is that we're enabling our customers to create whatever value they want in the interface that we've already provided them, and our road map is no longer the limiting factor. That's our ultimate vision and our ultimate goal. And I don't think we're that far off from getting there. We just have to put these pieces together.

Our next question comes from the line of Dan Dolev with Mizuho.

Really nice start to the year. Congrats here. So maybe a question for you, Jack, Amrita, looks like the product velocity is starting to tick up and doing really well. You're shipping a lot more products. I mean the question that we have, and we're getting a lot from investors is what is driving the uptick in product velocity, what is supporting it.

Dan, this is Owen. Thanks for the question. Product development velocity for us, I think, is ultimately what matters most, obviously, for customers, but then also to drive our business forward. And that's why on the development side, the kind of internal drumbeat continues to be high velocity, high quality.

Right now, it really feels like we're firing on all cylinders. Of course, there's room to go, and we expect velocity to only accelerate as Jack mentioned. But I think the proof is kind of in the pudding in terms of what we've been shipping over the past couple of months. Moneybot is now generally available. Managerbot is out to more than 1 million sellers after paying the Cash App Card, repurchase launch in Q1 and is scaling now. Cash App credit score, we just started rolling out a couple of days ago. We have Cash App managed accounts for kids 6 to 12 with parental oversight that we're in the process of ramping.

We have like a host of meaningful improvements on the food and beverage side. Actually, earlier, this morning, we had a biweekly release for Square with, I think, 13 or 14 improvements that we made. And so I think it's clear that our development velocity has increased meaningfully even from just the back half of last year, let alone a year or 2 ago.

In terms of the drivers of that, I think a lot of this is coming on the back of, one, the flow-through from AI tools and then also the org changes that we made.

On the org side, the way that we've evolved the org structure is that we have smaller teams, we have flatter teams, and that's leading to more autonomy, more flexibility. And honestly, just like less red tape a Block to get things done, and we're going to continue to push there. We think we can continue to get flatter and lean into our DRI, our directly responsible individual model.

And then an AI tooling perspective, I think as we talked about at last earnings, I think everything has really fundamentally changed over the past 5 or 6 months since late last year. And so we're seeing things like production code changes per engineer at Block is up more than 2.5x since the start of the year. I think we had that in the letter. I'm seeing on the development side all over the place, products and features that were previously scoped to, let's say, 5 or 6 engineers and 1 or 2 quarters of work, I'm seeing that being completed by 1 or 2 engineers in just a matter of weeks. The recent example here that kind of might add some color is, we're working on Buy Now, Pay Later for Cash App pay. So it's a similar product to what we have for Cash App Card but for Cash App Pay. That was scoped to roughly 3 months and 5 to 6 engineers and then what actually happened in late March and April is to machine learning engineers who had actually like no prior exposure to these services, they built it and shipped it all in 3 or 4 weeks, inclusive of all the quality testing that we needed to do.

And so I think that demonstrates kind of where we are in this cycle, but we're going to expect that rate of change to only compound further as we move ahead and the tools get better, goose gets better and the foundational models get better as well.

Our next question comes from the line of Bryan Bergin with TD Cowen.

I wanted to ask on Managerbots. So just with the broader rollout across the 1 million-plus sellers and understanding it's still early, can you talk a little bit about what you're seeing in terms of any early impact on retention, cross-sell, and really curious on what early usage is telling you to might inform your product road map given it's obviously a differentiated solution.

Sure. Thanks for the question. First, I just want to step back a bit and just talk about Managerbot and Moneybot overall, and then I can get into some specifics for Managerbot as well as Moneybot.

I think there's a few kind of critical things to call out. I think first, as Jack mentioned both Managerbot and Moneybot as well as Builderbot, they're all built on the same foundation.

And so we started working on goose in 2024. I think goose was the first model agnostic agent harness that was used at scale at a technology company, and we've been using it for years now. And so the benefit that we get there is when we make an improvement on the Managerbot side, it flows through to Moneybot and Builderbot or vice versa.

I think second, we're really leaning into proactive intelligence versus reactive chat, and that means Managerbot and Moneybot are able to take actions on our customers' behalf.

And then third, I think to your question, I think we'll start to see Managerbot and Moneybot flow through across the different parts of the business from acquisition to engagement, driving cross-sell and upsell as well as retention. But as you said, it is early. Like these products have been at scale for several weeks.

On the Managerbot side, essentially what we've rolled out is a tool that has more than 100 local agents that are working on behalf of a seller and they're able to really act as a protector for that seller. They have access to your sales data, your catalog data, customer management tools, reporting tools, et cetera. It's been really interesting to see how our sellers have been using this over the past several weeks. Just some examples for what folks are building. I think there's a lot of views and automations around who are my top team members, what are the top items that are selling in the category? What's happening with my revenue from a new customer versus an existing customer perspective? Revenue projections for what I should expect this week, what I should expect this month, sales trackers, appointment reminders. The list goes on. We're really giving these tools to our sellers and allowing them to automate a lot of the menial work that they face on a recurring basis, so they can focus on doing what they love and running their business. I think ultimately, we talk about it as basically a COO in your pocket or really a protector for our sellers.

One of the interesting things that we're seeing is that I think retention within the Managerbot product has surprised to the upside. So we're seeing that for [indiscernible] who come in and they use Managerbot, the rate at which they're coming back in a subsequent week or subsequent month is quite high and has surprised upside, and so now there's a lot of runway in order to ensure that more and more sellers are getting exposed to Managerbot.

And I just wanted to touch on the Moneybot side. as well because I think it's a pretty similar story in terms of what we're seeing. We're really focused on the [indiscernible] intelligence side. We launched an experiment a couple of weeks ago with a push notification alerting a certain cohort of customers to potential cash flow deficits that they might have in the future. I think that this is fundamentally -- and the response and engagement was fantastic. I think this is fundamentally different than kind of a reactive chat-based UI, where a given customer has to know the perfect question that they want to ask.

And then it's really exciting on the Moneybot side from a cross-sell perspective. What we're seeing is that for more than 1/3 of customers who are making a movement Moneybot, that money movement is then attaching to a new product. So I think across these intelligence products, including Managerbot and Moneybot, I think we have a huge opportunity ahead in order to drive cross-sell, upsell and engagement.

We're just getting started. We just rolled out Moneybot to GA. We haven't done any marketing in the app or outside of the app, and we've already had 1 million actives use Moneybot over the past week or so. So we're really excited about the runway ahead, and we're going to continue investing here.

Our next question comes from the line of Andrew Schmidt with KeyBanc.

Can you hear me okay?

Yes.

You mentioned that Square GP and GPV growth should converge in the back half as the processing relationship change lapse. On a go-forward basis, obviously, a few things that drive that spread, right? Pricing our targeting, seller size, geo mix, value-added financial services mix, et cetera. When we think about the back half and beyond, if you could discuss some of the key influences whether the spread should fully converge whether there's a smaller persistent spread that we should be modeling, that would be helpful.

Yes. Happy to jump in here on the gross profit -- GPV sort of metrics and how we imagine them evolving over the next couple of quarters. So first, let's just talk about the first primary driver of gross profit, which is GPV, of course. And as we look at that longer arc, I've obviously already talked about some of the key drivers for Q1 and where we see the underlying strength there. But as we look at the longer arc here, we continue to expect to accelerate GPV growth in '26 versus '25 and believe that we're on track to accelerate GPV growth in the low to mid-teens range in 27 and '28, as we said at Investor Day in November.

As we look at gross profit growth, first, again, to anchor to where we are today in Q1, gross profit growth accelerated to 9%. When you exclude hardware costs, which are a key driver of customer acquisition and new sellers coming on to the platform, a really successful driver of customer acquisition for us, when you exclude hardware costs, Square gross profit growth was actually 11% in Q1. So much closer to the 13% and an 11.5% on a constant currency basis, GPV growth in the first quarter.

We continue to expect gross profit to grow roughly in line with GPV growth in the second half of this year. And as you noted, pricing and packaging work both what we've already launched, but scaling that more broadly across our existing seller base as well as net new pricing and packaging opportunities are really the key drivers of that longer-term framework as those 2 metrics kind of come back are in line with each other.

Our next question comes from the line of Harshita Rawat with Bernstein.

So Amrita, I want to follow up on kind of your comments on Square go-to-market. You've seen good growth in new volume added. You talked about kind of more investments in go-to-market going forward. Maybe talk about the different components around self-onboard, field sales, partner channel. I think you discussed good returns and fuel sales investments and good growth and early growth in ISO channel.

Yes, of course. Thank you so much for the question. We had another very healthy quarter of NVA growth. The last kind of 18, 24 months has really been proving that we can illustrate a strong growth in actual year-on-year NVA growth curve, and we can build out a very diversified set of channels that we believe can sustain that growth curve into the future. We're seeing strong momentum across the self-onboarded and our independent sales organization or ISO motions. And as you referenced, payback periods across each have been strong and unit economics have been strong.

From March and April, they were both record months for new GPV that we were able to see from sellers that onboarded within those months, which is great to see.

I've spoken a lot about field sales and self-onboarded in recent quarters. That growth has continued. Marketing has continued to generate a pretty significant majority of our self-onboarded NVA payback periods holding at 4 to 6 quarters. We've done a lot of great work in driving our conversion rates up for our self-onboard motion, which is up 15% year-on-year. And from a first-party sales perspective, we expanded our field sales team further in Q1 both in the U.S. and internationally. So we now have a field presence in the U.S., the U.K., Australia and Canada. And our product is continuing to resonate more and more with larger upmarket sellers, and the field sales team are helping us close more deals.

As we mentioned in the letter, the signing of GOLFTEC and Steak Escape. We also signed Birch Coffee, Assai Republic and SinoHolet brought back 85 locations to Square. So it's great to see the momentum building.

The real new motion that we've been focused on building the foundations for that we're starting to see contribute this quarter is our third-party sales motion and the biggest change from last quarter is the ISO channel. It's still early, but it's definitely exceeding our expectations and it's starting to become a more meaningful contributor of NVA.

We continue to push the pace of signing ISO partnerships. We've already scaled to 140-plus ISO partnerships, which is 200% quarter-on-quarter new -- growth in new sellers coming into Square from that channel. And as I said before, unit economics and the payback periods are really strong.

Just to kind of give you a relativity equation, the volume of deals signed in [indiscernible] ISOs would equate to the timing we'd expect from about 70 field sales reps. So it's starting to illustrate really promising signs. And what I'm most excited about is just the diversification that we're now seeing across our NVA growth curve and the health of the NVA growth. So very excited for what's to come for the remainder of the year?

Our next question comes from the line of Bryan Keane with Citi.

Congrats on the results. I wanted to ask about Neighborhoods. I saw in the letter as of March, it scaled the $320 million in annualized GPV. And I think April, it added more sellers than the entire history. So I guess, Neighborhoods is starting to feel a little more real here. We got some concrete data points. And can you just help us understand what Neighborhoods is going to mean for both Cash App and Seller as this continues to grow and take hold?

Sure. Thanks for the question. I mean, overall, we continue to believe that we have just a really unique ability to connect both sides of the counter with the Seller side with Square and the consumer side with cash. I think right now, as you said, what we're going to see is the rate of adoption is accelerating really quickly in the past several weeks, and it's accelerating in a nonlinear way. I think you can see that in the chart packs that we put out today.

And so we're seeing seller locations and therefore, engaged buyers on the Cash App side really starting to ramp, and this is following the auto enrollment changes that we had and some other improvements as well.

I think in 2025, I think this work was really all about ensuring that we had product market fit. And at this point, we're really confident that we've found it.

So just a few stats here. The spend at a seller from followers for a seller who's engaged in Neighborhoods, reaches about 10% of their overall GPV after a few quarters which is pretty astonishing to see. On average, for sellers in the program, they get to about 1,000 Cash App followers within the first year. And at this point, I think we have roughly 100,000 followers on Cash App as a part of this program and about half of them were not active on Cash App in the prior year before they signed up for Neighborhoods. So I feel really good about market fit. Now all the focus is really on scaling and distribution.

So the enrollment changes that we were focused on in Q1 are really starting to pay dividends. Right now, we're adding hundreds of sellers a week, but we think we have a pretty clear line of sight to get to thousands of sellers a week.

In-store redemption is also working well. So this just expands the TAM of neighborhoods and makes it -- so you don't necessarily have to sell online to join the neighborhoods, program.

And then yes, as you mentioned, at the end of March, more than $300 million in annualized GPV from these sellers but really a really strong inflection point in April. And so in April alone, we added more sellers to Neighborhoods than in the entire history of the program since inception.

I think in terms of impact, we're expecting that the Neighborhoods program is going to start meaningfully driving Cash App actives in the back half of this year. So I think in 2H, it will be more than just a rounding error, which is exciting. And then we continue to have a lot of runway to invest here.

Right now, we're focused on expanding to more hardware types. Right now, Neighborhoods works best for folks who have the Square register with the buyer-facing display, but we're going to expand the TAM and make Neighborhoods work for more and more hardware types.

We're also really investing in the messaging feature that allows sellers to contact with their followers. We're seeing really, really strong results there. Some recent tests from the past few weeks, we've seen that the conversion rates on these messages are about 6x the conversion rates that our sellers see on their marketing e-mails. And so overall, excited to continue to invest. We expect this to flow through to higher win rates and better acquisition, better retention on the seller side and then really driving our network growth on the consumer side.

Our next question comes from the line of Ken Suchoski with Autonomous.

I wanted to ask about Borrow. You had another strong quarter of Borrow originations. I think Borrow is driving a little bit more than half of the growth at Cash App. You continue to see healthy loss rates. Can you just remind us how we should think about penetration and adoption rates for Borrow as you continue to expand eligibility into other areas like Cash App Green?

And then, Amrita, I think you mentioned that you're going to lap some very exceptional growth in Borrow in the back half of this year. Is there a normalized growth rate or attach metric that you could point us to as the right way to think about Barrow's durable trajectory?

Yes, so Borrow, let me first step back and just say, why has this product been so attractive for our customers? How is it delivering so much value to customers? We think it's really unique in that it's helping our customers manage income variability. It's helping them maintain flexibility in between income inflows. And it crosses so many different use cases with that broader context. And so when we think about that backdrop of the value it's providing, we think that there is continued growth at scale for Borrow and meaningful growth at scale for Borrow.

Some of the ways that we have grown, as you noted, is as we have now shifted fully to SFS, our internal bank originating loans for borrow that's given us improved unit economics which has, in turn, enabled us to expand eligibility to customers in new states and also expand eligibility to customers across Cash App Green, we still have room to ramp across each of those different areas. It has also given us the opportunity now that we've been in market for multiple years with Borrow, and we have a pattern of data for our more mature cohorts of customers to increase limits where we see we can responsibly do that based on our underwriting models. And so we still have room to go from a limit perspective across on a per active or per origination basis as well. So we continue to see expansion opportunities there.

We're ultimately going to be guided by variable profit margins, which is net of risk loss and processing costs. And as we think about the future, we think that there is tremendous opportunity to grow variable profit, particularly as the mix shifts to more mature cohorts where we see, as we noted back at Investor Day, our more mature cohorts. And you've seen this with other lending products we've had as well, like Buy Now, Pay Later, that as we get to know the customer better and can underwrite them better, we see that more mature cohorts have far lower loss rates than the newer cohorts of customers.

We saw that in the first quarter as well. Our newest customers had just over 3%, 3.16% risk loss rate, 7- to 12-month customers. So customers who had been around for a couple of quarters had about 3%, 3.01% loss rate. And our most established customers, those who had been on our platform for 13-plus months at 2.67% loss rate. So as this product matures, we see an opportunity to drive continued variable profitability and serve these customers with continued customer value.

We will now take our last question from Will Nance at Goldman Sachs.

I wanted to ask about network density and user growth. MTUs were relatively flat sequentially this quarter, still accelerating on a year-over-year basis. And that's despite the really strong growth in primary banking active this quarter. You mentioned some of the investments in sales and marketing in the near term. I was wondering if you could about how you're prioritizing kind of more top-of-funnel initiatives like driving network density and overall MTUs versus deepening relationships with customers and driving more recurring activity, which at least in our view, is measured more on NVA growth. Just how are you thinking about the balance there?

Sure. Thanks for the question. I mean we're really happy with the pace of expansion on the active side. So as you noted, actives grew about 4% year-over-year in March. And while this looks like $59 million for 2 quarters in a row, that's just an artifact of rounding and how we report. This is actually the fastest pace of actives growth in about 1.5 years.

We continue to focus on growing the network, and we're always balanced in terms of driving net new acquisition and network expansion as well as continuing to drive engagement. I think in the near term, in terms of how we're thinking about growing the network, there's a few key things. One is just the ongoing work around network health and peer-to-peer things like PayLink and the core peer-to-peer flow and new form factors for peer-to-peer hitting, and we launched some of those in Q1.

Also, I think the managed accounts for Kids launch should be a pretty meaningful tailwind here. We've had a lot of success with our teams program over the years, and this is giving even more flexibility to families and parents.

I think Cash App score also has the ability to drive not only engagement but also the monthly actives number just as we see the potential for yearly actives and quarterly actives to become more like daily, weekly and monthly actives. And of course, continue to invest meaningfully on the go-to-market side across all channels, driving growth, paid life cycle, brand partnerships, et cetera. That's on the short-term basis.

From a longer-term perspective, I think Neighborhoods is probably the biggest lever that we have. I think the Neighborhoods program has the ability to just fundamentally change the size of our network and the trajectory of growth, but we're in early days there. I think Moneybot similarly, we're in early days. I think Moneybot -- with Moneybot, we have the opportunity to attract some customers from noncore demos. And then we're continuing to invest in Cash App Green, making the Cash App Card more useful, making it more appealing to bring the Cash App card top of wallet.

And we continue to invest in Bitcoin as well. We made some meaningful improvements to our Bitcoin platform earlier this year. We reduced prices meaningfully so that we can continue to compete with what we want to be the simplest, cheapest and most accessible platform out there. So those are some of the kind of longer-term levers and tailwinds that we see. But overall, I think the way to think about network growth is that it just comes down to development velocity, like the more that we can ship useful things into the hands of our customers and prospective customers the more folks are going to choose to use Cash App and the more they're going to use it every day and every week. Thanks.

Thank you for participating in today's call. You may now disconnect.

We're going to kick in and get started. First of all, I want to thank everyone again for joining us this afternoon. I'm really happy to have Block with us and Owen Jennings with us as well. We also have Juan, who heads up credit and underwriting as well as Matt Ross from Investor Relations with us. And so guys, thank you all for being with us. It's a name that we've spent a lot of our time focused on really for many years. We did the IPO years ago, but it's totally changed over the years, has become a bigger and more interesting company over time. Let me start off with a quick legal disclaimer I have to read, and then we'll go into the questions. So just bear with me for 60 seconds.

During this conversation, Owen may make forward-looking statements, including about Block's expectations for its financial performance that are subject to certain risks and uncertainties. These statements are based on information available to Block assumptions, it believes are reasonable as of today's date. Block disclaims any obligation to update any forward-looking statements, except as required by law. You may speak to certain non-GAAP metrics. Please take a look back at Block's most recent filings with the SEC for a discussion of the company's risk factors. Reconciliations of non-GAAP metrics to their most directly comparable GAAP financial measure are available on Block's shareholder letter on its Investor Relations website. Further, any discussion on Block's lending and banking products refer to products that are offered through Square Financial Services or its bank partners.

Okay. With that, look, Owen, I mean, first of all, thanks again for being with us. It's -- as I mentioned, we're excited to have you. It's really an interesting time on the story. You've been at Block for a long time and business lead for almost 2 years now. So maybe just start off with what you see as different about the company now and really after the last 2 years of you being in this spot, how things operate differently, whether it's internally or not today versus 2 years ago would be a good place to start.

Sure. And thanks so much for having me, Darrin. Excited to chat. I think -- yes, so I've been at Block for more than 12 years. I started on the Square side of the business and led business operations as we were kind of like gearing up for the IPO, becoming more of a mature company and then went over to the Cash App side in 2016. And so that's when cash was like 25 people. It was just a peer-to-peer product at the time.

About 2 years ago, we decided to functionalize the company. We used to have more of like a rigid business unit structure, and there were these harder lines between Square and Cash App and some of the other products that we were building. And I think that action functionalization actually probably is like one of the key things that feels different now. I would say that over the past 12 years, there's been probably several different chapters at Block. On the functionalization side, I think primarily what it gives us is just like the ability to have an overall Block view and overall Block prioritization. It also lets us just like more flexibly move resources across projects.

And then I think critically, one of the kind of key parts of our master plan right now is connecting neighborhoods together in the neighborhoods product, and I'm happy to talk about that later. But really, like functionalization was the big unlock, which is allowing us to build that product because we have to build in the Cash App code base. We have to build in the Square code base. We have to have a unified understanding of who a consumer is or who a buyer is.

And then I think the second part is just around velocity, like the primary drumbeat that I've had with the development teams is high quality, high velocity. I think that was true for all of 2025. It's even more true now with some of -- how these AI tools are flowing through. So right now, what it feels like at Block is like more functional, more cohesive as like a unified singular company and moving more quickly, particularly with the flow-through from the AI tools.

Very helpful, Owen. Look, just taking a recap of fourth quarter '25 results. I mean, you had solid earnings with 24% gross profit growth, 33% growth in Cash App gross profit. And honestly, I think an even bigger headline was the 40% reduction in force. And so maybe just starting there, given I know it's on some folks' mind, just walk us through the decision-making process behind that reduction first, and we'll go from there.

Yes. I mean, obviously, I've been at the company for a long time. A number of the folks who we parted ways with were like long-time friends, long-time colleagues. And so these are like the toughest sorts of decisions. But I think it was the right choice for us to make as a company for our customers and for our investors. I think fundamentally, if I think about the pace of progress from an AI tool perspective, I would say there was kind of a meaningful clip of improvement from like the start of 2025 through like, let's say, November of 2025. And in that era, I think we went from -- especially on the development side, we went from like engineers writing code to like engineers using tools that like help them auto complete.

For less complex code bases, you saw like vibe coding flowing through. there was a fundamental change in like the last week of November, first week of December with like Opus 4.6 and Codex 5.3. And we basically crossed the chasm where these AI tools clearly could write code that would pass the quality bar and that would pass human review. And it was like a fundamental change. And I think many of us spent like December and the holidays playing with these tools, applying these tools to our work and kind of understanding how that flows through. And so I think we're feeling it kind of most acutely on the development side for engineering, for product management and for design.

But also, I think the tools are flowing through just like across disciplines and across all of the workflows you have at a tech company. And so then like from that perspective, we basically had the decision of like, okay, we are in the process in Q1 of like fundamentally thinking about like how do we want to structure the org, how do we want to operate? What does the development team look like? Like are we shifting from the status quo of a few years ago of like 1 PM, one designer, 8 to 12 engineers focused on a road map in kind of a waterfall fashion to like 2 or 3 or 4 builders in a squad who can just go and like run at a problem and can be like 5 or 10x more effective because of the underlying tools.

And so we had a pretty clear perspective on what we thought was going to happen. And then I think the decision was we can hold off on this sort of change or we can kind of take more of a proactive move from more of a position of strength. The business is doing well. I think that's the other part is that like this seems like a relatively sudden change perhaps from the outside. But for us, like we've been building in this space, and we've been applying these tools to our work for years and years. Like I was using Goose 2 years ago.

That's our -- that was like the first agent harness that was released, and we released it in an open source way and codeveloping the MCP with OpenAI and Anthropic. And so there's a lot of steps that got us here, but we felt like we're in a strong position to make this move. And we think that just like the fundamental nature of how you build software and how you run a company is changing, and we didn't want to be reactive 5 months, 6 months down the line or do this incrementally and have this hanging over our head for years and years. And so we made that decision.

What gives you confidence you can actually execute on your growth strategies, though, with only -- just over half your existing workforce?

Well, I think -- yes, great question. I think fundamentally, there's still this, I think, like inherent perspective that the number of people working at a company is going to be highly correlated with output. I think that basically is not true anymore. I think it was more true before like Opus 4.6 and Codex 5.3 and what we've been seeing in the past few months. But I just like fundamentally don't think that's true. There's countless examples I can go through, but we're seeing small squads or small pods of individuals who are doing the work that like you would have otherwise thought a year ago would take dozens and dozens of developers.

But the very way that we approach this was like it's incredibly nuanced. It's incredibly deliberate. So we had a few sets of principles that we wanted to work off of. First was reliability and stability is #1. The second is compliance and trust is #2. So it's like not take any risk there. And then three is how are we like reliably delivering durable growth across all of our brands. And we didn't go into this with some sort of number. Like this was not a cost-cutting exercise. This was a -- how do we design the organ operating model in the era of AI. That's how we're approaching it.

And so we took a blank sheet of paper and we said, okay, who do we need in order to make sure that we're going to be stable and we're going to be reliable, Who do we need to make sure we're good on all of our regulatory requirements, our financial partnership requirements, et cetera? And what teams do we need and how do we need to be organized in order to deliver the features and products that are on our road map. And we pressure tested that and we brought in the right people at the company.

And we feel really good about the position that we're in. Like if anything, our expectation is that we're going to be moving faster from a product development perspective in the coming months and quarters rather than slower. And again, I think that's the fundamental -- I had many conversations here today where there's like this implicit assumption that how can that be true. But I think the paradigm has like completely changed over the past few months.

Just a couple of follow-ups on that. One is, I mean, when you say you pressure tested it, how could you do that before actually implementing change? And then I guess, was there an element of just -- you maybe overhired a bit also? Or is this -- how much of it was AI-driven versus streamlining the business?

Yes. On the pressure testing side, I think there's a few different things. So one is like, unfortunately, this is not the first time that there's been a reduction in force at Block or like in the tech space more broadly. And so even though the magnitude of this for all of Block seems large, there's been like pockets of the company where this sort of thing has happened before. And so there's some pattern recognition there. I also think it's about like do you have believable people who are in the know who like have all of the context and who deeply understand the business and who you're confident in their decision-making.

I think that's like a critical piece. And so this was not just like Jack and his direct reports. There was a number of people who are working on this, thinking about this, who are like -- who are deeply trusted, and there's obviously mitigation plans in place should anything happen. So that's kind of the answer to the first question. Sorry, remind me of the second question.

No, I was just trying to figure out on top of just pressure testing, if there was excess in the company. I mean maybe you grew to a degree that had [indiscernible].

Yes. I've seen the tweets and things like that. So one, I don't know. I think that perhaps with some individuals, there's this thing with Jack, where Jack doesn't necessarily get the credit that he deserves. I mean Jack invented Twitter, invented Square, invented Cash App, invented Proto. And so I don't really understand that one, but I think there's a bit of a Jack overhang. I think if you look at basically any metric, like look at gross profit per FTE, I think you see that we were like above average, pretty reasonable relative to the peer set that makes sense.

I don't hear the sort of complaints with other folks. And then if you look at like gross profit per employee in 2025 or now extrapolated for 2026, I think it's like world-class. I think it's like NVIDIA and Meta or something. But moreover, I think if this actually were about whatever the claims are, like organizational bloat or overhiring or whatever, I think you would have seen a different action. Like what we described was like this is a 40-ish percent action at the Block level, it was more extreme on the development side, engineering, design, product management. And so that's not the sort of thing that's like correlated to like the bureaucracy and the bloat and what have you. So it just doesn't add up, and there's a bunch of folks who are tripping without context.

Okay. All right. That's really helpful, Owen. Just shifting gears a bit, I mean, because it was probably overshadowed by the RIF, but your underlying trends were really strong also. I mean you talked about growth of 12% on GPV through February, mid-February, which was despite pretty tough weather. What's driving that? I mean just give us a reminder of where you stand on that? And I know you've invested in sales and other areas, but what's the latest update?

Yes, we feel really good about where GPV growth is at. The basic way that I think about GPV growth is you have kind of new GPV that you're adding. And then you have kind of like the volume retention side, which is like same-store growth and then subtracting churn. I think things feel good kind of across the board. So we've massively ramped our go-to-market motion. Nick Molnar, Co-Founder of Afterpay, took over sales and marketing a bit ago. We've been ramping field sales. We've been ramping ISOs. The self-onboard motion has been quite strong as well. And so a lot of the work that was done in the preceding months and quarters then like starts to flow through in Q4 and Q1 and going forward.

And then I think from a volume retention perspective, this comes down to like continued investments in how we think about support, concierge support, account management, pushing a reduced churn, but then also just like net new feature development. Like new feature development is not only allowing us to win business. It's also helping us keep customers or grow with customers and capture a larger share of their wallet. And so across -- that's kind of how we break down the GPV equation. But across the board, we feel really good, both in the U.S. and also internationally.

Do you have the products you think you need right now to meet the demand and really sustain the growth you've been seeing?

I think we definitely have the products right now to meet and sustain, but I think there's always opportunities to continue to grow. So I think we've been really focused on the food and beverage space on the Square side over the past couple of years. And there's a few more things that we want to ship. I think, again, with these AI tools, it's becoming easier and faster to actually get these into market. We actually had a great example where we have a tool called Builderbot, which you can imagine is like an internal version of Claude code, but it's built on top of Goose.

And we actually fed Builderbot like one of the key features that -- feature requests we're getting from the sales team. And Builderbot just like built the whole thing, and it's like -- it's in prod. So I think there's more examples of that. And then I think we need to continue to work through vertical by vertical. Like there are still gaps with FSR, there are still gaps with retail. There are still opportunities with services. But like I don't think that's preventing us from getting to like the kind of long-term guidance we had around like the mid-teens GPV growth kind of long-term thing. But I think we're just going to continue to build and hopefully, that compounds positively.

On that note, I mean, AI, is it going to help with feature parity that you guys can offer into new verticals beyond, obviously, the restaurant area? And just help me understand kind of where you're utilizing it.

100%. We're using it everywhere, and it's not really as a tool, but like it has fundamentally changed the workflows for how we develop over the past several months. And it's -- as I said, it's been compounding for years and years. But in particular, things feel way different over the past few months. And so it's not just on the Square side and like point-of-sale features, it's like everything that we are building, every -- not only at Block, like if the tools are there, if you are on the tools, as we say internally, like this is meaningfully compressing the time required in order to build software.

We're having certain instances now where like it used to be the case that a lot of the time software development was actually the long pole to like get something in the market. We're increasingly seeing now like one spins up a quick feature. And then actually the long pole is like having a conversation with the partner or going through like legal and compliance or doing the modeling on how we should price the thing or what have you. So that's like a paradigm shift where like you can now just have dozens of agents like working on your behalf, and that is now the workflow and the software is being created. And now we need to like curate that. We need to edit that. We need to do code review. But anyway, long way of saying, yes, it's going to speed everything up.

Shifting gears to Cash App. I mean it's been showing outstanding growth. Some of it is obviously Borrow driven. But even without Borrow, you've seen the non -- let's call it, non-Cash App Borrow, Cash App growth accelerate to what we calculated almost 15% growth at this point, 14% plus. And so -- but starting with Borrow for a moment, I mean, it's been a big part of the growth story in '25 and now into '26. And a lot of that has to do with also the migration to Square Financial Services, right? Just how sustainable are these levels of growth that you're seeing in Cash App with Borrow, but even excluding Borrow?

Yes. So I don't love the breakdown of like lending growth and non-lending growth because I think it's too course of a view. Like on the non-lending growth side, there's just a number of different drivers with like different idiosyncratic things happening where you have like primary banking actives and direct deposit actives and Cash Card spend growing in that like 20-ish percent range. And then you have certain areas where like we're making strategic decisions like, for instance, Bitcoin, we're like choosing to monetize less there. And so that's going to be a drag or cash for business, we're less focused on that exact product type. That's going to be a drag.

The core growth of Cash App, we're really happy with. So like network expansion has been our #1 focus. We've seen really healthy acceleration there. We added 1 million in September, then we added 1 million again in December, and we think there continues to be like a number of tailwinds there. On the primary banking active side, I mean, Cash App Green was launched in mid-November. I think the print in December was really strong. I think it's clear that it's like really resonating with our customers. And then even on the Borrow side, like there's definitely kind of an idiosyncratic boost that you get when you like migrate over to SFS.

But I think there's so much opportunity for us to sustain, especially when I think about like the consumer credit product suite overall, where you have Borrow and all the different ways that we can continue to improve upon Borrow. We also have Afterpay on Cash Card post purchase, which is doing phenomenally. We have Cash App Afterpay applied to peer-to-peer, which like just rolled out like several weeks ago, which is doing quite well.

We also just rolled out Afterpay on the Cash Card prepurchase in alpha or beta a few weeks ago. And so I think one of the areas where we've demonstrated like really meaningful market fit is just like simple access to liquidity. That's what so many Americans need and what so many Americans rely on us for. And so I continue to think that we're going to see strong growth, both for like the kind of core ecosystem, as you said, and all these nonlending products, but then also our consumer credit products as well.

So I mean, if we talk about on that note, the MAU growth rate, the potential to grow actual monthly active users, you've had -- I think it was really since early '24, it had been relatively flat, right, for a while. And then third quarter this past year, this past third quarter, we saw it start to inflect and grow again. And then again, it grew once again in the fourth quarter, and you talk about it growing low single digits now. So help us understand your ability to sustain that. I mean you're at almost 60 million users already, monthly active users, which is not a small number. So the ability to keep that going.

I think there's still room to go. I think -- I'll break it down into kind of some of the more kind of near-term tactical things and then perhaps some of like the bigger bets. So on a short-term basis, one thing I want to call out is we report monthly actives. I look at so many different metrics like daily actives, weekly actives, quarterly actives, the ratio between those things, how it looks by platform, by geo, et cetera. And trends are looking healthier and healthier. I think we still have an opportunity to convert quarterly actives and annual actives into monthly actives. And there's a bunch of headroom there.

And it's not necessarily like a lapsed or churned customer. It's just -- if you go from sending 4 peer-to-peer payments a year to using the Cash App Card, then you're going to go from being a monthly active 4x to 12x. So there's a big opportunity there. Again, continue to focus on what we call like network enhancements. So there's all sorts of flows with millions of people going through them. There's all sorts of areas where we can reduce false positives, make sure that it's as easy and simple as possible to use Cash App, continue to invest in go-to-market, life cycle paid. That's all kind of bread and butter.

I think longer term, one of the -- I think maybe 2 things that are probably I'm most excited about. One is Neighborhoods. And so I think Neighborhoods has the ability to drive like a step function change in actives growth for Cash. I want to get to the place, and I think we're like just on the verge of the place where Square is the biggest strategic advantage for Cash App and Cash App is the biggest strategic advantage for Square. I think that's really exciting. Again, that's like core to like our overall strategy. And then I think Moneybot. Moneybot, we're actually -- this week, we're in the process of rolling out Moneybot to more and more customers.

I think there's nothing else like this in the consumer fintech industry. I like to think of it as like having a protector or a CFO in your pocket. I've been using it for months and months. We're not even talking about monetizing Moneybot yet, but you can imagine that being a meaningful driver of just like a new way of thinking about your finances, a new way of interacting with your money. And so I think that there are some of those longer-term bets as well that should be tailwinds for network expansion for years to come.

Yes. So you put it all together, I mean, you have effectively MAU growth in the low single digits, which you feel sound pretty confident around based on harvesting more of the quarterly or annual actives and more areas that probably haven't been really tapped yet. You have Borrow driving a lot of inflows, right? It's not just a product in itself. It's actually driving the ecosystem to some degree as well. And then you have incremental banking products, right? You put it all together, is that going to drive the organic trends, again, putting aside just the lending-oriented aspect of it, does that give you confidence in sustainability? Or am I missing new products?

We feel good. I mean, look, we're going to continue to roll out new features and new products. I think we've had a strong track record of doing that. I mean when I joined Cash App, we're basically just a peer-to-peer app. And then we basically rolled out a new major financial service every like 12 to 18 months, whether it was like the card or Bitcoin or...

Product velocity was high.

Stock investing or what have you. So we'll continue to invest. I think there's a number of things that we haven't talked about around like the Cash App credit score, I think, is going to be like a complete game changer for our customers and for like the underwriting industry overall. I think the connectivity between Afterpay and Cash App and how we're sending Afterpay customers into Cash App, Cash App customers into Afterpay. I guess the broader point is like fundamentally, this is an ecosystem. Internally, we talk about like we want to build a financial operating system for the next generation.

And so there's going to be more and more products and features that we can build that capture a larger share of a given customer's wallet. But like right now, I mean, I guess I would say the proof is in the pudding. We have millions and millions of customers who are choosing Cash App as their primary financial institution, who are choosing to earn green, whether that's through like depositing their income or through using Cash App Card and bringing that to top of wallet. And so I feel really good about where we're positioned. But again, like there's always more to build.

So you have accelerated growth in GPV. It sounds like there's conviction around the NVA there, obviously supporting more to go. You obviously have really good momentum on Cash App between Borrow, but even without Borrow, obviously, MAU growth. For a pretty long time, we've been wanting to see the ecosystem is connected and you brought up Neighborhoods, right? And so can you just start -- take a step back and maybe explain to the audience one more time what your goal is with Neighborhoods. And then we could just touch on -- has there been any traction, any evidence of success, merchant feedback or trends showing signs that it's going well?

Yes. I think that -- I'm glad to spend the time because I think this is like probably the most important thing that we're building right now across the entirety of the company. So the main thing that a seller says when you talk to a seller like a small business is I want incremental growth. And then the environment that they have to operate in is not great. Like basically, to get incremental growth, either they're paying like a large share of their tickets to like the DoorDashes and the Uber Eats of the world.

And then you kind of get addicted to that thing and then you can't get off of it. And then if you do, like growth comes down or they're up against like a more established, larger, let's say, quick-serve restaurant, like a Starbucks or a Burger King or a McDonald's who has like a tech team and has their own app and has their own life cycle marketing and what have you. So the basic question for us is like how do we give those same tools to every small business who's using Square, and that's what we've built with Neighborhoods. And so I mean, I can show you after on my phone. But essentially, let's say, I run a bagel shop in New York City, Owen's Bagels. You come in, we'll give you like a $1 reward that you can claim within Cash App.

So we'll say like, hey, Darrin, here's $3, download Cash App in order to claim it. And what we're seeing right now is like when people go through that flow, about half of them are like existing Cash App customers and half of them are new or lapsed customers. So pretty meaningful in terms of the ability to drive acquisition. And we're seeing really strong attach rates as well. Like for every buyer who's presented with that flow, it's about like a 5% to 10% attach rate. From a seller's perspective, they're then gaining a follower.

So now I have the applet in my Cash App where I can see Owen's Bagels and then the seller has the ability to send them marketing campaigns, send them offers and then discounts, connect with them, the same sorts of tools that the mega quick-serve restaurants and full-serve restaurants have. And so the seller is getting incremental growth. There's a bunch of other benefits, too. They're only paying 1% because like our cost of funding is lower. So anyway, there's a bunch of benefits for the seller that we're able to offer. And then on the consumer side, they're getting rewards in the form of local cash into their Cash App and they're getting like a seamless checkout option directly from Cash App.

And so we've spent a lot of time focused on this problem. Brian Grassadonia, who used to be my boss, was the CEO of Cash App. This is like one of his primary focuses is like connecting these 2 parts of the ecosystem. And so we've been testing in certain geographies, making sure that the flows are right, the conversion rates are right. And like it is working. It is an incredible product. And so now the focus is just on scale. So about like 3 weeks ago, we shifted our onboarding motion from something that was like inbound and like quite operationally intensive, where like someone on the account management team would have a conversation with the seller, but like now we have auto enablement.

And so we're able to take a cohort of sellers and turn Neighborhoods on for them. We've done that a few times. We've seen that the retention rate for sellers who like stay in the program is like 75% to 80%. So it's like quite strong relative to expectations. And now it's just about like going through this motion and getting more and more locations who are on Neighborhoods, and we have an understanding of how that's going to flow through into the attach to Cash App and then the subsequent attach to commerce. And so I'm like incredibly, incredibly excited about this. The key question that I've got today is like what is different now like Block has tried to do stuff like this before. I think there's 2 key things that I would call out.

So one, in previous worlds where we've built kind of the consumer side of the Square network, we weren't in a functional org model. And so we had these like really strong boundaries and lines between Cash App and Square. And so we needed to do that functionalization about 18 months ago in order to be able to build and get where we are. And then second is scale. I think like there's not a question of if there's a buyer base, if there's a consumer base. We have tens and tens of millions of customers who are using Cash App. And so now this is just about like what is that flow at the point of sale, at the point of purchase where you're able to connect the buyer with the seller.

Yes. I mean right now, I think you were in a few markets, right? You were testing [indiscernible] was one, but there's a few others. I mean, what's the trajectory? And I don't know if you want to -- you don't have to be so precise, but just a sense of where you hope to be over the next 12 to 18 months on this?

Yes. I mean I hope to be at like a way, way larger scale. I think -- so I think right now, there's like a perfect customer on the Square side for the Neighborhoods product. It's like someone who has Square Register, which is like you have a seller-facing display and a buyer-facing display on the hardware, someone who's already used to selling online and so you have like your catalog set up, et cetera. That's a very large number in itself. And so that's like the first target. And we'll probably take -- we'll probably do tests like a combo of just like auto enabling and rolling out and then also like a geo-based approach, both for the seller side and the consumer side.

And then I think over time, you start to have the conversation of like how do we get this out just like this is just like default on. And so it's like regardless of hardware type, like what does that thing look like? How does like the in-store redemption thing look like? What could this possibly look like internationally, like all of these things. But we are investing really meaningfully in this. As I said, like this is like one of the core pillars for like the overall business strategy because I think then once you actually do this, once you actually have like a meaningful share of local economies running on Block, then you're able to do things like meaningfully reduce costs for sellers or meaningfully increase rewards or meaningfully increase your reliance on certain parts of the legacy financial system. And so this is something we're really committed to.

Right. That sounds really encouraging. I mean you obviously could drive more MAUs in a pretty material way also. Just last one for me, and maybe we'll take 1 or 2 questions. Pricing. We noticed a few pricing changes over the past month or so with some increase to Cash App instant deposit that we wrote about. I think there was some on cross-border transactions as well. Just how are you thinking about pricing going forward? I know there was also -- you mentioned even somewhat of a reduction on the Bitcoin side. So just a sense of the overall environment.

I think I'll take the Bitcoin one separately because I think that's a little bit of a different flavor. But by and large, across all of the other pricing adjustments on Square, Cash App, et cetera, I see that as like an always-on motion. So basically like we're constantly tuning knobs and twisting dials for how we think about the value exchange with customers. So like, for instance, on the Cash App side, we launched Green. With the launch of Cash App Green, that means we're offering Borrow to more customers, higher Borrow limits. We're giving people free ATM transactions. We're giving people free paper money deposit, et cetera.

And so then we might like twist a knob or tune a dial somewhere else to monetize more in a place that's strategic. So the same thing on the Square side, like we've launched pricing and packaging or internally, we call it P&P. We're going to continue to kind of twist knobs there and make sure it's like should we add another tier? Should we change the eligibility for this? Should we change the limit for this? I think pricing is one of those things that you can constantly be iterating on, constantly be testing on. And we want to make sure that we're kind of at that efficient frontier of like where we're monetizing, where customers are finding value and kind of like maximizing the business results.

On Bitcoin, in particular, I think this was a bit more idiosyncratic. On the Bitcoin side, I think we kind of lost our position. Like we were the first public company to launch Bitcoin buy sell. We were the cheapest, we were the simplest, we were the easiest. We kind of had like a really, really strong market fit there. Over the years, for a number of reasons, like Bitcoin got more expensive on Cash App. It was harder to use, limits were more restrictive. And so we're really trying to get back to that place where we are the market leader, at least for like the average customer in the U.S., maybe not like the super advanced, super high-volume trading platforms. But for the average customer, it should be very obvious that you're going to Cash App for Bitcoin.

Very helpful. All right, guys. Why don't we see if there's any questions from the audience? And I think we have time for maybe 1 or 2. There's one in the back.

A question on the -- you talked about meaningfully reducing costs for sellers, right? And as you connect your buyer and seller ecosystem, are you starting to see that already come through for sellers? And how does that affect your margins, especially in the face of A2A payments, non-card payments as well?

Yes. I mean the primary thing that's happening now is Cash App Pay. So we have Cash App Pay and Cash App Pay is rolled out to a number of sellers. It's also like the primary way that you pay for something through the Neighborhoods product. And because of the share of Cash App Pay transactions that are funded through stored balance, we're able to reduce the fee that a given seller pays. So I think about -- I think roughly 70% of Cash App Pay transactions are paid via stored balance. And so let's say that there's a given seller who would be paying like a 2.5% swipe rate for like a given card.

Right now, we're saying we can offer you Cash App Pay transactions for 1%. But like as we see more and more of that and as store balances evolve and so on and so forth, you could see us like lowering that even more. And then like for a given seller who's on Neighborhoods, I think like one of the key questions is going to be like what share of their volume is coming from followers like is coming through the Neighborhoods program. And if that percentage is like reasonably high, you can see this just being a complete game changer for sellers because, one, they can have a reasonably large share of their transactions that are at a lower cost. That's like huge and blends down.

But then two, like if a good share of your GPV is coming through Neighborhoods, then you're really going to want to invest in outreach to your buyers and like use the marketing tools, use the discounting tools, loyalty tools, et cetera, in order to drive your business forward. So I think Cash App Pay is probably just the start. I know you've mentioned A2A and other things. I think there's no shortage of things that we can do because of the position that we're in on both sides of the counter with these face-to-face transactions. So I think about Bitcoin, I think about stablecoins, I think about agentic commerce. But right now, I think Cash App Pay is like the most meaningful manifestation of this dynamic.

All right. Any other quick ones or -- all right. Why don't we leave it there? Owen, thank you so much. That was a very helpful conversation.

Thanks, Darrin. Appreciate it.

Thank you very much, everybody, for joining us here at the 2026 Morgan Stanley TMT Conference. We're right in the middle of day 2 and excited to speak with Block. We've got Amrita, CFO and COO. I think she's deserving of one name. I think anybody in the industry and the investment community that says Amrita, they know exactly who we're talking about.

Thank you, James.

So anyway, before we get started, a couple of disclosures here. Please see the Morgan Stanley research disclosure website at morganstanley.com/researchdisclosures. I was also asked to read Block's legal disclaimer. I'm going to try not to mess this up.

During this conversation, Amrita may make forward-looking statements, including about Block's expectations for its financial performance that are subject to certain risks and uncertainties. These statements are based on information available to Block and assumptions it believes are reasonable as of today's date. Block disclaims any obligation to update any forward-looking statements, except as required by law. She may also speak as to certain non-GAAP metrics. Please take a look at Block's most recent filings with the SEC for a discussion of the company's risk factors. Reconciliations of non-GAAP metrics to their most directly comparable GAAP financial measures are available in Block's shareholder letter on its Investor Relations website. Further, any discussion of Block's lending and banking products refer to products that are offered through Square Financial Services or its bank partners.

All right. So we got all of that out of the way. Amrita, thanks for joining us. It's great to have you and the Block team back at the Morgan Stanley TMT Conference. Obviously, you guys shared some big news last week. And that being for those of you that didn't see the headline, you're reducing the workforce by about 40%. I think that one investor was pointing out that may have been the largest single workforce reduction by an S&P company ever, at least in one fell swoop. So big news for sure. And you're doing that as you focus on driving growth and efficiencies with your intelligence tools.

So I guess maybe first question is, Amrita, what gives you and the team confidence that you can execute on the AI-powered strategy with just over half the current workforce? I mean you have great momentum right now. You can see it in a lot of the metrics and the top line acceleration. So like how are you assuring that or making sure as best you can that you won't be disrupted?

All right. Thanks for the question, James, and thanks for having me here today. Of course, I'll start by saying this was a difficult decision. It was a bold decision for us to take, one where we had to say goodbye to many of our colleagues and have expressed gratitude to them for all that they've done to build Block. But it's one that we believe positions us in a much more front-footed manner for the next era of the company. And it was not a quick decision. It was one that was really built on the prior 2 years of history for us as a company. The prior 2 years of history involved 2 primary things for us.

First is getting far, far deeper in the automation tools themselves and building some of those tools, and I'll get into that in a second. And second was really reorienting the company from an operating model and organizational structure perspective. And I think you see threads across each of those 2 elements in the move and the reduction that we made last week. First, from an automation perspective, we, for the better part of 18 months now, have been training, developing and reskilling many of our employees around the use of automation tools. And that started actually with building our own agent orchestration layer that sits on top of external LLMs. That's called Goose.

It's an open source agent that enables actually any company that uses it, and there are other companies that do use it but it enables our employees to build automation into their workflows. And that includes, of course, disciplines like engineering, where you can imagine code getting pushed to production, but it also includes accountants and lawyers and designers who can automate their workflows, build dashboards, build using this agent in a way that makes their work more seamless and more efficient. So from an automation and AI perspective, while we have seen the speed of these technologies, in particular, in the last few months, really pick up pace, it is also a continuation of what we have been doing internally to build mastery in these areas and to continue -- that work is never done. We will continue that work in reskilling our employees and bringing that discipline into our work and that rigor into our work. But this is really a continuation of a journey that we've been on for the better part of a year, 1.5 years now.

The second piece of it is moving from deprecating our prior business unit structure where we had a fair bit of duplication across each of Square and Cash App into a more cohesive functional structure. That's a change that we made 18 months ago. But we've continued some of the themes and the elements that we saw really worked in that transition around flattening manager hierarchies, expanding our spans of control so that we can speed decision-making, ensure we know who is accountable for what initiative and really get to faster velocity. And we've seen that now play out in terms of both the combination of these automation tools and this more cohesive, less bureaucratic speed to decision-making org structure come to bear fruit in how we move as a company on behalf of our customers in terms of our product velocity and ultimately, in terms of our business performance.

So I want to ask a couple of follow-up questions there. First, this harness and orchestration layer. I've heard it referred to as Codename Goose and just Goose. So what's the official title of it?

The official title, I believe, is Codename Goose. That's right. We call it Goose internally. And we have created a version of Goose called Builder Bot, which is now able to push code end-to-end from idea, inception prototype and to production.

Got it. And then the second thing I wanted to ask is like, and you repeated one of the comments that Jack made last week on the call. But obviously, this has been a process that you've been going through. The orchestration layer has been under construction for a while. But you made the comment that you've seen a real acceleration in what the LLMs could do really back in December as some of those new versions came out. How much did that impact where you thought you could get from a staffing level now? Like did that change where you were headed or...

I think it did give us the conviction and confidence to be more bold. Absolutely. I mean we've seen an uplift in developer productivity metrics, developers pushing code to production of 40% just since September. And I think a lot of that is deploying more of these tools into our developers' hands and the tools themselves getting more and more high fidelity and more accessible. And again, it's not just engineering, but that is often where we see it take hold.

We have a number of other examples. The risk model that we built for one of our lending products, consumer lending products. This is the ability to post-purchase Pay in 4 on Cash App Card. We built that in 2 days. The prior iteration of that model for a different consumer lending product, we took us a quarter to build. So we're condensing what took 90 days into 2 working days with the benefit of the data that we bring to bear on top of these very powerful and profound tools.

Got it. So now trying to take this a little bit to targets and financials. How should we be thinking about your go-forward margin profile and your Rule of 40 framework?

Yes. I mean, look, we were exceeding Rule of 40 in Q4, even separate from a reduction like this, which obviously is happening during Q1 this year. What you see from us is conviction that we can accelerate our path to achieving that long-term margin target that we had previously talked about. When we set out to become a Rule of 40 company a few years back, I think it was in the 2023 time frame, we predicted that we would achieve it in 2026 and more importantly, sustain it. We are now in 2026, and our guidance has us exceeding Rule of 40 this year, and we forecast that we will be able to sustain it on an annual basis moving forward.

What does that look like for 2026? Well, it looks like a 26% adjusted operating income margin, which includes stock-based compensation, it deducts stock-based compensation. That is a 6-point improvement versus where we were in 2025. That is factoring in the reinvestments that we will make after this personnel action, where we are going to be reinvesting in the excellent people that we've maintained. We'll be investing to build in certain areas like our sales team or our engineering teams. We'll be investing in AI infrastructure, and we'll be investing in go-to-market. So we have, through this action, made the space for the shifts in costs that we need to be front-footed for the go-forward future of this company.

And most importantly, we see that both that we are able to maintain and actually build margin from the 21% margin that we expect to have in Q1 throughout the year, achieving nearly 60% of our AOI guide in the second half of the year and ramping margins into Q2, Q3 and Q4 but also exiting the year in the mid-teens range from a gross profit perspective. As you're talking about being a Rule of 40 company, you don't want to be a Rule of 40 company by having a 40% margin. You want to be a Rule of 40 company and exceed Rule of 40 by having durable compounding profitable growth. And ultimately, we believe that we're building the workforce and the operating model that enable us to continue to compound growth at scale in that mid-teens percent range, which is what we outlined at Investor Day for 2027 and 2028 as well.

So last week, we upgraded your stock to overweight. And one of the things that, for sure, was an impact was just the path to better profitability and margins, and that's just what you've talked about. But even before that, we were increasingly encouraged by what we were seeing from a product perspective that we really felt like was expanding the TAM and was creating the opportunity to accelerate the top line growth. And I think we've seen some of that and the KPIs are improving.

But going back to the product point, like how should we interpret what seems to be an improvement in product velocity? Is this like are we still at the early stages? Is this really kind of the beginning? And by that, I mean, is this the impact of having worked on product for a couple of years, now it's coming to market? Or are we really seeing acceleration so that we can follow on more quickly than we have in the past? Like help us evaluate and track how to keep -- how we should be thinking about keeping track of the rate of new product introduction.

Yes. I mean, look, it's our intention to build upon our product velocity momentum and increase it. We released more products for Square in Q4 2025 than we did in all of 2024. And our -- as we talk to more and more sellers, we see that there are more and more use cases. There are more and more needs that they have. So we are ever focused on expanding our product velocity. And we think that these tools enable us to do that. A, everybody is a builder. We now have the ability to envision how we can make our workflows internally more efficient and build for our customers in faster fashion because of that. B, the time to build has gone down dramatically. I mentioned the 1 quarter to 2 days for our risk model. There are a number of other examples like that across our various disciplines, but particularly, I would say, for engineering. And C, we see it speeding time to answer for our customers themselves.

Today, the most apparent example of that is in customer service, where we've automated 75% of the interactions on Cash App customer service with really strong CSAT and NPS scores. And we are ramping the expansion of our automation tools for Square customer service. But ultimately, the vision that we see is actually putting these tools in our customers' hands so that they are themselves empowered through the usage of AI on their dashboard, if they're a Square seller, what we call Manager Bot or through the use of the chat interface within Cash App, what we call MoneyBot, which becomes proactive intelligence in their own hands and eventually see a vision where if Square can't solve every seller's needs or Cash App can't build every piece of software for an individual, they themselves can actually generate the dashboard or the widget or the UI that solves the answer that they're looking for.

So in 2026, there's a lot more moving parts, especially with the change in employment structure, et cetera, than even we're used to with Block. And there's always a lot of moving pieces. But can you help frame for investors the top 2 or 3 priorities you are most focused on in 2026 and the KPIs that you think we should be tracking most closely?

Yes. So I think, first and foremost, it's product velocity, everything we were just talking about. And I think that there are some very actionable tangible examples of products across Square and Cash App that you should be seeing from expansion of commerce initiatives with Cash App Card and Cash App Pay and the integration of lending into those initiatives, the expansion of Cash App Green, which is our status tier sort of membership tier within Cash App to food and beverage products and services across our seller Square business. There are some tangible things that you can see that you should be able to see in the months and quarters ahead.

And then there's some bigger audacious things. Our neighborhoods initiative. We are shifting from an opt-in to an opt-out an auto enrollment motion. And you'd want to see that ramping as we go throughout the year. Our AI initiatives, Manager Bot and MoneyBot, we will start to be deploying these in bigger waves across our customer bases in the weeks and months ahead. Our Cash App credit score, the underlying technology that underpins our lending products. So these are the host of sort of tangible everyday expansion that you can imagine ramping to being meaningful in customer utility and therefore, our financials as well as the much bigger, much more transformative, much more audacious things that may not impact '26 financials specifically, but could lay out the foundation for our next wave of growth.

I think the second key thing you need to be looking at for Block is the fundamental network growth KPIs around our business. So in Square, what is that? I think it's the things that ladder up the GPV growth which is retention and new volume added and then further our software attach rates into our GPV or our seller base. Within Cash App, it's monthly actives growth. It's primary banking actives growth. It's our ability to grow our overall base of customers and also grow our engagement with those customers. And then the final thing, I think, is around our core financial growth. We've outlined ambitious but we believe achievable targets for the year around 18% gross profit growth and 54% adjusted operating income growth to $3.2 billion. And we believe you should hold us accountable to those growth metrics.

So just on kind of some of those building blocks, in particular, I would say that things like retention and new volume tends to be some of the more debated questions in the investment community generally. Like, is that something that like we can get from the company? Or like how do you -- how should we think about like tracking those components of the algorithm?

Yes. I mean, look, I think you need to see the proof points from us in terms of bringing new sellers onto the platform as well as understanding the mix of factors that impact retention for our customers. And really, it's primarily 2 things: same-store growth, which has an element of macro dynamic related to it, but also an element of the depth of our ecosystem. Are we able to serve more and more of our sellers' needs. They're no longer cobbling together Square point of sale with some external kiosk solution. Now they can get that all cohesively from us. And as we've released new hardware over Square, 2 new pieces of hardware just in the past 12 months or less, I think we have more potential to take on more of our sellers' business.

The other aspect of retention is around churn. What we've seen from a churn perspective across the broad base of the Square business has been relatively stable and very encouraging. But those are the 2 key elements that ladder up into retention overall. That is really what moves the base in any given period for the Square business. And as we said at Investor Day, a point on new volume added generally 7 to 8 points of new volume added move growth in the following year by 1 point. We grew new volume added by 17% in 2025, and we accelerated that growth throughout the year, ending the year at 29% growth for new volume added. So those are the sorts of -- that's the sort of momentum that you want to see in our business.

So sticking with Square and kind of the financial metrics. As you move upmarket and international becomes a larger share of the mix, you have noticed some potential payment pricing mix headwinds that we should expect to offset. And you hope to -- or expect to be a little bit of a headwind, but you hope to offset those via higher software attach. Walk us through the path and time frame for the software attach to pricing and upsell to become more visible in results.

Yes. I mean if you think about the breadth of the Square ecosystem, we have 30-plus products across commerce, team management, buyer loyalty, marketing, hardware, banking that we can offer these customers. I think the opportunity to simplify that ecosystem. Starting with our pricing and packaging tiering that we launched just this past Q4, where the early metrics are extremely encouraging. New sellers who onboard see an uplift in overall SaaS attach rates and existing sellers who shift to the new 3-tier pricing approach that we've taken, see an ARPU lift.

What we see from this as we continue to roll this through the much broader base of our millions of sellers is the potential to bring the broader set of our ecosystem to these sellers beyond just core payments or just core hardware. So we're excited about that. I also think as we think longer term about -- and this is not necessarily a 2026 thing, but as we look into the future, the potential to simplify and almost abstract products from our customers into utility through Square AI, through Manager Bot, so all a customer is thinking about is what do they want to do and asking that chatbot for what they want to do. And that becomes immediately apparent to them without having to switch screens and being able to seamlessly navigate from there. I think that gives us the potential to create a much more personalized customized experience for that seller that involves the full suite of the ecosystem that we bring to bear.

What we've talked about in terms of time line is sort of the back half of the year where we expect to see more of that normalization across gross profit growth and GPV. Obviously, in the first half of the year, we've talked a lot about this processing partner change that we made and also investments importantly into hardware, which is where we see the opportunity to really attract new customers, especially larger customers. We believe our hardware and the integration with all of our software and payments is a differentiator for us and one that really helps attract new customers. And those are some of the areas of investments that we're making in the first half of this year.

So I want to turn to Cash App and kind of along these same lines of accelerated product introductions and expansion of TAM, talk about the credit products within Cash App. Borrow originations have accelerated significantly. And you've highlighted maintaining loss rates while expanding access to -- of Cash App customers to these Borrow products. How do you view the next phase of the borrower road map? What are the types of products that we should be thinking about coming next?

Yes. Borrow has been an incredible product for us and an incredible product for our customers, many of whom want to be able to make decisions in between paychecks to smooth their cash flows to almost get this tap into a line of credit as they need it. We see younger generations, the modern earner is either a thin file and not able to get a credit card or find that sort of revolving debt to be sort of against the grain. And a product like Cash App Borrow, which enables you to tap into it when you need it or a product like Buy Now, Pay Later or these consumer lending products that we have, really give far more choice to our customers.

What they've been for us is also an incredible business because of the access to data that we have, because of the unique attributes and short-term nature of these products, we are able to drive meaningful variable profit growth and strong return on invested capital through these products. What has driven Borrow's meaningful growth in the back half of 2025, and we think will continue to drive growth into 2026, particularly in the first half of this year, is really around 2 things. First, we have a bank, Square Financial Services, and we have just shifted originations for Borrow into our bank from a partner bank, which gives us stronger unit economics. The other thing that our banking license enables us to do is take Borrow nationwide, whereas for the prior few years before we shifted originations to SFS, we were only in a subset of states. That gives us immense TAM expansion opportunity for Borrow. And as we build history with those Borrow customers over time, it also gives us the ability to underwrite them at greater levels to expand limits for each of these Borrow loans and expand effectively that line of credit.

The second piece that has driven Borrow growth, particularly in Q4, is the deep engagement of Borrow into Cash App. We launched, as I mentioned earlier, this new status tier called Cash App Green, which many of our customers really, really want access to because it gives them a differential premium offering within Cash App, access to priority phone support, overdraft protection, specialized offers and also access to Borrow or access to Borrow at higher limits. And what we've seen is that these Borrow customers are deeply, deeply engaged within Cash App. And so what we've seen is that the launch of Cash App Green actually brought a lot of new customers into Cash App Borrow, the most new customers in any period that we've seen coming into Cash App Borrow, which we're excited to grow with them as we build greater signals around their inflows and outflows into Cash App, we think we have the ability to continue that pace of growth into 2026.

So let's talk about as lending scales, one of the concerns that investors often have is just the cyclicality economically and credit products can be more cyclical than payments a lot of times. How do you think about managing risks in a -- maybe in a recession scenario or a downturn in credit, especially as borrow and BNPL continues to grow? Should we expect loss rates to go up as you try to maintain access for and maintain those customers? Or how do you -- or do you try to keep those really flat? Like talk to us about how you try to manage in a downturn?

So maybe I'll share three points. First, on how we manage it; second, on the scenarios we've run. And third, what we actually see in our customer base and who our customers are for Cash App and for Borrow. First, in terms of how we run the product, the models are incredibly responsive, the underwriting models. They are near real time in terms of being able to flex the data we see about a broad population or an individual customer and then reflect that in the credit score, the internal credit score that we use to underwrite that customer.

And so as we see a shift, which we have not yet seen, but as we see a shift in the broader environment, the model will respond and bring a customer's credit score down, which gets reflected in our underwriting and what we are able to provide in terms of either eligibility where we determine eligibility for these loans or in terms of limits. The second thing is that we can provide overlays. We can adjust manually any of those dynamics in terms of limits or eligibility, but also things like the amount of money that needs to be provided for upfront in a given loan scenario, term lengths. There are a number of different things where we have the ability to quickly adjust. And these loans are very short in duration. They're about 25 days, which means that we have the ability to pivot very quickly.

From a scenario perspective, we've run moderate and even severe recession scenarios. What we've seen in -- if you look at prior history, a moderate recession scenario is typically about an incremental 2 to 3 percentage points of unemployment. What that would mean to borrow is that we could actually keep variable margin -- variable profit margins stable to where they are today and see only a mid-teens percentage reduction to originations. So we can make that decision to keep variable margins where they are today and see a modest top line reduction from originations perspective or we could decide to see less of a top line reduction and bring margins down very slightly.

Even in a severe scenario, recession scenario, we still see variable profit profitability for Borrow loans on an individualized basis and a cohort basis. Finally, what I'd say is that when we look at the Cash App consumer, we get a lot of questions about who our Cash App customers are. These are modern earners. These are folks who are looking for a more flexible way to live, but many of them, 50% of Cash App's customers actually come from households with $70,000 or more in household income. So we serve a pretty broad base of customers, many of whom we believe can be resilient in whatever the economy holds. And again, our product attributes give us the opportunity to be very nimble in how we can respond to that.

Got it. So I want to talk a little bit about another component within Cash App and these relationships, and that's kind of the primary banking account relationships as well as inflows per active. I think one of the KPIs that stood out to me in the December quarter was the really rapid growth in primary bank accounts. I mean, it grew over 10% sequentially in that number of accounts. And you've highlighted that as a key driver of inflows per active and the ways that you can monetize that, I think, should be pretty clear to people. How are you thinking about scaling this cohort? I mean, whether that be through Cash App Green initiatives, direct deposit teams families? And what are -- what unit economics do you need to see for Green to scale meaningfully?

Yes. So people are very excited to get access to Cash App Green and the suite of sort of privileges or benefits that we provide them. The way you get access to Cash App Green is you either are bringing us your paycheck through direct deposit above a certain amount each month or you're bringing us $500 of commerce volumes in a given month, usually through Cash App Card or through one of our payment vehicles. And obviously, we monetize those as inflows run through our system in the case of Paycheck Deposit or as those -- we see those payments through interchange on Cash App Card or Cash App Pay. And so we have seen that this cohort of customers, our primary banking active generate 10x the gross profit per active of a peer-to-peer customer through Cash App. And we've also seen since the launch of Cash App Green that this cohort of customers, retention has actually improved. They are more engaged and more retentive in the Cash App since we packaged the suite of benefits together.

And we've also seen the volumes flow through in terms of activity and inflows. We saw inflows up sequentially as well, 10% growth in Q3 to 12% growth on an inflows per active basis in Q4. We're seeing these volumes come through many of our products. And that's leading to sort of a rising tide lifting all boats across the broader Cash App ecosystem and ultimately, the monetization rate also growing. So we think we are just in the early days of exposing our 59 million monthly actives to this primary banking activity across both lending and banking products as well as our commerce products. And we think we have a lot more opportunity to enhance these benefits, potentially tier them in the future and also expand the attach rate to our overall base.

Got it. So last few minutes here, Amrita, I want to talk about capital allocation and cash flow. You introduced non-GAAP cash flow as a key metric, and you've discussed the ability to return a large portion of it via buybacks while still investing in growth and working towards an investment-grade balance sheet. How should investors think about the decision framework today for buybacks versus incremental growth investment? Like what's taking priority and what can shift those prioritizations?

Sure. I think what we outlined at Investor Day in terms of our prioritization still stands today, which is we're going to ensure that we can continue to invest and grow our business, which includes our operating expense base and our lending portfolio. We used $3 billion of our capital to grow our expansive lending portfolio, which has high 20% range ROICs. These are -- that's a decision we would make all day long because it leads to durable compounding profitable growth.

The second priority is returning capital to shareholders. We returned $2.3 billion in capital to shareholders in the last 12 months as well, even as we continue to invest both in our operating expense base and in lending originations. That's a durable program for us. We said we want to maintain roughly 80% of that non-GAAP cash flow in the form of returning capital to shareholders. And that we'd expect that non-GAAP cash flow to grow to about the $4 billion range by 2028. Obviously, since Investor Day, we are accelerating the pace of our profitability year in 2026 in terms of our expectations relative to November. And ultimately, over time, we think that accretes to longer-term profitability as well as to our cash flows as well.

So last question to wrap up here, Amrita. You've had a very eventful last week. You've spoken to a lot of people, investors, press, et cetera, I'm sure. What is the key 1 or 2 messages that you want to leave with people, in particular, where would you like to disabuse people, maybe have some misconceptions, et cetera?

I think the thing that is fundamentally true for us internally, and I would love people externally to feel this, is that we're incredibly mission-oriented to accelerate our product impact across our customer base. And that includes building new products, but it also includes putting the power of these new powerful AI tools into our customers' hands because we won't even be able to build everything that they may need to power their lives or their business.

I think the growth potential from what that could be in the future and our differentiated capabilities there from a data perspective, from a banking, underwriting and risk model perspective and from a proactive intelligence and design interface perspective are really unique to Block. So the future, as I think about the next 3 to 5 years is only accelerating for our company.

Love it. Amrita, thank you so much for joining us. This is really...

Thanks, James.

Hi, everyone. Thanks for joining our fourth quarter 2025 earnings call. Today's call will be 45 minutes. We have Jack and Amrita with us today, along with Owen Jennings, our business lead; and Nick Molnar, our Sales and Marketing Lead for Block. We will begin this call with some short remarks before opening the call directly to your questions.

During Q&A, we will take questions conference call participants. We would also like to remind everyone that we will be making forward-looking statements on this call. All statements other than statements of historical facts could be considered forward-looking. These forward-looking statements include discussions of our outlook, strategy and guidance as well as our long-term targets and goals and how we plan to operate moving forward.

These statements are subject to risks and uncertainties, including changes in macroeconomic conditions and risks related to the workforce reduction we announced earlier today. Actual results could differ materially from those contemplated by our forward-looking statements. Reported results should not be considered an indication of future performance.

Please take a look at our filings with the SEC for a discussion of the factors that could cause our results to differ. Also note that the forward-looking statements, including earnings guidance for 2026, and our future operating plans discussed on this call are based on information available to us an assumption we believe are reasonable as of today's date.

We disclaim any obligation to update any forward-looking statements, except as required by law. Further, any discussion during this call of our lending and banking products or for to products that are offered through Square Financial Services or our bank partners. Within these remarks, we will also discuss metrics related to our investment framework, including Rule of 40 with Rule of 40, we are evaluating the sum of our gross profit growth and adjusted operating income margin.

Also, we will discuss certain non-GAAP financial measures during this call. Reconciliations to the most directly comparable GAAP financial measures are provided in the shareholder letter. These non-GAAP measures are not intended to be a substitute for our GAAP results.

Finally, this call in its entirety is being audio webcast on our Investor Relations website An audio replay of this call and the transcript for Jack and Amrita opening remarks will be available on our website shortly.

With that, I'd like to turn it over to Jack.

Thank you all for joining us. Today, we shared a difficult decision with our team. We're reducing block from over 10,000 people to just under 6,000. I said everything I needed to say to our team in an e-mail posted to Twitter. So please read it if you'd like.

What I want to talk to you about now is why I believe this is the right path for our company and what block looks like going forward. We're making this change after delivering 1 of our strongest years. We set clear priorities for the year. and we executed on all of them. In 2025, gross profit growth more than doubled from the first quarter to the fourth quarter. We surpassed Rule of 40 in the fourth quarter. We reignited Cash App network growth and engagement. We scaled our lending products and delivered strong returns.

We accelerated Square GPV growth and had our strongest new volume added year on record. We shipped our first proto units, and we increased share repurchases to return more capital to shareholders. We have conviction in achieving the long-term financial targets we laid out at Investor Day and are meaningfully raising our initial outlook for 2026.

We know how to grow this business, and this decision today is a choice about how we operate it going forward. The core thesis is simple. Intelligence tools have changed what it means to build and run a company. We're already seeing it internally. A significantly smaller team using the tools we're building can do more and do it better. And intelligence tool capabilities are compounding faster every single week. I don't think we're early to this realization. I think most companies are late.

Within the next year, I believe the majority of companies will reach the same conclusion and make similar structural changes. I'd rather get there honestly on our own terms, then be forced into it reactively. And this isn't just about efficiency. Block serves millions of customers, sellers and consumers who are going to feel the economic effects of the same ship. Small businesses that rely on us to get paid to manage their money to access capital. Individuals navigating a financial landscape that's changing fast.

Our job is to help them navigate it through it. That's not a new mission for us, but the urgency behind it is more pronounced and the speed at which we need to deliver is accelerating.

So here's how we're going to operate from here. First, intelligence will be at the core of how the entire company works, how we make decisions, how we build trust and manage risk how we build products and how we serve customers. We're moving toward a model where our customers can build their own features directly on top of our capabilities that changes the nature of what we are as a company and it dramatically increases the value we can deliver for customers.

Second, extreme focus. There are 4 things we're going to focus on building now as a company, customer capabilities, interfaces where we can compose and deliver those capabilities, proactive intelligence based on our deep customer understanding and real-time data and an intelligence model to fully orchestrate the company's operations. This allows us to best serve the master plan we laid out at Investor Day.

And third, speed. A company of our new size has no excuse for being slow. We will decide faster, ship faster and learn faster. The structure we're building is designed exactly for that. We believe block will be significantly more valuable as a smaller, faster intelligence native company. Everything we do from here is in service of that.

Amrita will now share more detail on the quarter and our outlook for the year.

Thanks, Jack, and thank you all for joining. The organizational changes we're sharing today represent a deliberate choice about Block's next phase of growth. The decision impacts many employees who played an important role in building block, and we're deeply grateful for their contributions.

As Jack mentioned, we're making this change after delivering a strong year across the business. In the fourth quarter, we outperformed our guidance across gross profit, adjusted operating income and adjusted EPS, translating product velocity into strong financial performance.

Block generated $2.87 billion in gross profit, representing 24% year-over-year growth. and we grew adjusted operating income 46% year-over-year to $588 million, delivering 3 points of margin expansion even as we invested in initiatives with strong ROI and that we expect to drive future growth.

On a per share basis, we grew adjusted diluted EPS 38% year-over-year. We repurchased $790 million of shares in the fourth quarter bringing our total for 2025 to $2.3 billion. We exceeded Rule of 40 in Q4, and we believe we're on track to sustain it on an annual basis moving forward. Stepping back, 2025 was a pivotal year for Block. Gross profit growth more than doubled from the first quarter to the fourth quarter, leading to $10.36 billion in gross profit for the full year and growth of 17% year-over-year. Even with additional investment in go-to-market, we grew adjusted operating income 30% year-over-year in 2025, delivering 2 points of margin expansion.

Cash App monthly actives returned to growth in the second half of 2025, ending the year at $59 million, and we executed on our engagement strategies with primary banking actives growing 22% year-over-year to 9.3 million monthly actives in December. We grew consumer lending origination volume by 50% year-over-year in 2025, while sustaining strong margins and healthy risk loss performance. We accelerated Square GPV growth from 8.6% in 2024 to 10% in 2025 and delivered our strongest year ever for new volume added or NDA, as we expanded our distribution channels.

We continue to lean into our differentiated vertical integration and hardware design expertise with the launch of 2 new devices, Square handheld and our second-generation Square Register to better serve a wider range of seller use cases. We began shipping proto mining rigs with proto gross profit scaling in the fourth quarter. Reviewing further some Q4 specifics, catch-up gross profit grew 33% year-over-year to $1.83 billion, accelerating relative to Q3. Throughout 2025, we focused on reigniting Cash App's network growth. and that work has paid off.

In Q4, we grew monthly actives to $59 billion. Our focus on deepening engagement is also working with primary banking actives attach rate growing meaningfully in Q4. These customers have generated nearly 10x the gross profit of peer-to-peer only actives, and we believe they create a foundation for long-term inflows per active growth. Cash App Commerce Enablement volume grew 17% year-over-year to $54.7 billion in Q4, driven by strength in Cash App Card, where we saw the strongest quarter for new Cash App Card actives in over a year. and saw Cash App green drive increased retention and cash up card volume.

Commerce monetization rate increased 4 basis points year-over-year as attach rates for Afterpay post purchase continued to increase. We also grew consumer lending origination volume 69% year-over-year in the fourth quarter, with consumer lending variable profit growth consistent with originations growth. Within consumer lending origination volume, Borrow delivered an exceptional fourth quarter with origination volume growing more than 3x year-over-year. We leaned into borrow offers for Cash App Green actives as 1 element of our new status program.

Many customers deeply value access to liquidity and -- and beyond strong stand-alone unit economics, we've seen Borrow drive deeper engagement across other parts of Cash App. Our lending strategy is focused on maximizing variable profit. scaling responsibly, while maintaining disciplined risk management. That approach was on display in Q4 and early 2026. We Q4 was the strongest quarter for first-time borrower actives ever, which drove higher portfolio losses in December and January based on the mix shift to new cohorts, which have higher losses by design.

As of mid-February, all 2026 cohorts are trending below our risk loss targets, demonstrating our ability to quickly calibrate risk and adjust exposure for new cohorts based on the strength of our underwriting team. product design and our proprietary data and credit infrastructure.

Turning to Square, where our distribution motion has continued to gain traction. 2025 was our strongest year ever for NBA growth of 17% with growth of 17%. That momentum continued into the fourth quarter with 29% year-over-year NDA growth. we saw progress across both marketing-led self-onboarding and sales channels with sales-led MVA growing 62% year-over-year in Q4.

In addition, we now partner with over 100 independent sales organizations complementing our direct sales motion and extending our reach to more new sellers. GPV grew 10.3% in Q4, and we've seen growth reaccelerate so far in Q1, with growth quarter-to-date as of February 24 of over 12% year-over-year. Square gross profit grew 7.5% year-over-year in Q4, driven by growth in Financial Solutions.

Hardware costs and higher processing costs were each a 2 percentage point headwind and to square gross profit growth in Q4, consistent with the expectations shared at our Investor Day.

Looking ahead, we expect our new organizational design to increase velocity, we have seen significant improvement in AI tooling capabilities. We've seen engineering work that would have taken weeks to complete, be done by a small team in a fraction of the time with Agentic coating tools. These are reflected in our developer velocity metrics, where we've seen a greater than 40% increase in production code shipped per engineer since September.

We've been prioritizing automation and how we build internally for the past couple of years as we built bespoke tools that increased AI adoption. Some of our automation work streams are nearly fully rolled out. Others are earlier in their maturity, and we expect to continue to develop automation improvements in parallel with the advancements of the underlying technology.

The outcomes we have seen are encouraging, and the long-term impact will depend on thoughtful implementation cable. We are taking this decisive action from a position of strength. Gross profit growth accelerated throughout 2025, and we expect to sustain strong growth in 2026, with execution across a portfolio of ramping or new initiatives in Square and Cash App.

In Cash App, we expect to compound our gains in our banking and commerce ecosystems. Scale Cash App Green further and expand Money Box to our full customer base in the coming weeks and months. We launched Afterpay prepurchase in February with strong early indications of demand and expect to scale it throughout the year. We also recently launched Pay in Four, Buy Now Pay Later functionality for peer-to-peer transactions, which is a first for the industry. Our focus is to ramp these products along with Bora while maintaining healthy loss rates.

In Square, we expect to ramp go-to-market motions further across self-onboarding, sales and partnerships. We're focused on excellence in our food and beverage products and accelerating product velocity across other verticals. And to continue to drive net volume retention higher. We recently launched Square AI to all markets and are excited to deliver more proactive intelligence capabilities to our sellers as we build towards manager bot.

We continue to be focused on connecting our ecosystems and believe we're finding product market fit with neighborhoods. Our focus now is on scaling. We're moving from an inbound motion to an auto enrollment motion for sellers -- and we recently added in-store redemption capabilities to increase functionality for consumers and widen the addressable market to more sellers.

Our guidance reflects this product velocity momentum. For the full year, we expect year-over-year gross profit growth of 18% to $12.2 billion, an increase relative to our Investor Day guidance and an acceleration relative to what we delivered in 2025. For Q1, we expect year-over-year gross profit growth of 22% to $2.8 billion.

In addition to the growth momentum we're seeing, our guidance also reflects a smaller cost structure going forward. We believe the actions we're taking today will enable us to deliver faster product innovation for customers in the future. While also enabling us to invest meaningfully in our business. With this change in cost structure, combined with the investments we plan to make, we are increasing our guidance for adjusted operating income in 2026 to $3.2 billion, reflecting year-over-year growth of 54% and 6 points of margin expansion relative to 2025.

We are increasing our expectation for adjusted diluted EPS in 2026 and to $3.66, also reflecting year-over-year growth of 54%. For Q1, we expect adjusted operating income of $600 million and adjusted diluted EPS of $0.67. Reflecting year-over-year growth of 29% and 20%, respectively.

Before wrapping up a few additional considerations related to our guidance. Our Q1 operating income guidance includes a modest benefit from today's announcement, but we expect the organizational changes we announced today to begin to more meaningfully impact adjusted operating income in the second quarter, with the full impact of our new cost structure, more meaningfully improving profitability in the second half of the year.

Given these timing dynamics and the pacing of investments in both risk loss and sales and marketing, we expect adjusted operating income margins to expand each quarter throughout the year from our Q1 starting point of 21%. We expect these margins to expand at a faster rate in Q3 and Q4 relative to Q2. And we expect to deliver just under 60% of our 2026 adjusted operating income guidance in the second half of the year.

Within OpEx, we expect higher risk loss growth in the first half of the year based on our strong borrower growth rate expectations in Q1 and Q2. In Square, we continue to expect gross profit growth to be roughly in line with GPV growth later in the second half of the year. In the first half, we anticipate a continued spread between gross profit and GPV growth with some potential variability driven by hardware costs and the pace at which we move upmarket.

We view Square gross profit growth, excluding hardware costs as a clear measure of core profitability as we view hardware to be a customer acquisition investment to win larger, more retentive sellers. We expect increasing software attach rates to be a key driver of gross profit growth acceleration, and we expect to continue to evolve our pricing and packaging to ensure appropriate price to value, while delivering attractive total cost of ownership for sellers.

We have strong conviction in cash up strategies to grow its network and deepen engagement, which have helped drive 2 quarters of sequential active growth across monthly actives and primary banking actives. While monthly actives may fluctuate from time to time, we continue to expect low single-digit active growth in 2026 and over the long term.

We expect approximately $60 million in net interest expense in Q1 and $200 million for the full year, up modestly from the expectations we shared on our third quarter earnings call as we deployed more capital in the buyback and borrow growth in the fourth quarter. And finally, similar to last quarter, we expect a mid-20% non-GAAP effective tax rate in 2026.

And with that, I'd like to open up the call to Q&A.

[Operator Instructions]. Our first question comes from the line of Tien-Tsin Huang from JPMorgan.

Jack, I did want to ask a question to you, if you don't mind. And knowing you are here. I'm sure you put a lot of heavy thought into this reduction in force. So I'd love to just hear a little bit more on why now. We're just what, 3 months removed from Investor Day. So why are you ready to make this change now? And why is this the right level to run the company at?

Yes. And there's a few things that have all been compounding towards this moment in this time. As you know, like we have been working very hard to functionalize the company. That's a big part of what gives us more confidence in making this move.

We were operating a company with basically 2 companies with inside of it, both having their own structure, a lot of duplication. And as we functionalized it allowed us to act more like 1 company and recognize where there are common capabilities and common foundation. And we're still doing a lot of that work, but I have the confidence that we're in a place that we can move much faster there.

I also believe we were one of the first -- we were the first agentic [ Carnes ] out in the market. This is Goose. But something happened in December of last year, just last year, where the model has just got in order of magnitude more capable and more intelligent. And it's really shown a path forward in terms of us being able to apply it to nearly every single thing that we do. So if there are any gaps in our usage of AI right now, it's an application gap.

And I'm really confident that we can go through the majority of our organization, certainly our development, but the majority of our organization and apply these tools in a much stronger way that has the effect of allowing us to ship much faster, to explore a lot of the path much broader. So we can run the right experiments and get to the right answers and give feedback immediately for product market fit. And ultimately, to operate more and more of the company in a way that I think all companies will eventually go.

I do think the tools are at a state right now where every single company out there is going to run and grow in a fundamentally different way and be structured in a fundamentally different way. And a big part of me wanting to do this right now is I wanted to get ahead of it. And I'm confident that we've laid the foundation in order to do that and to push really fast to get there.

So we're in a place where like a lot of what we've been working with and all these threads are coming together in the right moment. And I want to make sure that we're ahead of the market, ahead of our customers' expectations and actually building for the future. And I do believe that a lot of the expectation going forward is not just that we deliver intelligence to our customers through managerbot and Moneybot for instance. But the very end of that is that they can build their own features and build their own visualizations on top of our capabilities through our interfaces.

We have incredible distribution. We have incredible understanding in real time of real transactional data on both sides of the counter and we can proactively prompt our customers, and we can proactively compose interfaces that will fit the task before them, which I think is quite unique and not something that you can find certainly at other companies in our space but also more broadly in technology. And I intend that we win in this space and that we grow and bring this intelligence to both sellers and to individuals and ideally to bring them together into this 1 ecosystem, we're calling neighborhoods.

Our next question comes from the line of Darrin Peller with Wolfe Research.

Look, I mean, there were some very strong trends, especially in cash at considering users growing again, inflows per active growth accelerating double digits and also on Square, we're seeing new sales helping with NDA accelerate nearly 30%. Just -- if you could just touch on what you think drives sustainable momentum across both the businesses and especially in light of the reduced headcount levels.

I just want to touch on how you're sustaining this and how you really expect to sustain solid momentum like this as shown in your guidance just again, just given the changes in the business.

Sure. I think we have a lot of conviction in our ability to sustain these durable growth rates. I think that there's high-level ways to answer your question. The first is just around the org structure and the org size and what does that mean? And then the second probably is just from a product development and road map standpoint, how are we feeling -- so on the org structure side, to reiterate some of what Jack was talking about, what we've seen is that smaller, more nimble teams have allowed us to move faster and actually get products into our customers' hands more quickly.

With the moves today, we are eliminating some of the organizational debt or organizational overhang that has existed. We're also inherently increasing talent density across the org, including the development or -- and obviously, we're getting all the benefits of the AI tools and the improvements in the foundational models, and that's flowing through to everything that we're doing, particularly on the software development side.

I'd say overall on the org structure and org size side of things, we're feeling really confident and we're actually feeling like this is going to help us execute more quickly and with more precision. On the second category, which is just product development road map and the growth levers that we have, again, we have really strong conviction in our road map and how that's going to flow through to gross profit growth. I think the clearest signal is -- in my mind, it's the increase to the gross profit guide that we gave today.

But I would tend to break this down into a few different categories. I think we have, first, just like the core network growth of Cash App and Square, then we have key product launches that we're planning on in the coming months and quarters that are very high conviction.

And then last, we have some of the bigger bets. I think those are green across the board. So we continue to have teams that are focused on core network growth, whether that's actives growth and inflows per active growth on the Cash App and Afterpay side or whether that's teams focused on net volume retention and driving new GDV on the Square side.

From a product launch perspective, we have a ton of things that we've been shipping over the past few weeks and things that are coming down the pike from like how we're thinking about improvements and enhancements to Cash App green. How we're thinking about scaling Cash App Card functionality and growing Cash at pay, the Bitcoin improvements that we're making after pain the Cash Card prepurchase just rolled out to the initial cohort a few weeks ago, and we're seeing really, really encouraging signs there in early data.

Similarly, on the Square side, we've shipped a number of key features that drive that food and beverage excellence. We have a number of other features that are coming down the pike in the coming months. we're continuing to refine our pricing and packaging. The list goes on. And so we feel really confident in those levers and how they're going to flow through. But then, of course, it's not just about the near-term growth. It's also how are you investing in a way that's going to drive that durable growth over time.

And so we have part of our development portfolio allocated to things like neighborhoods and scaling neighborhoods to money bot to manager bought to cash up credit score, a lot of which we think kind of represent the future of the product experience for our interfaces at block and which should drive gross profit growth, not just this year, but into the future. So overall, we're feeling really confident in our ability to sustain these healthy growth rates.

Our next question comes from the line of [ Ramsey LSL ] with Cantor Fitzgerald.

Our next question comes from the line of Bryan Bergin with TD Cowen.

Hope you can hear me. I wanted to just follow up on the work changes and hoping you could talk more about how those changes today may flow through the financial outlook this year and potentially beyond. So I appreciate the cadence color. Just wanted to follow up on on those cost impacts and how that may translate to where you can exit '26 on AOI, any important free cash flow impacts to be mindful of as well there as you go through '26 and beyond? And just also where are the investment dollars shifting to from headcount?

Brian, it's Amrita. Happy to take the question. We'll start on sort of the cadence throughout the year around AOI and maybe even before that, starting on gross profit. And then we'll share some of the investment areas as well. So obviously, as you've heard, we've raised both our gross profit guidance from 17% growth at Investor Day for 26% to 18%. And and meaningfully raised our adjusted operating income guidance.

From a gross profit perspective, in terms of the pacing throughout the year, we expect a very strong Q1 with 22% gross profit growth and we've been prudent in our tax season assumptions with that. We also expect to sustain strong gross profit growth throughout the year and end the year in the mid-teens gross profit growth range in line with the longer-term Investor Day guidance we gave in the mid-teens as we look forward as well.

From a profitability standpoint, we expect to grow AOI nearly 30% in this first quarter and expect margins, as I noted earlier, to expand throughout the year off of that Q1 21% margin range. Really, the reason for that margin expansion throughout the year is a couple of things.

First, look, strong underlying unit economic strengths in the business and incremental margins driving that leverage. Second, timing of some of the cost structure changes. As I noted earlier, you'd see a less meaningful impact on the -- from the cost structure changes to our Q1 results, given the timing in the quarter and the notice periods for employees outside the U.S. as well as seeing some of that notice period dynamic flow through into Q2.

Timing related to sales and marketing spend where we expect to see some meaningful increase in spend from Q1 to Q2, again, on the back of strong returns that we're seeing where that can drive long-term profitable growth. And then risk loss growth, as I noted earlier, being higher in the first half of the year on the back of really strong borrower continued growth for borrow in the first half of this year, and so ultimately, that we're delivering strong AOI growth to start the year, but expect that to compound throughout the year, with just under 60% of the $3.2 billion in AOI, we expect to come in the second half of the year.

And similar trends really as you look across EPS as well. Just to then quickly on the second part of your question, in terms of where our opportunities to invest are they're really in addition to the normal course of our business across product innovation and go to market. There's 3 things that I'd call out here. One is that we see meaningful opportunity to invest in our people, invest in hiring, invest in retaining a world-class team to deliver for our customers.

Ultimately, we expect to hire some more senior AI engineering talent we'll continue to level up our engineering and product capabilities. Second, as I noted, we're going to continue to invest in go-to-market to scale our customer acquisition efforts further. And then third, we'll keep building on our AI infrastructure, including the tools and the capabilities ultimately that we're going to need to build a world-class organization. So those are some of the 3 areas of investment that I'd see playing out throughout the year as well.

Our next question comes from the line of Dan Dolev with Mizuho.

So yes, I just wanted to ask about your primary banking actives, Amrita and Jack. I mean, this looks like a very, very strong quarter, $1 million PBAs added accelerating growth to almost 23%, and these customers generate over 10x to profit proactive. So this sounds very exciting. I remember you guys have talked about this as kind of the Holy Grail is adding the banking addictive. So I wanted to know what you're doing there and how exciting this one could be over time.

Thanks for the question, Dan. This is Owen, I can take the first crack at it. As you said, we're really, really excited about where primary banking actives came in, in Q4 -- as you know, we launched Cash App Green in November at Cash App leases. And the whole concept around green was to expand access to the banking benefits that we offer to customers. We used to only offer those benefits to direct deposit actives. Now we have a broader understanding of how customers themselves see banking primacy -- and so if customers are spending more than $500 a month on Cash App Card, they're eligible for Cash App Green and everything that comes with it.

The results following the launch of green were fantastic. So as you noted, 9.3 million primary banking actives in December, growing 22%, up about $1 million from September I think over and above the count of primary banking actives, it's actually the engagement that's most exciting. As you noted, gross profit per active is almost 10x what we see for a peer-to-peer only active.

We've also seen, since the launch of green Cohort retention has improved for primary banking actives since we launched. And then we've seen incremental engagement across a number of different products and features on Cash App. For example, seeing incremental gross profit coming from borrow, from Cash App Card from Instant Deposit. And that's, as you'd expect, as the green program is really just an incredible incentive for customers to bring more and more of their financial life to cash up.

I think one good example of just showing the increase in engagement is on personalized offers. So for green customers, we're giving personalized instant discounts on Cash App Card to those customers. Before we launched green, we saw engagement or like the attach rate with offers at around 2%. And then following green, we see it at around 14%. So just a massive shift in customer behavior that's coming from this program.

I think ultimately, this is tied to our broader strategy around serving the modern earner. We continue to see a huge opportunity here as we talked about at Investor Day. This is a really big and it's a growing part of the U.S. population. And these folks are typically underserved by the legacy financial system. And so what we're seeing is an increase in the number of individuals who are -- they're earning flexibly across hourly wages, across gig work, freelance work, they're entrepreneurs, they're solopreneurs and there's no perfect financial institution out there to serve their needs.

And we think that this is a place where Cash App is leading and where Cash App will continue to lead and I think the key part here is that this was the first launch of green. So we're really just getting started. I think on the last earnings call, I talked about how we love a complex system with lots of knobs and dials that we can tune in order to reward customers and steer customer behavior. This is just the beginning of our approach for how we're going to drive more and more primary banking actives, but it's a good first side.

Our next question comes from the line of Jason Kupferberg with Wells Fargo.

Really good to see that the Q1 GPV reaccelerated 12% quarter-to-date despite some of the weather events out there, there is an easy compare, though in Q1. So I just wanted to get your sense of visibility on the full year guide there, which I believe is low to mid-teens and -- maybe if you can just touch on the vertical trends that you've seen quarter-to-date, if there's been any variation in trajectory among the major verticals.

I'll kick us off on some of the latest GPV trends by vertical. And then I think Nick may add in on some of what we're seeing from a go-to-market perspective and how that inflects the curve in the future.

If you take a step back, Jason, as we look across all of the updates and changes we've made from a product ecosystem to a distribution channel perspective, we believe the strategy that we've got in Square is paying off. When you look at the broader years of '24 versus '25, we accelerated GPV growth from 8.6% to 10%. We did see, of course, as you know, a moderation in the fourth quarter relative to the third quarter. Again, through Tuesday, year-to-date, we've seen GPV growth reaccelerate to over 12%. And in the U.S. as well, accelerating to over 7.5%.

Ultimately, in the key verticals of focus for us, we've seen really strong results. Food and beverage GPV, up 16% year-over-year. Mid-market sellers, also exhibiting continued strong performance in the fourth quarter. And we now view an opportunity to bring the playbook that we've used successfully in food and beverage over the past 12, 18 months to other verticals within the Square ecosystem to drive further strength as well. And so as we look back at what we can deliver in '26, we continue to have conviction that we can accelerate GPV further in 26 relative to 2025.

And again, that's on the back of some of the really continued progress that Nick and team are making from a new volume added perspective with our strongest year ever in 2025. But I'll turn it to you, Nick, to share more on that.

Yes. Thanks, Amrita. Look, as MVA continues to grow and have seen acceleration in '25. It does illustrate that it will build compounding cohort curves and only contribute more meaningfully in terms of GPV growth over the course of 2026. We did a lot of great work in 2025. As Amrita mentioned, we exited '25 with new volume added in Q4 above 29%. We saw very strong growth from our self-onboarded perspective and still 65% of our volume comes from our self onboarded sellers, which is a real competitive advantage for Square.

Marketing is still holding quarter payback period, which is highly efficient. We saw an even steeper acceleration from a sales perspective. Sales led MDA in Q4 was up 62%, as was referenced in the opening remarks, which significantly exceeded the 40% growth target that we spoke about late last year. We have stayed very focused on the marginal ROI as we've scaled with our field sales team and our telesales team and our investment has been successful.

We had 15 U.S.-based sales reps in Q1. We're now over 140 by year-end, and we just did our first deal in Australia and the U.K. through our field team. So seeing that continue to expand. Over 50% of our inbound leads for our field team is through our partnership channel in Q4 and particularly with Cisco, where we're seeing 80% growth in referrals quarter-over-quarter, we've really lifted our strategic relationship with them and seeing strong progress.

And if I just look forward to our existing reps will continue to scale just given time in seat and many of them were ramping during the course of 2025. We scaled our independent sales organization partners to over 100. We have a great team leading that and it's complementing our direct to sales motion and scaling across multiple geographies.

And then as Owen mentioned, we're really seeing a lift in product velocity and quickly closing the guard from a competitive product set perspective. So 2025 was our strongest year ever in MVA fueled by a transformed go-to-market motion across marketing, sales, partnerships, and I really expect that to continue to compound into 2026.

Our next question comes from the line of Will Nance with Goldman Sachs

I was wondering if you could talk on MAU growth. I think it came in a little bit stronger than what the Street was looking for, I think, more or less in line with what you talked about on the Investor Day. So could you just remind us about how you're thinking about the growth algorithm in Cash App from an MAU perspective.

Sure. We're really happy with the growth in actives in the second half of last year and in particular, in Q4 in December. As you said, we hit $59 million monthly active accounts in December that was up from $58 million in September. This was driven by a few different things, efforts across multiplayer money, network enhancements, our go-to-market motion and then also just our focus on teens in the next generation. So on the multiplayer money side, we had some key launches.

We rolled out PurePeronWeb. We're in the process of rolling out our new core payment flow. And that critically, that's connected to Moneybot. And then it also is the flow that is built to support stable coin. So continuing to tweak things there and get that rolled out to 100%. We also launched Payment Link, which just makes it easy to get paid into Cash App, and you can send those links through text or DM or what have you.

We continue the evergreen work on the network enhancement side, just making sure that we're reducing friction where we can and making cash up easy and simple to use. Teens and families we've continued to invest in as well. And then right now, we're working on expanding access to Cash App Cards and savings accounts for children who are 6 to 12 years old, now the teens program is for those 13 to 17 years old, and we've seen strength where we can kind of grow with those individuals, and we expect it to be the same for children who are 6 to 12.

And then marketing is obviously always on full funnel across all of the channels, how we think about incentives, how we think about rewards. I think critically, it's not just about the actives number itself, it's also about the quality of active. So what we're seeing is higher engagement rates and higher attach rates for new actives. For instance, in December, 21% of new actives attached to a banking product, and that was up pretty meaningfully versus December of the previous year.

So all in all, we feel good about the growth algorithm. There's a number of things that are contributing to actives growth. We feel confident in that low single-digit year-over-year growth number that we've given. There might be some wiggles month-to-month or quarter-to-quarter, but we're feeling really good about where we are. And of course, we're trying to do everything that we can to surpass those expectations.

Our next question comes from the line of Tim Chiodo with UBS.

Great. Let's shift gears a little bit. I want to about a new revenue stream. So Cash App score recently was made available effectively as a service to other third-party lenders. You mentioned that this is early, but you're already having some good conversations with some third-party lenders. My understanding is they would effectively be buyers of this service and incorporating it into their own underwriting flows as may be a part of a more holistic approach to underwriting. But the main point is, I was hoping you could talk a little bit about the revenue opportunity and the pricing model.

Tim, thanks for the question. I'll just set the stage a little bit before I get into the details. I think what we're seeing in the U.S. is a lot of consumers moving away from credit cards and moving toward other forms of payment, and that's especially true for younger individuals.

And so a byproduct of this is that a decent share of the population is now basically anonymous to the legacy credit bureaus. But as time goes on, those folks are contributing more and more to the U.S. economy, and this is kind of the bet on the next generation and the modern earner that we've been talking about.

But right now, to some extent, they're getting left out of the traditional credit model. On the flip side, meanwhile, we lent out $18.5 billion to consumers in Q4 and that number was up almost 70% year-over-year. We did that profitably. And we were able to do that largely because of the unique data that we have on our customers that we use to generate a unique Cash App credit score for each of our customers.

So then now we're thinking through how do we leverage this credit score. I think the first step is that we're going to show the Cash App credit score to our customers. I think there's a couple of benefits there. First is just building transparent -- giving transparency and building trust with our customers. We also think this could be a meaningful driver of behavior just incenting customers to engage more with Cash App in order to drive their credit score.

And then second, to your point, we do intend to partner with certain third parties or allow third parties to buy credit score data from us. Since Investor Day, and we have a website out now as well, we've seen really, really strong demand from a number of different folks. And we've had a number of conversations. So it's clear that there's a tremendous amount of demand out there.

Also, just given the criticality of this for us going forward, we want to be super deliberate in terms of how we design that program and where we choose to monetize and the sorts of folks that we choose to partner with. And then there are subsequent things that you can imagine where it's not just data mechanism taking place, but also there's actually UI within Cash App, where we're able to connect customers with with certain credit offerings where maybe we don't power those things right now, but we can increase access and we can bring down costs because of the unique data that we have.

So at this point, I would say where we are is -- it's always been clear to us internally that the credit score is extremely valuable. That's how we underwrite such a large book and do it so profitably. Now I think it's increasingly clear that it's valuable for consumers and it's seen as really valuable for other lenders.

I think probably the most interesting thing that I would say here and I'll end with this is that I think this is just further indicative of how critical borrow and our lending products are to the Cash App ecosystem overall. I think we have an opportunity here to build a very high-margin product, a very high-margin gross profit stream. But that could only really exist because of borrow and Cash App Afterpay and our other lending products. And so it's just part of the overall ecosystem on the Cash App side and how we're trying to increase access.

Our next question comes from the line of Andrew Schmidt with KeyBanc

I appreciate the move today. I got to ask on BNPL. A number of good comments there, momentum in Afterpay post purchase, the new products rolling out in 2026. Just curious as a starting point, how 4Q came in versus expectations? And then how we should think about growth into 2026 across core Afterpay, post purchase and then some of the newer products you're rolling out?

Thanks for the question. I'm happy to take this question. So firstly, when I think about binate later, I think about it more from the lens of our kind of commerce consortium and I think that more appropriately represents what's going on in the market. It's no longer just about paying for. It's about pay now, paying for through our integrated merger relationships after on the cash up card, paid monthly. -- than kind of the apples-to-apples view, and that's how we look at it internally.

As we've been kind of executing over the last period, we've been very focused on disciplined, profitable growth for both Afterpay and cash out with these focus for GPV and e-commerce volume was up consumer lending originations, as Owen mentioned, up 69% year-over-year, but really focused as well on being conscious from a risk loss perspective and scaling in the right way -- for Afterpay specifically, we added large partners like Fanatics and Endeavour Group, which is the largest liquor retailer in Australia. -- post-purchase by now Paletas continued to gain traction and is 1 of the fastest-growing products which is primarily new customers who are Afterpay.

And then as I would also mention, we're in the early days of rolling out prepurchase at the cash at car, which we started in February, enabling financing for eligible actives. And so I'm happy by what we're seeing from a buy-now-pay-later perspective. cash at play as well. I know you didn't mention it, but it's important as part of this kind of commerce stack. It's continued to scale at a very meaningful pace, up 55% year-on-year and active surpassing $8 million in the fourth quarter.

And when I look at these merchant partnerships, where we're seeing strong product market new distribution opportunity like Instacart and Target. It provides a unique and simple on-ramp for Afterpay down the track, given design this from a single integration, a single contract single settlement perspective. And then to your question on point on 2026, I still believe there's a very large and growing can, and we're very well positioned to capture it. 90 million Americans are expected to use [indiscernible] in 2026 and volume doubling by 2031 and given cash outs scaled customer base and particularly the scale of the cash up card.

It's differentiated owned by us, and I'm really excited to see that continue to continue taking that to market. So we're looking forward to the rest of 2026 and focus may have broader commerce performance.

Our next question comes from the line of Rayna Kumar with Oppenheimer.

Just want to go back to cash Avoro for a second. Can you talk specifically by your expectations for Cash App borrower growth in '26? And separately. How have loss rates trended in Bar and with the NPL?

Rayna it's Amrita. Happy to happy to see -- there's a little bit of feedback Okay. I think that's better. Yes, [ Barro ] had an incredible quarter, as you saw. And we continue to be excited about the growth path for 2026 with Bora. As I noted on the call, we expect to see even stronger growth in the first half of the year relative to the second half. And you'd see that flow through. What we've seen so far is that variable profit margins continue to be strong.

And even the fourth quarter was the pretty astounding 223% year-over-year origination volume growth, 50% quarter-over-quarter growth. Even with that, we saw variable profit margins in line with our targets across both new and mature cohorts despite that triple-digit origination growth. Really, as we think about what's driving that borrow growth, I think we'll continue to drive growth as we head into '26.

And there's really 2 big drivers. One is -- as you know, we've transitioned borrow loan origination to SFS. And SFS is now fully -- this is our Bank Square Financial Services. SFS is now fully originating all borrower loans. And with that, we have both improved unit economics on bar loans and new states that we can expand into. And that expansion is underway, but we see an opportunity to go much further there. And so that is a big driver. That expansion across the new states and the improved unit economics is a big driver of the growth that you've seen in Q4 and we'd expect to see in '26.

The second big thing is the deep integration of Barrow into this broader Cash App ecosystem and in particular, with our program around Cash App Green -- in the fourth quarter, we leaned into those Borrow loans. We know that they're so attractive to the modern earner. And we saw a lot of success where customers were excited to either get their first borrower loan or get a higher limit as they became a cash up green customer. When we think if you step back again and think about Borrow, it is an important element for the modern earner in how they can address the variability in their income.

Many customers have cited to us, they seek flexibility. And Hari provides that for them as they think about those periods in between paychecks. And that's really a primary driver here for why they would take out of Borrow loan and why we've seen such a sounding product market fit across our customer base here. And again, expanding borrow rapidly, but still doing that responsibly given the product design attributes and given the very, very strong underwriting models that we've built through our 15 years of of understanding lending and really strong growth across each of the 2 businesses from a lending perspective.

So that's really what's driven borrow as we think about this past year and why we continue to expect strong momentum for borrow into '26.

Our next question comes from the line of Ramsey Elisa with Cantor Fitzgerald.

So AI, you guys have woven AI into obviously, a lot of the conversations, having a transformative impact across your business. I have a 2-parter. I guess, first, do you see AI as a new competitive vector where block has an opportunity, maybe a rare opportunity to sort of meet frog competitors or redefine the competitive landscape? And I guess, second, what gives you guys the right to win here? What are Block's competitive advantages in AI?

Yes, I do. So I think it goes back to those 4 things that we want to focus on right now. In terms of what we build as a company. The first that sets us apart is all of our capabilities that we've built up over time. That's everything from our network and peer-to-peer -- it's the fact that we can issue cards that we can accept cards or we can lend money to sellers and individuals. These are very, very hard to acquire as capabilities, and they're hard to maintain.

And these are things that represent exact use cases that customers are coming to us in the first place for. When you pair that with the interface, we have a massive install interface on the Square side with our merchants. We have the same on the cash upside through an app and the website. What we'll be able to do is compose these capabilities furtherly to deliver them to all of our customers in real time in a much more personalized way, in a way that they're going to feel like they can actually build their features and their functionality themselves.

I think that's a significant advantage I think the biggest advantage though is our understanding of our customers. We have an understanding of both sides of the counter. We have real-time data, which is very real transactional data, and we can connect it from the merchant to the consumer, and we can actually use that understanding to be a lot more proactive. Instead of our customers coming to our intelligence systems and knowing what questions to ask and what the prompt the AI, we can actually prompt our customers, and we can do it in the right time so that they can have an experience where they have an intelligent system that is looking to protect their business and to protect their individual finances and help them along whatever goals they might have. And these are out today and something that we're going to continue to build on.

And then finally, is making sure that we're using this intelligence and we're building these world models to help us orchestrate the company much better and be a whole lot more efficient about how we work and how we deliver and how we ship. So I think all 4 of those together, I know all 4 of those together really set us apart.

And a big part of the move we made today was to get us in position to do just that and to be ahead of our customers' expectations and to be ahead of the curve and actually being able to deliver that new functionality.

We will now take our last question from Bryan Keane with Citi.

Amrita, the guidance for '26 today is above what was outlined at the Analyst Day. What does that mean for the 2028 targets of $15.5 billion in gross profit and adjusted EPS of $55 million, and I think it was $4 billion in free cash flow. What's the bridge that you need now to get there? Or are those targets a little bit different?

Brian, thanks for the question. At the simplest level, what you're hearing from us today is we believe we have a path to accelerate the strategies we laid out at Investor Day. We've meaningfully raised our 2026 outlook, not just on profitability, but also on gross profit, showing that path to exiting this year, still in that mid-teens growth range, which is really important as we think about heading into '27 and '28 because of the strong unit economics and incremental profitability in our business, that leads to that path of compounding profitability at a greater rate than gross profit.

So while we're not updating our Investor Day targets on '27 and '28 today, what you see is a really credible and profitable path to delivering compounding profitability at meaningful scale in that '27, '28 view for our business. And we couldn't be more excited to get to work for 2026.

Thank you for participating in today's call. You may now disconnect.

All right. Let's get something out of the way as some people are finding their seats here. So we're going to start with the legal disclaimer. During this conversation, Owen may make forward-looking statements, including about Block's expectations for its financial performance that are subject to certain risks and uncertainties. The statements are based on information available to us and assumptions we believe are reasonable as of today's date, that's in Block. We disclaim any obligation to update any forward-looking statements, except as required by law.

He may also speak as to certain non-GAAP metrics. Please take a look at Block's most recent filings with the SEC for a discussion of the company's corporate risk or company's risk factors. Reconciliation of non-GAAP metrics to their most directly comparable GAAP financial measures are available in our shareholder letter and our historical financial information spreadsheet, which is available on the Investor Relations website. Further, any discussion of our lending and banking products refer to products that are offered through Square Financial Services or our bank partners.

All right. That was perfect timing for everyone to get their seat. Thank you for joining us today. So we're really, really glad to have with us today Owen Jennings, who is the Block Business Lead. We also have many members of the IR team here. We have [ Janina, ] we have Katie, we have Nikhil. Thank you to everyone for making the trip to Arizona and for being such a big part of our conference.

All right. So let's do an intro to Owen. I think many of you have gotten to know Owen over the last few years as he's become more a part of the investor discussions, but he was also a big part of the Investor Day. So Owen's role, it's a little bit of a different title, right? He's the Block Business Lead. But really, what he does is he looks after Block's business performance. He's been at the company since 2014. He's had numerous operating and leadership roles across both Square and Cash App, and his current role actually oversees a large number of functions. I'm going to list them off just to give perspective. But it's all of product, it's business operations, it's financial operations, it's executive operations, it's customer ops and its customer support.

So with all that, again, Owen, thank you so much for being here. Second year in a row.

Thanks for having me, Tim. Appreciate it.

All right. We're going to get started with a Q4 update. So we want to spend most of the time on some of the longer-term bigger picture stuff. And coming out of the Investor Day, there's a lot to cover. But we're going to spend a few minutes at the beginning just to talk about the near-term numbers.

Sure. So I don't think there's that much new to share relative to Investor Day and Q3 earnings. I think on the Square side, we continue to expect GPV growth in the low double-digit range. So a slight deceleration relative to Q3, largely driven by some weather events in October. And then also we're comping a pretty strong holiday spend season last year. So that's kind of in the kind of 10%-ish range there for Square.

And then on the Cash App side, we're excited about the strength that we're seeing with Cash App Actives. We're excited about the launch of Cash App Green. And so I think that overall guide of about 19% gross profit growth and 39% growth in adjusted operating income is still the right ballpark just in terms of how we're seeing things shake out in the quarter.

All right. Great. And on the Square GPV that you mentioned, just for what it's worth, that 250 basis points tougher comp from last year. And for what it's worth, we are already modeling a slight deceleration from Q3 levels because of that comp that you called out.

All right. Well, we said we would keep that quick. Let's keep our word. Let's move on to some of the key Investor Day highlights. So it was a really great day for Block and I would say, for all of the payment sector. The day provided a great opportunity for us to look at Block's vision and strategy really for the next 3 years and beyond. So we wanted to start by giving Owen an opportunity just to expand upon some of the real key highlights for him.

Appreciate it. It's great to see you there. I think I'll start on the Cash App side. So on Cash App, really focused on the ecosystem that we've built across our network products, our banking products, our commerce products, our Bitcoin products and then now with the launch of Moneybot, our AI products, I think some of the key call-outs are probably, one, Cash App Green, which we released at Cash App releases. This is really providing a clear way for us to drive that primary banking activity on Cash App. We also announced Afterpay on the Cash Card prepurchase, which I'm really excited about. So we'll be piloting that in the coming months. This is a huge paradigm shift for consumer credit. And it's pretty unique for Block, just given the scale of the debit card program that we have. So Cash App Card is the fourth largest debit card program in the United States, and now we're putting buy now, pay later functionality on top of that debit card, and it just looks completely different than what some of the competitors are able to do given the scale that Cash App is operating at.

On the Square side, I think that probably the 2 main call-outs that I'm really excited about are Manager bot and then also neighborhoods. And so on the Manager bot side, what we've been able to do is leverage the strength of the foundational models to give tools to our sellers that let them automate so much of the day-to-day work that they have to do. And this is not just like simple kind of queries and insights. This is actually allowing us to give sellers tools where they can automate tasks that used to take hours and hours, if not days, and we're condensing that into just minutes.

And then I think probably the biggest theme, and hopefully, we'll talk about it more is neighborhoods. That's kind of the third pillar of our overall strategy, our overall master plan is to connect buyers with sellers through Cash App and Square throughout the neighborhood. And so Brian walked through some impressive metrics on the neighborhood side, and we're really excited to increasingly scale that product and just watch the acceleration, both on the buyer side as well as the seller side.

All right. Excellent. Our next couple of topics are going to stick with the Square theme. So we're going to move into the growth path through 2028. So I mean, the bottom line is accelerating trends, right? And I think that's probably all I need to say, and I was hoping you could put a little bit more color on that path through 2028.

Sure. I think there's a -- so we do expect an acceleration in GPV growth as well as gross profit growth over that 3-year period. And I would break it down into the product side as well as the go-to-market side. So on the product side, we're just really excited about some of the key features and products that we're working on from neighborhood to Manager bot to really just functionality for some of the core verticals. We have been focused over the past 18 months on quick-serve restaurants. And I think we're going to continue to focus in that vertical, but increasingly building for full-service restaurants, the retail vertical and really like all of the neighborhood spots.

I think we also have a massive opportunity to drive SaaS attach rate higher as we think about our new pricing and packaging on the Square side. So those are some of the key product elements. But then on the go-to-market side, it's about kind of full funnel marketing from brand all the way to the bottom of the funnel and then our investments in the sales team. And so we're seeing really strong ROIs across all of our go-to-market activities. And when you put those 2 things together, that's kind of what adds up to this acceleration in GPV as well as gross profit.

All right. Perfect. Let's dig in a little bit deeper on one of those topics, which is the evolving distribution approach. So in the past, it was kind of 80-20-ish in terms of self-onboard versus sales and other. And it looks like this year, it's more of a 70-30-ish mix and eventually getting to 50-50 is what you've talked about. Can you just talk a little bit about that evolution and what's kind of in that other 30?

Sure. I do think the self-onboard motion that we have at Square is kind of a superpower for us. There's not other point-of-sale companies where a given merchant can self-onboard. And so that was like one of the magical things early on for Square. And we're going to continue to invest in that. There's still a lot of opportunity to make that as simple as possible, as low friction as possible, make sure that we're getting the reach to all prospective sellers. At the same time, we're increasingly building out our sales team. So now we have Nick Molnar at the helm running sales and marketing for all of Block.

Nick, who is the Co-Founder of Afterpay is one of the strongest sales leaders in the world, in my opinion. And there's a few different pieces here, but I guess 2 of the big things are just continuing to focus on telesales and then also building out field sales. So on the telesales side, we've had that motion for some time, but we have a huge opportunity to continue to scale that team, not just in the U.S. but also internationally.

And then on the field sales side, I think actually, I was here last year, and I was telling you, we have our first cohort of field sales, and it's going to be great. It's going to be awesome. And you were like, okay, well, we'll see it when we see it. But here we are a year later, and we have roughly 100 field sales reps. We have -- it's very formulaic and mathematical in terms of how we're thinking about that. We're going to continue to invest here up until a certain marginal ROI threshold that we have. And we're seeing just phenomenal returns, phenomenal paybacks. And so we think we have a lot of room in the U.S. to continue to invest there.

But then also, we have the ability to bring all of this machinery that we've built for the U.S. into international markets. And so I think what you're going to see over time is just as we continue to lean in on the sales side, you're going to see a larger and larger share of NVA, new volume added, coming from the sales team versus self-onboard. But just to be clear, the goal is that the overall pie of NVA is growing in a pretty meaningful way. And also you're seeing a mix shift. So I really don't think about this in terms of cannibalization. I see this as just continuing to drive new volume across all channels. And I think it's incredible that we're in a place now where you have Nick just laser-focused on this outcome on the go-to-market side.

Excellent. Let's move into another topic here on Square, which is penetrating the food and beverage vertical. So investors often look to the upmarket, meaning larger merchants in general and the restaurant vertical in general as 2 of the more competitive areas in payments. But the reality is when we look at your numbers, upmarket has been one of the faster-growing areas and food and beverage retail has been one of the faster-growing areas. So with that as context, I think what investors are really looking to know is how do you view your competitive positioning in restaurants with larger restaurants, both on the QSR side and the FSR side?

I think what you're seeing right now is the result of our focus over the past 18 months. So we said we're going to focus on moving upmarket, and we're going to scale our sales team, and we're functionalizing the company and putting Nick on top of that. And we've said we're going to focus on food and bev and QSRs in particular. And now you're seeing the results where we are meaningfully moving upmarket and taking share there. And on the food and bev side, you're seeing GPV growth run quite a bit hotter for food and bev versus other verticals. I think the number we gave at Investor Day was 17% year-over-year growth for food and bev GPV.

And that's been a result of tremendous focus and high velocity on the product development side, but then also some of the go-to-market motions that I talked about before. In terms of our competitive positioning, we had some gaps in the -- on the QSR side, call it, 18 to 24 months ago. We've launched more than 100 features. And now when I talk to sellers, I talk to prospective sellers, I talk to folks on Nick's team, there really aren't that many gaps. There's always incremental things that you can build for a particular merchant. But by and large, we're extremely competitive, and I really like the win rates that we're seeing there.

I spent a lot of time talking to sellers and prospective sellers. And I think that we feel really good about quick-serve restaurants. Moving to the full-service restaurant side. One of the things that was interesting when we functionalized the company, and I came back on to the Square side and Nick took over as the Head of Sales was just how well Square works for upmarket merchants and frankly, for upmarket full-serve restaurants. I think there's like -- there's a mean or a brand perception that Square is just for smaller businesses, but we have hundreds of thousands of large sellers in this vertical who are using Square.

And so I think a big part of this is going to be around the distribution side. That said, there's some key products and features that we know that we need to build, and it's not -- it's like relatively trivial, things like enhancing how coursing works or some FSR-specific analytics. And so we can get those things out. And we think that we can be just as competitive in the full-serve restaurant and the simple retail space as we are in the QSR space. And that's really critical to the long-term strategy of the neighborhoods. Like our whole goal here that I'll keep on harping on is let's get Square on as many countertops as possible in the neighborhood and then let's connect all of those sellers to buyers using Cash App. And so a bit more to build for FSR and retail, but generally feeling really good about our competitive positioning.

All right. Excellent. We're going to move on to a final topic on Square before we move to Cash App, but this comes -- it relates to this whole -- the growth differential between GP and GPV or gross profit and gross payments volume. So metrics that were mentioned at the Investor Day, right, NPA and NVA, so new profit added, new volume added. And what you mentioned was that in the U.S., you actually saw the new profit growth outpacing the new volume growth. And I think that was a standout to many investors. And it relates to the commentary that you gave throughout the guidance experience, for the total Square segment, you actually expect the volumes and the gross profit to grow at a similar level. And I was wondering if you could just elaborate on that broader topic. It's an important one to investors.

Sure. So we gave guidance on the next 3 years. And so during that period, we do expect that, by and large, GPV growth, processing volume growth will be in line with gross profit growth. The key levers that are kind of driving some of the changes here are we are increasingly moving upmarket, and we are having a large degree of success internationally with Square. And so when you think about what that does on the margin side, there's a slightly lower take rate for the larger the seller is or the more that new volume added is coming from international.

But the flip side of that is that larger merchants are way more likely to adopt our SaaS products, which is obviously accretive from a margin perspective. And then just more generally, I think we have a ton of room on the SaaS side. We launched unified pricing and packaging just a few months ago. And I think that we have a huge opportunity to just increase the attach rate to our software products by tweaking how that system works, looking at the tiers, looking at the pricing. I think if you look at Square and you comp us relative to some other players in the same space, the share of gross profit that's coming from software is lower than you might otherwise expect.

And so there's basically an offset happening here where we might make a little bit less on the payment side, but we intend to make more on the software side, and that should probably net out with GP and GPV roughly in the same spot.

All right. Glad we tackled that. Let's move on to Cash App. So in addition to that recent return to growth in MAUs, they were up quarter-over-quarter in Q3, you laid out a longer-term plan over that 3-year period to have Cash App gross profit CAGR at roughly a high teens level. So before we get into more specifics, maybe just talk about that growth path through 2028.

Sure. The way that I think about gross profit on the Cash App side, on the consumer side is what we call internally the inflows framework. But basically, you have actives, you have inflows per active and then you have your monetization rate. And I think there's a number of key levers that we're talking about that hit on each of those, and that's what ends up coming together to compound in that strong gross profit growth rate over the period. On the active side, some of the key things that we're talking about are, one, obviously, our marketing motion in general, our focus on this concept of multiplayer money, and just continuing to make money more social, continuing to build for teens, continuing to build for families.

Over the medium term, I think neighborhoods will be a massive, massive driver of Cash App Actives. On the inflows per active side, this is really just about engagement. When you take someone from a simple peer-to-peer active to, let's say, a more engaged banking customer, they're going to inflow way more. So the green program that we just announced, frankly, Moneybot with the ability to cross-sell, upsell with personalized content is a big driver of inflows per active.

And then on the monetization side, there's a number of levers. We're focused, as I talked about at Investor Day of kind of reclaiming our spot as the best place to buy and sell Bitcoin in the United States with Cash App, Afterpay on the Cash Card prepurchase, Afterpay on the Cash Card post purchase. So we have bets and we have our road map laid out in a way where we can drive meaningful growth for actives, inflows per active and monetization rate, all of which is going to lead to that overall gross profit number.

All right. Excellent. This next one, we can maybe keep quick because you kind of hit on it earlier a little bit, Owen. But you mentioned the prepurchase BNPL functionality, which is launching and going to be out in early 2026. Maybe you could just talk a little bit more about that product. And just in the interest of time, when we talk about card products, the one that maybe is not there is a secured credit card, and we often get asked if that's something that could potentially be launched down the road or whether or not that's even necessary.

Makes sense. So on the buy now, pay later on the Cash App Card, I think what the younger generation increasingly wants is a debit card plus buy now, pay later. They don't want to get stuck in a revolving debt spiral, and we're seeing that play out in terms of attach rates to our products with the teen cohort and with folks who are in their late teens or early 20s. And so we're bringing that to market. We've already brought it to market with retro. Prepurchase is even better because you don't need to have the full balance in your Cash App at the time of purchase.

And then there are some products out there that are somewhat similar to this, but the key difference is just the scale. Like we have 26 million monthly actives. 20% of teens in the United States have a Cash App Card. That's like a pretty crazy thing to think about as we pursue financial tools for the next generation. And so we're going to keep on leaning in here, providing more and more flexibility to our customers. In terms of the secured credit card, there's kind of 2 different pieces for why folks might be interested in it, why investors might be interested in it. One is like you can make more interchange. The second is, is this like a useful value prop to actually increase the credit score of a given customer.

What we've seen when we've tested the second part of that is they don't really work. It's not really like a very good, reliable way to help you build your credit. And so the product that we talked about at Investor Day, I'm extremely excited about, which is the Cash App score. So we have a score for every single one of our customers. It updates basically in real time. And we think we have the ability not only to provide that transparency to customers, which will drive positive behavior for Cash App, but also there's an opportunity to actually bring that score externally and allow our customers to better participate in the economy maybe in places where we don't currently play. We don't have a mortgage product right now. We don't have an auto lending product right now. We think that, that's probably a much better strategy to actually increase credit access and creditworthiness in the U.S. and then we can figure out however we choose to monetize and increase our monetization rate over time. We have tons of options.

All right. Perfect. Well, that was a great segue. You mentioned the scoring system. So let's talk a little bit about Block's unique underwriting model, and this was definitely center stage at the Investor Day and covered quite well. Also, I'm sure many investors have seen, but you also published a white paper earlier this year called Block's modern approach to credit, which I think covers a lot of these topics. But maybe you could hit some of the key points and then just some of the -- what makes the model different that could kind of help you absorb various ebbs and flows of the economy, if you will.

This is one of the areas that I spend a lot of time on personally, and I'm really passionate about. The headline is that the consumer credit model in the U.S. is just fundamentally broken. The technology has evolved over the past 30 years, but the concept of the credit score has not. And so the way in which a given consumer is traditionally being underwritten is it's using a subset of data and it's using really lagged data and then it updates very infrequently. This doesn't make sense to us. And so the score that we've built is based on all of the signals we have about a given consumer.

And critically for us, this is not just Cash App data. It's also Afterpay data. It's also buyer data on the Square side. Like we have one of the most incredible data sets on financial and economic activity for a majority of Americans. And I think that, that's pretty incredible. We then update that score basically in real time. So if you -- let's say, you go into overdraft coverage or you have a failed transaction, like you can see your score decrement and we're giving you the ability to kind of change your behavior to improve your score.

I think when you couple that with just like world-class team, Brian Boates and I spoke at Investor Day, Juan Hernandez, who's our Head of Underwriting, just absolutely world-class team on the machine learning side who's doing our underwriting, plus the short duration of the loans, we just feel incredibly good about this business and this product line, like to the extent that there is some downturn or some sluggishness in the U.S. economy, one, we're able to react so quickly because of the short duration. But then two, we're actually able to observe this incredibly quickly.

Like we actually have a real-time minute-to-minute read on the U.S. economy because we have so many sellers who are processing payments. We have so many consumers who are using the Cash App Card, like all of the things that we saw around the tariff tantrum or when COVID hit, it's like we saw that 6 weeks before retail sales or 6 weeks before PCE. And so you can imagine how we flow that through into our underwriting model. It's not just a deep understanding of who our consumers are and their creditworthiness based on the unique data we have. It's also a near real-time understanding of what's happening with the consumer more broadly in the U.S.

All right. Excellent. We've got a little bit over 5 minutes left. What we're going to do is we're going to try and tackle neighborhoods and then we're going to move into some of the incremental margins in the guide, and we're going to wrap up with the guidance philosophy.

All right. Let's go to neighborhoods. So this was another big highlight of the Investor Day. So bringing the 2 ecosystems together, Square and Cash App. You talked about many of the value propositions, which is the 2 sides of the merchant and the consumer. You have the 2-sided network, stored balances, network-wide rewards, first-party online ordering, target marketing. The list goes on. Let's talk about the value that gets delivered to both the merchant and to the consumer and what this means for Block.

I see neighborhoods as the most important thing for the next 5 years. It's basically, I think, the third chapter for Block. So the first chapter for Block was Square. I think the second chapter was hatching, nurturing and scaling Cash App into what it's become today. When I joined Cash App, there was no gross profit. Now a majority of Block's gross profit comes from Cash App. And then I think neighborhoods is kind of this third chapter. The basic setup is that what sellers are getting is the ability to have an enterprise-grade app.

It happens to be an applet within Cash App, but that's hugely valuable for a seller. It allows them to market to their customers. It allows them to do loyalty and rewards and discounts and the like, all without having a tech team. On the consumer side, what consumers are getting is rewards. They're getting local cash, and they're able to then use that cash in the local economy. They're also getting a seamless incredible way to check out that's built kind of natively into an app that they're already using, which is pretty unique versus trying to hatch this buyer network from scratch, which is quite hard to do.

In terms of the business impact, I see this flowing through in a number of ways. On the seller side, what we're expecting is higher win rates, better acquisition, better retention, less churn. And this is already happening. Like the reason we won Bluestone Lane was Nick and I went and talked about neighborhoods and how incredible it's going to be and how it can drive your business forward. On the Cash App side, I think that there's going to be a huge tailwind on the active side. We're basically turning tens of thousands, hundreds of thousands of points of sale into a cross-sell or into an upsell for Cash App.

So that's going to be a meaningful tailwind. And I think also the buyer base there is not necessarily going to be identical to our current customer base. And then obviously, from Block's perspective, we're monetizing on the seller side, we're monetizing on the consumer side, but we're also able to do really innovative creative things in terms of the payments and how we're routing that, whether it's on Bitcoin or it's on a stablecoin or it's on a ledger, however we choose to do that. So this is really the thing. It's the third pillar of the overall strategy, but I think neighborhoods really is the thing for the next 5 years.

All right. Excellent. We're going to wrap it up. I'm just going to combine these 2 into one, but we're going to talk a little bit about the incremental margins in the guidance period. So implied in the guide was that those incremental margins would be reaching the 50% plus level as we get out to 2028. And I think it would just be helpful to let investors know what kind of confidence you have in that? What are some of the main drivers of allowing that 50% plus incremental margin to happen. And then in the interest of making this a 2 for 1, we'll go with the guidance philosophy. So there was a little bit of a change earlier this year, and I think it would be a good use of time just to reiterate how the company thinks about giving guidance to the investment community.

Sure. So on the guidance philosophy side, we want to take a prudent approach to our guidance, and that's really -- we've been consistent this entire year. We also don't bake in specific kind of economic scenarios to the upside or the downside. So we're not kind of trying to forecast when a recession might hit. We're also not trying to forecast if tax refunds should be way larger this year or how Trump accounts are going to flow through or if there's like a kind of tariff-related dividend or stimulus check. And so we kind of have a base case of macro assumptions that we use.

To some extent, we can think about our business as an attach rate on to what's going on in the U.S. economy, plus all the benefits you get from product, plus all the benefits you get from distribution and marketing. And we always want to take a really deliberate and prudent approach to how we're thinking about guidance. In terms of incremental margins, we have a strong track record of having very high incremental margins. So I think the proof is in the pudding. I think I'm talking a lot about all of the products that we're planning on launching more from a customer perspective and a product development perspective, but you can see how things like neighborhoods and Moneybot and Manager bot and Cash App Green and Bitcoin revitalization and serving FSR, like how all of these things ultimately flow through to higher incremental margins. And I think I have an extreme amount of confidence that we're going to execute. That's our main focus every day. It's not investor meetings. It's just executing and shipping great things to customers.

All right. Well, Owen, I have to say on behalf of my team and all of UBS, it really is a pleasure having you here, second year in a row on stage, a pleasure doing this with you. And again, a special thanks to Nikhil, Katie, [ Janina ], the whole team at Block for both a great Investor Day and for taking the time to be with us here in Arizona. Thank you.

Thanks so much, Tim. Appreciate it.

Good morning. Thank you all for being here. Really appreciate it. Really excited to have you. We have a great agenda that I think will show the broad momentum we're seeing across our business. And for those of you I don't know, I'm Matt Ross, Head of Investor Relations, as was just said. Before we get into that agenda, you know the drill. We'd like to remind everyone that we'll be making forward-looking statements during today's presentations. All statements other than statements of historical fact could be considered to be forward-looking. These forward-looking statements include discussions of our outlook, strategy and guidance as well as our long-term targets and goals. These statements are subject to risks and uncertainties, including changes in macroeconomic conditions, and actual results could differ materially from those contemplated by our forward-looking statements.

Reported results should not be considered an indication of future performance. Please take a look at our filings with the SEC for a discussion of the factors that could cause our results to differ. Also note that the forward-looking statements, including financial guidance and targets discussed during these presentations are based on information available to us and assumptions we believe are reasonable as of today's date. Actual results may vary based on macroeconomic conditions and other risks and uncertainties in the company's periodic reports filed with the SEC. We disclaim any obligation to update any forward-looking statements, except as required by law.

Further, any discussion of our lending and banking products refer to products that are offered through Square Financial Services or our bank partners. Within these remarks, we will also discuss metrics related to our investment framework, including Rule of 40. With Rule of 40, we are evaluating the sum of our gross profit growth and adjusted operating income. Also, we will discuss certain non-GAAP financial measures during today's presentation. Reconciliations to the most directly comparable GAAP financial measures are provided on our Investor Relations website. These non-GAAP measures are not intended to be a substitute for our GAAP results. Finally, these presentations are being webcast on our Investor Relations website. A replay and copy of these presentations will be available on our website promptly following the end of these presentations. Okay. So like I said, we have a great agenda in store today.

Jack is going to come up next and talk about where we've come from, where we're going and the strengths that guide us there. We'll dive deep on product, our underwriting strategy and discuss how we're driving engineering velocity. We're going to talk about how we've redefined our go-to-market strategy over the past year, and Amrita will show how all of this comes together for our financial profile and guidance. After the partner panel and Q&A, we'll end the day with our demo hall. This is going to be an amazing opportunity to see and feel our products and talk to our executive team. Before I turn it over to Jack, I want to share some of the key themes that you'll hear throughout the day today. I am going to keep these in mind as you listen to the presentations. This is what makes Block unique. We're a technology company. That's actually a profound statement.

Many of our competitors are software companies or payments companies or fintechs or neobanks. We aren't any of those things. We build technology to solve our customers' financial and operational problems. We build hardware, software, commerce capabilities, financial solutions and networks. We design our products with a focus on customer empathy and creating value rather than extracting it. Ultimately, we connect ecosystems that empower people. We have unique capabilities, differentiated interfaces, network advantages and proactive intelligence that we bring to bear for our customers. These strengths drive our conviction in sustaining durable growth, compounding profitability and meaningful cash flow. We're excited to get into it. With that, I'm happy to turn the mic over to the only person to have founded and been CEO of 2 S&P 500 companies, Jack Dorsey.

Hi, everyone. Thank you for joining us today. Thank you for the time. I'm going to spend a little bit of time talking about where we're going as a company and what we want to focus on in the future. And then we have a full agenda going into all the details and how we're thinking about, what we're building today and what we want to build for our customers in the future. So I wanted to start with some gratitude. I want to thank you all for having patience with us, for your belief in us, for the time that you're spending with us today. We're really excited to share our story. We put a lot of work into this presentation. We know that our business is complicated, and we want to use this time to make sure that it's much easier to understand going forward. We don't see this just as a presentation to you all.

We think a lot of the value here is about getting feedback from you as well. So please give us feedback, be critical, be upfront, be frank, and we are listening. And it's in this room, and it's also for all those who are watching online. Always continue to give us feedback. It helps us. So I wanted to start off by saying and addressing what the [indiscernible] has happened over the past 2 or 3 years. I know you all have seen the stock performance, and I know you all have questions about what was going on in the company over those 2.5 to 3 years ago. And I wanted us to acknowledge this and also own it and go point by point on how I would diagnose some of our problems in the past and how we're correcting them. So first and foremost, we had an org structure that served us in the very early days, which was around the GM structure for Square and one for Cash App, but really stressed the product and the organization going forward.

We actually pitted these 2 organizations against each other in order to compete with one another and constantly raise the bar. But in the end, we found that, that competition wasn't serving our customers, and it wasn't serving our original goal of being able to be both sides of the counter, Square and Cash App, seller and consumer. So we changed that. We changed to a functional organization that allowed us to have a lot more flexibility and allowed us to put our best humans and our best talent against our biggest problems and actually build shared resources. Second, we lost our focus on engineering. Because we had a GM structure between these 2 ecosystems and these 2 brands, a lot of our engineering talent dissipated and it wasn't highlighted, and we weren't leading with engineering mindset or the ability to solve problems and create challenges for ourselves and solve those problems for our customers. This was a big issue and something that I intended over the past year to really put more of a premium on.

We are a technology company. We are engineers, and we need to build magic technology that we can design and productize around for our customers. We've made this reset through a functional organization, and you'll see a lot of it in -- manifest today in the products and the features that we're putting out to all of our customers. Third, we just had the wrong leadership. We've made a lot of changes over the past 1.5 years to make sure that we have the right leadership team in place, that it is a functional organization, that all of our folks are focused on mastering their craft above all, so that we can deliver the best products and features to our customers. And then finally, we weren't focused enough. We didn't have the right focus within Square.

We didn't have the right focus within Cash App. Now we do. And again, you'll see that manifest throughout the day in our presentation. So now what do we look like now? One, we're accelerating our velocity. It's really important to us that we put out as many features and products as a high-quality bar as quickly as possible so that we can learn from our customers and what we need to build for the market. Second, we're more and more profitable every single day. This has been a big focus for us. Rule of 40 has been an amazing instrument and framework that we intend to continue to push on and allow us to make the right decisions around our business. Third, we're connected. We're actually connecting the ecosystems in very visible ways through things like Neighborhood and Bitcoin, but also invisible ways to you all internally as we continue to bring these ecosystems together and get all the leverage of our shared systems.

And then finally, we're more and more automated. And this is really important to me because it allows us to move much faster at a much lower cost of doing ARM business and bring that cost -- that cost leverage to our customers as well. So I wanted to review some of our strengths as a company as a way to expand on the investment thesis that Matt just presented. As I see them, we have all these capabilities and assets that are very hard to acquire and very hard to build up. We have these 2 at-scale ecosystems with more behind them. And we're really, really good at interface and building interface and experience. So I want to dive into each one of those.

On our capability side, we have all these financial capabilities, inclusive of lending, of payments, of everything that sellers and also individuals on Cash App intend to do with their financial life on a daily basis. We have operational capabilities, and this mainly is around the Square side. We help businesses operate their business and help them with things that take a lot of time away that we can give time back around. We have all these viral networks within our business and within our brands. The most visible and largest, obviously, is Cash App, but we see networks within our staff -- our Square seller staff population within their employees, within their customers and also sellers themselves. And we benefit from building these networks and make them more and more dense every single day.

And then finally, we have AI capabilities and assets. And these were built in-house and custom to us, which allows us to be more vertically integrated with every single thing that we do. And all of our velocity over the past 6 months to a year is due to the fact that we've invested in AI infrastructure that, again, is custom to us. On the ecosystem side, you think about 2, and we'll go through that. One, we have Square, which is focused on sellers and merchants. The second obvious one is Cash App, which is focused on individuals. The third, which I think you're seeing more and more weight behind and also features and how things all connect is Bitcoin. And this is really focused on building networks and opening the financial network so that we can leverage it much better and again, bring the cost down to our customers. Afterpay, you know as buy now, pay later, but we really think this is an ecosystem around advertisers.

How do we get merchants, whether they be very small or very large, to greater reach so that they can really focus on bringing more and more customers every single day. And then finally, TIDAL is right now focused on musicians, but over the next few years, we'll be focused more and more on general creators and everyone who's creating and looking to distribute their work to a much larger audience. On the interface side, this is where we really invent and where we have a lot of strength. It starts with hardware. We are a hardware and software company, and this is very unique. We build our hardware full stack. We can build it in the U.S., and we can build extremely complex hardware systems from a point of sale, which is a full computer that sits on your countertop, all the way to a Bitcoin miner and the ASIC and the hashboards.

And we can do it in a way that makes sense to our customers that gives them flexibility and gives them an entirely new experience where they can't find anywhere else in the market. And because it is in-house, we can pair it with really great software that drives it specifically, which is hard to find. The second is that network aspect, the social networks that we find naturally in Cash App. These are viral networks. They have viral loops associated with them. Every single person that comes on to the network, whether it be an individual in Cash App, a seller within Square, an employee of that seller within Square or a customer makes the entire network more valuable and bigger. We have not done enough work to really see this manifest in the products and in our revenue and in the numbers, but this is a big focus for us.

And then finally, we have something which we're calling proactive intelligence. This is artificial intelligence paired with real-time living data. And we have a deep understanding of both our sellers and also our individuals on Cash Apps, and they are providing us data and understanding every single day so we can be a lot more proactive with our tools and reach them in a way that they don't have to know which question to ask. We can actually take their data and understand what might be the most predicted next outcome or the predicted next action. As a company, we've benefited from having multiple inflection points. Our first was this understanding of moving like seeing more and more of the world moving to plastic away from paper cash and checks. And when we saw that, we built the card reader, and that really was the birth of Square.

Our next one was noticing what our sellers had to deal with every single day and how they are going to banks to get loans and those loan amounts were just way too big and way too unmanageable for our sellers. And what they actually needed was a better way to manage their cash flow. And this is where we created Square Loans, which was an invite-only system that allowed us to give anywhere from $500 all the way up to $1 million to a seller based on an understanding of who they were and what they needed and where they sat within their own industry and their own competitive set. And this worked. And this gave us a lending approach that we now extend to Cash App with Borrow, and we can go even further as we look more broadly at our ecosystems. The third was the debit card and recognizing that all these people had debit cards in their pocket, we could actually build a peer-to-peer network on top of it because there was a very low-cost way to push money to that debit card immediately.

And all you needed to sign up for that peer-to-peer experience was a debit card in your pocket and suddenly, you could get instant access to your funds. This created Cash App and allowed us to look at that debit card, but also create one of ourselves in the Cash App Card. And then finally, I think we're on the brink of another inflection point for us, which is this concept around proactive intelligence. How do we take our living understanding of our sellers and our customers and take that data and pair it with really great AI such that we can prompt our customers instead of waiting for them to prompt us. Throughout our 16 years, these 3 words have come back again and again. And it's one of our principles as a company, and it's something that guides us, how do we give our customers time back? How do we save them time -- we believe this is the most valuable resource that we can give to them and something that is really important, not only to them but also to us, how do we give ourselves time back and save a lot of the temporal cost and also, obviously, the financial cost going forward.

And what this means to us is how do we build a fully autonomous economic platform for both individuals and for businesses. And this is exactly what we're focused on. Today, you're going to see a deep dive in the Cash App and the Square and the Bitcoin into all of our products, and we're going to go through all of our features and why they matter and how this all ladders up. But I want to spend a little bit of time before that focused on how I think about our future and our -- specifically the interface of our future. So as we think about the plan for the next year and the years out, we have a 5-point plan that we're working against. And a lot of this has to do with how do we build into our brands the right technology so that we are future-proof. So we have an interface that lasts a decade, and we can be truly proactive and get more and more customers to consider us, but also to stay with us and build on top of us.

So the first point of that plan is to build ManagerBot to operate your business. This is about Square. Right now, we call this Square AI. But as it gets more proactive, as we get a deeper understanding of every single thing that a seller is doing, we want to move to a world where it actually becomes a proactive COO, a manager for your business that truly operates your business, and I'll get more into that. Second, we want to build MoneyBot, which you saw cash releases to make the most of your money. We'll go deeper into that. We want to connect Neighborhoods globally through Square and Cash App, and we'll go very deep into this later on in the day and what that means and why we think it's important. We want to reduce our dependency on the current financial system with Bitcoin. This is very important to us that we have other options than this current financial system, and that's why we put so much emphasis on Bitcoin.

And we want to build it all with tools that we've created that allow us full autonomy and allow us full velocity and really raise the quality bar on ourselves. So going into the ManagerBot first, we see this as a way to automate payroll, scheduling, inventory, marketing, all the mundane tasks that a seller has to do on a regular basis. We want them to think of this as hiring a manager or hiring a COO to truly operate their business end-to-end. This reduces manual work and increases throughput so they can really focus on what makes their business their business, which is their customers, their personality, how they think about their products, how they think about expansion, but take all the mundane work away. Is this possible? Absolutely, it's possible today because we have this understanding and because we have this real-time information coming in every second that they use Square.

We want this to be consistent. We want it to be always on, and we wanted to focus on just effortless operations. So you can just -- you can truly see it as running your business. And again, we have the technology to do this today, and this is going to be a big focus for us. MoneyBot is just getting started as well, but this automates budgeting, taxes, savings, payments, everything in an individual's financial life that weighs on them where they have to do something very mechanical. We want MoneyBot to be on the very edge of pushing the envelope on helping them build wealth and helping them build savings and helping them really think about their financial life going forward. It's going to be adaptive to all customer behavior and the local context, and you can see this today if you're in the beta for MoneyApp. It really understands who you are, the context you're in, the questions you've asked in the past, and it's super, super fast. And this is only the beginning of it.

And then finally, it's globally portable Bitcoin native foundation. What this means is this is working within Cash App such that it can go to stable coins, it can go to cash, it can go to Bitcoin. It all looks the same, and it can operate on your money in a much more fluid and easier way so that you don't have to think about how you're transacting and what you need to do. So both ManagerBot and MoneyBot, we believe, will eventually take over the interface of Square and Cash App. And we're racing to push really hard on these and make them feel like it's something that, again, you can trust to proactively help run your business and help run your individual financial life. On Neighborhoods, this is something that connects all of our ecosystems together. We see this as one of our strengths, in-person transactions, in-person commerce.

We see this as one of the greatest ways to increase Cash App adoption and also Square adoption. It drives usage for both Square and for Cash App. It gives our Square merchants a new way to reach out to their customers, and it gives Cash App customers a new way to engage with our sellers and gives them potentially instant Cash back or whatever rewards that a seller wants to make. But it does so in a way that really respects the seller instead of making them a commodity in something like a delivery app, and we'll go deeper into that later on in the day. It reduces cost for us, and it also reduces costs for our customers because all of these are honest transactions. They're in our network, and it truly expresses both sides of the counter in the way that we've been trying to do for years. Bitcoin. There's always been a lot of questions around why we focus on this so much, but really it comes down to this is a long-term infrastructure thesis. I hope that you all saw or the Cash App releases last week.

I think you saw a lot of the breadcrumbs in terms of what we're trying to do from a payments perspective and from an everyday commerce perspective. And we believe that generally, we need another option for payments and Bitcoin represents that. Stablecoin represents that as well. But we believe Bitcoin is the most open and the most neutral and the most independent and it's something that we really want to see become everyday money as quickly as possible. Why? Because it allows us global access. We can ship all of our features in Cash App, all of our features in Square around the world much faster if we have a neutral global open protocol for money.

A big one that we were pushing last week is it's lower fees for sellers. Instead of paying 3% for transactions, they're paying 0 into 2027 and 1% thereafter. This really reduces the cost for them, and we do believe that more and more merchants will be driving their customers to lower-cost transactions such as Bitcoin and stablecoins. And finally, it's programmable. And this is really important as we get into a gen of commerce and really pushing ManagerBot and MoneyBot to help run your business, having money that is inherently an open protocol and is programmable is going to be very important.

And we have a really good reputation in this space. Block is the most important and the most impactful company within Bitcoin, period. We are doing the most for this open protocol for money. We are open and flexible if it's not necessarily the right answer, but we do believe we need an open protocol for money. We do believe we need a native currency for the Internet, and we do believe we need a third option compared to the current financial system today. So that's what this is all about. BuilderBot, finally is a model independent autonomous software creation tool. We started this as goose. You'll see a little bit of it today in another form called G2. This underlies everything that we're doing in terms of building for the company today. This investment 1.5 years ago is the only reason we were able to get MoneyBot and Square AI out so quickly.

And every single person in our company has used this tool to build something, which is very impressive. And it allows them to automate a lot of their work away and help us focus on what's actually meaningful. And we intend to leverage this significantly over the next few years. Goose is behind all this. You all may see Goose as a front end, but it's also a back end. There's something we call headless Goose, which runs in the background and is constantly looking for ways to improve everything that we're doing from MoneyBot to ManagerBot to our own engineering, to our security. We have gone full on in terms of trying to automate our company.

This is our goal is how do we automate fully our company and all the management tasks and all the operational tasks that come along with it. And we want to make sure that it enables every single one of our roles in the company from financial roles to legal roles to engineering roles to design roles, such that they can build something themselves. And they can get to at least a prototype state or something that saves them time and gives them time back so they can focus on something more -- more meaningful, and finally, before I turn it over to Owen to go through our products in depth, I want to talk about our mindset going forward. We are focused on automation of our company, as I said. If it can be automated, it must be. This is something that we're taking on. We're looking critically at every single thing that we're doing and looking for opportunities to automate our work way. So again, we can focus on being a lot more creative and create more products and more features much faster.

We believe that there is a great relationship between humans and AI. We're not going to be diminished by it. We're going to be -- we're going to embrace it. And we think our role as humans in this is designing it and making sure that we really focus on the experience and how it feels and that everything is going to be run by AI. And again, this is a mindset that we're applying to all of our work. How do we design this in a way that feels amazing to customers and allows them to take away a bunch of that friction and time that they otherwise would focus on mundane task to really focus on being more creative and focusing on their customers and their business or their financial life more.

And then finally, I hope you're seeing this in our company and comparing it to the past 2 years or 3 years ago. We're really focused on velocity. We're focused on a high-quality bar, but what matters most is speed and speed is going to be our core competency going forward. If we can move much faster as a company, if we can ship products and features, we're just going to learn much faster. And we're going to learn the right product market fit. And I've never felt more confident that we have all the tools, the structure, the team and the people to actually prove this and show it off and show that we can move faster than any other company out there, certainly in our space, but as time goes on with larger technology companies and our peers as well. So this is going to be a big focus for us, but all 3 of them are really, to me, what changes our company and makes us much more successful in the future and allows us to focus on the things that you're about to see during the rest of this day.

So thank you very much for the time. I'll be back for Q&A. But right now, I'll hand it over to Owen to go through Square and Cash App. Thank you.

Please welcome Block's Business lead, Owen Jennings.

Hello? Today, I'm going to talk about the product strategy that will let us achieve the basic plan that Jack laid out. As you know, the basic plan is to build the smartest app to run your business, build the smartest app to let our consumers run their entire financial life, to connect Neighborhoods globally together through both apps and then to remove dependencies and single points of failure with Bitcoin. So now let's get into the how.

At Block, we have an extremely unique set of product capabilities. These capabilities are ones that no one else on earth possesses from our hardware to our networks, to our Bitcoin stack, to our underwriting capabilities and more. Without going into too much detail, we generally think that these capabilities fall into 1 of 4 categories. All of our product capabilities are either financial, operational, network-based or AI-driven in nature. Our brands, our apps are just the interfaces that allow us to make these capabilities useful for our customers from Cash App to Square to Afterpay to Proto and more. But increasingly, what you're seeing is the blending of our brands, the blending of our ecosystems. Neighborhoods, Bitcoin payment acceptance, Cash App, Afterpay, all of these are really recent examples of how we're combining our ecosystems together. We've made a ton of progress on the product side over the past 16 years, but there's still so much opportunity ahead.

On the Cash App side, we're focused on networks. We're focused on commerce. We're focused on banking, Bitcoin and automation. On the Square side, we're focused on core commerce, automation and scaling our networks. And then overall, we're focused on bringing together these ecosystems and adding even more value to our customers on both the seller side as well as the consumer side. Said another way, we're leveraging our capabilities to build what we believe are networks that only Block can create. This is how we're going to achieve the plan. We're building the smartest app to run your business. We're building the smartest app for consumers to run their financial life, and we're connecting Neighborhoods together globally. We're connecting everyone in the Neighborhood. This is the future that we imagine. Square on every countertop, buyers connecting with sellers through Cash App, Square employees getting paid instantly into Cash App and payments routing on the global Bitcoin network.

This is the neighborhood that we envision, and this is what you're starting to see come to life. So let's go a bit deeper into Cash App's product strategy and how the work on the cash side is going to allow us to achieve the basic plan. Cash App's mission has always been to redefine the world's relationship with money by making it more relatable, instantly available and universally accessible. Each new product that we launch and every product that we have launched is guided by this mission, breaking down barriers to access and building technology that makes money more approachable and simpler for our customers. To date, we've been pretty successful here. We went from a single peer-to-peer app, a simple peer-to-peer app when I joined Cash App about a decade ago into a full-fledged consumer finance platform, an entire financial operating system for the next generation.

And to me, these numbers really just reflect how deeply Cash App is stitched into the daily lives of our customers. But still, there's so much more work to do. So let's get into it. Fundamentally, Cash App is an ecosystem. It's a network of products that are stitched together into one simple and cohesive app. As we look to the future, our product strategy is really built around 5 key pillars. We are the only ecosystem that has these offerings at this scale. We combine the network dynamics of peer-to-peer with commerce capabilities across Pay Now and Pay Later with a full-service banking suite, the best Bitcoin experience out there and now MoneyBot, an industry-defining AI money assistant. Here's a little preview to help you feel it before I get into more.

[Presentation]

Wake you guys up a little bit this morning with that one. Okay. So network expansion is our top priority on Cash App, and it's also my #1 focus personally. And this is because at the root level, Cash App is fundamentally a network. And network expansion drives everything else that we do. It lifts all boats. We benefit from the classic network effect of a peer-to-peer ecosystem where every new customer that's joining Cash App is making Cash more useful for the rest of our customers. And we see this in the data. Engagement and utility vary directly with the number of network connections that a given customer has on Cash App. When we think about driving network expansion and network density, there's a few key product focus areas for us. The first is network enhancements. The second is multiplayer money and the third is teens and families. Across all 3 of these areas, the primary audience that we're targeting is the next generation.

And that's because we have such incredibly strong market fit with the next generation. We're seeing really meaningful shifts in terms of what -- how the next generation is earning and how they want to participate in the economy and Cash App is going to be there to serve them fully. Okay. So let's talk about network enhancements quickly. We're focused on the core flows of the app and just making it incredibly easy to go through login, to go through sign-up, to go through the core peer-to-peer flow, card onboarding, et cetera. This means focusing on payment success rates and flow conversions. It means focusing on our customer life cycle and the overall customer journey. It means leveraging AI and incentives to drive that next best action for our customers and in the past couple of months, investments in this area have led to an increment -- hundreds of thousands of incremental monthly actives on the Cash App side.

Second, we're also investing in multiplayer money, and this is because we believe that money is inherently social. We launched Pools this past summer and have already seen widespread adoption. This feature for what it's worth, allows customers to Pool funds together for a shared expense like buying concert tickets or going on a trip. But critically, what we're seeing post launch is that Pools has been a key way to drive new connections on Cash App. And we know that each connection on cash drives incremental inflows and incremental peer-to-peer GPV. But Pools is really just the beginning. We're scratching the surface here. We know that money should be more communal, more expressive. Honestly, it should be more fun. And we're continuing to build new social features and products that allow our customers to connect with each other in deeper and deeper ways.

Last, we're focused on building the simplest, safest consumer finance platform for teens and families. We already have millions of teens that are transacting with us on a monthly basis. We're continuing to invest for this population. We actually just launched high-yield savings a few weeks ago for the teen population. But we also plan to support accounts for 6- to 12-year olds with a focus on the card and on savings. We're also planning to support accounts and balances for those 0 to 5 with a focus on parent saving tools. We're actively working with the Treasury Department and the Trump administration right now on whether we can leverage Cash App taxes and Cash App investing to make Cash App an easy and obvious place to save for your child's future. Fundamentally, our product approach on the teens and family side is about 2 things: one, expanding access; and two, growing with our customers over time. We believe that we have the most compelling banking product out there for teens right now, and we're only going to expand access from here.

We made a bet several years ago to grow with our teen audience, and we're seeing that pay off now with really strong graduation rates and really strong engagement for teens who are turning a teen and then continuing to run their financial life on Cash App. Shifting to the second pillar of the Cash App ecosystem. Our Commerce Suite has achieved massive scale over the past few years. Our goal has been to build a commerce platform that lets customers pay however they want, in person or online, pay now or pay later. We've built the tools and products that meet customers where they are with maximum flexibility. Starting with our Pay Later products. We built these for the next generation of customers who just want more control of how they manage their money. We have a comprehensive set of pay later solutions within Afterpay, but then also increasingly within Cash App as we unify our offerings in the United States.

Taken together, we're giving customers flexible and transparent ways to pay over time, while at the same time, driving engagement and driving better conversion for merchants. All of this is powered by our unique approach to consumer credit. These loans don't revolve. You can't take out another loan on Afterpay if you haven't paid back an existing loan. There's no revolving debt spirals. We use proprietary near real-time data to underwrite our customers, which allows us to expand access to millions. Brian Boates is going to speak a bit more about this later on today. We're continuing to invest in core Afterpay, particularly in markets like ANZ, where we have tremendous market fit.

But we're also focused on unifying Cash App and Afterpay in the United States increasingly as we tie the 2 together. And this is a huge opportunity, both for our customers, but then also for our business. We've seen early success here already, but there's still a lot more to do. We think that we have an opportunity to cut over basically all of the U.S. Afterpay actives into Cash App over time. And this can drive Cash App actives growth, but also it will just increase LTVs for these consumers who are going to attach to products over and above Afterpay as they come into the Cash App ecosystem. And we're not just guessing here. It's already working. We're starting to see -- we really started to scale Cash App -- Afterpay on the Cash App Card this past summer. And we've already gone from a $2 billion annualized rate of originations to more than $3 billion from July through early October.

And I think our growth here reflects a few things. First, just our unique data and our world-class ability to underwrite. Second, how much fit these pay later products have with our customers. And then third, the potential for unification to be an enormous tailwind for Cash App. Next, we're announcing that we are not only going to be scaling Afterpay on the Cash App Card post purchase, but also we're going to be rolling out Afterpay on the Cash Card prepurchase. We believe that this is a massive paradigm shift, particularly just because of our scale and the scale of the Cash App Card program. We have more than 10x the active card users than some of the smaller competitors who offer similar things in the market. We'll be issuing a new Cash App Visa Debit Flex card, and we'll be starting pilots in the coming months.

I have a card in my pocket and actually, it's not in my pocket, but it's over there. And I have my -- and I have an app version, and I'm happy to show all of you at the demo bar later today. We're really excited about this. Of course, though, our Pay Now solutions really drive the majority of the cash commerce volume right now. Cash App Pay has grown from basically nothing a few years ago to a quiet behemoth, largely on the back of the enterprise sales team that Nick leads and that came over with the Afterpay acquisition. And we believe that it will continue to grow as more and more large merchants choose Cash App Pay because we're able to offer a lower cost structure given the stored balances that we have in Cash App. Actually, we just signed up Target and rolled Target to 100% this week, and we continue to see a really strong pipeline of large merchants who want to accept Cash App Pay.

Cash App Card is obviously the cornerstone of our commerce suite. We're the fourth largest debit card program in the United States, only coming in behind Wells, JPMorgan and Bank of America. And about 1/5 of all teens in the United States have a Cash App Card. Just think about that for a second. 1 in 5 teens in the United States have a Cash App Card. That sort of penetration is truly unparalleled. And as we look ahead, we're focused on enhancing the utility of Cash App Card. Cash App Card is becoming so much more than just a simple payments tool. Increasingly, it's the gateway into Cash App's entire banking suite. And when it comes to our banking platform, we've made meaningful progress on primary banking actives over the past few years. We've gone from about 2 million primary banking actives a few years ago to now almost 9 million. And this has largely come from just making our banking product more compelling, filling feature gaps, so on and so forth, but also systematically driving cross-sell and upsell into primary banking from our core base of 58 million monthly actives.

Okay. But why does this matter? It matters because primary banking actives are more engaged, more retentive and ultimately just way more valuable than the average customer. A primary banking active on Cash App generates more than $300 in gross profit on an annualized basis. This is more than 10x the annualized gross profit of a peer-to-peer only customer. I'm just going to pause here for a second so we can look at this chart. We have so much runway to drive conversion from the 58 million actives into primary banking actives. And each customer that we convert to a primary banking active drives incremental gross profit and incremental ARPU. The way that customers are earning and participating in the economy is fundamentally changing right before our eyes. More than 40% of our customers right now are not earning income via the standard traditional W-2 direct deposited into your bank account.

These are gig workers and content creators, entrepreneurs and solopreneurs. And that's why we launched Cash App Green last week, a massive improvement in terms of how we think about our banking suite. Qualifying customers can now earn Green by spending on their Cash App Card, so if you spend at least $500 a month or by getting their paycheck deposited into Cash App. This is a huge improvement. And when they do so, they get access to all of the best that Cash App has to offer from high-yield savings to personalized targeted instant discounts to priority phone support, higher overdraft coverage and now the ability to unlock Cash App Borrow and get higher borrow limits. I think that this program is going to be the single most important driver of primary banking activity on cash as we head into 2026.

Green is going to be the thing that moves our customers from the left side of that chart that we are just looking at to the right side of that chart. It's branded, it's simple and clear. It's gamified. It's now dual access where you can unlock it with spend, and it includes the ability to unlock Borrow and get higher borrower limits just by choosing Cash App as your primary banking platform. As I said on the earnings call a couple of weeks ago, on the product side, we just absolutely love these sorts of multivariate systems. They allow us to run experiments to turn knobs to twist dials. They let us calibrate and just find that efficient frontier of what's best for our customers and what's best for our business.

The first product I worked on at Cash App was our referrals and invitations program. The next product I worked on at Cash App was Cash App Boost, which was our instant discounts program. And for me, it's just so clear that Cash App Green is going to be another one of those for us. We'll be able to build on top of this primitive. We'll be able to offer more benefits, tweak the offers, change the tiering and so much more.

The single most important part of Cash App Green, I think, is the ability to unlock Borrow. Borrow is among the highest product market fits that we've ever launched at Cash App. It helps our customers smooth over expenses and manage their cash flows in between pay days. And we've 5x originations on Borrow over the past 2 years, all while keeping loss rates relatively flat. And what we see is that customers absolutely love Cash App Borrow.

It has one of the highest retention rates of any product in consumer fintech. But the other critical piece to understand here is the second order effects and the second order benefits of Borrow. Borrowers are more engaged than the average Cash App customer, a majority of borrow funds actually stay in the Cash App ecosystem and flow through Cash App. So the way that we think about it is, one, borrow is a great business in its own right. Second, it's one of the key drivers of second order engagement that we end up monetizing.

And then third, now, critically, it's a huge carrot that we can use to incentivize behavior like primary banking activity. We'll now turn to our fourth product pillar on cash, Bitcoin. We fundamentally believe that Bitcoin is a better form of money because it's decentralized, because it's censorship resistant, because it's global by default and because it's inherently deflationary. We're getting back to our core principles on the Bitcoin side, and we have a lot of really exciting launches coming up in the coming months. Our basic goal here is to be the simplest, cheapest and most accessible Bitcoin platform in the United States. Currently, our Bitcoin customers are some of the most valuable customers on cash. We see higher inflows.

We see higher engagement. We see a higher monetization rate, and it's all coming from that engagement on the Bitcoin side. First, incredibly easy to buy Bitcoin. We were the first public company back in 2017 to launch Bitcoin buy and sell. Then we made it easy to get paid in Bitcoin with automatic Bitcoin distributions when you get your paycheck deposited into cash with no fee and no spread, so our customers could literally get paid in Bitcoin. And now as of last week, we're making it easy for customers to spend their Bitcoin. Let me show you how it works. So now in Cash App, there's a map view of sellers that accept Bitcoin, which we continue to see increase. We'll pull up the QR code scanner. You can scan a Bitcoin QR code, review the receipt details. And just like that, you've paid for your cappuccino or you've paid for your latte in Bitcoin.

Money is taken on a bunch of different forms over time from barter to precious metals to paper bills to credit and debit cards and now increasingly because of work that we're doing, Bitcoin. But it is not the case that every single customer who holds Bitcoin right now wants to spend their Bitcoin, which is why we are launching Bitcoin payments on USD. This is a complete paradigm shift. We can now transfer value from a Cash App consumer to a Square seller on Bitcoin rails, but using dollars. This allows customers to spend their fiat instead of their Bitcoin while still strengthening the Bitcoin network. Here's how it works. A customer initiates a payment by scanning the QR code. We prompt the customer to see if they want to fund this Bitcoin purchase with Bitcoin and their Bitcoin balance or with dollars. So here, we'll select the dollar balance. We then auto buy Bitcoin on the customer's behalf, send the Bitcoin to the Square seller on the Lightning network.

We then auto sell the Bitcoin, all for no fee and no spread, and we settle the transaction in dollars. There hasn't been a new debit network created in the United States in the past 40 or 50 years. And what you just saw was us moving dollars on the Bitcoin network into dollars on the other side. This is a complete paradigm shift. As we look toward the future, the last pillar and probably the most major pillar for us to talk about is automation. Introducing MoneyBot. MoneyBot is your always-on assistant that helps you manage your money with clarity and with confidence. MoneyBot helps customers understand and navigate the complexity of money. It learns and adapts. It connects the dots between how you spend, how you save and how you invest. So let me give you a quick tour here of MoneyBot.

First up, you're going to see MoneyBot in the bottom nav. It's the friendly little smiley face that's winking at you. When a customer taps in, we're analyzing their money movements in real time, and then we're reflecting that back to the customer. MoneyBot greets you proactively, and it suggests prompts based on your activity using our proactive intelligence models. One of the hardest parts of managing your money is knowing the right questions to ask. All right. So let's tap in here where I have a review of -- I spent 12% less on groceries. MoneyBot will then generate a chart in real time, showing me my spending patterns. It clearly explains what's happened with my money and why. The most important thing is that it's going to keep on prompting to get to that next relevant action and that next best action for our customers.

So MoneyBot suggests moving my excess cash into a savings account for my rainy day fund. It's then getting the work in an agentic way. It's going to try to complete this flow on my behalf. MoneyBot isn't read only like everything else out there. It's actually doing the work. It's building agents that can complete flows on behalf of our customers. There is one key thing here that right now, we will always have the customer in the loop. We will always have a human in the loop. So before any transaction happens, a customer will hit confirm. But we're taking out as many steps as possible, and we're giving time back to our customers. Okay. Let's go to the second demo. Let's imagine that I went out to dinner with my friend, Justin Danks, then I come back to MoneyBot and it prompts me and it says, "Hey, I saw you went to dinner. Do you want to split the most recent purchase from Gulp Noodles.

So I can tap into that. And I can reply and say, yes, I want to split it. Let's split it with Danks, but I want to cover the tip. So MoneyBot will do the math using the receipt data that we have. It will find the right person or who it thinks is the right person, which is Danks. And of course, it will complete as much of that flow as possible. So this looks pretty good to me, and I can just tap on that action card, the UI of which we generated on the fly. So then using our new core payment primitives, I can confirm the details of the money movement and [ BAM ], just like that, I sent the request to Danks. This is a pretty awesome and pretty new way to think about a bill splitting experience.

Overall, when we created MoneyBot, we wanted to do 2 key things really, really well. The first was personalization. MoneyBot knows you and it knows your Cash App activity from the way it greets you to the guidance that it offers to how it responds. Every interaction with MoneyBot is one of one. The second is proactive intelligence. A big challenge with AI is often knowing the right questions to ask, but MoneyBot changes that. It keeps a pulse on what's happening. And again, it's not just read only. We're actually able to complete these flows on a customer's behalf and take 9 or 10 steps out of what otherwise would have taken 10 or 20 seconds to complete. We can now do it basically instantly. But we think this is really just the beginning of inventing on the interface. We're turning MoneyBot into the default way to experience cash.

We see MoneyBot as the primary interface that can power all of the products and all of the features that we offer to our customers. And again, all of this is powered by our focus on memory, proactive intelligence, the personal and proprietary data that we have, our ability to do generative on-the-fly UI and of course, an always-on understanding of your money. So summing up Cash App, I think you can see that we're building momentum across all 5 of these key pillars, each reinforcing the other to drive long-term growth and customer engagement. On the network side, we're accelerating actives by focusing on the next generation. In commerce, we're making our spending products even more flexible across pay now and pay later. On the banking side, we're driving primary banking activity with the launch of Cash App Green.

With Bitcoin, we're working to make Bitcoin everyday money in a way that no other company is. And on the automation side, we're leading the next evolution of personal finance with MoneyBot. All right. Now let's turn to Square. Our mission on Square is to build the future of neighborhood commerce and to do so by making commerce easy for our sellers. We wanted to be effortless to start, run and grow your business. When I joined Square, basically all of our GPV was on that little white reader that plugged into an audio jack. But we've come a long way since then. We're serving almost 5 million sellers of all shapes and sizes across a number of different geographies. When I talk to sellers across the globe, I hear 3 things really, really consistently. First, they complain about the dozens of software tools that they have to use, that they have to juggle in order to run their business. It's a huge burden.

Second, labor costs and input costs are taking a massive toll, particularly in the past few -- in the past few years. And third, they need more ways to drive growth. It's getting harder to attract new customers and to engage deeply with loyal customers. That's where Square comes in. Our goal is simple, to give sellers the tools that they need to make selling easier and to make operations smarter. To do this, we organize our product efforts here around 3 key pillars. The first is core commerce, the second is automation and the third is networks.

We believe Square is the only company that designs and builds every layer of the seller experience in-house. This is critical from the hardware to the software, to the payments, to the commerce tools, to the financial services that run on top. And this deep vertical integration gives us end-to-end control of the customer experience. So we can move faster, we can offer the best experience to sellers, and we can serve more types of sellers and ultimately give time back. What makes this approach unique is that it can scale across every audience from food and beverage to retail, to health and beauty, to services, and it scales across geographies as we grow as well.

We own the entire vertical stack. And then we've been able to build primitives for each layer of the stack that work for every type of seller. We've been extremely focused on food and beverage recently, as you know, but our approach lets us serve more types of sellers than many of our competitors who, one, don't have the vertical integration that we do; and then two, don't have the platform primitives that allow you to serve multiple audiences. So let's get a quick taste of Square before I dive in.

[Presentation]

All right. Let's dive into our first pillar for Square, core commerce. Square's commerce solutions are bringing together the software side, the banking side and the hardware side into one simple, seamless and scalable product experience for every type of business. Let's start with software. At the heart of Square's commerce ecosystem sits the software, the operating system for sellers and really the connected tissue for local commerce. Square makes local commerce easy by powering every job a seller needs to do to run their business from the front of the house to the back office.

The way that I think about this software suite is that it's really like the central nervous system of a given seller's business. And this is critical because we know how important software is, especially as we move upmarket. Larger sellers are choosing Square because of our software capabilities from marketing tools to staff capabilities to our developer APIs. This is a huge selling point for Nick and the sales team when they're having conversations with larger sellers.

And when sellers use our software, we see retention increase as sellers are deepening their engagement and their relationship with Square. In 2025, we shipped a ton of new features on the software side. And going forward, we're not slowing down. As we look into 2026, we're going to make further inroads, not only in the QSR space, but also the FSR space and the retail space so that Square shows up in every single neighborhood on every single countertop.

Banking is also a major differentiator for us when it comes to our core commerce capabilities. We know that banking is incredibly hard for small businesses. That's why we built Square Banking to focus on speed, simplicity and access. And it's already all inside the tools that our sellers are using every single day. Sellers get instant access to their funds through Square Card and instant payouts, plus they're getting reliable access to liquidity through our lending products when they need it.

When it comes to lending, Square has a couple of unique advantages. First, we have access to real-time proprietary data that lets us underwrite sellers who would otherwise be left out. And then second, because of our position in the flow of funds, we have first access when it comes time for repayment. This lets us increase access for sellers, and it's going to continue to allow us to innovate on the lending and working capital products that we can make available to our sellers.

Our banking products continue to be one of the most critical drivers of growth on the Square side. And going forward, we're leaning in even more. We're expanding nano loans. We're launching a premium credit card, and we're cooking up new credit paradigms that will help sellers of any size in any shape, smooth over their cash flows and invest more in their business. Last but certainly not least on the commerce side is hardware. Hardware is one of our superpowers. We've been a hardware company from the very beginning from day 1.

Not only does this mean fewer points of failure or faster customer experiences, better support, it's also about our brand. Our portfolio of hardware products has grown significantly over the past few years. We're continuing to invest in purpose-built elegant hardware that sellers are proud to put on display. Our hardware is instantly recognizable by customers, sellers and buyers alike. And it just feels good when you hold a square handheld in your hand. A lot of investors are calling this the Templeton Touch.

But whatever you call it, it's clear that we are defining the point-of-sale hardware category, and we have offerings for any environment and for any type of seller with additional form factors coming next year in 2026. Overall, we've been delivering for food and bev for the past 2 years, just like we said we would. We've brought together the software side, the banking side, the hardware side that all food and beverage sellers need. You can see it in the results.

After saying we were going to focus on this space, we're seeing GPV growth run at 17%. We're seeing new volume added growth run at 26%. For me personally, I think Katz's Deli choosing to run on Square is a pretty good sign of the market fit that we have here in the QSR and the food and bev space. Here's another quick example just to bring things to life. This is Van Leeuwen Ice Cream. They've been a Square seller for over a decade, and their journey kind of just perfectly illustrates the value of the Square ecosystem.

Van Leeuwen started like most small businesses do, 1 location, 1 point of sale. And since then, they basically adopted everything that we have to offer. At this point, they're running 70 locations on Square, and they're doing $50 million in GPV on an annualized basis.

Turning to the next pillar. Let's talk about automation. For Square, we see AI as the greatest tool to give time back to our sellers. Our AI tools aren't just analyzing data and offering up insights. It's fundamentally helping sellers run their business. We're taking tasks that used to take hours and hours like organizing all of your vendors and comparing prices to figure out where you're going to buy your onions or your coffee cups from, and we're collapsing that down into seconds.

And just like on the Cash App side, we're focused here on proactive intelligence, smart, tailored action prompts that give our sellers real economic value in real time. Most small businesses today are just overwhelmed by the software tools that they have to use. They're generally paying for 10 to 20 software tools, but then they're only using 20% or 30% of each tool. It's kind of a crazy situation.

It creates a ton of unnecessary cost and complexity and a ton of wasted time. Square's automation products are going to change that. We're giving sellers time back with powerful, easy-to-use tools like Square AI, voice ordering, order guide and support bot, all of which have been designed to automate the hardest, most time-consuming, honestly, the most annoying parts of running a small business so that our sellers can focus on what really matters, which is growing their business.

So let's take a look at Square AI, designed to make sellers make faster and better decisions. With Square AI, you can check daily sales, you can explore business performance, you can get clear actionable insights. Here's one example. A business owner asked Square AI if they were okay to close their wine bar an hour early on Mondays. Square AI instantly showed them how significant the tips are typically in that hour.

And so within minutes, the small business owner and their staff decided to stay open. This is a decision that would have taken hours and hours and multiple spreadsheets before, and we just condensed that down into 3 or 4 minutes. Next, I'm going to go through a demo of voice ordering. AI voice ordering helps our sellers never miss a sale because they're never going to miss a call ever again. Here's a demo of Willem, our Head of Product on the Square side, showing you Square AI voice ordering.

[Presentation]

Next, I'm excited to announce Managerbot. Managerbot is rebuilding Square from the ground up to be AI native for basically everything in the back office. It's proactive by nature. AI agents anticipate the needs before sellers have to ask, low stock, spiking orders, time to plan for the holiday rush, and it's adaptive by design.

Views build themselves for each business, making Square completely personal and endlessly customizable. It's fast and it's assistive. Smart drafts and automated workflows turn complex tasks like a detailed purchase order into quick and confident actions. And it's agentic at its core. Routine work takes care of itself, freeing sellers to focus on what truly drives their business.

Our vision for Managerbot is that it's going to be the future for Square for everything on the back office side. Managerbot will be truly agentic, meaning it can take actions on your behalf. We'll generate custom UI in real time based on the task at hand and it will offer proactive intelligence to our sellers so that they can make smarter decisions and run their business more efficiently. Closing out on Square, we'll zoom out and talk about the broader Block ecosystem a bit, how we're using our networks to connect not just different parts of Square, but different parts of Block overall.

Our network strategy on Square is focused on 3 key opportunities. First, the network between buyers and sellers. Second, the network between employees and staff who work at Square small businesses; and then third, the vendor network. Brian is about to go pretty deep on this opportunity, so I'm not going to spend too much time. But suffice it to say, we see a massive opportunity to connect Cash App with Square.

This will drive growth for Square sellers and will drive actives into Cash App. On the employee side, there's another incredible opportunity to connect employees at Square businesses directly into Cash App. We'll leverage Square Payroll, integrated tipping, time management tools to drive these employees into Cash App. And this does more than just simplify payouts and time management, it's extending our network. Every single new staff member at a Square business will become a Cash App active with access that everything Cash App has to offer.

Third is the vendor network. There's some products here that we're in the process of building, and we plan to leverage the scale of the Square seller base to transform procurement and to improve margins for our sellers. The first step here was order guide, which we announced at Square Releases, advising sellers on what they can buy and from whom so that they're able to save money.

The next step is to connect sellers together in a network that automates AP and financing through standardized catalogs. And then eventually, group purchasing and negotiated rates is where we see this network going. Every transaction between sellers in the Square network will strengthen it and will drive further ecosystem growth. So Square is focused on core commerce, automation and networks, each working together to help sellers thrive.

In commerce, we've united software, hardware and banking into one seamless platform. And in automation with tools like Managerbot, we're giving sellers something truly transformational. On the network side, we're building 3 interconnected ecosystems, buyers -- buyers and sellers, the employee network and the vendor network. All of that will create shared value and compounding growth for Block.

Together, these 3 pillars position Square as the platform that empowers sellers to do more, grow faster and build stronger businesses everywhere. Square is no longer just that little white reader. We're a mature operating system and the central nervous system of millions of small businesses across the world. And Cash App is no longer just a peer-to-peer payments app. It's a full consumer finance platform that millions and millions rely on to run their everyday lives.

We're expanding and deepening network connections on the Cash App side to drive network growth. We're building flexible spending tools for everyday spending. We're the primary banking platform for millions. We're embracing Bitcoin as everyday money, and we are pushing that forward more than anyone else. And all of these things are going to be built directly into Moneybot. That's the power of the Block ecosystem. Every link that we create between Square and Cash App strengthens the other and accelerates growth for both brands and for Block overall.

When you put it all together, we're doing more than $10 billion in gross profit. We've built more than 25 revenue streams, each of which are doing more than $100 million in gross profit on an annualized basis. And as we increasingly connect our ecosystems together, we see massive runway to continue to accelerate growth here. We have a strong track record of doing so, and now it's time for us to continue executing.

Overall, product velocity at Block is back, not just on the Square side, not just on the Cash App side, but across the company. We've organized ourselves in a smarter, more flexible way. We have the right leaders in the right spot. We've raised the bar on performance. We have deadlines and we have releases to drive urgency, and we're firing on all cylinders. Now I'm going to pass it off to Brian, the creator of Cash App, to walk through a little bit more about neighborhoods and how we're connecting Cash App and Square together. Thank you.

Please welcome Block's ecosystem lead, Brian Grassadonia.

There's a nice healthy debate going on back there about what happened with Owen's AV issue. We think he might have unplugged the cord. So just keep that in mind when he was giving AV guys trouble. So I want the microphone. Anyways, good morning, everybody. Thank you for being here, and welcome.

I'm extremely excited to get to chat with you all today. I think the last time that we held one of these Analyst/Investor Days in person, it was about 10 years ago right down the street over at the Presidio Officers' Club. Some of you might have been there. It was right before our IPO. And I got up on stage and I got to share something I was working on, which was Cash App.

And at the time of our IPO, I think it's just like worth calling out that Cash App, it really was a footnote in terms of the investment thesis of our company. I think I had maybe a 5-minute allocation, maybe 2 or 3 slides to kind of get to share the work. I got a little bit more time today in some plugs, so maybe I have a little more credibility this time. But yes, so today, I get to share another project that I've been working on. Similar to Cash App, it's a network.

We've been working on it for about a year, and I really do think that this has the potential to have as much impact for Block that Cash App has had potentially even more. So I'm hoping that you all get excited about it and understand the potential. So just to set a little bit of background context. When I started working on Cash App back in 2013, I kind of started a side project.

It was born out of an exploration I was doing at the time to figure out if there were ways where we could lower the cost of payment processing on behalf of our sellers. In order to do that, I knew that I would need to create a product that could achieve mass market scale with a cost of funding advantage.

And so as a result, we started exploring ideas in the peer-to-peer payments landscape. And so we started working on a product that we called Square Cash at the time, kind of symbolizing the connection between the 2 ecosystems. And what I thought would be just a small side project ended up being a 12-year journey. So about a year ago, I stepped away from the day-to-day management of Cash App to kind of see if I could create an experience that would bring the original vision of Cash App back full circle to see if we could drive economic empowerment for our sellers and consumers in a much more deep and even meaningful way.

So we began our exploration by looking at the neighborhood, a place where we believe that the opportunity for driving economic empowerment truly comes to life. And so in many ways, I've always thought about neighborhoods as representing the battleground for the cultural identity of our society.

In the ideal scenario, our neighborhoods are fueled by a thriving small business economy where local business owners and entrepreneurs feel inspired to be their most creative selves where they can pour their creativity into their storefronts and into their products. But also often, our neighborhoods don't end up looking like this. They end up looking a bit more like this.

We've all visited communities like this. They -- you kind of take the 50 largest national chains, you pop them down in a predictable grid. And these aren't places that inspire us. They're not places that we like to linger. They're places that kind of stress us out. We visit them if we're hungry or if we have to buy something, they're very utilitarian. And so the unfortunate reality, though, is that these national chains, they have tremendous resources.

They're well capitalized. They have repeatable playbooks for opening new locations and spreading. They have robust software offerings for streamlining their operations and managing costs. And increasingly, they're developing really sophisticated digital strategies for not just acquiring new customers, but in some ways, even more important in today's environment, retaining the customers that they have, establishing first-party relationships, direct relationship with their consumers and reengaging them.

At the heart of these digital strategies, kind of a theme that we've seen play out over the last 10 years is that we're increasingly seeing national chains investing in their own first-party mobile applications. And these applications for the most part, they kind of do the same thing. They tend to wrap some sort of online ordering utility into a rewards program. And these national chains are really investing in distributing these.

If you walk down the street, if you walk into their store, they're thinking about the kind of customer life cycle in their store. They'll oftentimes have a big sign plastered on their window prompting people to download the app, maybe signage at the point of sale to download their app.

And it's essential that they do this because they're trying to avoid being disintermediated and giving up their customer relationship to third-party delivery marketplaces. And for the most part, this strategy -- it's really working as we kind of see here from the App Store rankings. Some of these apps represent the largest apps in the food and beverage section of the App Store.

And so what started off kind of as a strategy of like the largest national chains has actually become the default playbook that we see for most of the national chains within the United States, develop a relationship with our customers directly so that they can build a followership of downloads, they can send marketing campaigns, they can directly engage their customers.

And so we talk to a lot of local businesses. And they kind of see this theme playing out, and they have the exact same objective, like they don't want to be disintermediated either. They want to make sure that they're establishing a direct relationship with their consumers. They don't want to give up their customer relationship to marketplaces. And so a lot of them have kind of pursued the same strategy of trying to build their own mobile applications. But we think that this is a futile effort. I don't think that this is likely to work.

And for some of us, maybe we've seen some of these applications. But the problem with them is we -- consumers really don't have an appetite to download dozens of mobile applications for every restaurant or QSR that you would visit. We all have tons of apps on our phone. They kind of get lost in the clutter. We don't have an ability to kind of manage dozens of log-ins.

We don't want -- we don't have the capacity to manage dozens of fragmented loyalty programs. These apps tend to not have the scale for any one of the sellers to build up a stored balance system to drive down the cost of processing. It just is not a strategy that we think is worth pursuing for local businesses, and we don't think it's going to work. So that's why we built neighborhoods.

And so with neighborhoods, we rolled this out a couple of weeks ago at fall releases. For those of you that are there that just heard me say a lot of what I just said, I promise you the rest of the presentation is different. But -- so that's why we rolled out neighborhoods.

So with neighborhoods, what we're able to offer to our sellers is we're able to offer them a software offering that gives them all of the same capabilities of having their own mobile applications, all of the same benefits without having to manage the complexity, without having to invest the cost, without having to figure out how they're going to invest in the distribution strategy to get that application distributed.

It's an ecosystem that exists within Cash App, and I'll explain in a second kind of some of the features that our sellers are able to get with us. So the first thing that we're offering our sellers with neighborhoods is a first-party online ordering profile. So when their customer downloads Cash App, they receive a profile, and this profile has all the same capabilities that you would otherwise get with an application.

It has an ability to order directly from within the application. We built a network-wide rewards system that works as part of the program, all stored within Cash App. So instead of consumers having to manage dozens of different loyalty programs, it's one loyalty rewards program called Local Cash, where if you acquire local Cash at one seller, you're able to spend it at another seller, so we're able to create kind of economies of scale and a strength in numbers so that the local businesses are able to compete more effectively with local chains.

Because this is built into Cash App, we have a pooled stored balance account, which leverages the Cash App stored balance so that we're able to help drive down the cost of processing for sellers that are adopting neighborhoods, and I'll talk about that in a second.

Sellers are able to build a loyal base of followers, just like they might -- if you can imagine if they were building an Instagram followership or something like another social media platform that we're able to drive followers instead of downloads. And those followers once a seller acquires a follower, we're going to provide an offering that behaves just like if they were to get a download because we're offering a free suite of marketing tools for the sellers to reach their followers. There's no payment.

They don't have to pay to engage their own customers, and there's no gatekeeping and no additional fees. So next, I'm going to kind of walk you through a demo of the customer journey for how neighborhoods works. And so it begins in store, right at the point of sale. I was walking down the street just yesterday down on [ Chestnut ] Street.

There was a large national chain. They had a big billboard or I think it's like a window plastering -- their window kind of promoting their digital application or their mobile application. So we have a very, very wide network and distribution of buyer-facing displays. Many of you have seen them in your local neighborhoods right at the point of sale.

And we can start our journey by promoting neighborhoods right at the point of sale and just like you might see an opportunity to download a mobile application. Customers are prompted to follow the seller and earn rewards on Cash App. As they move through the checkout flow, there's an opportunity to follow the seller. And then as they move through the flow, we're using local Cash rewards, which is a cashback program.

This is -- it's an in-network loyalty program where you can scan the reward and you can save the seller's profile directly into Cash App. And so this is Cash App. And so once you enroll for neighborhoods, you have a new experience, right, it's called the neighborhoods tab on Cash App. And now you can see you're following that seller, you have their card, you have your local cash balance, which you can accumulate across sellers, and you can see your order progress right in the middle app up there.

So just to kind of help illuminate the opportunity here, we have a massive, massive distribution of quick-serve restaurants within the Square platform today. We see -- we have over 250,000 locations that are already on Square. And those -- at those locations, we see over 320 million unique cards every single year, just to kind of give you a sense for like the scale of our distribution and the scale of our reach.

And so we've been testing neighborhoods now for a year. We have different cohorts, and this is what the cohort curves look like in terms of how effective we've been at acquiring consumers at a given seller into neighborhoods. You could see each quarter that we've like iterated on that experience, we've gotten stronger than the last quarter. And so you can see these curves, we haven't really seen the potential of where these go.

Right now, they look like they're just up into the right in a kind of a completely linear way. And if we look at some of the examples for some of the sellers on our platform that have really leaned in, we've been able to achieve almost -- enrolling almost 10% of their customer base in just the first 6 months of them being live, and that looks like it's still continuing to grow.

Now the most exciting thing for us, and I think in terms of the investment thesis, for neighborhoods is that approximately 50% of the people that are enrolling in neighborhoods were not active on Cash App in the last quarter, which represents a massive opportunity for us to bring new Cash App customers into the ecosystem and continue scaling the Cash App network. We think this is a huge competitive advantage in terms of our proprietary distribution channels to continue growing the Cash App network, bring sellers on to neighborhoods, turn the network on, customers come into the ecosystem.

So coming back to the demo. So once a consumer adopts Cash App, now they have the neighborhoods tab on their phone. And now the profile acts just like it would if they would have had that seller's mobile application. They can order directly from the seller, they can do pickup, they can do delivery. They can browse items. Here, we'll look at what pastries are available. We'll select an almond croissant. We'll add it to our cart.

And this is where the local cash reward system can come into play. You can apply your local cash to the order. So as you're earning local cash at the seller, you can apply it kind of creating a consumer advantage or consumer use case for them to want to order through this channel versus other channels. We can check out. And then we're back on to the neighborhood set.

So the other thing that we're really excited about with this is because we're leveraging Cash App. Cash App brings in over $300 billion a year in inflows, we have a large stored balance pool that we've been able to create within Cash App that we're putting -- allowing our sellers to leverage to bring down the cost of payment processing for them.

So instead of them investing in their own mobile application, trying to build their own stored balance or their own top-ups where they might bring down the cost of processing, we're allowing sellers to leverage our stored balance ecosystem to bring down their cost, which we've seen to be a really, really compelling reason why sellers are wanting to adopt this. If they can drive sales to this channel, it helps bring down their cost.

Now I think something that's important to kind of highlight here is that this kind of strategy in terms of our pricing, this isn't about us trying to kind of create a new payment margin business where you charge 1%, and we're trying to make a lot on the spread between our cost and the 1%.

This strategy is all about building a network that has tremendous value for sellers and tremendous value for consumers so that we can create network scale so that we can bring sellers into the ecosystem through a pricing -- through this pricing mechanism and then allowing us to bring consumers into the ecosystem as well. That's part of -- that's what our strategy is here.

So moving along with the demo. This is just showing as you kind of move throughout the neighborhood, and you find sellers that are on neighborhood, you can follow multiple sellers. It's simple. It's all consolidated right in your Cash App. You can follow multiple sellers. And as you're building up your local cash and sellers, you can spend across the ecosystem.

So again, I think that the right mental model for you all to kind of think about this is this is all about a seller building their own following. This is almost like an anti-marketplace where they're not getting kind of commoditized where they're just -- their items are getting kind of commoditized within a supply. This is about them building their own followership.

And we're kind of putting our money where our mouth is by giving them a suite of marketing tools for them to reach out to their customers directly once they follow them. So this is a view of Square dashboard. I can see how many followers I have. I can see how much local cash they've redeemed them my store. I can see what kind of demographics we have and how much revenue they're generating.

And so as I build up my followers, I can compose campaigns to engage in. So in the same way that if I were to build my own application, distribute my own application, one of the main reasons that sellers do this is that they can send campaigns and push notifications, offer free items to keep them coming back. So a seller can compose a campaign.

In this case, we'll select our entire audience, but you can cut this by lapsed customers. I can compose and send out a free croissant to my followers, all for free without any payment for us as long as it's for your own followers, you can send it out. And then the consumer is in Cash App, they can receive that message. In this case, I have my free croissant.

Now one of the most important things here, the reason why this is so powerful is because we built this in a way where there's a catalog available on the profile, there's online ordering in the profile. These campaigns kind of serve as like a bankable item. Now I have a bankable item of offers from my sellers to reengage. I can click on the offer, I can add it to my card.

And then I can order that item for free, and you can see the discount is applied. So I'm not paying anything for the croissant. So we're extremely excited about neighborhoods. We have sellers in San Francisco. We're just starting to roll out. Two of these sellers are actually in the hall right now. And so you can try the 2 coffee carts and neighborhoods has turned on for the enrollment flow. But the -- I want to just kind of highlight, we're just showing San Francisco here.

But the way we built neighborhoods is we built it in a way that it becomes stronger the more sellers that are in the neighborhood that are adopting it, but we don't have to rely on supply side saturation in order for the strategy to work. We built it in a way where it can replace any given seller's mobile application, so it works in a one-to-one way. What this means is that we're rolling neighborhoods out nationwide. We're not going city by city right now.

So there are sellers that are on neighborhoods right now all across the country. And we're not having to kind of use a traditional kind of like local marketing like rollout motion. But this just kind of shows you where we're at in San Francisco. And this just kind of highlights the opportunity of our current distribution. These are all the Square seller QSRs that are in San Francisco today.

And so our work right now is about a go-to-market motion where we get sellers turned on. I want to kind of highlight this is a motion for us. This isn't like an automatic. We don't just turn this on for sellers by default. We have to make sure that they have quality supply, that their catalog is up to date, that they're ready to take online orders and set up on our system. We need to make sure that the local cash reward system that they're in agreement with that.

So this is a distribution motion for us to get as much supply in the network as we can. But what we've spent the time on the last year doing is really dialing in the consumer adoption curve at the point of sale, making sure that those consumers are adopting it, they're finding value that they're reengaging in the ecosystem, that they're ordering, we find that funnel right now to be really stable. So all of our effort right now is all about scaling neighborhoods on the supply side. So with that, I'm going to pass it along. I think I have 2 minutes over. So let's see. That's the end of it. Thank you.

Please welcome Block's Hardware lead, Thomas Templeton.

Okay. Today, a lot of modern life works, thanks to open protocols. The Internet where you scroll and work and socialize and shop, your e-mail, the WiFi you're connected to now, your wireless headphones and speakers, all these things just work, thanks to open protocols. But money, money is different.

Money is a tangled mess of closed systems and standards that only sort of work together. Between customers and cashiers are many layers of inefficiency and complexity. For as long as Block has been a company, it's been our work to abstract away complexity from what should be very simple, moving money from buyer to seller, friend to friend, payroll to bank account. This is core to our purpose of economic empowerment.

And while we do a good job abstracting away that complexity, the underlying system could be a whole lot better, more transparent, more secure, more open and sound. It could be open by default, like any of the other open protocols that make the modern world work. And this is why we spend so much time thinking about and talking about and working on projects in support of Bitcoin because Bitcoin is an open protocol for money.

It lets anyone, anywhere, anytime move money without a bank or other third-party intermediary. It's global, battle-tested and replaces trust that's in a handful of large entities with trust in code and math, removing institutional dependencies. And because it's a single open network, there's less friction, lower transaction cost and none of the complexity and fragmentation of legacy financial rails.

And that's all good for Block because it can help us move faster, roll out products globally at lower cost without needing to customize for countless local payment schemes and really positions us to be and act more like an Internet company. As a company, we're uniquely positioned to move Bitcoin forward to be a leader in a technology that is beginning to behave more and more like everyday money. And we're focused on advancing Bitcoin through 3 key priorities.

First is making Bitcoin more accessible. For years, we've made Cash App the easiest place to buy and send Bitcoin. And now so Square, we're giving sellers access to buy, sell and convert a portion of their sales into Bitcoin. Second is everyday utility. Just last week, we enabled millions of Square sellers to accept payments in Bitcoin with a click of a button. And Spiral has long-funded developers to build on and improve Bitcoin at the protocol level.

And third is security. We started with Bitkey, giving customers a safe and easy way to own and manage their Bitcoin. The team behind Bitkey has revolutionized what self-custody can be. And we launched Proto, our Bitcoin mining hardware initiative. Now I want to spend the bulk of my time here today to talk about Proto, where what's good for Block as a business and good for Bitcoin as a network really overlap. So why we care about mining?

From a network perspective, the whole Bitcoin project depends on it. It depends on it being robust, resilient and decentralized. If mining fails, Bitcoin fails, full stop. And from a business perspective, mining and mining hardware, in particular, has many of the hallmarks of an industry ripe for disruption.

First, it's dangerously centralized. One large company and a handful of small ones, all operating from a single country, essentially own the entire market. And that's bad for pretty much everyone, from mining operators to the Bitcoin network itself. Second, there's no meaningful choice. If you want to mine profitably at scale, you buy the same machines that everyone else has, like it or not.

And without any meaningful competition, there's been no incentive for the market leader to make even the most basic improvements to their offerings. No matter how much customers complain, the market leader doesn't have to listen at all, let alone take action to address any of those complaints.

In all of this, we saw an opportunity. We started talking to miners about their pain points, what's wrong with their hardware, what hardware could be. And we decided that the market leader wasn't going to listen to their customers, we would. And we heard a few things over and over, loud and clear. First, today's mining machines simply aren't optimized for modern infrastructure.

When it comes time to upgrade, which is every few years in this industry, miners face an expensive, wasteful process. They essentially have to start over with an entirely new fleet, dealing with significant labor cost and downtime. Second, these machines aren't built to last. And when they break and they break often, repairs become a nightmare.

Parts are scarce, maintenance requires hauling heavy machines off of racks into the repair centers and the design itself makes repairs unnecessarily complex. And every minute of downtime is profit lost. And third, the software landscape is fragmented and inefficient. In our dozens and dozens of site visits, we never saw the same software setup twice. Instead of streamlining operations, current solutions actually complicate things, often providing incomplete information for operational decisions and requiring operators to run multiple systems to manage their fleet.

These weren't just a few isolated complaints. We saw systemic problems across the entire industry. So naturally, we started looking at the market opportunity and 2 things immediately stood out. First, the size of the market. It's massive. Bitcoin's hash rate, which is the total computing power on the Bitcoin network has expanded over 4x in the last 3 years alone. Miners are expected to generate $17 billion in revenue this year with manufacturers generating up to $6 billion in hardware sales with one supplier owning over 80% of the market.

We've seen mining adoption only accelerate in recent years and expect that this trend only strengthens as Bitcoin continues its path towards mainstream acceptance. The second is that barriers to entry are enormous. You need 3 things to compete in this space. The first is deep expertise in ASIC and hardware design. Second is established relationship with the semiconductor foundry. And third, and this is critical, you need an unwavering commitment to Bitcoin to ride out the market cycles.

For Block, these actually aren't barriers. They're assets we already have. And we look at it this way, we realized we weren't just well positioned to enter this space. We had a massive head start. Let me show you what I mean. First, it starts with the team. The team behind Proto has shipped millions of hardware devices in dozens of markets for Square, Cash App and Bitkey. And before that, many of them spent years building category-defining hardwares at companies like Apple and Tesla.

We're talking about people who've shipped iconic products, led world-class engineering and supply chain teams and know how to scale high-quality hardware. For 16 years, we put our devices in some of the toughest environments out there, busy kitchen, high-traffic coffee shops, retail stores where they get used hundreds of times a day, and they work. They just work.

And the numbers tell the story. We've shipped over 30 million Square devices since inception. Secondly, through our years of manufacturing Square hardware, we built a strong relationship with one of the premier semiconductor foundries in the world. This isn't just about having a supplier. It's about having a strategic partner at the cutting edge of ASIC technology who can deliver for us and our customers.

Third, what ties this all together, Block is committed to Bitcoin for the long term. We see this as fundamental to the future of financial infrastructure, and we're investing accordingly. And this matters to miners. If they're going to be partnering with a key supplier, they want to know it's going to be around for years to come.

And finally, we're doing this where others aren't. We're an American company designing and assembling our products in the United States, which is particularly attractive to American buyers. We're beginning to break up what has been a dangerous point of centralization in the harbor market, improving supply chain resilience and giving mining operators a much-needed alternative to the single-use machine monopoly of the past decade.

Between the market opportunity, the customer needs and our unique capabilities, Proto was a clear next step. We decided to build what the market was missing and what our customers overwhelmingly asked for. Bitcoin miners at their core are infrastructure investors. Their goal is simple: to maximize the return on their investments in power and sites and hardware. Every decision comes down to yield on infrastructure, whether it's power contracts, cooling designs, fleet management or the mining hardware itself.

The math is the same, maximizing yield on every dollar invested. Proto was built to solve for that. We didn't just build another disposable single-use shoebox miner. We completely reimagined mining infrastructure. Rig is modular, durable and easy to repair. And instead of having to throw out and replace an entire fleet each upgrade cycle, mining operators can just buy hashboards, which is better both for Block and our customers.

And on the software side, Proto Fleet only adds value, bringing together many of the functions that have historically required their own infrastructure. And people love it. Beyond a couple of hundred people in person in Dolphin at our launch, our live stream drew more than 90,000 views through Bitcoin magazine coverage.

We made headlines in more than 300 publications across more than 30 countries. And long-time miners called it one of the most exciting developments in mining in a decade. All this together translated to hundreds of inbound sales inquiries and fleet beta requests in just the first few days after launch. More than just sparking intense initial interest from the market, all of these features together, the modular design, the easily swappable hashboards and the durable infrastructure can create a completely different business model compared to legacy mining hardware.

By making hashboards the core upgrade component, we've essentially created a razor-razor blade model. Our highest margins come from these hashboards, which are the parts customers need to upgrade every few years to stay competitive. It's good business for us, and it's a better deal for our customers who save by reusing the razors, so to speak, through multiple upgrade cycles.

And where customers see a software as another revenue stream, we're making our software completely free and open source. Why? Because we believe that miners who use and love our software will naturally gravitate towards our hardware solutions. It's a powerful lead generation tool that drives our core business. Today, our target margins mirror that of other manufacturers at 10% to 20%.

But this is where our technology and business model create a powerful combination. With each new ASIC, we're pushing the boundaries of chip level efficiency. These improvements, we believe, will drive higher margins as we deliver more value per board. Our vision is to deliver value to customers by pushing hashboard technology forward, shortening the path to profitability for operators, increasing hardware uptime and longevity and lowering the total cost of ownership.

And we're building a business we believe has greater upside, one that sells less of the lower-value commodity parts like chassis and fans and more of the high-value hashboards over time. And what really excites me about this is where we're headed is rig and fleet are just the first couple of steps. Today, most of our addressable market is made up of large industrial miners, but that base is continuing to expand.

Our total addressable market grows along 2 key vectors. First, industrial miner demand. With each new ASIC generation that we produce, we believe our systems can deliver higher efficiency and better cost per terahash, driving reoccurring fleet rest cycles across our growing installed base.

We expect this to create a compounding hardware demand profile, both from existing customers upgrading and new entrants scaling into the market. Second, new customer expansion. Advances in system design from new form factors and cooling methods to more flexible power configuration are lowering the barriers to entry. These innovations expand mining into new environments and use cases, unlocking demand from small and mid-scale operators, distributed power producers, new geographies and new types of customers.

Stepping back, this is a multiyear growth opportunity. By continuing to invest in ASIC innovation and system design, we're positioned to serve the full spectrum of customers from institutional miners to everyday users. Each advance in performance, accessibility and integration not only expands our total addressable market, but can also strengthen our long-term competitive advantage.

Ultimately, we're building a platform that connects the entire mining ecosystem across hardware and software, driving durable growth for Block while advancing the broader decentralization and resilience of the Bitcoin network. Thank you.

Okay. We're going to take a 10- or 12-minute break, be back here sharply at 11:05. We're going to keep the agenda going from there. See you in a little bit.

[Break]

All right. We're going to keep it going with our next couple of presentations. We talked earlier about the unique capabilities that Block has across our ecosystem. The next 2 speakers will talk about both -- talk about a few. So first one coming up is Brian Boats, our Risk lead, who will talk about our underwriting strategy.

There we go. All right. Everyone is coming back in. I hope you all had a chance to use the restroom. We're going to talk about underwriting. So you've already heard a little bit about our lending products, including Cash App Borrow and what that drives for our business. So I want to take a step back and talk a little bit more about why we think that risk and credit risk specifically is something that we're really good at and how it's something we've been able to take advantage of in creating and scaling a number of successful products over the years.

So this isn't new for us. We've been successfully managing credit risk for lending products for more than 10 years now. It seems like forever ago, but I remember shortly after joining the company in 2013, how we were starting to pilot what was Square Capital at the time is now Square Loans. And it was a merchant cash advance product for Square sellers.

And the idea was kind of born from within Square's risk team based on the insight that we could use real-time card processing data to successfully underwrite sellers without relying on external credit report data. I was fortunate enough to be a part of building out the early underwriting models and framework as we scale that product to billions of dollars in originations, which allowed us to establish a really strong track record and ultimately begin selling these loans to institutional investors.

Since then, we've developed and scaled a number of lending products within Cash App, including Borrow, and we acquired the Afterpay business. This year, across Square, Cash App and Afterpay, we are on track to originate over $50 billion. So this tremendous growth, obviously, is enabled in large part by our ability to successfully manage risk and expand our lending offerings responsibly.

So just as an example, this chart shows how over the past year, we've been able to double the average customer borrower limit with no significant increase in loss rates. Not to mention that the borrow portfolio has more than doubled in each of the past 2 years. So this green line, this flat, very flat green line here, that is the loss rate as we've continued to scale the portfolio, which is a very incredible achievement. So keep in mind, borrow customers are generally considered subprime. 70% of borrow customers have a FICO score below 580.

So how we've been able to achieve all this? Well, for starters, risk is not just a back-office function at Block. Over the years, the risk team has been a tremendous source of innovation, and our expertise is a core part of how we design and build new products. So for the Square loan side, this was recognizing Square's unique position in our sellers' card processing funds flow and using that to seamlessly service repayments instead of relying on customer-initiated bulk ACH repayments.

On the borrower side, it's the shorter loan duration, which gives us the ability to tune underwriting dynamically with near real-time data and credit scoring. So the average loan duration is about 21 days, meaning that even with a small fee, our book turns over about 17x per year, generating cash and really strong returns. And each borrowing event triggers an updated credit decision instead of longer duration loans or open credit lines that typically rely on lagged credit report and data.

And then lastly, Afterpay's down payment requirement for BNPL, transaction level underwriting and the ability to pause access to the product when customers become delinquent. But of course, beyond the product constructs, there is also an incredible amount of sophistication and technology within our credit models and how we underwrite our customers. So I want to take a minute to share more about what makes our credit models and our approach so unique.

First, we have a massive amount of incredibly rich proprietary data about our customers and their financial activity. In the case of Cash App customers, this can include any number of things ranging from peer-to-peer transactions, Cash App card spend, paychecks deposited via ACH, investing and savings balances, among many other things. Most other lenders rely on lag third-party data. Even our peers that offer similar products don't have this kind of breadth of financial activity data.

And we believe the high -- the quality of our data is incredibly high. So we're able to aggregate all of this data, train proprietary in-house credit models using millions of historical credit decisions and repayment outcomes across all of our lending products. And then in near time -- near real time, compute credit scores for every single one of our customers.

Internally, we started to refer to this as the customer's Cash App score, and it's something we've been able to use successfully across a number of our consumer lending products. So in contrast, traditional credit scores suffer from a reliance on lag data that can make other lenders slow to react to developing macroeconomic trends.

So for example, this chart shows that while credit card delinquencies nearly doubled from 2021 to 2024, the average traditional credit score remained largely unchanged, missing out on these swings entirely. And the results speak for themselves. So with our internal data and credit models, we're able to approve 38% more customers than we otherwise would if we relied only on traditional scores while achieving the same loss rate.

And this is not limited to Cash App. So we take a very similar approach on the Square side, which enables us to approve 63% more sellers than we otherwise would if we relied only on traditional credit scores and again, achieving the same loss rate. So our unique approach in technology drives how we're able to expand access to financial services and credit for our customers and for our sellers.

Okay. So zooming out a little bit, we can start to look at and manage our entire loan portfolio as a function of the Cash App score with every customer and every loan mapped directly to an expected loss. Our goal is to maximize variable profit dollars. It's plain and simple. So this is real Cash App score data as of September 2025.

And everything right of our credit threshold, we deem as good underwriting risk and everything left would be too risky. So it looks very simple, but there is a lot of technology and data that goes into this. And not to mention, obviously, the high degree of expertise and talent and technical ability within our credit team as well.

So the Cash App score gives us a powerful lever for managing risk and enables us to dynamically manage exposure and profitability along an efficient frontier that aims to optimally balance both growth and risk. And under the hood, there are other powerful levers we can use as well, whether it be how we think about treating first-time borrowers or repeat borrowers as well as individual customer level dynamic credit limits.

So we can even use this as a framework to stress test our portfolio and underwriting strategies by running simulations under different macroeconomic conditions. So you can see now this white dash line shows the Cash App score distribution under a stress scenario, where you can see the mass of the distribution shifts left and thus the optimal credit threshold shifts to the right.

Given the near real-time nature of our technology and our approach, coupled with the shorter loan duration of Cash App borrow, we can easily react quickly to shifting conditions by tuning credit risk thresholds and customer level limits. And this recalibration enables us to target positive unit economics, maximizing variable profit under various macroeconomic scenarios.

We're also innovating in how we explain credit decisions and scores to our customers by using AI to translate technical internal system details into easy to understand recommendations that both educate and guide customers towards positive behaviors that over time can help customers improve their scores and gain access to more credit.

I'm also very excited to share that we've just started piloting the very small number of customers, showing customers their Cash App scores directly inside Cash App for the first time. So here, you can see how the score is visualized for customers alongside actionable recommendations and transparency into how their score is changing over time. So this is a really great example of how we can start to productize the risk team's internal proprietary models.

So early feedback, still early. Early feedback has been extremely positive. And as customers see their score and take action, it can drive positive behaviors and deepen engagement with Cash App. And we're just getting started here. So the Cash App score presents a number of significant opportunities for us to transform how customers understand and access credit.

We want to give customers not just more transparency, but also more control over their data and their credit scores and potentially even be able to take that with them and qualify for credit products that maybe Block doesn't currently offer. The traditional credit ecosystem has many multibillion-dollar players, but we believe it also has a lot of room for improvement, especially when it comes to transparency and control for consumers.

So while still very early, the Cash App score shows potential to be a distinctive revenue-generating offering for Block, not just a powerful internal tool for first-party products. So we're exploring how it might create additional value for customers and the broader ecosystem over time. So a lot more to come on that front.

So in closing, Block has a proven track record and foundation for lending for both businesses and consumers and the ability to scale lending products with responsible growth and strong returns. Our proprietary data, technology and expertise gives us a unique edge at assessing risk and expanding access, and we're well positioned to innovate across new lending products and more. That's it for me. Thank you for your time. See you later.

Please welcome Block's engineering lead, Arnaud Weber.

Hello, everyone. I'm Arnaud Weber, the new lead for Block Engineering. I joined the company last June, and I've been running Block engineering for the last few months. I have been working in the tech industry for the last 30 years and have held leadership roles at companies like Google and Twitter. I also started 3 start-up companies with multiple successful exits.

As a newcomer, I had the opportunity to quickly gain perspective on Block's biggest strength and opportunities over the last few months. This presentation will focus on Block engineering, Block automation and how we are transforming into an AI-first company. We made a critical change just before I got here to functionalize all of Block, including engineering. That change has been very powerful.

It has accelerated our velocity and enabled us to deliver more products to our customers faster. However, this is still work in progress. My #1 priority is accelerating engineering velocity. We need to ship excellent software and do so more frequently. I'm really proud of what the team has accomplished this year, which you can all see with the recent releases we had for both Square and Cash App.

However, we will continue to focus on improving our product development velocity. This focus on velocity is coming at an opportune time as we are able to take advantage of the surge in productivity from using AI tools. The engineering team and all of Block is embracing AI to automate the company and deliver AI products to our customers.

Finally, while functionalization helped us become more efficient in many ways, we need to continue to optimize how we work across team boundaries. As Jack said earlier, Block is a technology company building connected ecosystems and financial products. With the availability of advanced AI tools, everyone at the company is expected to build what they need or contribute to our main products.

Our top priority for 2025 has been to automate Block. We want to automate as many tasks as possible in order to move faster and allow everyone to focus on the most critical work. Automating Block is still work in progress, and this effort will continue to be one of the top priority for at least 2026. In order to make all of this possible, we have developed our own general AI agent, which is tailored to our needs and integrates with every software and data layer at the company.

Embracing the AI revolution is critical to our success. And this is not just for engineering, but rather every function at the company. Across Block, employees in functions ranging from HR to customer operation to legal are also using our general AI agent in their everyday work, leverage it for use case that range from generating customer insights to automating the intake of inbound requests.

Block has built a world-class engineering team and isn't new to machine learning or artificial intelligence. Block has been developing ML models since building automated onboarding in 2012. In the very early days of the company, we also developed some ML models to pioneer automation of cash flow-based customers underwriting.

Most recently, we developed Goose, an open source general AI agent and partnered with Anthropic to develop the model context protocol, which you may also already know as MCP, which is critical to connect AI systems with any other application, both for reading data and performing actions. We also launched G2, [ our text ] to persistent application playground to let everyone at the company build the automation they need.

We learned a lot about AI while developing Goose and developed a shared agentic substrate that is completely reusable. For example, this allowed us to build Square AI and Moneybot for our Square and Cash App customers. Here is an overview of Block's AI strategy. We are on a journey to automate every function at the company with Goose, our own general AI agent and G2, [ our text ] to persistent app AI playground.

We are working on automating customer support with AI. This is mostly focusing on cash, but it will extend to Square and Afterpay for both text and voice. Finally, we are using Goose, G2 and many other tools to fully capitalize on AI automation for the purpose of software development. Let's go through some of these efforts in more details. We launched Goose, an open source general purpose AI agent at the beginning of last year.

We built Goose to automate the company. We needed to go beyond what large language models can provide and offer everyone a general agent that can do work for them while processing our proprietary data, not just answer questions. Goose is a general AI agent that integrates with many services through MCP. Unlike just a foundation model, Goose can read proprietary and real-time data and has been designed to perform action.

Goose is foundation model agnostic and is designed for deep insights and continuous learning with self-improvement. We have already integrated Goose with about 150 services, and we will continue to grow this ecosystem of connected tools as needed to enable the automation of most of our functions. Our differentiated AI strategy also drives what we can build for customers and the speed at which we can build for them.

Every AI tool we are delivering to our customers is powered by the same foundation that we are using to automate Block. We were able to build a minimum viable product for Moneybot in 6 weeks and Managerbot in 8 weeks. These were very short development cycles given the complexity of these agents. Moneybot provides customers deep insights and recommendations to help improve their financial lives. Managerbot redefines a Square dashboard to become the interface for small businesses to optimize and manage their operations.

Owen talked about this earlier, the speed at which we are delivering this to customers is simply incredible. Goose is driving efficiencies throughout every function, not just engineering. For example, Goose is routinely used to analyze proprietary data such as internal sales data, build dashboards and manage work in ticketing systems. Goose can also create artifacts, documents or even editing video assets. Finally, Goose is used for software development.

For example, we can now simply tag a bug report in our system and have Goose automatically prepare a diagnosis and a possible code change to fix the problem, all done automatically with almost no human in the loop. Let's talk about G2. Goose has been an amazing productivity tool for Block, but it was just the start.

In the third quarter, we rolled out G2, an agent interface we built to further automate our work. Building on the foundation of Goose, G2 offers an intuitive user interface made of tiles. It enables anyone at the company to create dynamic autonomous workflows that run on their own, so they can focus less on repetitive tasks and have more time to work on more impactful things. The real power of G2 is that any nontechnical person can build a custom application they need without requiring the help of an engineer.

In the past, an employee will express needs and a team of engineers will build a custom application. With G2, everyone can just build the custom application they need in just a few minutes. G2 exponentially increases the efficiency and potential of each employee at the company. G2 is made of tile. Each tile contains a persistent application that works on the user behalf continuously and asynchronously. G2 usage is similar to Goose usage, but in the context of these persistent applications. Please see for yourself, here is a 1-minute video showing G2 in action.

[Presentation]

All right. Let's talk about a few metrics. AI tools are generating substantial operational improvement across the organization, improving both velocity and efficiency. We've achieved a 25% reduction in manual work hours by using AI tools across more than 75% of our employee base. In customer support, AI now handles 65% of Cash App cases, significantly improving response times and the overall service quality. Our engineering teams have embraced AI-assisted development with over 90% of code submission now offered partially or fully with AI support.

This has translated in a 30% increase in the median number of weekly code change engineering produced throughout September. These metrics demonstrate how AI is not just enhancing productivity, but fundamentally transforming how we -- how our operational efficiency, positioning us to scale more effectively while maintaining high-quality outputs across every business function.

We're navigating AI's rapid evolution in engineering by adopting an AI-first approach that goes beyond single tools like Goose or G2. We are leveraging diverse AI technologies to boost development velocity and are evolving the culture to simply become AI first. We've added AI fluency in our job ladder and interview rubrics. We have also launched several programs to foster effective AI usage and adoption. The next step for engineering is really to use AI for every task, including the most complex or most difficult work.

We are accelerating engineering pace beyond AI by developing tools that keep engineers in their flow state, eliminating context switching and friction that traditionally slows development cycles. We are focusing on systematically enhancing our developer experience from streamlined workflows to powerful frameworks. We are also implementing some rigorous performance management to ensure that we are fundamentally transforming how engineering teams operate to achieve unprecedented velocity and productivity.

Looking forward, we're going to continue to automate Block with more advanced automation in many functions. The strategy to develop AI systems tailored to our needs has been showing great results, and we are going to continue to develop goose and G2. On the engineering side, we will continue to optimize engineering velocity in every possible way. Expect us shipping impactful high-quality releases at a much higher pace. Thank you.

Please welcome Block's Sales and Marketing Lead, Nick Molnar.

Howdy. All right. Excited today to speak to everyone about our go-to-market strategy, going to dive deeper into the Cash App and the Square ecosystems. So before we start, I just want to ground ourselves in a really important reality that I don't -- you don't see in a lot of other businesses, and it was one of the kind of key components when I started to get familiar with Block that really hit home for me, and it is the organic nature of both networks and how they unfold.

And so when you think about the Cash App ecosystem with 67% of new actives joining Cash App as a function of an organic experience, it really just illustrates the strength of the peer-to-peer network and the dynamics of how these network effects unfold as individuals really want to pull others in their community, in their neighborhoods into the Cash App ecosystem. And when you look at Square with over 70% of our new volume added coming from our self-onboarded experience where there's not a single human that speaks to those sellers as they join our platform, it really illustrates the strength of where Square started, from a sense of building a really strong self-onboarding motion, technology first, really thinking through how do we drive scale into our ecosystem. So the grounding nature of what drives our network on an organic basis and the foundations, I think, is really important.

The second thing that is really grounding for me that I pay a lot of respect to is just the position that the 2 brands have in the market. They have really strong brand presence. There's a meaningful amount of customer empathy. There's obviously a lot of scale as my colleagues have spoken to earlier, but when we think about how we're showing up to our sellers, how we're showing up to our consumers, we have a really strong brand foundation to build off of.

So what I want to talk about today, first, speak to from -- particularly from a marketing, a product attach perspective, how we focused on accelerating Cash App. Then, we're going to speak through what have we done from a Square go-to-market perspective to transform our motion over the last largely 12 months; and finally, perspectives on what are our sustainable competitive advantages and kind of where am I really focused over the next 12 months.

Cool. So just starting with product attach. Owen kind of spoke to this, but when we started to -- more specifically, when I started -- when I joined the Block ecosystem and got under the hood of seeing that, yes, we have 58 million monthly active consumers but over 40% of them have a Cash App debit card. Over 8 million are primary banking actives and so on and so on, and to see not just the scale of the monthly active base but knowing that Cash App is more than just a peer-to-peer network. These consumers are engaging with Cash App in a way that is fundamentally different to how they see their other neobank or fintech relationships because Cash App serves them differently.

And what Cash App has been able to prove is an ability to drive product attach rate, drive cross-sell and upsell across its full suite of service, and it's doing it at scale. And the reason why it's important is that when we're able to attach a consumer to more than 1 product, they have 2.5x the monthly inflows, so really incredible engagement within the app, but consumers are really looking to use Cash App for more and more things as their relationship with our network develops.

And then secondly, we have really strong channels that we own. The ability to drive over $600 million of incremental Cash App Card GPV from our owned channels is something that I'm really proud of and similarly, just gives us a competitive advantage as we think about our owned and operated channels to drive growth.

The other thing that we do and we hold ourselves really accountable to is showing up in a hyper-local way. And so if you're looking at this map, it represents the actives on Cash App. The darker the green, the more dense the network. And even if you take like an example like Florida, we're not just looking at Florida as a city. There are 4 subnetworks that exist within Florida that are all different. They're all unique in their own rights. Those consumers are attaching to our products in different ways. They're engaging with each other and with our business in different ways. And so the ability to be hyper local in how we show up and to consider each sub network, I think, is core to the DNA of Block. If you actually overlaid Afterpay on this, Square on this, Bitcoin on this, you would see the really dense map of Block and Block's network. But this really gives us insight into the Cash App ecosystem.

Just getting on to now how we focus on driving customer acquisition efficiently. As I mentioned before, 2/3 of consumers that join Cash App come in organically, but 1/3 join us as a function of really thoughtful strategies that we're implementing. They're not just thoughtful, but they're operating at scale, and they're operating with really strong payback periods. The strength of the referral payback period just is a further extension of that organic nature of Cash App, where consumers and actives really want to pull their networks in, and we see really strong payback periods across our referral network.

And our paid marketing spend is operating at scale with up to 6x or 6-quarter payback on that spend, which is incredibly efficient. And when I think about the course of the last 12 months, we have significantly scaled our marketing spend, and we have been able to prove that we can keep pushing into that curve, accelerating our actives adoption as a function of our paid marketing strategies and execution, and we're seeing those payback periods illustrate the strength that continues to prevail.

And then finally, building brand through partnership is something that, I think, is such a competitive advantage not just for Cash App, frankly, but for Block as an overall business. We are really fortunate that some of the best brands in the world, some of the most culturally influential people in the world, some of the most influential sellers in the neighborhoods, they want to partner with Block.

It's a really unique opportunity to build brand through partnership, and we -- when you think about some of these examples, you've got the launch of Afterpay in Cash App that we did through A$AP Rocky. You have the Timmy Chalamet brand campaign that went out earlier this year or the Sabrina Carpenter partnership is a really perfect example where it's end to end. It's thoughtful on how do we think about partnering with her on the presale of her tour, where that's driving Cash App actives into our ecosystem and driving Cash App Card actives into our ecosystem. But 2.5 million consumers have put a Sabrina Carpenter stamp on their Cash App card. That's big.

And it's not just big for our network, it's also big for the partners that we work with. And so the opportunity to keep leaning into this brand-led strategy through partnership is something that I'm personally really focused on and the team is leaning into very, very intently. There's been a lot -- this has come up many times. But when you can start to think about Block where Cash App is Square's advantage and Square is Cash App's advantage, that's when it all starts to really hit home because you have 2 independent networks that are functioning really efficiently and effectively in their own right, but when they can both feed each other and drive the network effects of 1 another, I really believe that's when you see the next phase of Block's growth come into fold.

So the last 12 months, we've worked really hard, first and foremost. And it's been a lot of conscious work to think about what are the main levers for us to transform Square's overall go-to-market opportunity. I fundamentally believe that Square was underselling itself relative to its true technical capabilities, relative to the scale that it operates at, and it was a real privilege to have the chance to think end to end is like how do we push this. How do we push this further and achieve greater outcomes?

So when I think back to like what was the state of play for Square on the 1st of January, we had a strong telesales motion, but we hadn't pushed it as hard as we had the opportunity to. There was a lot of room to scale in our telesales motion. We had basically 0 field sales reps in the market. We hadn't got out from our offices. We hadn't got out into the field and started selling.

There wasn't really an end-to-end strategy. We were doing a lot of different things, a lot of different verticals, and we were probably a bit too peanut butter spread on how we were showing up in the market. So we got really conscious of our end-to-end quick-service restaurant strategy and thought about this in detail.

And then finally, there wasn't a clear framework that allowed us to keep scaling into the curve as long as the marginal ROI is there. There should be no limitations for how much we push and scale our business as long as the incremental dollar of spend or the incremental head count brought on is producing a marginal ROI that meets a benchmark and a threshold that we've set. So what that meant over the prior 3 years, when we talk about NVA, we're talking about new volume added, so a new cohort of sellers that we're bringing on to the platform.

It was pretty stagnant. Between '22 and '24, we hadn't really seen much growth. And it's pretty daunting when you're thinking about the fact that the baseline is $30 billion of NVA, and we've got to shift that curve. These are big numbers, and we want to shift that curve upwards. But we've seen a really good reacceleration over the course of 2025.

So we estimate that our full year '25 NVA growth will be north of 15%, which is pretty amazing to see when you think about the baseline and the scale that we're talking about. But also, Q4 is going to be the strongest quarter that we've seen year-to-date. And so we haven't just seen a really good outcome over the course of the last 12 months, but we're exiting 2025 in a really strong position with Q4 estimated NVA at over 23%. And that's a combination of seeing strength in self-onboarding and a combination of seeing strength through our sales channels, and I want to dive into a little bit more detail on that.

But before I do, been asked a lot of questions like is Square just buying market share. Like that's been the question that keeps coming up at me. And I actually feel -- well, firstly, the data point here is really clear. Our new volume added is growing at 12% year-on-year. New profit added or our margin, our gross profit is growing at 11% year-on-year. So yes, there's a 1% delta, but they're largely correlated.

And when people think intuitively in this room about what's the spread, I actually think some of it maybe hasn't been as considered as to what might drive the delta between new volume growth and new profit growth. And there's kind of 3 main things that I want to just like to highlight. The first is in the U.S., we're actually seeing stronger net profit added than net volume added. People might be like that's great. I'm like, well, we probably have some room here. We should be getting a bit more aggressive. We should be showing up with pushing this a bit harder because we've got room in our ROI model. But from a U.S. perspective, we're seeing new profit growth outpacing new volume growth.

Over half of our NVA comes from our international markets. International markets do have different margin profiles than the U.S. market. There is interchange regulation. It leads to lower margins in our international markets. So as our international growth does continue -- and I think we have a massive opportunity given the respective competitive profiles of the U.S. market versus rest of world to really accelerate our international opportunity, but there will be a spread between those 2.

And then the second thing, you've heard Jack talk about a couple of times that our goal is to take us from a 70-30 self-onboarded to sales mix to 50-50. We're not -- we don't want to do that by driving any cannibalization of our self-onboarding motion. But naturally, the self-onboarded motion is serving smaller sellers relative to the -- I'm not saying sales teams serving -- we're not always serving the Katz's Deli of the world. But even when you get to an average deal size that starts to get above $250,000, $500,000, the margin profile is smaller than the self-onboarded motion. So you should expect some spread as sales continues to outpace self-onboarded.

I don't see any of these things as a bad thing. I don't see them as buying market share. I see them as some of the strongest cohort network growth curves that I've seen in the business as I've studied the Square business over the last years.

Okay. So let's now just get into 4 key areas that I think will kind of sum up where our strategy has been for Square and more specifically, where I see the growth continuing to prevail over the course of the next 3 years. Self-onboarded. We are seeing post like the last couple of quarters, a real step change in our self-onboarded NVA growth curve. We see strength in web and app, which is those kind of coming into our ecosystem via our own channels, and a lot of this is being driven by our marketing spend.

And so what we've seen over the last 12 months is we're 50% -- we've grown our overall Square marketing spend by over 50%. And as I -- as was on the last slide, 70% of leads into the self-onboarded business and also the lion's share of leads that come into our sales team are coming from a marketing originated channel. So we've scaled our marketing spend by 50%. We're maintaining over 300% ROIs, and there's 4- to 5-quarter payback. So really strong paybacks are sustaining as we've significantly pushed the spend, and we're seeing really strong payback period.

So our marketing strategy, I see as a fundamental competitive advantage, and the science that exists in how we execute that spend is also a function of just the DNA of what Square -- how Square has been developed over the last 16 years. There are a couple of other things that are driving the elevation of our self-onboarded motion, which, by the way, is some of the highest growth rates that we've seen since 2017.

So first and foremost, we're moving into an AI era. Square's brand is the #1 brand that shows up in SMB-related keyword searches through AI platforms, and that's happening as a result of very conscious strategies. I've spoken about the marketing performance but a real competitive advantage for us. And then we've been really conscious of how do we continue to build a more personalized onboarding experience that's adaptive, that considers the industry someone's in, the size that they're in, the size of seller, et cetera, so really thinking about our funnels, our flows, have a great team that is resolutely focused on how we drive these 2 components. And then secondly, we continue to focus on how do we show up. How does the brand show up? How do we continue to stay hyper local, thinking about this from a local neighborhoods perspective?

Brand transition. When I stepped into this role, I really -- one of the first things I learned was that people thought that Square was for coffee shops and small businesses, but it is so much more than that. And when you tell our partners at Square serving millions of sellers, talk about the scale of the volume through the platform, the breadth of the industries that we serve, we weren't showing up in a way that was reflective of the quality of our software, the quality of our hardware, and it just wasn't end to end from a vertical perspective.

So we very purposely declared QSR as our primary vertical we wanted to focus on. It wasn't done with the goal of alienating all the other verticals that we serve. It was actually the opposite. It was to be illustrative that if we focus on being end-to-end, we can build a marketing and a brand strategy that can shift perception in an industry. And then let's go and take that playbook, and let's scale it across the broad set of industries that we power and that we focus on.

It's translating to real outcomes. And so when you look at these -- some of these brand metrics, 4.5 point lift in the belief that Square is made for the business of my size, a lot of that is starting to come from some of these upmarket deals that we're winning, whether it's Katz's Deli or Bluestone Lane. Square is made for my industry, being really thoughtful on how we're showing up end to end in all the publications, in all the local channels, being really thoughtful of this industry and how this industry shows up.

The quick-service restaurant industry is very different to the full-service restaurant industry. They both happen to sell food, but there are a lot of things that are very, very different. And so we're thoughtful in how we execute these strategies end to end. And a lot of that is coming through in our sellers understanding the breadth of technology that we can offer them.

Now getting to sales. We've seen really strong sales growth over the course of 2025. Our international sales NVA growth is over 70%, seeing really strong strength outside -- in rest of world outside of the U.S. market. Field sales is at 12% of U.S. NVA now. Remember, that was at 0, basically 0 on the 1st of January. 12% is a great number, but we've been ramping over the course of the year, the field team. So when you think about the ramp here, in June, we were 42 field reps in seat. End of December, we estimate we'll be at 150, and we just want to keep pushing it and pushing it globally as long as the marginal ROI prevails.

There's a really interesting dynamic in the U.S. market that is unique to us, which is we're able to see the Cash App debit card data every day in a really granular neighborhood level. What that does is it allows us to see Square's penetration in local neighborhoods, our competitors' penetration in local neighborhoods. So the TAM where our opportunities are, lead list, we can then build targeted field motions and density profiles against the information that we have. So we know the addressable market, and then we have good models to estimate how do we maintain that marginal ROI and really scale into the curve. And we've only really just started this from a global perspective. We had our first U.K. field cohort start last month, and we're starting now to push that out across all of our international markets.

We're also seeing really strong payback. Even though that team scaled from 0 to likely 150 by the end of the year, we're seeing a marginal ROI of about 250% through this channel. U.S. field is already outpacing our U.S. outside payback period, even though it's a really new motion, and we have a lot of room to keep scaling. So I'm really proud of the team. I'm proud of the leadership within that team and how they're driving the outcomes.

A big part of field as well is how we work really locally with partners. If you think about a local neighborhood, there's many people that power that neighborhood, whether it's the Cisco rep that's showing up every day at our partners, the same partners that we're serving store, whether it's the telco rep. We're thinking really in real pod-like ways and working very closely with a few partners that we believe can be really impactful in driving this motion. But over 50% of our inbound leads to our field sales rep have come from partner-led motion, which is a really interesting learning and one that is new for us that we're seeing come to life.

And then a couple of -- I've mentioned Bluestone Lane and Katz's Deli, upmarket wins that really start to put us on the map. Blind Tiger is an example of someone that went to a competitor and on their own accord, after having a couple of years with that competitor, decided to come back and then unbeknown to me, wrote this beautiful post on LinkedIn that many of you have probably seen, illustrating why they made their decision and why they love Square.

And it's really incredible when you start to see the market start to prevail where people understand the true dynamics of the Square platform and how powerful and capable it is. Bluestone Lane was actually also beginning to roll out that same competitor, had some teething issues, tested us in parallel, and within 3 weeks later, they rolled out across all 70 locations. So I feel like we're showing up better and better. And then you'll hear from Alex Fisher, who leads our Square sales team, later today on a partner panel with Bilt and Cisco and excited for you to get some insight directly from them as to how we're partnering both from the Afterpay Cash App side as well as the Square side.

And then finally, these are kind of new channels but many that we believe we have clear leading indicators that can scale pretty quickly over the course of the next 3 years. Many people ask us about our third-party sales motion. It was about 1% of our U.S. NVA, so de minimis, nothing this year. But we're in pilot to prove that we believe that we could drive the right outcomes, the right economics. 90% of our deals that we're doing through third party is at rack rate or a flat rate, and the seller size is more upmarket.

So we brought in some leadership who, I believe, built the third-party motions across the world. We have really strong teams now. We feel like we can scale this. And we believe that by 2028, it can be over 10% of our NVA, so an S curve to watch over the course of the next 3 years.

That was the laser instead of the clicker. And then international, seeing really strong growth from an international perspective. You're already seeing sales NVA almost at 50% in our international markets, which really gives us this confidence to keep investing into the curve, but we have really strong product market fit in our international markets. The quality of our hardware is unmatched, and it's a real competitive advantage when we can bring that level of innovation into these international markets.

We've invested deeply in direct processing relationships in our core markets, which means that we can compete given our scale on a processing cost perspective with better margin profiles, and we feel like we're in a really good spot to compete. And then we're starting to roll out new opportunities where we're shipping our software with some payment partners in local markets, starting with LatAm and a test and learn underway in Mexico.

So what do we think? I really believe, yes, 2025 was a great year, but we have so much room to keep growing. 23% CAGR of NVA growth over the course of the next 3 years is something we can touch and feel. We can see the line of sight. We know the levers. We've spoken about them today as to how we make that happen. And I believe it's -- a lot of it is about the right execution, the right focus, the right marginal ROI profiles and then beginning to build some of these new motions, scale field, continue to see the right ROI and bring third-party and partnerships and lean really hard into our international opportunities.

Cool. So these are the 4 sustainable competitive advantages that I believe Block has that are largely unreplicable with our competitor set. Number one, we have true global reach. We are not just a U.S. company, and we know how to show up locally, build local strategies and get the leverage we need from a global perspective. And we're seeing over 50% of our NVA come through our international markets today. Two, there's been a huge amount of investment in our payment infrastructure and architecture in all of those markets, gives us a processing advantage, a scale advantage that we can bring into some of the newer early-stage markets.

Number three, Cash App is Square's advantage and Square is Cash App's advantage. We're no longer just selling the what. When you show up and you're like, we can do your kitchen display, we can do your payments, we can do your order management, it's a very different conversation when you show up and say we can do all of those things that you want to run your company, but we also have a business called Cash App. Cash App has 58 million monthly active consumers. We have our neighborhoods product. We can drive down processing costs as a result of the strength of Cash App, and we can drive foot traffic into your store. That is a very different conversation than the one that we've had over the last 3 years.

And fourth, we're not just driving growth for growth's sake. We're driving profitable, considered compounding cohort curves. I'm really proud of what the team has been able to do in step changing the NVA curve and looking at the profit profile that's been able to come with that.

So just to close, we are winning more today than yesterday. Sounds really basic, but if we keep winning more today than we did yesterday, I believe it puts us in a really, really good spot. So I appreciate everyone listening here today. Excited to have a conversation later at the Q&A. And yes, see you all soon. Thanks.

Please welcome to the stage Block's Foundational Lead, CFO and COO, Amrita Ahuja.

Hi, everyone. All right. This is our last formal presentation of the day. We'll have a seller panel and Q&A after this, and I hope you enjoy the demo hall, too. But let's talk about how everything you heard today comes together to form our financial outlook for the future.

First, I want to reflect on what we've delivered in the recent past. Our track record underpins believability in delivering for the future. Looking at the last 5 years, we've achieved a 30% compound annual growth rate. Since 2020, we've nearly quadrupled our gross profit, and since our last Investor Day in 2022, we've nearly doubled in scale. These results highlight the strength, the diversity, the resilience of our business model to achieve scale and exceptional growth.

We've scaled by expanding multiple ecosystems. Both Square and Cash App have grown as contributors to our overall gross profit over the last 5 years. We now have 2 powerful ecosystems: Square serving sellers, Cash App serving consumers, each driving growth and with a long runway ahead.

It's our focus on product velocity, to bring back a slide that Owen showed you, that delivers growth. Over the last 5 years, we've consistently launched, acquired and scaled new revenue streams from our BNPL platform to Square's online solutions and lending within Cash App. Today, 26 revenue lines each generate more than $100 million in annual gross profit, more than double what we had 3 years ago in 2022.

It's this product velocity and 5x the number, by the way, in 2020. And over the past year, through September, the products introduced or acquired since 2020 now represent about 1/4 of our total gross profit. These products are a testament to our ability to find new problems to solve on behalf of our customers, which then turn into vectors of growth for our business. And over time, we can scale them into meaningful scale and size.

That was a product view. Now let's take a customer lens, first with customer acquisition. After moderating last year, we've seen an inflection in both Cash App and Square acquisition in recent months. Cash App's monthly transacting actives have hit a new all-time high of 58 million as of September. And as you heard from Owen and Nick, this is from a combination of product launches, network enhancements and our marketing. We believe the recent momentum puts us in a great position as we head into 2026.

On the Square side, it's a similar story. We've seen a meaningful acceleration in new volume added in 2025, driven by a product focus on food and beverage, our expanded sales presence in the U.S. and internationally and a revamped marketing strategy. That's encouraging traction on the strategy we laid out earlier this year.

Within our ecosystems, we see engagement drive retention. In Cash App, as actives build larger networks with other actives, we see improvements in retention. For Square, we see a similar trend as sellers adopt more products across our ecosystem. We are focused on continued improvements here because as we retain more of our customers, they grow with us over time.

We've also seen our focus on engagement translate into monetization. Product adoption has driven meaningful expansion in monetization for both ecosystems. Since 2020, Square has nearly doubled its gross profit per seller and Cash App has more than doubled gross profit per active. And we believe we have a long runway here for future growth as we continue to cross-sell and launch more products.

Let's shift to our profitability. Over the last few years, we've executed a transformation in our cost profile. We sustained top line growth while maintaining discipline on our expenses. And as a result, we've significantly improved our margin profile. You can see the results in the sustained improvements in both adjusted operating income and adjusted EBITDA, adding more than $2 billion in both metrics in 2025 relative to 2022. Functionalization has been a key driver of this progress. We've found efficiencies within our teams and across shared infrastructure throughout the business from our development cycles to go to market. And we believe that there are opportunities to find further efficiencies as we look to the future.

Overall, our execution puts us in rare company. This screen here is based on consensus expectations for the next year. We're 1 of only 24 companies in the S&P 500 operating at $10 billion or greater gross profit scale, growing gross profit 15% annually and delivering 20% or more in adjusted operating income in margins. That's less than 5% of the S&P 500 at this level of scale, growth and efficiency. And we're one of them. It's a powerful moment to appreciate what we've built, and we want to continue to deliver on this progress to drive shareholder value.

Over the last decade, our total addressable gross profit opportunity has expanded dramatically. Back in 2015, we had a single core market, U.S. payments. Between 2015 and 2020, our addressable market expanded as we added Square international markets and launched Cash App. These markets grew to $190 billion by our last Investor Day in 2022. Today, our addressable opportunity is nearly $0.5 trillion, more than doubling in just 3 years, boosted by the additions of Buy Now, Pay Later, Cash App Borrow and Proto.

On the right, you can see the breakout across key groupings of commerce enablement, financial solutions and the Bitcoin ecosystem. Each represents a large and growing opportunity. And across this $500 billion addressable market, we're less than 2% penetrated today. This sets the foundation for a long runway of durable growth ahead.

Now let's get into those 3 categories I just showed you. We know our business is complex and evolving. Starting in the fourth quarter, we plan to introduce a new framework to simplify how you can understand and model it. As always, we seek your feedback as we refine this approach.

We'll break our revenue categories into 3 areas: commerce enablement, financial solutions and Bitcoin ecosystem. We believe this approach better reflects the jobs we do for our customers than our current revenue categories, transaction revenue, subscription and services, and hardware. Let's get into what each includes.

Commerce enablement products help sellers scale with Square processing, software and hardware. And those products give consumers tools to spend with purpose through Cash App Card, BNPL solutions and Cash App Pay. Financial solutions products expand access to capital through Square Banking and Cash App Borrow. They enable customers to withdraw funds immediately with instant transfers, and they help consumers save and invest. Our Bitcoin ecosystem makes Bitcoin accessible and secure through Proto, Bitkey and our buy-sell product within Cash App.

As Jack said, we are a technology company that builds tools to empower customers. We have a broad array of products to serve our customers, and we continue to innovate across each of these areas. Taken together, the diversity here builds a durable growth profile.

These next few slides get into our business composition using these categories. We'll start with Block overall. You'll see a healthy growth CAGR for each of these 3 categories, as all 3 have compounded in the mid-teens to mid-20% range over the past couple of years. Commerce makes up a majority of our mix at nearly 60%, with financial solutions delivering the strongest growth in recent quarters and nearly 40% mix as of Q3. In the next few slides, I'm going to get deeper on these metrics because we plan to report many of them every quarter to help you track our performance.

Let's dive into Cash App and its mix across the 3 categories. Commerce is the consistent long-term driver of Cash App's growth indexed to spending across our ecosystem. Financial solutions is the recent area of upside as we've launched and scaled Borrow. Each now contributes roughly half of total Cash App gross profit.

In commerce enablement, we have key spending products like Cash App Card, Cash App Pay and BNPL. We put BNPL in commerce given the importance of the integrations for BNPL with the rest of Cash App's commerce tools. We measure performance on volumes and monetization rate. In the bars, you'll see the consistent growth approaching $50 billion in volumes in the third quarter, with growth accelerating in each of the last 2 quarters. As we've scaled, you'll see that the line above it, our monetization rate has been remarkably stable between 1.5% and 1.6% of volumes. We see this as profitable, durable growth driven by product innovation that expands our share of daily spending.

On to financial solutions. With products like Cash App Borrow and Instant Deposit, we track gross profit per active here. You'll see steady expansion in the past year, growing from $9 in Q4 of last year to $13 as of the third quarter, driven primarily by scaling Borrow.

Now let's hit a couple of the key operating metrics that influence those categories. Primary banking actives are a key indicator of engagement and inflows growth. These are actives who deposit a paycheck or spend $500 or more each month. As you heard from Owen, we're now at 8.7 million primary banking actives in October. This group has grown quickly, now representing 15% of total Cash App actives. Steady growth here drives the consistent inflows per active growth we've delivered. As we build greater utility, we can drive engagement and ultimately see more of our customers become primary banking actives over time.

Turning to our lending products. The bar chart shows the strong growth we've delivered across borrow and BNPL with a recent acceleration as we've expanded borrow. We grew lending origination volume more than $4.5 billion year-over-year, growth of more than 50%. We know investors are always focused on risk and returns here.

The lines above reflect performance. You'll see our margins on originations have been remarkably consistent, right around 2%, along with returns on invested capital or ROIC in the high 20% range. So even with this scale, we delivered an ROIC of 28% in Q3. By the way, this is a trailing 12-month calculation and doesn't reflect the full benefit of migrating originations to SFS, which we expect will improve returns from here.

We've looked at many other modern fintech and BNPL competitors. We do not believe that any of them are operating at this scale with this growth or with this return profile. We deliver all 3. We know transparency matters here as we scale these products. So we plan to share these metrics on a consistent basis.

Staying on lending, even as we've scaled volumes significantly, Borrow loss rates have remained below 3%. We use risk loss as a key input to how we manage the business. If losses rise, we can adapt our funnel to adjust our risk exposure and to maintain a targeted loss rate. As we scale Borrow over time, we'd expect to see a higher mix of originations going to repeat customers that tend to have lower loss rates.

This chart shows Borrow mix by customer tenure over time with a majority of origination dollars this year going to actives who have used the product for more than a year. These actives have a loss rate in the mid-2% range compared to newer actives with a higher loss rate. This difference is part of our underwriting strategy. We can be more intentional with the pace at which we expand Borrow access to new customers to manage total loss rates and optimize profit. This is a product we want to scale quickly even if that means risk loss grows on a dollar basis. We know the returns and growth are incredibly strong, and we have been generating that growth at stable loss rates.

Borrow is an exceptional investment and delivers a very important need to our customers. And as Owen shared, Borrow also drives engagement and retention benefits above and beyond the lending-specific returns you see here.

I want to share the unit economics for our 2 largest lending products, Borrow on the left and BNPL, Pay-in-Four on the right, to explain their strength and why we're excited to invest behind them. There are 3 things I want to highlight here. First, our margins on originations of these products are stable, right around 2% of origination volume, consistent with what I showed you earlier. Second, these loans are incredibly short duration. Our book turns over in roughly a month for both of these products. Finally, that combination leads to remarkable results. Without leverage, we're looking at ROICs of around 30%. For $100 of our capital without leverage, that means we can generate around $30 per year, respectively, on these loans. And if we use warehouses or other funding structures like deposits, that increases returns with ROEs at 100% or greater.

Let's shift gears to Square. Similar to Cash App, commerce enablement is the consistent compounder here. It represents over 3/4 of the mix and spans our payments, hardware and software portfolio. Financial solutions has been the area of faster growth with Square loans as well as our broader business banking suite, instant transfer, Square Debit and balance products. Financial solutions have steadily gained a greater share of our mix.

This chart lays out the power of the ecosystem approach based on our real data over the past year. As a seller goes from adopting 1 product to 5-plus products, monetization increases by around 14x. That's from a combination of different revenue streams, payments, banking and software and often enabled by sellers' growth, more locations, serving additional use cases and handling complexity with our ecosystem.

We think about gross profit in terms of monetization rates. That is gross profit as a percentage of GPV. For commerce enablement, you see general stability with some puts and takes from our payment and geographic mix but overall, a strong attach rate that serves as our foundation. Financial solutions represent a key area of cross-sell, where you've seen steady improving attach and room for further growth.

Now let's get frank. Recently, we got a lot of questions about gross profit growth relative to GPV growth. We recognize there's a lot of noise currently in Square's gross profit trends given the operational changes we've made and strong upmarket growth, increasing hardware costs. This chart addresses that directly. We're showing 2 cuts of gross profit: 1 for reported Square gross profit and 1 excluding hardware, a Q2 network remediation payment and the operational processing change we called out.

What you'll see with that blue line is that excluding those 3 items, actually, we actually accelerated gross profit from our low in Q1 earlier this year and continue to grow faster than GPV in Q3. What you're seeing is that the spread on a reported basis is driven by these 3 items. Recent underlying growth trends have been strong and improving. We've talked about our conviction in the strength of our business and the strategies we're deploying across product and go-to-market. And we've talked quite a lot about our conviction in accelerating growth.

This chart shows why. We've seen this show up in reported GPV and underlying gross profit growth today. This view is relevant to the near-term dynamics of our growth, but it's not something we plan on showing on an ongoing basis as we believe these processing partner impacts are largely transitory.

All right. We've talked about where we have been and where we are today. Now let's talk about what we expect to deliver in the years ahead. Let's start with the near term in 2026. First and foremost, we remain committed to achieving Rule of 40. Let's take a look at how we expect to get there.

On the top line, we expect to deliver gross profit growth of 17% next year to reach nearly $12 billion in gross profit, continuing our strong momentum from the back half of this year. We believe Square and Cash App are both positioned to drive durable growth. On the Square side, we expect the results of recent go-to-market investments, scaling field sales and continued strength from self-onboard to continue compounding. On the Cash App side, we're turning the corner on actives growth, and we have a number of recent and upcoming product launches that we expect to contribute to growth more meaningfully next year.

Shifting to the bottom line. As we plan to balance that growth with discipline and strong profitability, we're going to start guiding to adjusted EPS, which, as a reminder, similar to adjusted OI, includes the impact of stock-based compensation. For 2025, we expect adjusted EPS of $2.35. And looking ahead to 2026, we expect to grow adjusted operating income by 31% with adjusted EPS growth of 36% to reach $2.7 billion of adjusted operating income and $3.20 of adjusted EPS.

We've transformed our cost profile over the last couple of years, and we believe we still have a lot more to do. There are a number of levers in our expense base where we can drive continued efficiency across our fixed cost base, partner value chain, risk loss and broad investments in automation.

And finally, we expect this to generate meaningful cash at approximately 20% of gross profit in 2026. I'll come back to this new non-GAAP metric we are introducing shortly. Our priority remains achieving Rule of 40 in 2026 and sustaining it over time. Taken together, we believe this financial profile puts us in great shape to deliver next year. Similar to prior years, we will strive to outperform this initial guide with a focus on delivering stronger growth through our investments.

Now let's get into the growth drivers across each ecosystem over the next 3 years. Starting with Cash App. We expect low single-digit actives growth over the next 3 years. We are laser-focused on growing our actives base, and are executing at scale to compound impact. Growth here will be driven by network innovations we discussed today with specific initiatives like teens and families, multiplayer, money and block networks. Actives growth has a compounding effect that is also felt in engagement across our ecosystem, as Owen highlighted.

In recent years, we've executed well on consistent increases to inflows per active in monetization rate, driving Cash App's ARPU growth. We expect those to continue at a healthy clip. We expect inflows per active growth to come from growth in primary banking actives by introducing incentives like Cash App Green, powerful tools for our customers. We expect to increase monetization rate through the banking and lending products we've talked about, Cash App Borrow and our Bitcoin capabilities.

Our forecasts imply the average active is bringing in about $7,000 in inflows into Cash App in 2028, still a fraction of the median income in the U.S., reflecting the runway ahead to continue to grow Cash App longer term. I think we'll come back to the Square side of it, but let's put it together first with what the next few years looks like. If we look longer term, we plan to sustain our compound disciplined growth in 2027 and 2028. We expect to grow gross profit in the mid-teens range over that time frame. We believe we have sustainable drivers in both Cash App and Square and expect Proto to ramp in the coming years.

On profitability, we expect adjusted operating income to grow 30% with adjusted earnings per share growth in the low 30% range. We're continuing to see gains in operational leverage, and we expect those to build over time. The investments and priorities we're making today are setting us up for compounding returns in the years ahead. And finally, we expect non-GAAP cash flow to improve to 25% by 2028. This is a powerful combination of growth with efficiency, mid-teens top line growth with over 30% earnings per share growth. We expect to achieve Rule of 40 in 2026 and sustain it in 2027 and 2028.

Now let's come back to the next driver of that 3-year view, which is Square. Over the next 3 years, we expect a low to mid-teens compound annual growth rate across both reported gross profit and GPV. We expect gross profit and GPV growth to accelerate in 2026 relative to 2025 to the low double digits, and we expect further acceleration into the mid-teens in 2027 and 2028. Importantly, we expect gross profit growth to be similar to GPV growth each of the next 3 years, once we lap some of the dynamics that we discussed earlier in the first half of 2026.

Our accelerating growth expectations are due in large part to the increasing investment and strong marginal ROIs Nick discussed earlier. We have 2 powerful growth levers here: retention and acquisition. For acquisition, approximately every 8 points of new volume growth in a given year leads to an incremental 1 percentage point of GPV growth in the following year. Retention has a more immediate and outsized impact as a 1 point improvement in retention translates directly to 1 additional point of GPV growth. We believe we have opportunities in both areas.

On the growth of GPV relative to gross profit, as we move upmarket with larger sellers and as international becomes a bigger part of the mix, our -- we expect to see a mix shift in our payments pricing. However, we expect that to be generally offset by increased software attach as we reach larger sellers as well as cross-sell, upsell and pricing initiatives as we execute on our recent pricing and packaging change.

Shifting to Block's incremental profit margins. What we're seeing here is the real story of our efficiency. We're scaling the business at a mid-teens growth rate and converting that growth to increasing incremental profitability. For every $1 of additional gross profit we generate, our incremental margin tells us how much flows to the bottom line.

In 2025, we're converting 1/3 of growth to adjusted operating income. In 2026, we expect incremental margins to expand, despite investing over $130 million in a number of net new growth initiatives that we expect will sustain our growth for the long term, including MoneyBot, Neighborhoods and Afterpay prepurchase.

Looking ahead to 2028, we expect to convert about half of our incremental gross profit to profitability, with our incremental margins improving each year.

Shifting to the returns we see on the investments we make to drive long-term growth. In Square, we're generating a 2x ROI on our go-to-market investments over 3 years with a 6-quarter payback period. Cash App is even more compelling. We're seeing 9x ROI over 3 years with just a 2-quarter payback period. When you can acquire customers at these economics, you keep investing, and that's what we're doing. Embedded in the outlook we provided today is continued investment behind these returns as we scale acquisition across both ecosystems. If we execute well on our growth initiatives and outperform our gross profit guidance, we expect to reinvest some of that upside in sustaining long-term growth as long as the marginal ROIs remain compelling.

Since our last Investor Day in 2022, we've achieved substantial leverage on our fixed costs. Our quarterly gross profit has doubled since Q1 of 2022, and we've moderated growth on the key areas of our expense base, product development and G&A. Looking ahead, we believe there's more we can do on fixed costs to unlock investment in sales and marketing and to grow our lending portfolio. And we believe all this will allow us to sustain compounding earnings growth.

Now let's shift to capital allocation. We have 3 priorities here. First and foremost, we're investing in product innovation and go-to-market execution to sustain long-term growth. Second, we're returning capital to shareholders through a consistent share repurchase program. We've repurchased more than $1.5 billion of our shares in 2025 through September, and we are committed to continue this trend. And third, we're optimizing our capital structure.

We intend to achieve an investment-grade rating over time. This is about building a strong, resilient balance sheet that supports sustainable growth. These 3 priorities work together: invest in growth, return value to shareholders and strengthen our foundation.

Today, as I shared earlier, I want to introduce a new cash flow metric that we plan to report going forward. We're calling it non-GAAP cash flow. And we believe it's the most representative measure of the cash we're generating and our ability to return capital to shareholders.

Let me walk you through how we define it. We start with cash flow from operations and subtract CapEx, which gets you to free cash flow. Then you make 2 important adjustments. First, we adjust for settlement timing, the timing of working capital for our payments products. This can change quarter-to-quarter, but doesn't really reflect the underlying economics of our business. This is a standard adjustment payments and fintech companies tend to make. And second, we adjust for the capital we invest in our lending products, adding back cash freed up from warehouse lines. Why? Our lending business has recurring funding needs, which we support today through warehouse facilities and plan to eventually use deposits to fund our growth.

Traditional free cash flow doesn't capture the full picture. Non-GAAP cash flow shows you the deployable cash we're generating, the cash available for share repurchases and strategic investments. This is a metric we'll anchor to going forward, and we think it's the right lens to evaluate the cash potential of our business.

We plan to meaningfully inflect our non-GAAP cash flow over the next 3 years. As we mentioned, we expect a 20% cash flow yield as a percentage of gross profit in 2026, and we expect to improve this as a percentage of gross profit over the coming years. So over the next 3 years, we expect to generate approximately $9 billion in cash on a non-GAAP basis. And in 2028, we expect to generate $4 billion. That's $9 billion we can return to shareholders or invest strategically.

We plan to continue to repurchase shares, and we'll act more aggressively when we believe shares trade at a deep discount to intrinsic value, like we think they do today. That's why today, we announced we've expanded our share repurchase authorization by an additional $5 billion. We believe we can return up to 80% of our non-GAAP cash flow back to shareholders over the next 3 years. Our commitment to profitable growth provides us with a compelling opportunity for value creation here.

This is where it all comes together. This is the financial profile we're building towards. These are the numbers, if you extrapolate our guidance to 2028, we'll be approaching $16 billion in gross profit, generating $4.6 billion of adjusted operating income, delivering $5.50 of adjusted EPS and generating $4 billion in cash flow on a non-GAAP basis. This is the financial profile of a company that's positioned to create durable value for shareholders for years to come.

As we close, I want to leave you with how we started on our investment thesis. Block is a technology company, building connected ecosystems that empower people to participate more fully in the economy. And our strategy is to drive durable growth, compound profitability and generate meaningful cash flow through our 4 strengths. First, our unique capabilities, the mix of financial infrastructure, hardware, operations, networks and AI that we've built over 16 years is hard to match. Second, differentiated interfaces, simple, intuitive products that make lasting customer relationships. And third, network advantages. Each new seller or individual makes the entire ecosystem stronger.

Finally, proactive intelligence, using real-time data and AI to help our customers run their business, make the most of their money and give time back. These are what will fuel the next chapter of Block. Thank you.

We now have a 20-minute lunch break. So feel free to grab some food and come back at 12:55. The demo hall downstairs is also open.

[Break]

All right. We are back. I hope you're all enjoying your lunch. So we have 2 more sessions up here for the rest of the day. We have Q&A in a few minutes. But before we do that, I'm really excited to have this partner panel for you to listen a little bit more about what we're doing across Square and Block and how we're working with our partners. So we have Alex Fisher, Square Sales and Block Partnerships lead, who's going to have a conversation with 2 folks that we've started working with recently. Lindsay Hirsch, Head of Growth, Strategy, Planning and Design at Sysco; and Brandt Smallwood, President at Bilt. So please join me in welcoming them to the stage.

Hi, everyone. Thank you for having us. I'm thrilled to be here, and a huge thank you to Lindsay and Brandt for joining us today. I know these 2 incredible businesses don't need much of an introduction, but I would be remiss if I didn't share a little bit about them before we begin.

So first, Sysco. Lindsay, thank you for joining us. Sysco is the largest food service provider in the world, the unseen infrastructure behind millions of restaurants and food businesses. They power the sellers at the heart of our Square ecosystem, helping them operate smarter, more efficiently and more sustainably in a changing economy.

And Bilt, Brandt, thanks for joining. Bilt has fundamentally reimagined the relationship between where we live and how we build wealth. By turning the largest monthly expense most Americans face, housing, into their most valuable financial asset, they've created the fastest-growing rewards ecosystem in the country. With over 5 million members and a presence in 1 in 4 buildings. And now their neighborhood program is growing as well as the commerce platform, and they're building a comprehensive ecosystem that serves Bilt members through the entire housing life cycle from renting to homeownership and everything in between. They've proven that your home isn't just where you sleep, but the center of how you earn, spend and grow financially.

Gave you a long intro there.

You did. There's a lot to say, a lot of good stuff. So together, these 2 businesses illustrate how Block connects supply, merchants and spend, all in one ecosystem. So we'll dive right in. Lindsay, let's start with you. Nick gave a preview of this earlier in his presentation, but Square has become the default point of sale for your sales consultants across your 750,000 restaurant locations. What led to this decision? And how has our partnership differentiated Sysco in the food and beverage marketplace?

Yes, absolutely. When we were considering and thinking about our partnerships, at the heart of it, we were really trying to optimize for our independent restaurant customer and what is it that would meet their needs. And when we were looking for a partner, we were looking for someone who could provide the right solution for that particular customer as well as operate at the scale that we needed with Sysco. And so if I think about that, it came down to really 3 things.

The first was around we wanted a holistic ecosystem. It wasn't just around a point of sale. We wanted to partner with someone who could provide more than just the hardware and software and extend to things like marketing, loyalty and even access to capital, which many of our independent restaurants are looking for. The second thing, as we thought about it was time is one of the most precious things that our independent customers have. And we wanted to make sure that we were going to work with a partner who could ensure that they would be able to onboard customers quickly when they move to their system, and Square's reputation really helped with that.

And the last thing that we looked at is Sysco scale. We have operations coast to coast, and even internationally in places like Great Britain, France, Ireland, Canada. And we wanted to work with a partner who was also thinking completely across the U.S. and nationally. And in terms of -- to your other question around what -- how it's allowed us to differentiate.

I think fundamentally, we see other food service distributors partner with certain folks, and they're able to provide the standard discounts on hardware and software. And I think what really tips the edge and what's allowed us to differentiate, and Nick alluded to this, is our groceries on us. This is allowing us to provide what our particular customers need, and those Square sellers, what they need with access to some discounts that they can use and give right away on their food and supplies on a day-to-day basis.

I love it. I know you won't share any specific numbers because I pushed you on this backstage. But can you walk us through some of the business impact you've seen, maybe share some examples of how Square has transformed your customer relationships?

Yes, absolutely. I think a testament to this early partnership, first of all, has been the engagement, which has been amazing with our over 5,000 sales colleagues. I think the first statistic that I like to give is over 60% of our sales consultants, as we call them, have actually used this Square offer with their customers. And I think a testament to that, we've had for multiple years, what we call our restaurant solutions partnership program, and this has been the fastest ramp one that we've seen. So that's been incredibly exciting.

The second stat that I won't give some specifics, as you mentioned, but when we see a customer move over to Square, those customers with Sysco are growing faster than customers who are not. The other thing that we found very compelling is as we all go and prospect together. So we can provide, as a joint partners, a holistic solution to the customers. So their food distribution needs, the ecosystem on the back end that they're really looking for. And there's a particular seller that we have -- seller on Sysco's behalf in New York that has used this and gotten 12 new prospects to convert over by having this offer in hand.

And then the last thing, to your point, Alex, around it also allows us to provide something special to our most critical customers. So for Sysco, we have a loyalty program that we call Perks, where we provide them with the best levels of service across what we can offer. But with the Square partnership, we've also given them exclusive access to different things like events. So as an example, we just had one in Dallas last week, where we brought all these Perks independent customers together to really talk about some of the challenges that restaurateurs are experiencing today to be able to learn to connect directly with the Square team, directly with the Sysco team and just really strengthen the bonds that those communities have.

That's great. What was the number you said for one of your sales consultants?

12.

It's incredible.

12.

I love that, more of that. So how does working with Block give Sysco a new way to support these businesses? I know we share a deep fixation on supporting small local businesses. How is Square helping you guys do that?

Yes, absolutely. I think it's really allowing us to show up holistically. And I brought a quote from one of our sales consultants. His name is Jeremy, that really brings this to life. So Square helped me offer more than just food solutions. I was able to solve a real business pain for my customer.

With high processing fees, poor support and outdated tools, my customer needed something better. Square delivered on every front, fast onboarding, reliable equipment and real savings. It strengthened my relationship and reinforced my value as a trusted adviser. We always say at Sysco, when our customer wins, when our customer is able to grow, we're able to grow. And I think this really just highlights the level of that reinforcing the network effect. When we can go in there together, we can provide that customer savings, we can allow them to grow and then that helps the entire e-commerce and network effect on both sides.

Thank you, Lindsay. Brandt, over to you. So Bilt has done something truly extraordinary, taking something as fundamental and routine as paying rent and turning it into a rewarding local experience that connects users to the neighborhood. Can you share a little bit about how you saw this opportunity and moved to innovate in the space?

Yes, absolutely. And first of all, thank you so much, Alex, and the Block team for having us. Really excited to talk about the partnership. Yes. So Bilt started with just a simple insight, which was pretty much every industry and every category that consumers spend, be that hotels and airlines to retail and even the local coffee shop, have some form of loyalty program. That loyalty program, they use to reward their best customers to drive behavior, repeat spend, bigger basket sizes, whatever, and it gives something back to those customers who engage more frequently.

What was interesting to us and really the initial insight was that housing is consumers' largest spend category. So when you think of someone paying rent or a mortgage, that's often 30% to 50% of someone's income. And it's pretty much the only category out there that doesn't use loyalty as a tool to drive behaviors that those parties care about. So whether that's things in the rental space like setting up auto pay or doing digital payments or making your payment for your rent on time, or signing a lease or renewing a lease, there were no real tools in the industry for property managers to do that and to drive those behaviors. And as a consequence, for consumers to get something more back when they engage in the ways that the merchants or in this case, the property managers were looking for. And so that was the initial insight.

There are a bunch of structural things as to why that was the case. The property space is pretty unconsolidated. So the largest property managers have 100,000, 200,000 units. And when you think about standing up a loyalty program that has connectivity and the ability to earn points that you can transfer to United and Alaska Airlines and Marriott, 100,000 consumers is just not scale enough to make a difference. And so one of the insights and one of the things built it differently, was aggregate all of these partners.

Today, we partner with 70 of the top 100 property managers in the country. We are the way that everyone who lives at their buildings pays rent. covering now 1 in 4 properties across the country, and we are their loyalty solution that they use to drive those types of behaviors that I discussed. So that was kind of the initial insight. And over time, that extended to the neighborhood. So people choose where they want to live, not just by the 4 walls that they live in, but it's by what's around them. That could be schools and museums. It could be restaurants and bars and activities and entertainment. And being able to have a unified commerce experience and loyalty platform where people, as consumers can go and get more and be rewarded in their neighborhood where they're spending most of their money outside of housing spend as well as for those merchants to reach the people that live nearby was just a natural sort of extension of our ecosystem.

So I guess maybe digging a little deeper, what comes next? What do your users want? And how do you think about building or partnering to deliver on that ask?

Yes. I think for us, it started and there's certainly a foundational level of rewards and just a reward sort of currency and the ability to do those types of things for consumers. But I think where we've really been pushing and what we're trying to do, you hear a lot of companies talk about connected commerce. But to us, no one's really pulled that off in a big way, in a local sort of environment and for local businesses and physical kind of point of sale.

So a lot of where we're focusing, a lot of the partnership that we're working with Block across the business on is around creating better commerce experiences. So it's not just, "Hey, I get rewards because I spent more at this place, or I get extra whatever because I went to this restaurant 3 times that month." It's also just actually making the whole interaction feel better.

So the example that you can take from out in the market is -- I don't know if you all -- if you've been in taxis and also ride share, if you remember the first time you took an Uber or a Lyft and you get out of the car at the end and you don't have to like swipe your card or pay or get a receipt, or sign a receipt or hope that they have a credit card terminal or a Square terminal or whatever, it's just you can get up and leave. And that little thing makes that whole experience so much better such that now when you go to the airport, you don't even -- taking a taxi is the weird experience. It's actually way better to just get out of the car and leave when you're done. And those are the types of experiences we're trying to create kind of category by category.

So to give a few examples of what we've done. In the pharmacy space, we've created really kind of the first of its kind, automatic HSA and FSA reimbursement capability. So now go to any Walgreens in the country, use any credit card that you want to use or any debit card that you want to use, and through our integrations with Walgreens, we can automatically identify, one, that you transacted there; two, which items in your basket are HSA or FSA eligible; and then three, file that reimbursement on your behalf. So now your contact solution, what's reimbursable, can be in the same basket with the other 10 items you bought, and we'll go and file that $6 reimbursement for you that you probably wouldn't have done otherwise because it's too much of a pain.

Take an example like the restaurant space. At restaurants, many folks on the rewards side can give you a statement credit or they can give you points. But for a restaurant that's trying to create a real hospitality experience, we now, through integrations with the likes of Block can actually power a better experience for the merchant where they can know when you show up, send a free round of drinks to your table automatically because you did some action that they deemed important. Maybe that's you came 3 times that month. They can set that up with a few clicks, automatically fulfill that.

And as the consumer, you didn't know what happened behind the scenes, but now you're at this local restaurant that you love, you go to all the time. They know your name, they send a free round of drinks when you show up or they get your dessert, or they send a free Lyft ride for you at the end of the meal. And those types of experiences, I think, drive behavior for merchants by just creating a better commerce experience.

Magical integrated experiences.

Exactly. We use a lot of the same language.

So one more question. We'll end on a little bit of a teaser here. While we can't share yet what we're working on together, can you share a bit about how you see Block as a partner that can help fuel the evolution of these experiences?

Yes. I think if you look at some of the announcements Block has put out recently, there's a real shared vision in terms of making local commerce just a better experience. And I think what's cool about Block and Bilt is when you look at our businesses, on the merchant side, the areas that Block is really strong versus areas Bilt is really strong, there's a lot of complementarity there as well as some overlap where there's a lot we can do together. And then when you look across the businesses, the types of capabilities that you all can bring from Afterpay and Cash App and other kind of consumer-facing product experiences that are useful to our customers who live in buildings and shop at merchants that are local. So we're really excited. I think we have between our companies, a real shared mission in terms of what we're trying to do for neighborhood commerce and excited by being able to integrate sort of the best of both to do that.

Awesome. Well, thank you both so much. That brings us to our time, and thank you all for your time and attention.

Thanks very much.

All right. We have arrived at the last session of the day before the demo hall, which I'm personally very excited about. So we have about 45 minutes or so to just answer your questions directly. So we're going to have Jack, Amrita, Owen and Nick come back on the stage. I'll do my best to moderate from up here. We have a few mic runners running different parts of the auditorium. And so if you have a question, just raise your hand, and we'll try to get to you.

We'll start with Bryan and then Tim, first 2 hands I saw. Sorry, go ahead, Jason. Yes.

First of all, thank you very much for a tremendous presentation. Really appreciate all the detail. And what I really wanted to ask big picture is just as we look at the guidance that you've laid out for 2026 as well as the subsequent couple of years, what do you see as just the biggest risks to these financial targets, putting the macro aside? And maybe as part of that, if you can talk about some of the embedded assumptions just around loan loss rates and any additional color on commerce enablement versus financial solutions versus Bitcoin in terms of the gross profit buildup?

I can start on this. The way we build our forecast is we take the known trend lines in our business in very real time and extrapolate them based on, obviously, the history of data that we have across the multitude of products that we've got across our ecosystems. And we extrapolate them for the months and quarters ahead.

We then overlay that with a portfolio of new initiatives, many of which we shared today that we expect to launch in the weeks and months ahead. And when we probability weight that portfolio of initiatives as to when we expect that they would be released and how they would compound to growth in the future. And so that really is the exercise that underpins what we shared today.

Specifically, from a 2026 perspective, more of that growth, more of that weighting, obviously, is coming from the initiatives that we've already got in our portfolio and that we've been recently launching products like our Cash App Borrow product, Afterpay's integration with Cash App Card, in particular, the post-purchase integration, which we've already scaled and will continue to scale, but also more nascent product launches in the future like prepurchase.

And then with Square, what you'll see is the compounding growth of product innovation as well as go-to-market. Some of the exit rates that Nick talked about continuing into the future will be, of course, incredibly guided by our marginal returns as to how we invest in that and how we expect that -- those investments to deliver growth into the future.

From an execution standpoint, a lot of it, of course, comes down to execution -- sorry, from a risk standpoint, a lot of it, of course, comes down to our ability to execute, whether it's measuring returns on a weekly and monthly basis so that we ensure that our investments are appropriately calibrated to growth or it's measuring loss rates, for instance, on our financial services products or lending products to ensure that we've got the right inputs around our expansion efforts there. But what we see today, we're incredibly excited about what we think we can deliver in '26 and beyond.

Bryan Bergin from TD Cowen. Nice job here. I wanted to dig in on the margin, maybe talk about the confidence in that margin outlook over the 3-year period and particularly some of the key sources for you. Curious as you guys are also going full on with goose and Builderbot, G2. How you think about what that means for you for needed workforce intensity in the company as well?

Sure. There's a full gamut of costs that we can explain, and I think it's different movers across our different cost categories. From a personnel standpoint, I think you've already seen us over the past few years get far more efficient. As we look ahead, functionalizing our company, working against a consolidated Block roadmap together, being able to move people into squads so that they're working on the most high-priority initiatives, I think that gives us a tremendous amount of urgency and speed, but it also gives us efficiency in how we deploy our resources to deliver impact and the returns on our teams.

I think we are still in the very, very early days of that. I think the second piece from a personnel standpoint is automation. We can enable our current employee base to deliver more and more to see higher returns from our existing employee base and to ramp in the mid-teens from a gross profit growth perspective without meaningful personnel investments above and beyond how we enable our team from an automation perspective.

There's a number of other non-personnel cost categories, from variable costs with sales and marketing and risk loss. These are big categories, where we want to continue to refine and get more and more efficient, but are mindful of investing there, where we see strong returns to drive growth.

And then, there's a number of other non-personnel fixed categories, which are real estate, T&E, software and cloud fees, professional consultant fees. There's -- that's a big body of spend, and we are going to be fairly rigorous in how we scrutinize that spend to ensure that we can put more of our dollars in the categories that actually return for our customers.

We do intend to go all in on automating through goose and all the tools that we built on top of it. And I would expect to be able to prove a lot more of that next year. But the #1 priority for our company is to automate our company because if we can do that, we can do that for our sellers, we can do that for all of our customers.

And we've already seen by investing in that, we get entirely new product categories such as Moneybot and Managerbot and everything around Builderbot as well. That acceleration will lead to things we're not talking about right now in terms of features and products as well. It just allows us to experiment much faster, build much faster and get to product market fit much faster.

We go to Tim next, and then, there's a question over here also.

All right. Great. This question is more for Nick, I think. But you talked about 300 salespeople in seat by the end of 2027, I think it was. And it was -- you've given a lot of tools for them. So whether it's Neighborhoods, the AI tools, you mentioned a stat today around 50% of the leads coming in are coming from the partners. So it's kind of supercharging these salespeople. So with that as a backdrop, I was hoping you could talk about the sales force productivity, meaning for these 300 people, what should we be expecting in terms of their contribution, whether it's to the acceleration over the next few years or it's a per salesperson? Or maybe if you can't go to that level, maybe just how does that productivity expectation compare to maybe the competitor salespeople?

Yes. So my anticipation is that this telesale -- this field sales motion should be able to get to the same size of our existing telesales motion over the course of the next 3 years, like that's the scale of the opportunity. If we want to get to 50-50, field is going to be the primary driver of our ability to step change the sales-led cohort, and we're already seeing very clear line of sight.

We are working really closely with our development teams on how do we better automate the sales motion. I would still estimate that about 50% of our rep's time right now is spent on admin and not spent selling. So we have a huge amount of room to give time back to our reps to make them more productive and to be able to drive more NVA per rep while we scale the count of reps.

From the field motion specifically, we are really early, and the ROIs that we put up on the screen are reasonably primitive in a sense of like how we're steering our reps on what -- like where to go, when to go. So for example, we don't presently have best routing path of the day for a rep of where they should go and when. The reps are walking their local neighborhoods, and we know their lists.

And yes, the TAM is reasonably underpenetrated now, so that works. But there's a way to make them significantly more efficient than what they are doing right now or our present like sales force way of working is designed for someone sitting at their desk, it's not designed for someone on the move. So how do we think about bringing that in where like if you walk into a store and you're trying to sell, you need to find the right moment that's at the right time when the person behind the counter has the space to listen to you or wants to commit to finding the space to listen to you.

There's a lot more science that can be brought into how we show up in the field. And our processes to date and our technologies to date are not optimized for our field team, but we're really focused on making them optimized. So like the baseline of ROI in my mind is kind of like the starting point that gives us confidence, but I think we have a lot more room in finding efficiency of our reps and giving them better technology to help them automate and scale.

And just one thing to add. From a development perspective, we have dedicated teams that are partnering with some of the teams at Block that are a bit more operational in nature. So we have a dedicated development team that's working with sales and account management, similar thing for customer operations, similar thing for risk operations and compliance operations. And so, there's folks across engineering, design and product whose entire job is to look at that workflow for, say, field sales or, say, for account management and say, how am I going to automate that, how am I going to get that 50% number down to 30%, 20%, 10% and really excited about the progress we've made in the past few months.

Then we'll give to Adam next and for Darrin.

Harshita Rawat, Bernstein. So 2 questions. First on Cash App monthly actives. As we look out into the coming years, Amrita, you kind of guided to low-single-digit growth. But my question is, given all the paybacks you're seeing, we talked about that today, the product velocity, all the network and neighbor initiatives, why not aim for a higher number than the low single-digit growth, fully recognizing that, that number hasn't grown in the last couple of quarters? So this is an improvement, and you may be kind of working off of the recent trend line.

And then a follow-up, Amrita, just on the guidance. The 17% gross profit growth guidance for next year, the 15%, 27%, 28%, how should we think about that number, including the variable cost, all of them, including risk losses?

Do you want to talk...

Sure. I'll take the actives question. I appreciate the question. I guess, one thing I just want to draw a distinction between is there's guidance, and then, they're setting a goal. So you can bet that our personal goal and what the team is aimed at delivering, we're trying to meaningfully outperform anything that we put out there from a guidance perspective. And I'm really, really happy with the progress that we've made.

Basically, this spring, we kind of said publicly that we're making network expansion the #1 priority for Cash App. We've shipped a ton of improvements over the past several months, and we're now starting to see that flow through. So I talked about this a bit at earnings, where we're seeing that year-over-year growth rate accelerate, obviously, off of a low base and not a place that we're happy with.

We're seeing really positive trends. And I'm looking at numbers on a daily basis, on an hourly basis and really happy with what I'm seeing. There's also other levers that are going to drive the business or we hope to drive the business that aren't necessarily factored in. I did -- I talked about -- in my speech, I talked about network enhancements. I talked about teams and families. I talked about multiplayer money. Obviously, Neighborhoods is a huge potential tailwind, where you're talking about tens of thousands of points of sale and essentially making each of them an upsell into Cash App.

There's entire new product lines that Brian Boates talked about the credit score, for instance. There's areas we didn't touch on today related to stablecoins, related to Cash for Business. So I wouldn't read that as much as like a goal. I would read that more as guidance, and I think we're working every single day to outperform.

And I'd also say on the actives front that, as I'm sure you see in your own model, Cash App gross profit is levered pretty strongly to actives growth. So if we can outperform that actives growth, we obviously have shown a track record of dramatically growing ARPU within Cash App, the amount of utility that customers are finding on a daily basis across the ecosystem, how money moves through all of those products and the monetization rate on them has underpinned really dramatic growth from an ARPU perspective.

And so to the extent that we can inflect the actives growth number, that will -- that materially shows up in gross profit. So I think what we've shown today is based on our most recent track record, the compounding results that we've seen over the past 6 months, but obviously, there's a lot more to do there.

On the second piece, which is variable profit, I mean, look, I think what you saw in the presentation is obviously margin expansion, not only in '26, but in the next 3 years. We also shared incremental profit margin expansion from '25 and into the next 3 years. We, as I said earlier, will tolerate risk loss growth on a dollar basis. And you'll see that show up in our P&L, as we expand these lending products, but we're going to be incredibly watchful to ensure that the returns on that growth, the margin on originations continues to be within our target levels.

And so our ability to respond to any changes there and to profitably grow the unit economics on the individual lending products themselves continues to deliver over time. So I'd expect to see variable margins as well expanding in line with those broader rates.

All right. So we're going to go to Adam right here in the middle, if you want to raise your hand, then we'll go to Darrin, right next to him, then I'll come up front for [ Hamish ].

Really nice job today presenting all this. I think you kind of created a bit of a clearing event in increasing the aperture of the visibility into the income statement, getting a little bit more away from just gross profit growth and expanding into the adjusted operating income line. Is it right way to look at this given the headwinds, Nick, that you described a little bit on the Square side, more sales force-driven, higher merchants, which is a little bit lower margin, but you're driving a lot more operating income growth?

And it looks like on the Cash App side, maybe a little bit of the reverse, gross profit is growing a little bit faster than the contribution to the adjusted income growth. Is that the right way to think about it, but the building blocks are there on both sides of the business to drive EBIT -- to drive -- I keep saying EBITDA, adjusted operating income growth?

And then, Nick, if you could just talk about your sales force adds and where they're coming from? And what you're looking for as you build this group?

So on the first part of the question, if I understand it right, some of the incremental areas of growth. So for Square, it's maybe larger sellers, international markets, and then, for Cash App, our lending products come at lower blended margins today than the core payments and software business. I think that's right. What we're seeing though is as we orient increasingly to variable profit dollars generated, and we expect to grow that with discipline over time, we can see an overall blended profile across the mix of our products continue to deliver margin expansion. And that's accreting from a leverage standpoint, as we strictly manage the fixed cost base. I hope that answered your question.

Yes. And then -- so yes, I mean, we think about this as dollar variable profit growth, like that's the way -- ultimately, the more dollar variable profit growth we can drive or acceleration of that year-on-year growth curve, the more that flows through into operating income. So when I'm looking at our opportunity, yes, we're like managing to a margin profile outcome because we don't just want to drive GPV for GPV sake. But there are also some realities of how network effect is unlocked in a B2B-led business where people do respect certain people in their Neighborhood, certain sellers in their Neighborhood. There are staples and icons of Neighborhoods that really shift the perception.

And then in partnership, you can actually like demyth some of the realities of what people might think of with Square through someone that they already respect. So when -- we're running a campaign with Katz's Deli or the founder of Bluestone Lane is on the front page of the F&B Trade magazine talking about our hardware. That is a way better campaign for us than us running our own marketing campaign.

I still -- we're definitely not at the efficiency -- like we're not maxed out on our efficiency frontier of our marketing spend in my mind. We want to keep pushing it as long as it's going to drive inbound lead volumes and quality inbound leads that go down to the bottom of funnel and translate to an actual closed win rate. But we have such a meaningful portion of our leads today come from our marketing spend. And as we keep pushing it, we're seeing that marginal profile prevail.

So there's like -- how do we keep driving the channels that will drive leads while we scale our team, because if you scale your team and you have no leads, they're going to be -- the inefficiency will start to show up and start to prevail. Field reps don't need leads. They need territories where you're underpenetrated, where you know that if they run the right routes, you're going to achieve the right ROI outcomes with win rates.

Telesales, some of our other teams, that's like enterprise, that's where we start to get more into kind of the lead routing piece. I do think international is a really interesting piece here. And I spoke about the different variable profit margin profiles of international versus the U.S. business, but we're driving MVA growth of 70% at the moment. Like it's -- these are really big numbers. And I think we can keep pushing in that territory of growth rate if we play our cards right.

So I'm really focused on field. I'm focused on starting to build the right upmarket motions. Some of -- our leadership from the early days of Afterpay is now leading those motions and starting to build that out on the Square side. And then, there are some newer things like reseller scaling field and being really focused on international.

The other thing I would add, Adam, is we talk a lot about payments pricing up market, but there's also a software opportunity that's pretty meaningful. And as you move up market, you attach more software. The pricing and packaging work that we launched Square releases a month ago is also an opportunity to sell more software to our customers and help them run their businesses more effectively, which has a monetization benefit, of course.

Darrin next, followed by [ Hamish ].

It's Darrin Peller. This is probably more for Owen and for Jack. But, for some years now, we've talked quite a bit about the connection of the ecosystems being a big aspiration of the company, Cash App and Square. And I'd love to hear more tangible examples of what you think is actually going well today, and more importantly, what you see as potentially showing milestones of success in a year from today or 2 years from today that have said you would look back and say, you really did succeed in connecting the ecosystems. To me, that's one of the biggest potential differentiators of Block going forward.

Yes, I can start. I think the biggest proof point ultimately is going to be Neighborhoods because it's a real product that both our sellers and our Cash App customers will value. I do believe it will drive significant usage for both of those ecosystems. We were not able to do that over the past few years for a number of reasons, technical, personality, like organizational and whatnot. So being able to see actual sellers and actual individuals use it on an increasingly regular basis and what it can potentially unlock for them is massive.

But that's just one part. Like everything that we talked about last week with Bitcoin also is referencing how we pull our ecosystem together and how they can actually play off one another to the positive. So I think over this -- over the next 6 months to a year, we'll have a lot of proof points that we're excited to show you all on why these 2 ecosystems can really scale together. And we're one of the few companies in the world that have both sides of the counter, and we intend to fully take advantage of that in every single way in order to get more customers on -- in both of those ecosystems.

I can just add a few thoughts. I really wanted to lay out kind of how we think about our capabilities, and then, our brands really just being interfaces on top of them at the start of my talk because I think it gets to your question. So I think there's already a number of ways in which we are and we have been connecting our ecosystems. That's not necessarily incredibly visible to customers. And this was part of the goal around functionalization.

So right now, we have like a singular AI stack built on top of goose and that agent substrate, and that's powering Moneybot and that's powering Managerbot. It might not visibly feel to a customer like we're connecting the ecosystems, but it's letting us move faster. It's letting us build incredible things in a matter of weeks or a matter of months.

Similarly, we now have a singular financial platform across the entirety of Block versus having one for Square, having one for Cash App, so on and so on and so forth. So I think that we've made a lot of progress just in terms of our ability to move more quickly, our ability to get rid of duplication at the company.

In terms of things that are going to really affect the customer experience and where you kind of get that combinatorial benefit that we've been talking about, I agree Neighborhoods is probably like the biggest thing to watch in the immediate term. But really on the development side, what we're doing now, as like one product development team, is we're looking at every piece of Square. We're looking at every piece of Cash App, every piece of Afterpay, and we're saying, how can we provide differentiated value here? So there's a few other touch points that I would think about. One of them is obviously the integration of Cash App and Afterpay in the U.S. I think that's absolutely massive.

So going back to the previous question, we're working toward having that tailwind of Cash App actives in terms of U.S. Afterpay actives coming into Cash App. I think similarly, we continue to focus on our payment stack with Cash App Card and Cash App Pay. So the more payments that we can get at Square sellers with Cash App Card and Cash App Pay, the better that we can make that experience, both for consumers and for merchants, if you think about things like rewards or if you think about things like processing costs or what have you. That's why I think dollars on Lightning or Bitcoin transactions on USD was such a massive announcement to talk about today.

And then I touched on it a bit in my talk, but I think the employee network and the staff network is a pretty meaningful opportunity here. Increasingly, you're seeing us build more and more features and products in the Cash App that are broadening the aperture of Cash App into like basically whatever is related to your financial life, you should be able to manage it within Cash App.

And so we have millions of staff members who work at small businesses on the Square side. We also see a very large number of new staff members on an annual basis. And to the extent that we can make Cash App just the default banking platform to get paid instantly for work that you do in a given hour or a given day, that's going to be pretty massive. But I guess more broadly, I would say, basically, we're looking at every single capability and then how can we expose that to a given customer through a given interface and how can we add more value by leveraging capabilities across our brands.

Okay. So we're going to go to [ Hamish ] next, who's a very front row. And then Tien-Tsin after that.

Jack, maybe a question for you. One of the things you've had in home is the importance of product velocity. And it feels like there's been a massive change there organizationally over the last couple of years. Where are you on that journey? Are you able to characterize that? And what more do you have to do to where you want to be?

Yes. I think we've certainly done what we need to do from a structural standpoint. I think the rest of it comes down to mindset and more accountability and putting into practice. The tools we're using are very advanced, and we are ahead of the game in most of these things. Goose has not only been successful at our company, but other companies such as Stripe and Databricks, like it's a model that actually works. And part of its power is that we're completely model independent. So it can be a front end to any model, whether it be open source or one of the bigger corporate frontier models. So it allows us a lot of flexibility in applying it to the work.

So I would say that we have had significant velocity shifts over just the past 6 months, but every single month, it's going to get better and better and better, as we get more of the team to use the tools as we understand, like where we can fill the gaps and like really apply this technology even more. But most of it's making sure that we get this mindset, in my last slide, fully integrated into the culture. And that's going to be a big part of my entire focus, our leadership team's focus and making sure that we have an organization that really lives up to those 3 things. That changes our velocity completely. So we made major strides. All the structural stuff is more or less done. Now it's just like putting into practice again and again and seeing it compound.

Okay. Tien-Tsin, up here, and then, we'll go to Dan over here.

I guess, I just want to share a couple of reactions maybe to your session, Jack, if that's okay, and get your feedback on it. So from a mission standpoint, the mission has always been pretty consistent, right, economic empowerment. I think you shifted that to include autonomous economic empowerment, if I heard that correctly. So that's one observation, big push towards autonomy.

And then the second one, when you talked about inflections, my reaction was that in the past, most of these inflections were from established products, and then, you bring those to the mass markets or to the underserved. But I think the one that you called out, I think, it was what data and then AI. I would say those are less established, right?

So I'm curious how that -- this inflection might be different as you're moving the mission more towards autonomy? Is the market ready for autonomous tools? Is it ready for Bitcoin? How are you thinking about that within the framework of past inflections that have worked very well for the company, if you follow my question? And I know, in the past, Jack, you've talked about Horizon 1, 2, 3. I don't know if that thinking applies here or not. Sorry for the long-winded question.

My sense is that any company that doesn't build a platform for autonomy is going to become irrelevant because the frontier labs will take more and more of those use cases. And our intention is to lead this effort and not to react to it. And I think you're right in terms -- well, I would say that all those other 3 inflection points, those were not established products at all, like especially for the people that we served. All of them were certainly looking at like these use cases and broadening the access, but they weren't established in our customer set. And establishing them in our customer set and then building on top of them so that we could go more upmarket is where we really want.

We believe there's a massive opportunity, which is differentiated and unique in the sense of having real-time living data, fed into models that we create and we control that other companies are trying to take from companies like ours and ingest them so they can build similar services, but we have all that today. So we think it's really important to focus on this concept of proactive intelligence, noting that most of the AI models today are trained on old dead data from the Internet. They don't have access to the fundamental data that we have every single second of every single day as people just use our product.

And all these models are becoming more and more commodity, especially given all the open source models coming out of China. So it gives us a very unique vantage point and gives us an ability to actually level the playing field for our customers and for ourselves and move faster than we were able to in the past. So I do see it as an inflection point. I do see it as something that transforms our company, and we intend to lead on it, but words are meaning us, we're going to prove it. We're going to prove it to you all.

In terms of Bitcoin, again, like this represents a shift and an opportunity for us to reduce a singular dependency on the current financial system, the networks and provide other options and provide our sellers the ability to really push their customers where they go, so they don't have to pay fees. There's economic incentive to this. It's not just being about crypto, it's not just using cool technology. There's economic incentive and economic freedoms that this technology gives our seller customers and our individual customers. And this is just the beginning. It's not just about payments and transactions. There's a whole category of services that we can build on top of this open stack, but payments is obviously the most fundamental and the most important.

Just one quick add-on from a product perspective. I think we've done a good job on the Square side and Cash side of just obfuscating away from the complexity. And so you had a question about readiness. I think the question is like, I believe there are some customers who perhaps don't care that, let's say, Moneybot is running on, let's say, GPT 5.1 versus Claude Sonnet 4.5 versus an open source model. What they care about is that they're able to save up a rainy day fund or they're able to get good financial advice from Moneybot.

I think similarly, you don't necessarily have to believe that tens of millions of customers are going to like actively choose to pay in Bitcoin tomorrow or next month, we can obfuscate a lot of this complexity. What they care about is that their transaction goes through for their coffee, and what sellers care about is the transaction goes through, and also, maybe I'm paying less. So it's our job as like a design and engineering-led company to obfuscate away a lot of the stuff that we're talking about here and just build incredibly simple experiences that customers love. And I think that's more so what we're getting at.

So I'll go to Dan over here, and then, a question on the back bench back there.

Really, really interesting Analyst Day. Maybe just a question on the -- on all the lending stuff. I mean, the one thing that I came away -- by the way, Dan Dolev from Mizuho, sorry about that, is how good the lending is, right? Like the loss rates are very low. And I think a lot of people don't understand it. I think that's a big overhang on the stock. And so my question is basically like would you consider maybe consistently providing more data, maybe even making it a separate segment that shows, okay, here's everything we do in lending and here's everything else because the data speaks for itself, and it looks really good. There's no reason to not put it out there. That's just maybe a question on me.

Yes. I mean, Matt, you should speak to this, too, but I think a big part of what you're hearing from us today is a commitment to increased regular disclosure and transparency on these quickly ramping parts of our business, whether it's -- in important parts of our business, whether it's on Square go-to-market or it's on Cash App lending or what have you.

I think a big part of the reorientation of the revenue categories is to highlight the pieces that come from financial services. Now, there's more in there than just lending, but certainly lending is a key piece of that. And everything from margins on our originations, our ROICs, like these are incredibly strong metrics that we're tracking on a daily, weekly basis. And so we do commit to sharing more of that on a regular basis.

Yes, I'll just add, so there's a chart or a slide in Amrita's presentation that showed originations by borrow, and BNPL showed variable profit, and it showed return on invested capital. Our plan is to share that information going forward. As Amrita said, we seek people's feedback on what we shared today. And so let us know what you all think.

It's worth just pausing for a second. That's one of my favorite slides in the entire day. 50% origination growth, 28% return on invested capital, 2% variable profit margins that have been stable throughout the last several years. It's just -- I think the team that manages their underwriting risk, both who's up here and everyone else with him, has done an absolutely exceptional job, and it's worth reflecting on the fact that, that scale, that growth, those returns just I do not think exist anywhere else.

Can I make a couple of points? I think lending is a super powerful block. I think when you actually look at gross profit profiles across like fintechs, others internationally that we believe are great businesses, it always comes back to lending. And access to liquidity is one of the most valuable things that you can give a human, and we're seeing that. And the reason why we are so uniquely placed that it is a superpower is because we didn't start our life lending someone $2,000 over a 24-month period and making a decision today that we have to live with for the next 24 months. We have such fast velocity of our book, short duration loans, small average order value, small ticket sizes, highly diversified. We're dealing with millions of consumers every single month. And that's like a very unique thing that we have designed that is fundamentally the opposite of the broader financial services ecosystem.

So when you see that there's like pressure in the market on loss rates and you see that we've been able to hold our loss profile while significantly scaling, the fact that risk loss is up on a dollar -- like a year-on-year metric is an irrelevant point of view when you're growing borrower at 134% year-on-year and the velocity is prevailing and you're assessing each loan or each order every single time. So I think we have a job to do to keep reinforcing that our lending is different from everyone else's lending.

And our lending is the most real-time lending that happens in the market because we're looking at it on such a short order basis with such high velocity. And that's why you're at over 100% return on equity as a result of the annualized returns that our margin profiles prevail. So I think this is the thing we have to keep leaning into and like hold it and be proud of it because it's a superpower for Block.

Yes. And this DNA started all the way back with Square Capital, which is now called Square Loans. I think one of the most undervalued aspects of our business is the data and the understanding we have of our customers. And now that we have these tools such as AI, we can do something even more magical that is cohesive with lending, but really allows us to tie so many use cases together with our understanding.

All right. So there's a question in the back row here.

My name is Cameron MacKenzie. I came actually down from Vancouver, Canada, because I'm so impressed with what Jack and Jim created many years ago and all the incredible things you guys are doing and showing us today. You mentioned Katz's Deli, but Purdys Chocolates is a chocolate company that I grew up with in the local family in my town, Vancouver.

Building for durability was something you mentioned earlier, and this focus on teens and capturing teens' financial literacy. I'm an investment adviser with RBC Dominion Securities, and we talk about financial literacy all the time, but the sticking of that is not what you are providing with teens. And the bigger picture of why I came down here was to learn about the blockchain and the Bitcoin. And it's a yes or no question, probably to Jack, but is Bitcoin awareness an obligation for Block?

No.

Thank you. Keep your head down and keep doing what you're doing then.

We love Purdys chocolates, too. I think actually a question right next to you, if you want to just pass the mic one person over.

Yes, Sean Emory, Avory & Co. On the bot side, how do you think of if usage across the board ramps up and how that affects maybe margins? But then, even more importantly, I think monetization of it?

And then second, on the Cash App investing side, how breadth, depth do you want to go there? Some of the competitors are pretty deep at this point. It couldn't drive engagement over time. So that's kind of the second question.

Yes. The -- on the bot side first, we want to -- for Moneybot, we want to provide someone with something that is equivalent to having a personal CFO. And we think that's extremely valuable. And we think giving time back is extremely valuable, and we want to price it ultimately according to that. But we have a lot to prove before we get there, and we want to earn the trust that it's actually doing the right things for people, and they find real value in it, and that is exactly what we're testing right now.

On Managerbot, it's the same thing, which is we believe that this should be equivalent to hiring a COO or a manager for your business. And that if it's truly automating your business in the same way that we intend to automate our business, that's extremely valuable and should be priced accordingly. We think there's an opportunity with Builderbot as well for companies like ours, but also for smaller businesses that we've historically served over 16 years and certainly upmarket. We don't have immediate plans on how to package and productize that, but we do think there's a lot of opportunity to do so, and we will be looking at it.

Just a couple of things to add. Just from a cost perspective, as we think about Moneybot and Managerbot ramping, feel pretty good about it, not too concerned. As Jack said, eventually, you can kind of figure out the pricing just for those things. But then, in terms of Moneybot and how it actually flows through, I think it's actually a pretty -- it's a pretty incredible system from a product perspective because we've spent the past decade on all these like life cycle models and personalization models and next best action models, et cetera.

You've kind of had to hide that behind the other things. It either seems like -- it feels like a crummy push notification or you're kind of like building that on a different UI. This, it truly is giving customers suggestions. And so then the way that I expect that to flow through or how you could imagine it flow through is just cross-sell, upsell and engagement, new product adoption. We're already seeing instances of folks who are starting to use savings, starting to use investing or what have you from their conversations with Moneybot.

The other thing is, to the extent Moneybot can really differentiate, it's a huge value prop for a given customer who uses Cash App maybe periodically to bring their entire financial life onto Cash App because now you have this conversational CFO that you can chat to about everything that you do on the Cash App side. So I do think there's a lot of upside as well, it's not just on the cost side.

For investing, just where we're focused right now is investing products that serve the vast, vast majority of Americans. We don't have any immediate-term plans to do short selling or margin loans or what have you, like the vast, vast majority of Americans do not need those tools. And so we'll continue to invest. There's some interesting features we can build, but I wouldn't expect us to go 100% deep in the investing world in the immediate term.

Yes. I'll just add in tying your connection back to our guidance. We don't include meaningful gross profit opportunities related to our AI initiatives in the guidance that we laid out today. We do include some modest costs. I think, as I mentioned in my presentation, about $130 million in '26 related not only to AI, but Neighborhoods and Afterpay prepurchase. So some newer initiatives that we'll be ramping next year, we've included investments against.

But AI, maybe tying to Tien-Tsin's question earlier, is more nascent. And I think business models will evolve. At the very least, you can imagine things like retention and cross-sell through some of these AI conversational proactive intelligence means, but potentially business models on top of that, and that's not what's factored in the guidance today. That's upside potential.

All right. So the back of the room has been really quiet or maybe I've been missing hands all the time, but anyone in the back rows, have any questions? Question over here.

Ken Suchoski, Autonomous Research. I wanted to ask about monetization of Cash App. It feels like Cash App monetization has had different drivers and contributors over the years, right, starting with Instant Transfer initially, then you moved on to Cash App Card. Active penetration has increased. You're driving growth with Cash App Borrow. When you think about the next leg of growth, are there 1 or 2 products outside of Borrow that you think can really help contribute to gross profit growth over the next few years? I think, Amrita, you said there were a number of product launches in the works. And I also saw the -- I think there was a reference to Cash App Score and potentially leveraging that data and selling that data.

Yes. I can talk about this from a product development perspective, and then, I'll let Amrita tie it together in terms of the plan. I think on the Cash App side, there's no shortage of new product lines that we can build. I think we're in a really, really unique place, where we started with peer-to-peer, we've layered in a new financial service, basically every year over the past decade. And we've had market fit, and we have strong attach rates with all these products in a way that, frankly, some of the other competitors in the peer-to-peer space don't. And a lot of that is because where we started was serving those who are traditionally underserved by the financial system. And so the attach to Cash Card is really high and the attach to Borrow is really high and the attach to Bitcoin is really high and so on and so forth.

So one way that you can think about it is just to redefine the world's relationship with money. You have to serve basically every transaction type. So what are some markets that Cash App is not playing in right now where customers are transacting? Those are the sorts of things that you could imagine us building, whether it's in 1 year, 3 year, 5 years. And there still are a number of categories where we aren't playing.

I think that -- more specifically, I think credit score internally, and also, potentially externally is an incredible example of what could be a new product line. There's other products that are out there in the fintech space that we could easily build ourselves or integrate with.

And then I think more broadly, really the commerce side will continue to be a huge tailwind for us. I think Cash App Pay, we're really just getting started, and we see tremendous demand. And then there's so much that we can do with Cash App Pay with dollar on Lightning with how we think about building these payment networks. And so I think there's a number of potential multi-hundred-million-dollar gross profit lines that are kind of coming down the pike.

I think we have time for one more question. I can't see who it is back there, but -- yes, perfect.

It is Jeff Cantwell from Seaport Research. Nick, I thought your presentation was really good, and Owen, yours as well. Owen, you highlighted using Bitcoin for payments, and you called that a paradigm shift. The question I have is, how does Block plan to help do its part in facilitating the adoption, both on the merchant side, opening up that opportunity, but also with consumers?

It just strikes me that you guys have a lot of experience with Bitcoin over the years and you have ideas on driving consumer adoption because as we all know here in the U.S. at times, there could be a solution in search of a problem mentality with payments. I guess, I'm just curious what the plan is around driving adoption? Or how you see that playing out over time?

And then Jack, this probably is the most important question you'll ever get asked from the sell side. Are you Satoshi Nakamoto?

All right. I'll kick it off. Nice 2-parter there. So I think we're really good at driving customer behavior shifts. One fun thing that I like to do is think about when I started at Block 12 years ago, our readers were all swipe and everyone was -- were kind of in a tizzy about this whole EMV thing and like they were building the dip reader and so on and so forth. And then, all of a sudden, you get tap.

And we did a really good job of kind of like moving customer behavior forward, both on the seller side and also on the buyer side. And now, it's probably just like an afterthought that we were ever swiping cards for many of you, but that was really core to our business. And so there's a lot of learnings in there. I think one is keep it simple so that we can obfuscate away a whole bunch of complexity. I don't think the average American is going to necessarily deeply understand or care that much about the Lightning Network and what the L2 means versus the L1, and they don't have to. We don't have to put that front and center for them.

And then I think the second thing is just build an incentive structure that works. That's why I'm so excited about what Brian was talking about with Neighborhoods. I'm so excited about Cash App Green. We have a ton of leverage in the business. And so we can build incentive programs, both on the acceptance side as well as on the buyer side in order to drive adoption of any given product or any given form of payment.

And so that's what I would say. It's like if we keep it simple and we get the right incentive structure, then that will just compound positively over time. And it will be a similar sort of thing where in the next number of years, you'll look back and it's like, wow, can you believe that we were doing it this way when like this is clearly so much better for everyone involved. So that's like, by and large, how I think about it.

I think the incentive structure is there. And I think the cost savings is obvious, and our merchants will lead the way. And it's just a matter of trying it a few times where you see that value. And I'm sure you all have had experiences where you're starting to see more and more cash-only signs. And I think that only increases over time. So this provides another alternative.

On the Satoshi question, the most beautiful thing about Bitcoin is that question does not matter at all anymore. It's an open protocol taken over by a community that wants to see an alternative to an option. And if it was important to Satoshi, there's a simple way they can prove who they are. So we'll wait for that day.

But just as a way to close this out, I really mean what I said in the beginning about giving us critical feedback. We had a lot of questions today, but our e-mails are always open. If you e-mail me, you can discover my e-mail address, and I can't say it right now, but you can discover it. I read everything. I may not get back in a reasonable time frame or at all. But I take all the input, and it's really important that we get this critical feedback. If there's anything you don't understand about our business, if there's anything confusing, if there's something that you think is off strategy or just does not make sense and never has, then please send it our way. And we will consider it, and we will take it to heart, and we'll make sure that we improve it in any way that we can.

The most important thing for us is that we're building something valuable for our customers. And we believe that we have something that is truly unique. We believe we have these capabilities that are very hard to build up and to maintain. And we believe that we are again in a leadership position from a technology and design standpoint. And that's what I want you to hold us accountable to. And if you see us straying from it, then speak up, be frank, be critical and be brutal because we're only going to get better because of that. So it goes for all of you in the room, but also all of you in retail watching from afar. Please share the feedback, and we'll only improve from it. So thank you. We have so much gratitude for you all for your time, for your belief and your patience, and we're going to make good on all of it. Thank you.

Thank you.

Maybe one last thing. Jack probably doesn't want me to say this. He may or may not be Satoshi, but it is his birthday today. So what better way to celebrate with -- than with 200 of your closest friends? Hopefully, you see him down in the demo hall. Please go down and check out all of our products that are down there, meet other employees and sing Jack happy birthday.

Thank you.

Thank you all.

Good day, ladies and gentlemen, and welcome to the Block Third Quarter 2025 Earnings Conference Call. Today's call will be 45 minutes. I would now like to turn the call over to your host, Matt Ross, Head of Investor Relations. Please go ahead.

Hi, everyone. Thanks for joining our third quarter 2025 earnings call. We have Jack and Amrita with us along with Owen Jennings, our business lead; and Nick Momar, sales and marketing lead for Block. We will begin this call with some short remarks before opening the call directly to your questions. During Q&A, we will take questions from conference call participants.

We would also like to remind everyone that we will be making forward-looking statements on this call. All statements other than statements of historical facts could be considered to be forward looking. These forward-looking statements include discussions of our outlook strategy and guidance as well as our long-term targets and goals.

These statements are subject to risks and uncertainties, including changes in macroeconomic conditions. Actual results could differ materially from those contemplated by our forward-looking statements. Reported results should not be considered an indication of future performance.

Please take a look at our filings with the SEC for a discussion of the factors that could cause our results to differ. Also note that the forward-looking statements, including earnings guidance for 2025 discussed on this call are based on information available to us and assumptions we believe are reasonable as of today's date.

We disclaim any obligation to update any forward-looking statements, except as required by law. Further, any discussion during this call of our lending and banking products refer to products that are offered through Square Financial Services or our bank partners.

Within these remarks, we will also discuss metrics related to our investment framework, including Rule of 40. With Rule of 40, we are evaluating the sum of our gross profit growth and adjusted operating income margin. Also, we will discuss certain non-GAAP financial measures during this call. Reconciliations to the most directly comparable GAAP financial measures are provided in the shareholder letter and our historical financial information spreadsheet on our Investor Relations website.

These non-GAAP measures are not intended to be a substitute for our GAAP results. Finally, this call in its entirety is being audio webcast on our Investor Relations website. An audio replay of this call and the transcript for Jack and Amrita's opening remarks will be available on our website shortly. With that, I'd like to turn the call over to Jack.

Thank you all for joining. My intention for these calls going forward is to bring in more voices from across the company to share more perspectives on what we're building and why. This quarter, you'll hear from Owen and Nick, who are joining us for the Q&A today. Owen is our business lead and hope you able to share more on our product velocity and what's coming next on our road map and Nick leads sales and marketing across the company. He and his team are responsible for the momentum we've seen in our go-to-market motions and we'll be able to share more on what's ahead. I hope you all read our letter on where Square is headed and how we're delivering for our sellers. And with that, I'll turn it over to Amrita. .

Thanks, Jack. We had another strong quarter delivering for our customers and exceeding expectations across gross profit and adjusted operating income. Gross profit grew 18% year-over-year to $2.66 billion accelerating from 14% growth last quarter, driven by cash up.

Each of our profitability metrics grew on a year-over-year basis. Adjusted operating income was $480 million, showing strong profitability even in a quarter where we leaned into investments to drive long-term growth. Cash App's 24% year-over-year gross profit growth in the third quarter accelerated from 16% in the second quarter, our focus on reaccelerating active growth and increasing network density is working as we reached 58 million monthly actives in September.

This growth was driven by improvements in experiences across the app, including onboarding referrals and core payment flows, reducing friction while boosting engagement and retention. We've also seen success in our go-to-market campaigns focused on increasing brand awareness and reengaging actives who use Cash App infrequently.

Our strategies to deepen engagement continue to show up in our numbers. Cash App's gross profit per monthly transacting active grew 25% year-over-year to $94. Primary banking actives grew 18% year-over-year to $8.3 million, up from $8 million in the second quarter. And new products like post purchase Buy now Pay Later on Cash App Card are continuing to scale, reaching $3 billion in annualized originations in early October.

Last quarter, we shifted the origination of the majority of borrower loans over to our bank, SFS. This quarter, we expanded Cash at borrow to eligible active in new states and expanded in existing states through underwriting improvements, growing originations 134% year-over-year while delivering stable risk loss and strong annualized net margins of 24%.

We are bringing the successful Square releases format to Cash App with our first Cash App releases on November 13, said to showcase our road map and share more about the future of AI and Cash App and how we're driving growth across our banking products.

Turning to Square. Gross profit grew 9% year-over-year in the third quarter and GPV grew 12% with an acceleration of growth in both the U.S. and internationally. Our product and go-to-market strategies are working as we continue to gain profitable market share in our target verticals like food and beverage, with larger sellers and outside the U.S.

In Jack's shareholder letter this quarter, we outlined our strategy to power the neighborhood by being the best platform for sellers to grow and run their business. We're focused on 3 key opportunities. The first is connecting sellers and consumers at scale in a way that we believe only block can.

At Square releases, we introduced neighborhoods on Cash App to connect our sellers with Cash App massive network of 58 million monthly actives, neighborhood provides sellers the power of an enterprise-grade mobile app and the ability to offer customizable local rewards tied to free marketing and discovery tools, all with a 1% processing rate for all in-app orders.

Second, we are delivering world-class AI tools to sellers so they can put more of their operations and finances on autopilot. We've launched Square AI is this partner built right into the tool sellers use every day, which is empowering our sellers to get insights about their business in minutes that would have previously taken hours.

At Square releases, we announced AI-driven order guide to help sellers better manage procurement and disordering to automate incoming phone orders during peak demand times. Third, we're focused on making selling easier with software solutions and commerce tools for our sellers.

We believe we're the only company that designs the hardware, operating systems, software, commerce capabilities and financial tools for sellers. This vertical integration is an advantage for us, letting us move faster and serve more customers in a differentiated way.

At Square releases, we announced a number of new products, including multichannel menu management, unified third-party delivery app management and improved kiosks, enabling 30% faster order times for our sellers. These product strategies are positioning us well as we scale our go-to-market efforts to serve every seller that wants to work with us.

We've seen an inflection in new volume added or NVA, our proxy for volume growth from new customers. Sales-driven NVA is up 28% year-to-date as our field sales and partnerships continue to expand. We've also seen accelerated growth in NVA from self-onboard marketing channels. Marketing drives the significant majority of our self-onboard volume, and we are seeing strong NVA growth and very healthy 4- to 5-quarter payback periods.

We expect to deliver our strongest NVA performance ever in 2025 through expanding field sales partner program and targeted marketing. In the third quarter, we saw notable strength upmarket with GPV from sellers above $0.5 million in volume, growing 20% year-over-year, reflecting our strongest growth rate for these sellers since the first quarter of 2023.

In our international markets, GPV grew 26% year-over-year as we're seeing particular strength in our telesales channel. As we mentioned last quarter, our decision to increase operational flexibility at a processing partner modestly increased processing costs. This was an approximately 2.6 percentage point headwind to Square gross profit in the third quarter, which we expect to lap in the second quarter of 2026.

In Proto, our Bitcoin mining business, we generated our first revenue seeding what has the potential to become our next major ecosystem. We monetize Proto's innovation in hardware and software through hardware sales across basics, mining hashboards and full mining rigs that provide many of the key advanced components to mine Bitcoin.

In the third quarter, we sold our first rigs to our first customer. And while it's only a modest contributor to the second half of this year, we are actively pursuing a robust pipeline for 2026 and beyond. From a profitability standpoint, adjusted EBITDA was $833 million, and adjusted operating income was $480 million in the third quarter.

Adjusted operating income margins were 18% in the quarter. Product development costs remained flat year-over-year, while our growth initiatives across sales and marketing spend directly contributed to our growth in both Cash App and Square. Transaction, loan and risk loss expense grew 89% year-over-year as we invested in scaling our lending products, most notably borrow and the recent launch of post-purchase BNPL.

We continue to see healthy trends as we scaled post-purchase BNPL and borrower losses continue to trend below our 3% target. So far this year to the end of September, we have repurchased approximately $1.5 billion of stock, and we intend to continue returning capital to shareholders as we generate cash.

We're excited to share more about our capital allocation priorities at our upcoming Investor Day. Turning to guidance. We are increasing our full year guidance for both the Q3 beat and our raised Q4 expectations. For the fourth quarter of 2025, we expect to accelerate gross profit growth again with gross profit growing over 19% year-over-year to $2.755 billion.

We expect to expand adjusted operating income margins year-over-year to 20% and delivered $560 million in adjusted operating income. Taken together, we expect to be approaching Rule of 40 as we head into 2026. Our full year guidance reflects our Q3 outperformance and our increased expectations for the fourth quarter. We expect to deliver $10.243 billion in gross profit for the full year, reflecting more than 15% year-over-year growth, consistent with the initial outlook for 2025 that we provided a year ago.

We expect adjusted operating income of $2.056 billion, growing nearly 28% year-over-year despite meaningful investments in sales and marketing and scaling borrow and other lending products.

Finally, to help in your modeling for Q4 and the upcoming years, we want to provide some details on tax rate and interest expense. We expect our 2025 and long-term tax rate to be in the mid-20% range, relatively consistent with where we landed in the first 3 quarters of the year.

We expect net interest expense of $45 million in the fourth quarter, reflecting our recent debt raise and the latest benchmark rates. These figures are also good representations of our long-term expectations across both line items.

We typically provide preliminary forward year guidance during this earnings call. But with Investor Day coming up, we're excited to go much deeper on our outlook for both 2026 and our long-term financial performance in a few weeks.

Throughout 2025, our gross profit growth has accelerated, and we've expanded our margins. Most importantly, we've improved our velocity to deliver more for our customers faster. Ultimately, these strong results reflect our focus on building for our customers, and we're incredibly excited to welcome you in person and virtually to our Investor Day on November 19, where we'll share so much more. With that, I'll turn the call back to the operator for Q&A.

[Operator Instructions]

And our first question comes from the line of Tien-Tsin Wang with JPMorgan. .

Appreciate it. It's nice to make no 1 on the call. So I'll ask on the question, if that's okay. I've heard when you talked about Cash App growth and RIF on that topic, I know Jack's been pushing towards network density overall. So can you just give us a progress report on that now? When might we see an inflection in network growth, given some of the investments you're making?

Sure. Thanks so much for the question. We're really happy with where we landed in September. We've made some pretty massive progress here over the past few months. And of course, we still have a lot of work to do, and we see a lot of opportunity ahead. So we reported the $58 million number for September. But the underlying trends are strong as well.

So what we've seen is an acceleration in the year-over-year growth for monthly active since we declared this a top priority at Block and at Cash App. And we actually saw that acceleration in year-over-year growth for monthly active again in October, which is great.

I guess stepping back, how we think about growing monthly active overall is there's really 2 pieces. First, there's net new acquisition for new customers who haven't used Cash App before and then also engagement is a key piece of the equation as we can increase engagement and drive quarterly actives or annual actives to increasingly become monthly active weekly active daily active. And so that's really how we've been approaching it.

Some of the key focus areas on the development side have been: first, what we call network enhancements, which is basically just looking at our core flows and making sure that it's simple and easy for customers to successfully use our app and complete transactions.

On the multiplayer money side, this has been 1 of our key focuses. I know you all saw the launch of pools. We saw 1 million pools created through the end of September and then now 1.5 million pools created through the end of October. We're really continuing to invest here, not just in pools, but just how we think about social primitives and what we can build to allow our customers to connect with 1 another and that drives meaningful engagement. .

And then third is probably on the teams and family side. We continue to invest here. We've achieved massive scale on the Teams and Family side, we have 5 million monthly active teen accounts that are using Cash App, and we continue to invest to serve them. A couple of weeks ago, we launched high-yield savings for our team customers, and we're going to continue building both for teams and for parents.

And then I would say more broadly, we just continue to focus on high quality, high velocity. And that goes for the marketing development side as well as the product velocity side. On the marketing side, we're focused across the funnel, across channels. We're really leveraging incentives to drive customer behavior, and we've seen really strong ROI there.

From a product perspective, I think it's not just the network expansion work. It's really everything that we're building on Cash App. I see as contributing to network expansion and monthly actives growth either on a first order basis or on a second order basis. If we're building useful, simple things for our customers, that's going to reliably compound and drive active growth.

So overall, I think we have a lot of room and a lot of opportunity on the active side. We also have massive opportunity on the engagement side. We reported inflows per active grew 10% year-over-year that's a pretty good signal of just engagement on the platform. Also gross profit per active was up 25% year-over-year in September. And so all of our investments across Cash at borrow, Cash App Afterpay, post purchase, our banking suite, our bitcoin products, that's going to continue to drive healthy engagement as well.

So that's a bit of a snapshot just in terms of how we're approaching it. I think pretty happy with $58 million, but so much more work to do and a lot of opportunity ahead.

And our next question comes from the line of Tim Chiodo with UBS. .

I think this is probably a good one for Nick giving Nick on the call. So I want to talk a little bit about the field sales teams and their productivity and then a little bit around the GPV and the gross profit contributions that those teams will be bringing, so on the field sales teams, I gather, and if you could put some color around this, that there are certain things that you're doing to help make these sales people as productive as possible, whether it's other tools or systems you have in place, technology you're using?

I'm hoping you could shed a little bit of light on that to bring it to life. Gather the paybacks are quite healthy. I think you've talked about the field sales teams being in roughly the 5 to 6 quarter range. And then as a related follow-on, it's very logical to think that the salespeople and the ISO channel, they're going to be bringing on a larger merchant with probably a longer L in the LTV equation.

So we'll be around with you for much longer. It's also logical to think that they'll be paying slightly less in terms of their monetization rate per unit of volume. But the absolute GPV and the absolute gross profit growth that they'll be bringing will be at much higher levels. And I was hoping you could shed some light on both of those topics again, the field sales productivity and then the contributions that they'll bring.

Yes, of course. Thanks so much, Tim. Our go-to-market motions in general and field more specifically have been performing really well. As you mentioned, we're seeing really strong paybacks and the marginal ROI on our incremental head count that we bring on to the team continues to scale in a really nice way.

But to be honest, we actually have some meaningful room to continue to invest as we focus on that marginal ROI sustaining and growing into the future. Amrita mentioned in her opening remarks, our sales-led NVA was up 28% year-to-date through September and we expect to grow last quarter to over 40%.

So I feel like we're going to exit the year with Q4 in a nice way that takes us into 2026. A lot of that has been as a result of how we've shown up culturally the right tactics, the right sales motions, really gearing our reps up to hit the ground running and be able to close the deal in the least possible time.

But we've already significantly scaled our team over the course of the year. If I think about from the start of the year, we had next to no field sales ramped reps, we're now over 100 field reps scaling fast. And so I understand your point from a gross profit per -- gross profit relative to GPV. But while we have scaled our team, it's still pretty early from a field sales perspective. And of our U.S. is coming from field in '25. But as that team continues to ramp, we believe they'll continue to compound.

And we're seeing pretty stable margins as we're scaling our team, I so does have a longer as you referenced, but I don't think field is in the same category. Certainly, as we move up market, that can mean a different gross profit to GPV profile. But candidly, it's not really how I think about our economics. I think about how do we maximize our variable profit dollar growth head count that we have in the team. And if we can continue investing into our cohort curves and seeing that NVA grow per quarter, I believe that will translate to faster GPV over time, which will ultimately mean really strong gross profit growth.

And I know you didn't specifically ask about our self on boarding motion. But while we have seen sales strength, it has self onboarding. We're seeing Square hold a really strong organic motion, still with 70% of our NVA coming from sellers who sell on board, which is a result of a combination of flow optimization, really leaning in on the AI front. We're now the #1 -- we show up #1 for SMB-related keyword on AI-related search and feeling really good about our self onboarding is continuing to grow and scale some of the best growth rates that we've seen in web and app since 2017, and a lot of that is a function of how marketing has continued to scale, driving really strong lead flow and really strong return on investment.

Now I'll just add a couple of perspectives as well, Tim. Ultimately, our focus and belief is that compounding growth in GPV will drive gross profit, which will drive incremental variable profit dollars, which is our core focus across the business. .

What we see, as Nick has talked through, ultimately, are indicators of underlying health across that growth algorithm and across the platform from new seller acquisition trends to ROIs to opening up new distribution channels to be able to reach incremental sellers. And I think you see that coming through, whether it's outsized growth in food and beverage at 17%, or with mid-market sellers or larger sellers at 20% or in markets outside the U.S. at 26%.

So we're seeing that strategy play out and work. As you know, there's some idiosyncratic things that I mentioned in the interim remarks in last quarter as well around a decision that we made for operational flexibility that hit Q3 by about 2.6 percentage points from a gross profit perspective, ex that operational flexibility point, which we expect to lap in the second quarter of next year, gross profit growth and GPV growth are relatively equivalent to each other in the third quarter, and we'd expect that they would be as well in the fourth quarter ex that change from an operational flexibility standpoint.

So our focus again is on driving incremental sellers into our platform through the distribution channels that Nick has talked about, where we're seeing strong execution take hold.

And our next question comes from the line of Andrew Jeffrey with William Blair.

My question is around the borrow product and maybe to a lesser extent, the NPL. I think there's been a lot of investor concern about the credit quality of the products and the long-term profitability of these products and the 24% cash gross profit growth is awesome. I wonder if you could touch on why you think as we do, that these are superior products for consumers term liquidity products that address really pressing needs that traditional financial institutions have not been able to bring to market.

And so maybe touch on the value proposition as you see it and also on some of the distinctive Block brings to market Cash App brings to market in terms of underwriting, be that data-driven or AI to give investors a sense of why you think that's such a good business as do we.

Awesome. Thanks for the question. Yes. I'll start off on Borrow. First, Andrew, as you called out the broader purpose of the product and why it's resonated so strongly with our customers. And then secondly, go into some of the metrics where we see it as a good business for us.

First of all, these credit products are a really important part of our business in how we expand credit access, especially frankly, the segments of consumers who are often overlooked by the traditional financial system. These products provide financial mobility, cash flow flexibility and growth for our customers.

As a result, we've seen incredibly strong product market fit and growth in our system on the back of really healthy unit economics. We're able to do this responsibly fundamentally because of the deep capabilities that we bring to bear from an AI and ML-based underwriting perspective.

So zooming into what we're seeing in real time in these metrics, borrower performance was incredibly strong in the third quarter with origination volume up 134% year-over-year, reaching nearly $22 billion on an annualized basis in the third quarter and even higher growth from a gross profit perspective. This is on the back of a couple of different initiatives.

First, just core underwriting model improvements which we were able to deploy across both existing states and new states as well as expansion nationwide on the back of the migration to our bank SFS, which enabled us to unlock more states, in which we can steadily ramp the borrow eligibility offering.

And then third, providing borrow eligibility and getting more nuanced with limits for our existing customers who are highly engaged in the platform, whether those are primary banking actives or direct deposit customers. So those 3 strategies at play have helped us expand borrow but maintain very healthy risk loss rates below our 3% target despite this triple-digit originations growth.

And see, therefore, annualized net margins at the 24% range in the quarter above our internal targets. Very importantly, we also see that these borrow actives have meaningful lifts in engagement metrics that carry through the entire Cash App ecosystem relative to non-borrow actives.

We looked at this from the 12 months ending in August. And what we saw was that borrow actives have 3x higher inflows per active, 2x higher cash up card spend. Now 3x higher retention rates relative to non-borrow active, so it's a key piece of the broad engagement story for us around banking within Cash App. And we think more experimentation and more product innovation here around borrow can help us drive growth in other parts of our business.

So finally, I guess, what I would say is what powers all of this, whether it's borrow or other lending products like post-purchase BNPL where we've also seen earlier in its life but also seen very strong growth is fundamentally our cash up credit score, which is an internal score that we use is truly a core asset that we have that we can deploy across the range of our lending products.

And we think, ultimately, the model that underpins that is advantageous in that it has data that covers a wide range of financial activity across our entire platform, near real-time insights based on that activity and then advanced modeling using AI, ML and data science over a decade-plus of experience of serving lending products to our customers which ultimately then results in being able to expand access while still maintaining the strong loss rates and unit economics that we've been able to maintain here.

So we're incredibly excited about the metrics that we see here with Borrow will obviously be very watchful on a real-time basis on how they trend, but what we've seen so far has been extremely strong momentum.

And our next question comes from the line of Darrin Peller with Wolfe Research.

I think this is a good follow-up to Amrita, what you were just talking about to some degree. I mean, because even when we back out the growth contribution from Cash at Barrow, I mean, we're calculating an acceleration of cash at gross profit without the borrower benefit from what was, I think, around high single digits last quarter to double digits, low double digits this quarter.

So it sounds like MAUs, but also the flywheel look back at more Cash App inflows cash at borrow inflows is driving a lot of it. So maybe just talk through the different levers, putting aside purely the year-over-year comp on Cash App borrow itself of what you see really driving that and sustain that growth well into the double digits. And if you think it's sustainable now if you're going to have MAU growth continuing to drive that or if there's other variables we should think about too.

Sure. Thanks, Darren. I appreciate the question. I'm happy to offer a bit more color here. I think fundamentally, it's important just to think about Cash App as an ecosystem. So should we kind of think about the 4 key parts as our network products, inclusive of peer-to-peer, our banking products inclusive of direct deposit, our commerce products and then our Bitcoin products.

We've made meaningful progress from a product development perspective and on the marketing side across all 4 pieces. And so all of this is coming together to drive that acceleration in growth that you're talking about. I touched on some of the items on the network expansion and the active side before, and we expect to continue to see that pay dividends.

On the banking side, it's things like direct deposit attach and really seeing that primary banking activity. We've launched some recent experiments and architectural changes that are helping there. I mean on the commerce side, we're operating at tremendous scale, and we're also seeing really healthy growth. And so car GPV is growing at 19% year-over-year. Cash at pay GPV growing at 70% year-over-year.

I think Amrita mentioned the acceleration on the Cash App Afterpay side going from $2 billion in annualized originations to $3 billion in annualized originations now in early October. And so we're going to continue to invest across the entirety of the ecosystem. And I think what you get there is just a portfolio of diverse products and diverse business lines that come together and are able to deliver that durable growth over and above a steep acceleration on the borrower side.

But I would also, if I may, like we don't really see the world in this, like gross profit ex borrow sort of way. Amrita touched on this to some extent, but catch-up borrow and our ability to extend liquidity to our customers is just -- it's a fundamental part of the Cash App ecosystem. On a first order basis, it just has an incredible return profile. We have like -- we have a 30% return on invested capital for borrow.

I've looked all over the place. I haven't been able to find a lending product that has a return profile that looks like that. So on a first order basis, it's fantastic. But then also when we think about the strength of market fit, it's really the second order effects that got me the most excited.

When we offer a borrower loan, a large share of those funds actually move through the Cash App ecosystem. So you get kind of that double hit. And then this is 1 of the products, such a large share of the U.S. population is living paycheck to paycheck and has to smooth through their pay period that we see tremendous market fit for this offering.

And then I think, increasingly, we're going to be able to leverage that as a carrot to incentivize certain behaviors. So we've been doing some experiments in terms of eligibility and limits and fees for our borrow product and how we can kind of tune that to drive let's say, primary banking activity. And I'm really excited for what that can mean going forward. We'll have some announcements next week at Cash App leases. And then I'm excited to talk about the durable growth profile for Cash App in depth at Investor Day in a couple of weeks.

And our next question comes from the line of Adam Frisch with Evercore ISI.

Great to have Nick and Owen on the call and I hope that continues. I think a big issue for the right now is the macro versus the company specific. And given the significant and accelerating momentum on both sides of the business, plus a pretty tricky macro backdrop that I think some companies may be using as a crutch for subpar performance, can you speak, Amrita, to your visibility and how all of that is translating into your calculus around the 4Q guide and provide some color maybe on consumer spend. And then, Nick, on the company-specific stuff, if you could speak to your go-to-market strategy and what you're doing to drive such terrific growth acceleration on the Square side.

Yes, Adam, thanks for the question. I'll get us started here on the 4Q guide and macro. Obviously, it's a dynamic environment. We're paying close attention to the range of potential outcomes here. What we used to inform our guidance is what we see most recently in both our third quarter performance as well as in October.

What we've seen so far has been strong. Obviously, third quarter performance had acceleration across a number of key input metrics or operating KPIs that indicate the health of our underlying ecosystems, whether it's Square DPV or its inflows per active on the cash upside, we saw acceleration from 2Q into 3Q.

We continue to see really healthy returns on our investment in our go-to-market spend and then obviously strong underwriting outcomes as well across each of the different pieces of our lending portfolio. We saw only isolated impacts from tariffs and sort of the de minimis tax exemption changes that appeared in our Buy Now Pay Later business. But even with that, GMV growth remained strong at 17% or 18% on a constant currency basis in the third quarter.

Based on what we saw in October was relative consistency across a number of different metrics that we track, whether it's average transaction sizes, borrow origination volumes, loss rates, we're not seeing meaningful changes that indicate a change in the macro environment yet.

Cash out performance was strong in October. I think you heard Owen speak to some of this earlier. We've seen strong active growth inflows per active and monetization in Cash App. In Square, we did observe slightly slower growth towards the end of October that we believe was primarily weather related, but we're also seeing some of the strongest new volume added NBA that we've seen in a long time across cell phone board in sales, obviously off a very large base.

So look, ultimately, what we've seen has been healthy, but we're going to be data-driven and read our metrics on a daily basis as ever. And our philosophy here is that we have the ability to shift, whether it's on marketing or underwriting or how we run our business as needed.

And those are kind of the key elements that underpin the guide that we put forward, which we think is a strong guide based on the momentum that we've got heading into the fourth quarter.

Thanks, Amrita. And maybe I can just give a little bit more color on the go-to-market side. I spoke a little bit earlier about the strength of self-onboarding growth that we've seen. And more specifically, some of the flow opt work, the contribution that marketing has had and similarly, I spoke about scaling our sales headcount, particularly in the field sales team as we're seeing really strong marginal ROI.

Just to be clear, I believe we have a huge amount of room to continue to scale our headcount. Our field sales team to date is only effective in our U.S. market, and we have a lot of room to keep growing. We know we have a lot of room as a function of proprietary data that we have available and more specifically, being able to leverage and look at Cash App card data to understand our penetration in local geographies and local neighborhoods and local markets, really gives us line of sight of how far we believe we can push our headcount envelope and then begin to scale internationally.

We've seen some really strong wins up market, whether it's Delhi or Perdis Chocolate tier. We're proving just for small businesses and coffee shops that we're able to win large and complex sellers. And we have a massive TAM that we're excited and we continue to execute against, we've seen incredibly strong partnership momentum, 2 specific examples are Grubhub, which saw our ability to bring more of the block assets to the partnership, but we can look at these as not just a feature exchange or an individual deal, but how do we think about this across Square and Cash App combined.

And then similarly, from a Cisco perspective, we're seeing a strong feeling of new sellers joining the platform as a result of the strength of that partnership. So all in all, I feel like just given our ability to articulate a very considered and consistent strategy, we've been able to drive execution across our development teams, product engineering design through our marketing campaigns through how we show from a sales perspective, and it's that coordination that's leading to us winning more against competitions leading to delivery of features that we've been waiting for, for quite a while that are now coming to fold and seeing real strength in outcomes like multi-location, menu management, food delivery services, just features that we didn't have before that will table states for some of these upmarket sellers. So I'm really excited about what's to come, and I believe we'll exit Q4 in a really strong position going into 2026.

And our next question comes from the line of Dan Dolev with Mizuho.

Great results here. I wanted to ask about Square Bitcoin was announced earlier this quarter, fully integrated payments. I know it's going to be launched later this month, but I wanted to see if maybe if you've done any testing or anything that could give us an indication because if it works, it could be huge in our view. So wanted to get your views on that. .

Yes. So we're really excited to launch this to all of our sellers next week, actually and it's going to be available to everyone, and they just have to make a simple switch in their settings and they'll be able to start accepting bitcoin, we do have beta merchants that have been on for quite some time and have found it really easy, and it's something that they want to promote heavily because there's no fees associated with accepting Bitcoin.

So we've offered counterparts just the stickers and ways to show that like this business does now accept the bitcoin. We have a lot of hope for this. I think the challenge is going to be making the payment side and getting people comfortable with paying with Bitcoin. But that's just a matter of making the interface more accessible and more usable. We do a lot there within Cash App and also within BitKey and our spiral debt team works constantly on payment adoption and making sure that we can see the bitcoin everyday money. And it's something we're super excited about. And we're going to look for every try to both educate all of our sellers on why accepting Bitcoin is the best option and why buyers would want to use it as well.

And our next question comes from the line of Jason Kupferberg with Wells Fargo.

So you made it really clear that you feel pretty good about the competitive momentum on the Square side of the business. And I wanted to get a sense, you talked about all that new volume coming in. Is it coming more from sellers who haven't made the move to a cloud solution yet? Or is it coming more from other cloud-based providers?

And then I'm just wondering if there's been any changes in the Square pricing environment, either in terms of seller sensitivity to price or pricing posture that you're seeing exhibited by your competitors?

Yes, why don't I take this? So let me just start with the pricing point. I don't believe there's been any major significant payment pricing moves that we've made as a result of focusing on our go-to-market and as I scale the team.

From my perspective, it's been pretty business as usual. And more specifically, I think a lot of what we've seen is we're showing up in a lot more conversations as a result of getting out in the field. The field sales team going from basically 0 to over 100 today, and it will be meaningfully larger by the end of the year. That, from my point of view is a major contributor of our ability to have greater consideration and put us in more conversations to have the chance to win.

We're also seeing our telesales growth rate improving and pretty meaningfully internationally, we've seen a significant acceleration of NVA growth. And so very excited, yes, about the U.S. and how we're showing up, but our telesales performance in all our global markets is seeing a highly accretive NVA growth curve.

We're also seeing some of the lowest churn rates that we've seen since Q2 2023. And I think a lot of that is a function of the investments that we have made, talked about earlier, our account management team and how we're showing up and supporting our partners. And just to wrap up the question, a lot of the wins that we're having, yes, some of them are kind of the legacy point-of-sale systems.

But we, in recent times, have had like pretty meaningful win backs of those that have gone to direct competitors. And so we're seeing really strong win rates across all aspects of our competitor base -- and many -- once they had left are seemingly coming back as we're continuing to sharp and have those conversations. So I'm really proud of the team and what have been delivered this quarter.

And then just to touch on pricing a little bit. We did update our pricing on the Square side for our software products earlier this year. I think we went through it at Square release a few weeks ago. The reason for that from a customer perspective, a seller perspective, it was really all about split on the bid side, it's really about ARPU expansion and SaaS attach rates. So we used to have more than a dozen individual software products that sellers could attach to.

We combine this into a really simple 3-tier system where we have a free tier, we have a plus tier and then we have a premium tier for more complex sellers. It's just a massive improvement in terms of how we've simplified and streamlined the Square ecosystem.

When we look at that relative to the competitive set, it's just clearly a lower cost of ownership when you go with Square versus some of our direct peers, we are actually including a lot of things that our competitors are charging separately for. So I think like loyalty or marketing tools or team management tools or so on and so forth.

And Nick and the sales team are able to kind of show that breakdown when we're having a conversation, and we're trying to win a deal. So when I talk to people on Nick's team account executives are saying, yes, we're seeing stronger close rates in these deals. When I talk, they're lobbying the simpler structure. So overall, I think that's a great tailwind. But also I would say there's definitely some deals where we're up against the direct competitor and a cloud-based point of sale, but also we have to remind ourselves, this is a massive TAM. This is trillions and trillions of dollars.

I think it's like $1 trillion in TAM just for food and bev so just secularly, there's tremendous tailwinds here over and above kind of specific pricing dynamics.

We will take our next question from Bryan Keane with Citi.

Congrats on the results. Nick, I wanted to ask you about your baby Afterpay, maybe you could talk about some of the unique opportunities you see ahead with the asset that might differentiate you from the competition. I think volumes were up 18% on a constant currency basis. But obviously, there's probably a lot of growth to come, especially with the post purchase on BNPL and some of the other initiatives, but I'd love to get your thoughts there.

Yes. Of course, thank you so much for the question. Yes, as you mentioned, GMV was up 18% on a constant currency basis, and gross profit was up 23% year-on-year, the significant driver of growth was post purchase after down the cash card, which was key driver of growth in the third quarter. Adoption and our conversion is trading -- pending ahead of our expectations.

As Owen said before, we crossed $3 billion in origination run rate in early October, and we expect to continue to expand eligibility and increase attach rates and when we compare post-purchase Afterpay to borrowers early trajectory, we're seeing ask on the cash up cards scale in a meaningful way that pace is well ahead of the early trajectory of borrower, which is really encouraging for us to see.

And as we scale, we've had a resolute focus on our profile and our loss rates on consumer receivables in Q3 remained in line with our expectations. So healthy loss rates and strong growth rates. We have been very focused on rolling off to payout into Cash App, and we begin to turn our attention to the core Afterpay business across the world. We've signed a number of new partners over the last few months, including Uber and Amazon in Australia, Hibbett and Jenny in the U.S., and we're expanding our commerce network and our advertising business.

So yes, I feel like we're focused on the right things as to how Afterpay is showing up both within Block and in partnership with Cash App and with Square, but also as it's core network and really investing in the growth of reacceleration of the core Afterpay business.

And our next question comes from the line of Mihir Bhatia with Bank of America.

I was wondering if you could just spend a few minutes on AI here? Amrita touched on some of the AI tools that you are enabling for sellers. But I was wondering more just bigger picture and block, Jack. What kind of impact do you see AI having at block? Just touch on how you are currently what you're currently doing with AI? What are some of the use cases that might be interesting here in the short term, like, let's call it, a year or two and then I guess like really, at the end of the day, is AI going to be more of a cost side benefit for block? Or is it more of a growth driver?.

Just to answer that question right away, I would see it as both. I think it will allow us to grow a lot faster, monetize our capabilities even more. Just as one way to envision that is right now on the Square side, for instance, and even within Cash App, people have to navigate our interface to find features and products that we offer. .

We'll be able to surface them immediately as they need them based on the understanding and the data we have around how they run their business or how they run their financial portfolio on Cash App,. So it's definitely something we're looking at for growth. But also, we imagine it really reduces our costs as well, especially at the company level. Our goal, ultimately, like I believe that AI will be transformational for our company.

Our goal is to automate our company as much as possible and really take away a bunch of the mundane tasks that we have to do to serve our customers so that we can focus on more creativity, and we can ship features and products much faster. That has been proving out. We started about 2 years ago with Goose, which is very small projects to help automate engineering tasks. And now it's grounded into something that nearly every single person in the company uses, not just engineers, but nearly every single role in the company has touched it and benefited from it and saved some time from their day-to-day so they can focus on more important tasks.

And that has contributed a lot more to our overall lost over the past -- over this year, actually. And we expect that only to increase as we continue to build on this platform. The most interesting thing is Goose allowed us to put a lot of this functionality directly into Square. With Square AI, and we're going to be doing the same thing with Cash App as well. And you'll see some of that next week in Cash App releases.

But more importantly, you'll see it at the Investor Day, where we'll go pretty deep on how we're touching every 1 of our product services with AI and what to expect from. On the seller side, we want to build a virtual COO or manager for our customers, our sellers such that it can be very proactive because we have this deep understanding of their business.

And on the Cash App side, effectively a virtual CFO so that people can really make the most of their money. And our goal is to help people to even build wealth as well. And AI is going to be instrumental in doing this. And I think we have something really unique in that we have all this real-time living data that comes in every single second of every day and we can tune these models not to be trained of the Internet, but actually to be trained off real human data as it happens.

And it can be a whole lot more proactive. So you don't need to come to Square or to Cash App and no which question to ask. It can actually be proactive about things you might want to consider, products you might want to try out features that you want to turn on and do so on a very friendly and human way that makes sense. And both of these are in testing right now, and we're getting really good feedback from our sellers and individuals.

And our next question comes from the line of Harshita Rawat with Bernstein.

I want to ask about Cash App banking users. Good to see kind of the $8.3 million number user growing nicely. You talked about ways to keep an engagement here. You've had marketing campaigns recently, the product velocity appears to be improving. My question is, what do you think you need in terms of brand perception of product or otherwise to attract inflows into the app, which I know accelerated a little bit this quarter and drive more commerce spend per user, which I think can get a lot high.

Thanks for the question. I love this question. It's actually 1 of the key things that I'm going to be focusing on next week at the Cap release event. I think fundamentally, what we need is a platform that supports our understanding of primary banking behavior and what a customer who is a primary banking active actually is. And so that's really where we've been focused.

On the $8.3 million number, that primary banking actives were up 18% year-over-year in September, it's actually accelerated pretty meaningfully in October. So for October, we actually saw 8.7 million primary banking active, so 400,000 net add there. And then we saw the year-over-year growth rate accelerate from 18% to 20%.

I think the key perspective here is that we don't want to be too narrowly focused on just paycheck deposit actives. It's not actually reflective of the modern earner and how the next generation is actually participating in the economy.

And so we've been running a lot of tests and rolling out new products and new platforms that this world view. And I think we love systems like that because then we're able to really optimize flows to twist knobs and turn dials and we have a track record of doing that across a number of these programs that we've run, like our referrals and invitations program or our instant discounts program Boost.

And really, this is connected back to 1 of the conversations we're having about Cash App borrow. There are ways that we have within the app to incentivize a certain amount of behavior and bring Cash App card to the top of wallet. One of the advantages that we have versus some of the other neo banks is we have that base of 58 million monthly actives. And so -- and we have 26 million Cash App card active on a monthly basis right now. And so we're able to play this like cross-sell, upsell, attach rate game as well.

And so a big part is just driving engagement. In terms of the why and why we're so focused on this, it's just the ARPU and the LTV for primary banking actives is just so much greater than it is for the average customer. So every time that we convert your average Cash App customer or your average cash up card customer to a primary banking active, there's a huge ARPU uplift.

And so we're going to be pulling a lot of levers here. We're going to be looking at everything we can offer from limits to overdraft coverage, to rewards, to borrow eligibility to Cash App Afterpay and so on and so forth to build a really, really, really compelling banking suite. And we think that when we go to market with that, and we have campaigns about that, it's going to lead to some of the outcomes that you mentioned.

And we will now take our final question from James Faucette with Morgan Stanley.

I want to go back to the work that you're doing on Square and the product and distribution enhancement to us seems like it really could expand the appeal to a broader range of merchants. You made that pretty clear in talking about the responses you're looking to go upmarket, how should we think about, though, the impact to things like pricing and profitability?

And I guess 1 of the other questions I have in terms of market fit is, what segments of the market are really responding or what enhancements or the segments where you're seeing traction? What are they really responding to thus far in features, et cetera, that you can lean into.

Yes. I'm happy to take this. So 1 on just started like the block level and then I can talk about the Square specific components. From a block perspective, I think this is 1 of the really strong benefit to where we're able to go to market leveraging the combined value of block for our partners and our consumers.

So when we're showing up and we're speaking to a partner, we're speaking to them about Cash App's network of 58 million actives, we're speaking to them about the scale of the Cash App card that already exists on their platform.

We're able to illustrate the value of Square, where we have millions of sellers across a very broad set of industries, and we have both pay now and pay later that is a global network, not just a U.S. specific network. So that means that we can have very strategic conversations with our partners.

And that's where I think these like distribution opportunities truly start to unfold because we're having conversations at a different attitude that's looking at what are the benefits that block could bring as a whole that does create sometimes a more complexity in the partnership motion. But I do think that if we can be a little bit patient, knowing what I feel really good about what's to come and how do we think about these things global that are more all-encompassing across our platform.

And then when I think about just the overall competitive advantage of Square, number one, we're addressing a very significant TAM. We're addressing a very broad set of verticals. I mentioned earlier around some of the more recent product features like menu management, delivery platform integrations and others from an F&B perspective, which has been our focus.

But we are showing up across a broad subset of verticals, and we are starting to bring cash up into that conversation as well, where we can talk to our Square partners, not just about the features that we can provide them, but we can talk to them about our ability to drive the great work that Brian and team are doing from a neighborhood's perspective.

How do we start to bring those 58 million in Cash App into the Square sellers and illustrate, we can drive foot trap into store. Like we can be a growth partner for our sellers are not just a point of sale. And I think that is our fundamental competitive advantage over the long term.

I don't think this is about price and profitability. I think it's about scaling the team with the right marginal ROI profile and the incremental headcount and having a team that is appropriately represented to the TAM that we're servicing, and showing up with the right tactics, the right framework, the right ability for an account executive to do a deal when they're standing in front of the seller. And that's all we're seeing today. We're seeing really strong MVA growth, and I believe that it will continue to accelerate into Q4. So thank you for the question.

And ladies and gentlemen, that concludes today's call, and we thank you for your participation. You may now disconnect.

Okay. We are going to get started now. Thank you, everyone, for being here. I'm Will Nance. I cover payments here at Goldman Sachs. We're delighted to have Amrita, CFO and COO of Block. Amrita, thanks for joining us. I'm going to run through some quick disclosures, and then I'm looking forward to the conversation.

Thank you so much for having me, Will.

Okay. So during this conversation, Amrita may make forward-looking statements, including about Block's expectations towards financial performance that are subject to risks and uncertainties. She may also speak as to certain non-GAAP metrics. Please take a look at Block's most recent filings with the SEC for a discussion of the company's risk factors and for reconciliations of non-GAAP metrics to their most directly comparable GAAP financial measures. Further, any discussion of our lending and banking products or further products referred to products that are offered through Square Financial Services or our bank partners. With that, Amrita, thanks for joining us today.

Thank you for having me. And also just thanks for dealing with my voice. Hopefully, we may get through the whole session. I'm in the process of losing it. Let's go for it.

All right. We'll see what we can do here. All right. So kicking off, 2Q was a busy quarter and in our view, one of the strongest quarters in recent memory for Block. Over the past 2 years, we've been on this journey, that in my mind, started with some of your restructuring announcements and over successive quarters, you, Jack and the team outlined very specific strategies across every segment of the business, where you were focused on investing, including both on products and strategy as well as profitability and financial targets. And this quarter, it felt like we really began to see some of the progress show up in the results, particularly on the Square side. So to kick off the presentation, I was wondering if you could maybe do a state of the union around the investments over the last 18 months, what has worked and where there's still work to be done?

Great. Will, I think your question laid out the long term very well, and I'll come back to that, but I'll start with the short term, which is that we sit here today very confident in our ability to deliver on the guidance that we provided for the back half of the year to accelerate our gross -- on gross profit growth in both Q3 and Q4 and to exit the year in Q4 with 19% growth and 20% adjusted operating income margin. And since we gave that guidance a month ago, we've gotten questions about risk loss given the ramping of our Cash App Borrow product, in particular, even if you look at gross profit net of risk loss, we expect to accelerate our growth in the back half of this year, so both on an as-reported basis and net of risk loss.

Now turning to the longer term, which is really the genesis of your question. There's really 2 key things that we've changed that are fundamental to how our operating model and how we run as a business. One is our functional organizational structure and two, is how we orient our work and our priorities. So first, we used to be a business unit-oriented structure, we are now a functional oriented organizational structure, which means that we've elevated disciplined excellence around engineering and design, which means that we can flex our workforce across the most high-priority projects, whatever brand they happen to be on, and which means we can connect the dots across our various brands from Cash App to Square to Afterpay, to TIDAL to Proto. So it gives us organizational excellence and adaptability. The second thing is that we have road mapped Block's priorities as a whole and stack ranked each of our initiatives that ladder up to our overall strategy. So we focused our strategy, and we created clarity around prioritization of the initiatives that ladder up to the strategy. What each of these 2 things has done organizationally and culturally over the past year is it's led to greater product velocity. And that's what you see us delivering now so far in 2025 and what you should hold us accountable to as you look at the back half of this year and into next year. Just in Q2 alone, from a Square perspective, we launched Square AI, our latest Handheld and sometimes Square -- our latest hardware, I should say, in some time, Square Handheld. And we released new transformational features for Square Online. From a Cash App perspective, we went in 4 months from inception to prototyping to launch on Cash App Pools, which is our newest peer-to-peer future within Cash App and launched Tap to pay for Cash for Business. So the product velocity that you see across our business should be accelerating on the back of our organizational and prioritization efforts. And it's not just about product velocity. It's also about distribution. You'll see us do more as we invest behind strong returns. And as we experiment in new ways across our brand and performance marketing campaigns across the business. And it's this product velocity and distribution, which ultimately compounds to share gains and growth over time.

That's great. And I appreciate the update. I know there's been a lot of focus, but it sounds like things are truly accelerating the business kind of across the board. Before we go any deeper, I did want to touch on the current environment. I know everyone is eager to hear about what your data says about the state of the consumer. Is there any real-time insight you can provide on just the performance of the business, the health of the customer base? And just remind us what you're expecting in the back half of the year from a macro perspective?

Sure. From a macro perspective, obviously, we're very watchful and we did embed in our guidance that acknowledgment of the dynamism of the backdrop of the environment in which we operate. But what we've seen is resilience across our ecosystems. Through Q2, from a Square perspective, we saw acceleration from Q1 into Q2 on Square GPV, 7% to 10%. And importantly, in some of those key discretionary verticals that we look at, food and beverage and retail, we saw resilience as well with strong same-store growth and retention behind each of those 2 verticals. From a cash out perspective, we look at things like inflows per active and card spend. And we saw inflows per active be relatively steady from Q1 to Q2 at 8% year-over-year growth, but actually accelerating if you look at -- and we've talked about this before, some of the moderation in growth that we saw in Feb and March, we accelerated out of that into Q2 around inflows per active. Importantly, when we look at other key drivers of our business. So our underwriting models, repayment around loans like Square Loans, Cash App Borrow or BNPL, we've seen steady and healthy repayment rates. And for the investments that we make from a go-to-market perspective, we've seen strong returns on our marketing and sales investments behind our business. Now again, we have real-time data that we are managing our business behind. And so to the extent we see anything shift around repayment rate or ROIs from an investment perspective, we have the ability to shift things to protect our business and obviously continue to serve our customers responsibly.

Yes. That's great. So let's double click on the GPV trends in seller, particularly in the mid-market and the food and beverage because I think about those 2 categories specifically is an area where distribution really matters. And I know distribution has been a huge focus for the company across field sales and across resell arrangements, both here and abroad. When you look at the improved performance, what are the signals you're getting from the market that are leading you to guide to continued acceleration in the back half? And can you speak to the contribution from some of the new channels that you have?

Sure. So just philosophically, when you step back, the approach that we're taking that's different this year, really over the past sort of 12 months or so is to expand and broaden the ways in which we go to market for the Square business, which puts us in front of incrementally new sellers, a broader set of sellers than we were reaching before. And this product velocity behind our ecosystem gives us a chance to win more of those sellers, which leads to share gains and again, leads to compounding growth. So there's 3 key drivers of Square GPV: new customer acquisition; seller retention; and churn. And we've seen healthy and accelerating growth from a customer acquisition standpoint and across really the 3 key metrics. From a customer acquisition standpoint, what we saw in Q2 was the strongest dollar-based new volume added that we've ever had as a company as we attracted more sellers into our ecosystem and the highest growth rate we've seen since 2021. From a sales perspective, specifically within new volume added, just looking at the sales channel, the first half of the year, we saw 20%-plus growth rates, and we expect to exit the year at 40%-plus growth rates. Now it's still a smaller portion of overall new volume added relative to our truly differentiated strength, which is self-onboard, but it's one that we're leaning into as we see strong marginal returns across our sales force, from telesales to field sales.

Partnerships is another key piece of our sales ecosystem we're delivering higher leads, larger leads and above our targets into that sales team. So we're seeing strong conversion of those leads, when our sales team engages with them.

And then from a retention perspective, we're seeing, to your point, some of the key verticals for us, food and beverage and retail, strong retention, both on the back of the investments we've made from a product standpoint so that we can gain greater share of [ wallet ] [indiscernible] and also from a macro perspective. And from a churn perspective, we saw in Q2, the lowest churn that we've seen since mid-2023. So we're pretty encouraged about those 3 key drivers of our GPV growth rate and ability to accelerate from here.

Great. One item I did want to ask about that we got some questions on post earnings was, the contract renegotiation you talked about that led to about a 2-point gross profit in the seller business. And I think on our math, it worked out to about $80 million kind of on an annual run rate. Can you help investors understand just the nature of that change in the relationship with your processor. And kind of what you're getting out of this to justify the cost? And do you view this as sort of like an [ NPE ] positive change?

Sure. So first, I would say the changes like this actually happened beneath the surface regularly for a business of the size and scale and magnitude of ours. It's more noticeable. And so we called it out from a Q3 perspective because of the investments that we're making elsewhere in the ecosystem around hardware on the back of the strong launch of Square Handheld and on the back of increased customer acquisition, we're leaning into this really successful and important distribution channel for us with hardware. And so you're going to notice some of that gross profit to GPV differential, which is why we've called out this 1 processing partner piece. What happened purely is that we were holding more than was required from a minimum cash perspective with that processing partner in order to improve our operational flexibility. We brought that cash back from an interest income perspective, but it has a partial offset from a gross profit perspective. Net ROI beneficial to us, both from a flexibility standpoint and from a true economic standpoint with interest income. Ultimately, what we're focused on as we think about gross profit and GPV longer term is driving incremental variable profit dollars into our business. And those are some of the sort of healthy metrics that we're looking at, and we're seeing today is that even as we ramp with larger sellers in the U.S., we see new profit added dollars are actually higher than new volume added dollars, which means we maintain pricing power and the ability to cross-sell our 30-plus products into these -- into the seller base. And those are kind of the true health of the underlying ecosystem. Those are the sorts of metrics that we're most focused on.

Got it. And so just to follow up on that last point you made. Once you lap the headwind, investors have thought about this business as sort of a spread to GPV growth. Is that still the right framework? And do you think that Square will still maintain a positive gross profit spread if your -- the success you've had recently in mid-market and larger sellers continues.

Yes. I mean, look, I think we'll have more to say about this at our Investor Day later this year. I think ultimately, there are some puts and takes to think through. One is that we're going to be growing our business with larger sellers and with sellers in markets outside the U.S. Some of -- those are 2 of our top strategic areas of focus for the Square business, and those are 2 areas where we're seeing outsized growth. 25% GPV growth, 20%-plus GP growth in markets outside the U.S. That is going to come with lower take rate. As long as we're driving incremental variable profit dollars because we're seeing incremental sellers through those channels, we're deliberately making that decision in those trade-offs. It drives incremental profitability into our business. Now the flip side of it is that we see -- as we see larger sellers, as we bring more sellers on to our platform, as we broaden the product offerings that we have, we have the ability to cross-sell more products into these sellers. And so SaaS attached, banking attach should benefit the gross profit in a way where it obviously doesn't -- isn't reflected in GPV. So those are some of the puts and takes as we think about profit relative to GPV, but ultimately guided by the true economics of incremental profit dollars into the business.

Great. And just last 1 on the seller business. So you've been making a lot of investments in distribution. You just shared some of the results of those investments. Where are you in the build-out of things like field sales and partnerships? And what are some of the goalposts as we progress over the next 18 months that we should be looking out on the distribution side?

I think we're still early. I think as -- what we're seeing today is that the marginal investments into our field sales and telesales team is still -- is not diminishing in returns. It's -- they're coming in at the overall blended targets that we have from an ROI perspective, which means that we have a lot more room to run here. I think we're in our early days. I think you'll see us do more. But I also think you'll see us be disciplined to the extent that we see any shift in those returns or any diminishing returns or a need to shift to focus on A or B market over here instead of C or D, we're going to leave ourselves adaptable and nimble to do that. There's really 3 key pieces of the strategy from a distribution perspective. One is sales, which we've talked a lot about. The other is partners where we have had incrementally new partners over the past year than we've had in many years, frankly, whether it's the vertical specific partners like at US Foods or Cisco or SalonCentric or its horizontal partners like a T-Mobile. And where we've just started launching with ISOs, first outside the U.S. and then this year in the U.S. as well. And we're really excited by the leads that we're seeing, the size of the leads and the overall -- on an individual basis, on a per seller basis as well as the overall volume of leads that's leading into our sales team. And then the third key piece, which you'll see more in the coming weeks and months is around the brand refresh for Square, which we're really excited about, and you'll hear more about at Square releases next month.

Great. Looking forward to that. Let's pivot over to Cash App and starting with the Bank to Base strategy. You have seen a noticeable tick up in direct deposit growth year-to-date. I think something like $300,000 year-to-date in July versus $500,000 for the full year of 2024. Hopefully, I got those numbers right. You also shared at earnings that the cohort of customers using Cash App for primary banking services is much larger than the 2,800 of direct deposit -- that you have 2.8 million of direct deposits that you have. So what are you doing to deepen the relationship with customers and drive primacy, and what else can you do to tailor the products to more kind of banking type use cases?

Yes. Well, first, let me say, we're excited about the recent growth that we've seen and have continued to see on paycheck deposit active. There's much more that we can do to drive growth there and drive deeper engagement. But as we talk to our customers, what we saw is that many of our customers, over 40% of them don't earn a traditional wage that comes via ACH roles -- ACH rails. Many of them are independent earners or gig economy workers or have their first job in the neighborhood. And what we see is that many of those customers actually considered us to be their primary bank, but weren't showing up in the paycheck deposit active number. So then we looked across the engagement patterns on our platform, inflows, outflows, transaction movements, themes and patterns around spend behavior. And what we saw was that, effectively, we could consider someone a primary banking active if they were either a paycheck deposit active or they spent at least $500 through Cash App Card or Cash App Pay on our platform. And those customers are about 8 million monthly actives as of the end of Q2, growing 16% year-over-year. And those customers have 3x the ARPU -- over 3x the ARPU of the overall base. The overall base is about $87 on an annualized basis in Q2. For these primary banking actives, it's over $250 in ARPU, and they're transacting effectively on a daily basis within Cash App, 40 transactions in a given month from a spend perspective within Cash App. So they're highly engaged. Cash App is top of wallet, and they really consider us because the overall spend on average is about $900 for customers on their debit cards. We're top of wallet. We're the majority of their debit spend in a given month. So you're going to see us -- now that we've really segmented our customers to truly understand both what they're doing within our platform and how they consider us to be their primary bank. You'll see us do more with this customer base. In terms of providing full suite of banking packages from overdraft protection to ATM, free ATM fees, from savings, the full package of banking benefits that we have for this customer base. It's not just tied to being a paycheck deposit active but also to the spend threshold within Cash App. You'll see us do more with that. You'll also see us do more within the app itself from a design perspective within the Money tab so that people understand the full suite of commerce payment types that we have across Cash App because of the strong ARPU retention and engagement that ultimately we're seeing it's driving within Cash App.

I guess on that, it sounds like that -- with the segmentation work you've done, that is now the primary focus for direct deposits. How do you think about an acquisition strategy for that, just knowing how difficult it is to bring over primary bank relationships. And I guess, have you seen any evolution in your thought process around kind of penetrating the base versus acquiring direct deposit customers?

So we think both are important. We think growing the overall base of active is our top priority from a Cash App perspective. Ultimately, network density, which is the number of connections you have within Cash App, drive stronger retention and stronger lifetime value for customers. So products like peer-to-peer help us build upon that network density within Cash App. Once you're using Cash App regularly at that top of funnel level from a peer-to-peer perspective, we then have a chance to make sure that you're aware through in-app messaging and otherwise of all the other features that we have from investing, to savings, to spending. And so that's how we see people starting at top of funnel from a peer-to-peer instant deposit perspective and then working their way through with this full suite of products that we have. And then once we see the regularity of their inflows and outflows, we have the ability to make them eligible for other products that Cash App Borrow within Cash App.

Yes. No, that makes sense. So maybe we zoom out a bit and talk about the influence framework and MAU growth that you just referenced. I want to talk a little bit about the importance of the overall size of the network. You used the inflows framework to talk about the growth in Cash App. And over the last 18 months, it's been much more of an inflow than a monetization kind of algorithm. Can you talk about how you think about an inflection in MAU growth? And do you see that dense -- or that mix shifting a bit more towards the user growth in the near term?

So Jack and Owen and our full organization are fully focused on Cash App MAU growth, along with Square GPV growth. These are the 2 sort of North Star metrics for us as a business. The 3 key strategies that we're going to deploy to drive growth from an MAU perspective are driving increase -- I'll go through each one, but they're driving network density, they're increasing our spend in high ROI ways across marketing, referrals and incentives and growing with the next generation of customers. So from a network density perspective, this is, again, when we see customers with 4 or more connections with Cash App, we see a step change from a retention perspective and from an ARPU perspective. And so products like Cash App Pools, which is something that 60% of U.S. adults have to do is group their money together for an office gift or for a birthday present or a baby shower. Cash App Pools offers a tremendous opportunity to enhance the overall peer-to-peer network in a way that is unique to our ecosystem and also to do it in a way where we can bring out of network funds in by opening up Cash App for the first time to Apple Pay and Google Pay as a funding mechanism in the Cash App Pools. So we get to both bring more functionality on a peer-to-peer viral network effect driven aspect in Cash App and exposed people who maybe don't have a Cash App yet, aren't using it regularly to increased functionality within the ecosystem. We also launched Tap to Pay on Cash for Business, another way to expose people who don't yet have Cash App to the overall ecosystem. So that's an element around network effects and network density. From a marketing perspective, in July, we launched -- a relaunch, a rebrand of Cash App effectively with our Cash-in campaign, which is both a brand campaign as well as performance marketing tied to specific products to bring visibility to products like Cash App Card with 26 million monthly active and strong spend dynamics, product that we know has a very strong distribution surface against which attach our banking products and products like Borrow and paycheck deposit active. And so -- and referrals and incentives, which are knobs that we are turning on a weekly, daily, monthly basis based on the returns that we're seeing as more customers come into Cash App and as we're able to deepen them in the engagement funnel. And then third, next-gen perspective. Teams is a product, the families offering is a product that we launched some years back and are now going to have renewed focused energy and investment behind. We have 5 million sponsored accounts in Cash App today. And 80% of those accounts are Cash App Card actives, 25% use Cash App Pay. These are high product market fit products for our team customers. And in the coming weeks and next couple of months, you're going to see us do more, both from a product and a marketing perspective with these future spenders and earners of America that we're excited to grow with.

Okay. And then this year, a big topic of conversation has been the ramp in Cash App Borrow. And this is primarily coming from a significant expansion in your geographical reach, coupled with a step-up in economics from using your own bank instead of partners. Where are we in that process? And for those who are less comfortable with the idea of your credit exposure stepping up this much, what can you share about the performance of the loans and the underwriting so far?

Yes. I'll come back to this, but I think it's a very unique product and very differentiated relative to other lending products. First, just to talk about the year, the first half of the year was not about the new states actually, about the TAM expansion, it was more about traditional sort of credit underwriting improvements that improved both from an eligibility standpoint as well as a credit limit standpoint. And through those improvements, we were still able to nearly double our Cash App Borrow origination in the first half of this year. And getting to an $18 billion annualized run rate in Q2 and about $6 million monthly Cash App Borrow active. The back half of the year, is about not only continued credit underwriting improvements, but also launching Cash App Borrow in those 20-plus states that we weren't yet in through the migration of cash App Borrow from a partner bank into our own bank, Square Financial Services. We're super excited about this. We're going to be extremely deliberate and ramp into those new customer cohorts in those 20-plus new states. But what we've seen so far is encouraging, and that's really what drives the acceleration in the back half of the year.

Now from a credit underwriting and risk perspective, what's truly unique about this product is it is a cash flow management, working capital type of product. Small dollar loans typically about $100, $150 on average that lasts for less than 4 weeks, $1 turns about 15 to 17x for Cash App Borrow loan in a given year. The annualized net margin on these loans, as you see in our investor presentation, about 24% on a trailing 12-month basis as of Q2. We -- our target is above 20%. These are high ROI, high ROIC loans for us. And there are loans where we have the ability to determine eligibility. So to the extent that we see anything that looks different from a repayment perspective, we have the ability to pause and reevaluate or retrench as we expand these loans in the coming months.

Can we double-click a little bit on the use of the bank subsidiary because it seems like that's a really differentiated competitive advantage for Block overall across both segments. Where else do you see opportunities to lean in there?

We're very excited about the road map ahead for Square Financial Services. Today, the bank has 3 products in it, Square Loans, which is obviously a product we've been operating for 10 years, but about 5 years now within Square Financial Services, Square Savings account and now Cash App Borrow. When you think about the future of the company from a lending acquiring or deposit perspective, SFS will likely have a hand to play. And we also have future optionality even if you think longer term or about 0 to 1 products, products that we don't even have company yet, like stable coins as an example. We have unique capabilities and differentiators. A truly unique asset with SFS that we can bring to bear as we think about all of those things. So SFS, from a strategic perspective, brings us a direct line to our regulators as we think about what's strategic to our business. It brings us the opportunity to be more efficient in how we serve these customers. It brings us the opportunity to bring a number of products that are sitting on a partner stack into our own, which ultimately gives us reliance and resilience if we think about the overall supplier network for Square and for Block.

Great. Okay. Turning to Afterpay. Another detail you shared was the ramp of the postpaid BNPL this quarter. Could you just double-click on what this product is and where you are in the evolution of the combined Cash App and Afterpay offering?

We're really excited about this one. We launched it just in February. So this is the ability, if you're 1 of those 26 million monthly actives in Cash App Borrow, and we've determined you're eligible. So there's only a subset so far, we're still ramping this product. If we determine you're eligible, you can go into your transaction history and retroactively post purchase or pay in for. Let's say, you bought $100 pair of jeans, you can get $75 back that you then pay off over the next 4 weeks. What we have seen so far, just in these really first 6 months of operations is incredibly encouraging. We're able to take the same infrastructure that we built, the same internal credit scoring that we built for Cash App Borrow, which, by the way, if you compare it to traditional credit score, mechanisms like a Vantage Score. We are able to underwrite 38% more customers our internal credit score than a traditional credit score company would do like a Vantage Score at the same loss rates. So we are able to expand access to credit through products like Cash App Borrow or post purchase BNPL and Cash App Card and able to do it responsibly with sustainable economics for us. So with [ retro ], what we've seen is actually in -- I think the latest stats we gave were as of July, 1 million monthly actives and a $2 billion annualized origination rate as of July, which for us from an origination and margin perspective,are well ahead of where Borrow was at a similar point in its life. We're able to learn and compound those benefits the learning across each of the different products that we have. We're really excited with what's to come as we continue to ramp Borrow in the back half of this year. And I think maybe 2026 is where we see even more material benefits from it. And as we think about Cash App Card, revolutionizing it to become a next-gen credit card with transparency and upfront understanding of fees that don't trap our customers in debt spirals.

Great. Okay. One of my favorite Easter eggs in this past quarter's shareholder letter was the disclosure around Cash App commerce volume. And first of all, I think it would be helpful just to remind us what's in that number? And then secondarily, how are you thinking about that as an ongoing disclosure and as a way to measure the health of the Cash App business?

Yes. So commerce is 1 of 4 pillars for Cash App. Peer-to-peer financial services, commerce and Bitcoin. And if you look at the trailing 12-months, we had $183 billion in volume across our commerce pillar with 16% growth year-over-year. This includes things like Cash App Card, Cash up Pay, BNPL, Cash for Business. And in fact, the growth rate is much higher if you exclude Cash for Business. And so the core products that we're investing behind, which enable our customers to manage their cash flows and spend where they see fit, and we are where they want -- where they are, and where they need to be at the point of sale. We're incredibly excited about the commerce growth for Cash App for a couple of reasons. One is, it's the distribution surface into which we will connect our 2 ecosystems. Commerce is the pillar that unites Square and Cash App. And I think you'll see more in the next couple of months around Cash App Local and how we're able to drive incremental demand of Cash App consumers into Square sellers. That's a unique superpower that we've been testing, but we're really excited to bring to pair at far greater scale in the next in the months ahead. The second piece is that commerce is directly connected into financial services. As I spoke about earlier, as we think about those primary banking actives within Cash App, we think that there are unique benefits that we can provide, people who are deeply steeped in our commerce motion through our banking platform, which can then drive further growth in our banking platform. So the growth of 1 pillar begets growth in another pillar.

That's great. In the last couple of minutes, I did want to ask on the Proto initiative. I think you said in the shareholder letter that the guidance includes some contribution from Proto. Could you talk a bit about how much you're expecting that to contribute and how you think about forecasting the sales of that business?

Sure. So we'll have more to share about Proto at Investor Day. What I will say is that, first, we're very excited about this business. We just had a launch event last month where we showcased our mining rigs are going to be truly differentiated relative to what's out in the market today. That's through modularity, where customers can really have a more cost-effective solution by replacing only pieces versus an entire rig as needed. That's through reliability, that's through customer support so that the overall total cost of ownership for these mining rigs, we think, will be truly differentiated relative to what's out in the market today. What is that market today? We size it at as about a $3 billion to $6 billion TAM on an annualized basis for Bitcoin hardware supply. It is very much concentrated in 1 supplier that's based out of China. We -- as we talk to these Bitcoin miners, we see strong demand for differentiation and competition in the space. We already have a customer lined up and aim to -- intend to be shipping those rigs in the back half of this year and which in part contributes to our acceleration in Q4. And we have a long pipeline of pilot customers that we're experimenting with in the next couple of months as well. So we'll have more to share, but we're very excited about Proto.

That's great. Just like a more clerical question. Where will that show up in the P&L as we -- across the 2 segments? Is it cash App or...

In our other segment.

Other segment. Okay. Great. All right. Well, look, I think that's all the time we have, but thank you so much for spending the time. Really appreciate the opportunity to have a conversation.

Thanks, Will.

Good day, ladies and gentlemen, and welcome to the Block Second Quarter 2025 Earnings Conference Call. Today's call will be 45 minutes. I would now like to turn the call over to your host, Matt Ross, Head of Investor Relations. Please go ahead.

Hi, everyone. Thanks for joining our second quarter 2025 earnings call. We have Jack and Amrita with us today. We will begin this call with some short remarks before opening the call directly to your questions. During Q&A, we will take questions from conference call participants.

We would also like to remind everyone that we will be making forward-looking statements on this call. All statements other than statements of historical fact could be deemed to be forward looking. These forward-looking statements include discussions of our outlook, strategy and guidance as well as our long-term targets and goals. These statements are subject to risks and uncertainties, including changes in macroeconomic conditions. Actual results could differ materially from those contemplated by our forward-looking statements. Reported results should not be considered an indication of future performance. Please take a look at our filings with the SEC for a discussion of the factors that could cause our results to differ.

Also note that the forward-looking statements, including earnings guidance for 2025 discussed on this call, are based on information available to us and assumptions we believe are reasonable as of today's date. We disclaim any obligation to update any forward-looking statements, except as required by law. Further, any discussion during this call of our lending and banking products refer to products that are offered through Square Financial Services or our bank partners.

Within these remarks, we will also discuss metrics related to our investment framework, including Rule of 40. With Rule of 40, we are evaluating the sum of our gross profit growth and adjusted operating income margin.

Also, we will discuss certain non-GAAP financial measures during this call. Reconciliations to the most directly comparable GAAP financial measures are provided in the shareholder letter and our historical financial information spreadsheet on our Investor Relations website. These non-GAAP measures are not intended to be a substitute for our GAAP results.

Finally, this call in its entirety is being audio webcast on our Investor Relations website. An audio replay of this call and the transcript for Jack and Amrita's opening remarks will be available on our website shortly.

With that, I'd like to turn the call over to Jack.

Thank you all for joining us. As you all know, we've been talking for several quarters about our focus on increasing product velocity and ramping up our go-to-market investment. This quarter, you can see our work paying off. We're back to growth mode across the company. We're shipping faster. We're launching new features like Pools in just a few months, and we're accelerating the pace of delivering AI functionality to our customers.

In my letter this quarter, I discussed Cash App's scale and impact and our strategy to continue growing by helping our customers manage their financial lives better. We believe the capabilities in Cash App are unique and that no one else can deliver the money app we're building for consumers. I hope you take a look.

And with that, I'll turn it over to Amrita.

Thanks, Jack. We delivered strong results in the second quarter, exceeding our gross profit and adjusted operating income guidance. Gross profit was $2.5 billion, up 14% year-over-year, accelerating from 9% growth last quarter. Adjusted operating income was $550 million, up 38% year-over-year, as we expanded margins to our highest quarterly adjusted OI margin yet, 22%.

Product innovation and go-to-market investments are accelerating across Block. We're delivering more value faster and more efficiently. In the second quarter alone, we launched Square AI, Square Handheld and an updated version of Square Online. We showcased Bitcoin payments on Square, introduced Tap to Pay for Cash App Business powered by Square and rolled out Cashbot, our AI-powered customer support agent. We released paying monthly for Afterpay single-use payments in the U.S.; new features for sponsored accounts; a new, more personalized offers platform; and we took Cash App Pools from development to pilot in just a few months.

In Cash App, gross profit growth reaccelerated to 16% year-over-year in the second quarter. Cash App Card delivered healthy gross profit growth at scale, and BNPL gross profit reaccelerated, driven in part by the increasing attach rates for post-purchase BNPL on Cash App Card, which crossed 1 million monthly actives in July.

We began to meaningfully ramp Borrow on Square Financial Services during the second quarter. Our bank, SFS, now originates the majority of Borrow loans for our customers, and we plan to continue expanding SFS originations throughout the second half of the year. We're also exploring more ways to deepen engagement, including higher Borrow limits for paycheck deposit actives.

We believe the combination of assets we have in Cash App is unique and positions us for attractive sustainable long-term growth as an enduring ecosystem. Our strategy is oriented around driving strength in the 4 pillars of our business. First, we have a scaled peer-to-peer network that drives community connection and Cash App customer acquisition with $218 billion in peer-to-peer volume in the last 12 months. Second, our broad commerce capabilities generated $183 billion in volume in the last 12 months, growing 16% year-over-year or 21% excluding Cash App Business. Third, our banking solutions help millions manage their money. In June, 8 million actives either deposited a paycheck or spent at least $500 across Cash App, and Borrow reached $18 billion in annualized originations. And fourth, we've enabled millions of actives to buy and sell $58 billion in Bitcoin. For paycheck deposit actives who receive some of their paycheck in Bitcoin, we provide what we believe is the only way to buy Bitcoin with no fees and no spread.

Cash App is resonating with the next generation at scale. In June, we had 5 million sponsored teen actives and 1.7 million actives that had graduated from a sponsored account to an individual Cash App account. Engagement with sponsored teen actives is strong with nearly 80% attach rate to Cash App Card and over 25% attach rate to Cash App Pay. Simply put, Cash App meets the needs of this generation and delivers tools to help them run their financial lives.

Turning to Square. Year-over-year GPV growth accelerated to 10% in the second quarter, and we delivered 11% gross profit growth, which included a network remediation payment we had previously discussed at the end of last year. We observed strong GPV growth in food and beverage, and retail, up 15% and 10%, respectively. International GPV growth accelerated to 25% year-over-year as we continued to expand distribution across sales and partnerships.

We are changing perceptions of Square among new and existing customers, a testament to the products we've launched in the past year and the investments we're making across marketing, field sales and partnerships. We're focused on winning the quick-serve restaurant market, and we're delivering with customer wins like Colectivo Coffee; Shane's Rib Shack; and Ben's Soft Pretzels, a 60-location seller that we're thrilled to welcome back to Square. These amazing sellers are category leaders in their communities, and we're honored they choose to partner with us.

Beyond winning QSR, we're -- we continue to see strong performance from our field sales team with an estimated 5- to 6-quarter payback on recent sales cohorts. In the second quarter, we delivered our highest ever new volume added and our strongest growth in new volume added since the third quarter of 2021. Year-to-date, forecasted new gross profit added outpaced forecasted new GPV added as we grew upmarket in the U.S., signaling healthy pricing and product attach rates.

We continue to see high ROIs as we scale field sales, and we expect to continue to ramp sales personnel aggressively to broaden our distribution footprint further. We're also seeing early traction with our independent sales organization investments and expect to continue to scale that distribution channel further in the quarters ahead.

Turning to guidance. We're raising our full year guidance and our expectations for the back half of the year. Our Q3 guidance and implied Q4 guidance call for continued acceleration in gross profit growth. For Q3, we expect gross profit of $2.6 billion, growing 16% year-over-year. We expect adjusted operating income of $460 million or 18% margin. We expect to exit the year with gross profit growth of 19% and over 20% adjusted operating income margin, positioning us well for 2026.

As we look at Q3, there are 2 nuances to call out. First, we expect to see an adjusted operating income margin of 18% in the third quarter compared to 20% plus margins in the other quarters this year. This is due primarily to risk loss growth as we expand Borrow. We are investing behind a product that has strong unit economics on incremental growth, and we expect loss rates to stay within historical ranges. The timing of our expanded go-to-market initiatives also contribute to Q3 margin dynamics.

Second, for Square, we expect to deliver low double-digit GPV growth in the third and fourth quarters, accelerating modestly from the 10% growth we delivered in the second quarter. We expect third quarter gross profit in the high single-digit range and fourth quarter growth to track roughly in line with GPV growth. Square's third quarter gross profit growth is impacted by a few dynamics, including our decision to increase operational flexibility at a processing partner, which modestly increases processing costs and further investments in hardware as a successful go-to-market driver for Square. We continue to be encouraged by the strong results we see in our go-to-market efforts for Square with profitable volume growth and a return to share gains in recent quarters.

For the full year, we're raising gross profit and adjusted operating income guidance to reflect our strong execution. We expect full year gross profit of $10.17 billion or over 14% year-over-year growth. We expect adjusted operating income of $2.03 billion or 20% margin, expanding margins 2 percentage points year-over-year despite the meaningful go-to-market investments we're making to grow our business.

Our financial results and our updated guidance are a reflection of our ability to deliver value to our customers. We're honored to have been added to the S&P 500 this quarter, and we want to welcome new investors joining us on this journey. We believe we have the best combination of assets in the industry to deliver on our purpose of economic empowerment. And we're excited to share more about our long-term road map at our Investor Day on November 19.

I'll now turn it back to the operator to start the Q&A portion of the call.

[Operator Instructions] Your first question comes from the line of Tien-Tsin Huang from JPMorgan.

Really impressive growth here in the quarter and the outlook. So I just want to maybe check on conviction and visibility, of course, into the second half acceleration that you're talking about. I think, Jack, you mentioned you're shipping product faster. So given what you've seen and observed, I'm curious, are you more bullish in certain areas versus what we last talked about? And where might you be a little bit more cautious with more work to do than, say, 90 days ago?

Yes. I think this is all a function of our shipping velocity. And I think the biggest indicator of this is of the recent Pools launch. It's a pretty complicated feature just to do on network, and the team did an amazing job not just doing that within ideation to execution and shipping to customers within 3 months but also made it possible for us to go out of network as well, meaning that you can create a pool and you can invite friends who don't -- are not on Cash App currently, and they can use Apple Pay or Google Pay to contribute to the pool and ideally see that functionality in the utility and then sign up themselves.

So these are the sorts of features that we're now able to ship much faster. And it directly contributes to our overall network growth, which contributes to our overall virality and really, really strengthens what made Cash App, Cash App in the first place, which is this inherent network effect that we have. The products we can build on top of that just get stronger because of it. And it's -- and then it's all a function of us being able to show our customers everything that Cash App has to offer in the ecosystem.

But I've never been more confident of our ability to do that better than I am today. It's a function of our focus but also the tools we have access to today with all of our AI coding tools. Goose is being used by nearly everyone in the company. It's accelerating our developers. It's accelerating our designers. It's allowing us to experiment a near 0 cost so that we can actually get to the right answer much faster, and we can get the customer feedback much faster, too. So we can double down and pull the thread on what resonates with people. So I'm super excited and super bullish on our ability to ship faster, which will make every single thing about Cash App and also Square that much better and more usable.

Yes. And I'd just add, Tien-Tsin, we saw a lot in the second quarter that gave us some healthy signs and real encouragement around the products that are the key drivers of growth for us and the key drivers of acceleration in the second half. And that's what gave us the conviction to raise our guidance by more than the beat in 2Q to raise the back half of the year across both gross profit and OI.

What our guidance calls for is 2 points of sequential acceleration into Q3 and 3 points further sequential acceleration into Q4. And that's really on the back of 4 key things where, again, we saw strong data points in the second quarter. First, on the strength of Borrow, we now have 6 million monthly actives on Borrow. We're expanding eligibility, increasing limits in a responsible way with healthy loss rates and seeing enhanced unit economics as we transition that migration from a partner bank to our own bank, SFS.

Secondly, we're seeing some of the newer products in Cash App, like post-purchase BNPL on Cash App Card, which is the first real integration of Afterpay into Cash App, and Cash App Pay, 2 important commerce products for us really resonate and start to compound more meaningfully. Post-purchase BNPL as of July crossed the 1 million active milestone, which -- and we're really excited, again, about what we're seeing in terms of growth. If you compare post-purchase BNPL to Borrow at similar points in time, the newer product, which gets to learn from Borrow, is outpacing in terms of attach rates and in terms of loss rates and Cash App Pay now at 7 million monthly actives as of June.

Third key driver is Proto. You'll see a lot more at next week's launch event, but we expect Proto to begin contributing to gross profit growth in the second half of the year. And then finally, Square, we're seeing some nice acceleration in the Square business, and we'd expect to exit the year in Q4 with faster GPV growth, which ultimately will compound to gross profit growth over time as well.

Your next question comes from the line of Tim Chiodo from UBS.

I want to dig in a little bit more on Cash Card post-purchase BNPL. So this topic comes up a lot because investors are now very confident in the ramp in Borrow in the second half and the lapping dynamics, those are supportive of gross profit growth heading into at least the first half of 2026 as well. So we're often asked what's the next big product that can help drive the growth in the second half of 2026 and beyond?

Of course, there's a long list of items, and many of them are highlighted in the shareholder letter. But one that stands out is Cash Card post-purchase BNPL. You just mentioned some of the stats, the 1 million, the attach rates, the loss rates. I was hoping you could just elaborate a little bit more on this product in terms of those attach rates and just anything else that can help us to better quantify that opportunity in 2026 and beyond.

Sure. Thanks for the question, Tim. So we released the product in March, and it's been one of the key drivers of growth acceleration for Cash App and also what you saw overall for the BNPL platform. If you look across the second quarter, GMV for BNPL accelerated to 17% on a reported basis, 18% constant currency, up from 13% and 16%, respectively, in the first quarter. We also saw gross profit accelerate to 22% year-over-year growth, so part -- an accelerating story for BNPL overall.

The early signs that we've seen for post-purchase BNPL have been really strong, strong conversion, strong adoption. As I mentioned, we crossed the 1 million monthly actives mark. We also crossed the $2 billion originations run rate mark in July and expect to continue to expand eligibility and increase attach rates as we look at the back half of the year.

As I noted earlier, we're really taking the learnings from Borrow. And as we stack up post-purchase BNPL against Borrow's early trajectory, both in terms of origination volume and margin profile, because we're able to leverage our infrastructure around the Cash App credit score, we've been able to track ahead of where Borrow is and we know that that's become a successful product for us. So we're encouraged about these early signs that we're seeing on BNPL.

If I step back and if I think about 2026, obviously, we'll have a lot more to say later in the year and at Investor Day. But I think about the nascent products that are still ramping, like post-purchase BNPL, which we'd expect to contribute more in '26. Our traditional Pay-in-Four bringing that more into Cash App and seeing that ramp into '26 Cash App Pay, some of the newer products that we've talked about like Tap to Pay on Cash for Business, all these newer products continuing to ramp end of 2026 for Cash App.

I'd expect Borrow to continue to be a growth driver for us as well. It's not just about the back half of this year. And there's also, as we look ahead into 2026, compounding effects of these go-to-market investments we're making across each of Cash App and Square. So there are a number of drivers of growth as we look at '26 that we get excited about. And then most importantly, the key takeaways from this call, as you heard from Jack, is really around product velocity increasing, and so there's even more coming than what we have today.

Your next question comes from the line of Darrin Peller from Wolfe Research.

Nice job. Just one more follow-up on Cash App. I mean, it was obviously strong and accelerated well. Borrow was strong at $18 billion of originations. But I really appreciate the new disclosure you're giving. I saw 8 million banking actives you define as either 1 of the 2.5 million or 2.7 million direct deposit users, or I think someone's spending $500 per month across Cash App.

So that number was up 16%. Can you just touch on that metric a little bit more? It's a new -- I haven't seen that disclosure before. And how do you see that trending, driving Cash App gross profit even into next year if we're thinking about that the right way? And then I also love to call out on new areas for potential MAU growth on Cash App. So just how has that been trending, too?

Darrin, I can get started on this one. So first, what I would say is what you saw in the letter is that we've continued to experience strong growth on paycheck deposit actives with the 2.7 million that we reported in June. We also added another 100,000 in July, so we're now over 2.8 million, so we continue to compound growth there. But as we have done extensive research to inform our banking strategy, how we think about incentives, how we think about marketing to this customer base, as we did that customer research, we observed that many more people look at Cash App as their primary banking partner than the ones who we are recording in the paycheck deposit active metric.

So that caused us to analyze inflows. We looked at spend levels. We looked at transaction metrics to better understand how our customers are using Cash App. And based on that analysis, we put forward some of the new metrics that you noted in the letter, in particular, looking at a spend threshold as the primacy of a banking relationship. And that $500 per month threshold, we thought was important. The average debit card spend in the U.S. is about $900 a month. So that would reflect really someone who's, by and large, making Cash App Card top of wallet.

And when we look further at the ARPU of these 8 million banking actives, who are either depositing a paycheck or spending $500, first of all, they're growing quickly, up 16% year-over-year. Second of all, they're deeply engaged. They generated more than $250 in gross profit per active on an annualized basis in the second quarter, which is obviously 3x Cash App's blended $87 ARPU. And on average, they transacted more than 40x across Cash App in June.

So we're pretty encouraged about our traction with our banking strategy. We know that there's millions of people who place their trust in Cash App to be their banking platform. We're going to be doing more. We mentioned testing higher Borrow limits for paycheck deposit actives. You'll also see us testing -- expanding our banking benefits based on the spend thresholds. So we'll be doing more to bring awareness and incentives around our banking platform.

Your next question comes from the line of Rayna Kumar from Oppenheimer.

Last year, you started to lean a bit more into a Square sales effort. And of course, you've launched a number of new products. Can you talk a little bit about some of the returns you're seeing on these investments and if it's scaling as you expected?

Yes, we're very excited about what we're seeing in the early results of our expanded go-to-market playbook. We are getting ourselves in front of a much wider set of sellers now, and we're starting to see that accrete in terms of market share gains. In particular, from a sales perspective, what we're seeing is strong growth in the first half of this year on new volume added, 20% plus growth rates on new volume added. And we actually expect that growth to more than double in the fourth quarter just on the back of how we're ramping our sales team across both field sales and telesales.

Field sales, which is a newer motion for us, we're seeing an LTV to CAC, which is how we measure returns on investment, at extremely strong rates and paybacks, as I noted earlier, in that 5- to 6-quarter range. So that's what's given us the confidence to continue to ramp, both the field sales teams as well as our telesales teams both in the U.S. and internationally. And the marginal returns of these new hires are very strong, which gives us conviction to continue investing here. So it's that sales motion in concert with our partner motion, where we are seeing -- exceeding our expectations from a partner-driven lead perspective in the second quarter and also newer channels of growth within the partnership world around our first U.S. ISO partnerships. That's what's driving very strong momentum across our sales channels.

And I would also just note the strong growth that we're seeing from an international perspective. That's another place where we think international at 25% GPV growth, 19% gross profit growth in the second quarter is really benefiting from the investments that we've made on the ground with our sales motions.

And I would say even -- the final thing I'll say is that while we've seen really strong sales-enabled growth through both field sales, telesales and partnerships, it hasn't come at the detriment of self-onboarding from what we've seen. We continue to see really strong volumes with our already healthy sort of self-onboard motion as well.

Your next question comes from the line of Trevor Williams from Jefferies.

I wanted to go back to the spread between gross profit and GPV growth in Square. That was a bit narrower than where it was in the first quarter. If you could talk through some of the moving pieces there, I think you had pricing that went in at the end of March, the network incentives Amrita mentioned, just what the offsets to those were? And then for the rest of the year, it sounded like gross profit, a bit below GPV in Q3 and in line in Q4. Just the moving pieces within those 2 quarters and if longer term, we should be thinking about a pretty tight spread between those 2 growth rates.

Sure. I think the main thing that's going on here is a few nuanced near-term dynamics impacting Square gross profit that aren't really a reflection of the underlying strength of the business. Ultimately, what we're focused on is compounding sustainable GPV growth, and we know that, that will accrete to gross profit growth. The key -- one of the key things that we're looking at, we just talked about our sales motion, is that our new profit added from new cohorts of customers is even stronger than new volume added in the U.S., which tells us that our pricing and attach to additional products across our ecosystem continue to be strong as we onboard these new customers. And again, that will compound over time as we get into '26 and beyond.

In the near term, there are a couple of dynamics to point out. So as I mentioned in the interim remarks, we made some changes that increased our operational flexibility at a processing partner. That modestly increased Square's processing costs. So in the second quarter, we absorbed approximately 2 points of gross profit growth headwind from this shift, which basically offset that network remediation payment that we had talked about earlier. And that's something that we would also expect, as I noted earlier, to impact the third quarter but will -- it's sort of a couple of quarter impact, and we'll lap that as we head into 2026.

The second key thing I'd point out is hardware costs. Some of our newer hardware with handheld has seen strong adoption, and it continues to be a great go-to-market new customer acquisition channel for us. So that's one that we want to lean into as we bring new customers into the platform. So that's another impact from a Q3 perspective. Ultimately, though, we expect to exit the year with gross profit and GPV growth roughly in line with each other and to continue to focus on that cross-sell of more of our products to customers to help them run and grow their business.

Your next question comes from the line of Harshita Rawat from Bernstein.

I want to ask about Cash App user growth. Jack, you talked about focusing more on network density, including the focus on families and teens, and nice to see some of the products like Pools that have come through this quarter. You've also had some marketing campaigns. I guess my question is what other things can you grow -- can you do to grow the network and users at Cash App, the growth of which has stalled in recent quarters. And then just as a quick follow-up, any comments on Bitcoin mining initiatives in light of the recent deal from CoreWeave and Core Scientific.

Yes. I'll start on Proto and mining. We're going to have some news very, very soon. As Amrita said, we -- this will be as soon as next week. So we're really excited about everything happening with Proto. I think we've built the best miner out there, and the market is about to see that. We'll be able to provide the most flexible and the most customizable, and we built this entirely with customer feedback all in mind. So we're going to have some really happy customers, and we're going to grow that market and take a lot of market share, I think, in mining.

In terms of Cash App, it's -- just looking deeply at our customer base and our future customer base, we believe that we're building the money app for the next generation, and we think it's a huge opportunity for us. It's fairly untapped. There's not a lot of folks out there doing it very well. Cash App resonates naturally with a younger crowd. It's cool. It works. It's easy. It has absolutely everything people need. Our parents are often giving their kids access to it very early, and we plan to really leverage that and make something that is even cooler and even more usable.

And Pools is a result of that. We looked at what people are trying to do with their money, and we came up with this concept of multiplayer money. How do you make money to work in a way for multiple people at once? And just 1 incredible stat is that 60% of adults in the U.S. pool money for something. So we want to make something that worked flawlessly but also allowed people to not have to get people to necessarily sign up for Cash App, that they can actually contribute to the pool using a method they already have, which is Apple Pay or Google Pay, and then see the full utility of Cash App and then sign up themselves because they see it's so easy.

So we're looking very deeply at our customers, our future customers. And this goes into the products and the features that we build but also how we market it. We have some super creative marketing, and that's only going to get stronger and stronger as the year goes on. And the number of features and the number of products that we're going to be able to launch over this year is more than anything we've been able to do in the past because of the technology we have available to us and also the focus and all the reorganization that we did in the recent past.

So now it's finally clicking, and we're seeing it in the results as well. And the team is very fired up to just get as much excellent product out there as we can to our customers. And we're reviewing a bunch of really cool stuff, and all of it has felt like the early days of Cash App when we're building something that felt a little bit impossible, but we made it possible and we made it really cool. And it resonated right way. So that focus will pay off. And I think the days of not shipping are over. We're only as good and only a function of how quickly we can ship and how quickly we can experiment and how much we can put in customers' hands, and it's never been faster.

And I'd just add, Harshita, that what we're seeing -- a lot of what Jack just talked about, we launched relatively recently between Cash App Pools just over this past week, as we continue to ramp that to more customers, Tap to Pay for Cash App Business also very recently, our marketing campaign, which is a pretty buzzy and innovative way to get the message out to the next generation also sort of over the past months. All this is our execution is speeding up. It's all relatively recent. The early signs that we're seeing on it, maybe not even fully reflective in the 2Q results, but have been extremely encouraging in terms of the metrics that we look at from an actives and active engagement perspective.

So clearly, some early signs of success in reinvigorating network growth in Cash App, and we expect that to start showing results as we head into '26, but that's part of the conviction that we had as we thought about raising guidance in the back half of the year as well just on the execution for some of the very recent product and go-to-market initiatives from a Cash App perspective.

Your next question comes from the line of Dan Dolev from Mizuho.

Really good results. Great job on growing everything, including the Borrow product. I do have a question. We're getting a lot of inbounds on it this afternoon on this topic. So I did want to understand a little bit better how the Borrow thing is evolving as it gets bigger as part of the business. Maybe, Amrita, can you opine on the gross margin profile in terms of like what percent is it? Is it 100%? And maybe touch on like quantifying the puts and takes on the step-up in losses, again, because we're getting a lot of questions about this. But overall, great job on growing this and making it a big business.

Dan, yes, sure. Happy to talk more about Borrow. Obviously, performance, very strong this quarter. Origination volumes doubled -- almost doubled year-over-year to $18 billion on an annualized basis in the second quarter and now at the 6 million monthly actives in June, we expect that strength to continue as we roll out Borrow to more states now under the SFS originations.

We also published -- I'd point you towards our investor slides, which outline our annualized net margin or ANM. This is a big metric that we look at to measure the successful performance of the product and the unit economics of the product. What we see there are the strong economics at 24% margins in the second quarter, which is above our 20% margin threshold. Then you see multiple quarters really in that mid-20% range even as we've continued to -- as we continue to ramp Borrow meaningfully.

We also see Borrow, first and foremost, as a strong product on its own but also a key part of the engagement strategy for the Cash App banking strategy that we noted earlier. And we know our customers really value access -- fast access to liquidity. So as we noted, we're going to be testing higher Borrow limits for our paycheck deposit actives and explore other ways that we can use Borrow to drive engagement across Cash App.

On the loss point, taking a step back from Borrow specifically, the core asset that we're leveraging to power Borrow and also post-purchase on BNPL on Cash App Card is Cash App's internal credit score. It's our internal custom credit scoring mechanism, incorporating data across our customers in how they're using Cash App to inform an underwriting decision and eligibility for our customers. It's continuously updated, absorbs data across Cash App's ecosystem to assess basically where we can underwrite our customers, whether we can and then at what credit limit we can.

And we've put out a white paper recently that talks to this. But as we look at our credit model, our internal credit model can approve 38% more customers compared to VantageScore at the same loss threshold, which means that we can effectively expand access to people who are sort of left out of or underserved by the traditional financial ecosystem. So we're pretty excited about what Borrow has been able to do and all while maintaining loss rates in that sort of 3% or less range with strong unit economics.

Great. Really nice to see how this business is evolving. Great job.

Thank you.

Your next question comes from the line of Matthew O'Neill from FT Partners.

I just wanted to drill in and hear some early observations, particularly around the rollout of new hardware and seller, notably the Handheld. Curious if you're seeing anything around TAM expansion, win rates, improved retention or anything else that would be good to share here.

Yes. We've been super excited about Square Handheld. It's definitely our best form factor yet. We packed a lot in and again, like we listened to our customers on what their needs are and made something that's super portable, super affordable and extremely durable. But what's most interesting about it is that it scales to multiple types of commerce, not just for the restaurants, but it can be used in a retail setting or a service setting.

So it's, by far and away, our most flexible and I think one of the most flexible in the industry. We launched it in the U.S. in Q2, and we're starting to roll it out internationally right now. So super excited about it. The hardware has always been a big driver for us, and we think it will continue to be. It makes for a very easy sale, especially to our newer customers or winning sellers away from others.

But of course, it's not the only driver. The other thing that I think is going to be quite powerful over the next year or so is going to be Square AI. This is getting more and more sophisticated. We started with just the ability for our customers to quickly get more customized reports. But as we said a few earnings calls ago, we want this to effectively act as a virtual COO, virtual manager, if you will, to help folks manage their business of any type whether it be a restaurant, retail or service and at any scale.

And the team has been working super hard and fast on making sure that it really lives up to that promise. We're starting in the dashboard because that's where all of our sellers spend the majority of their time. It's also our one opportunity to introduce them to the entire Square ecosystem so that we can introduce them to a lot of our other services, including banking and customer relationship management. So it's a really good flywheel for us, and it allows us to put a natural intuitive language-first option on all the complexity of our ecosystem that we can offer sellers in a much simpler way.

And then, of course, the other big feature that we announced recently was enabling Bitcoin acceptance on Square. And this is early, but we think it's a big one. We think it's a good complement to everything that we're doing.

There's also been a lot of talk about stablecoins. Our philosophy at Square has always been to accept every form of payment that comes across the counter. And we're certainly going to enable our sellers to accept every form of payment, including Bitcoin or Tether or Circle. Anything that people are actually using to pay for goods and services, we're going to enable our sellers to accept because it means they always make the sale. And that's really critical to us.

So those 3, the hardware, our AI efforts within the dashboard and the app itself, and the new forms of payments set all of our seller up for a much more comprehensive and flexible offering in operation. And we pair that with just as a much stronger go to market and sales. Our marketing releases -- our last marketing release, we're doing this twice a year, was a hit and we can't wait for the next one. And everything that Nick and team has been doing with field sales and just really refining our approach is starting to show the effect, and that's from all scale of our sellers from the very small to the very large. So I think it's a perfect formation such that we can really compete on the merit of our offerings, which I think are immense.

We will now take our last question from the line of David Koning from Baird.

Great job. I guess you touched on the willingness to accept stablecoins at your sellers. I was just thinking more broadly. You focused so much on Bitcoin historically. Kind of what's your philosophical thought around stablecoins? Where do you think it's going to be most useful? And how might you guys play within the broader stablecoin ecosystem?

I think the most important thing is if people want to use it to purchase or if they want to use it to transact or transmit money through Cash App, we're going to support it. So you should expect Square and Cash App to support these things if people are using them, and we would focus on the major ones in use.

We do have a bank and we do -- we can offer our own stablecoin, and there are a lot of stablecoins being generated right now. And I don't necessarily always see the product market fit for all of them. I don't see the differentiator. It really comes down to what are people using and why they're using it. And right now, stablecoins are predominantly used in a remittance use case. If they do become more payments oriented, we'll be there. I don't think right now that it makes sense for us to offer our own because I just don't think there's a huge differentiator above and beyond what exists and in my view, above and beyond what Bitcoin provides.

Bitcoin still stands alone in it being entirely net new, and it has properties that none of these stablecoins have, which make it a better form of currency than the rest of them. It's certainly proven the case over 16 years as a store value. But our intention is to make sure that Bitcoin becomes the native currency of the Internet and that's used as everyday money. And we think it can get there very quickly.

And the reason to focus on that is because it's independent of any one particular corporation or any government. And it allows us to move much faster with our business as it does become more and more of a standard, not only at store value but remittance and also payment that allows Square to go to every single market almost instantly. And the same is true for Cash App as well.

So we're huge believers in it. We know it's going to be a long road. It's a protocol. Protocols move a lot slower than products and companies tend to do, but they tend to last longer as well. And that's why we believe in it so much, and we think it massively accelerates our business when it does hit, and we intend on making a hit as soon as possible.

Ladies and gentlemen, thank you for your participation in today's program. This does conclude the program. You may all disconnect.