SQ - Earnings call transcript Q3 2019

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Operator

Good day ladies and gentlemen, and welcome to the Square, Third Quarter 2019 Earnings Conference Call. I would now like to turn the call over to your host, Jason Lee, Head of Investor Relations. Please go ahead.

Jason Lee

Hi everyone. Thanks for joining our third quarter 2019 earnings call.

Amrita today. and Jack have with us We

First, of our to remind the format everyone of earnings we want call.

the We have which after website, our Investor closed. published a shareholder was letter available on Relations market shortly

call We to directly with will questions. begin some remarks the your before short call opening this

questions we Q&A, to questions call participants. sellers in from During conference our take addition will from

read. DoorDash Today, Caviar, On XXXX quarters, which we six completed that addition November X-K I our ordering shareholder have and food announcing to letter X, XX. quarter financial preceding we that filed release filed for on platform our you to an of encourage to sale the the third in includes a of October statements press we and the Caviar X-K all

everyone as at from that considered our be those should by the Reported We an will this to we factors to on Please statements could statements. also be future with contemplated materially performance. Actual a forward-looking like of results differ results call. for remind differ. filings not that SEC our forward-looking results our a could discussion of making look cause indication take the would

us call We any Also forward-looking the statements available on except as today’s disclaim statements, forward-looking of based note on law. information this to any obligation that update as date. are to by required

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

quarter, from receipt adjusted will with be SEC. and revenue of letter, a discussed as beginning the discontinuing we letter Additionally, use the discussions the comment shareholder of following next in

other to revenue background, to in as investors provide solution supplemental introduced performance we adjusted providers. non-GAAP our greater business and metric comparability and payment for November measure growth, a As XXXX

adjusted business. of internally measure performance to our Additionally, management the revenue uses

to components the continue based total costs disclose accordance are revenue. operations and Bitcoin adjusted our in forward, will determined key cost transaction of net which Going of statement revenue, GAAP, with

also the are based sum quarter this measures costs. GAAP well transaction as as costs We guidance gross and introducing profit, Bitcoin new of on

with this non-GAAP our change, We have Investor as metrics. financials. website well an reporting document details spreadsheet with historical on FAQ as on Relations other There any changes no further or GAAP the posted our to are

Finally, our available of is call replay be being our webcast Relations will this entirety in its audio website on on Investor An website. call shortly. this audio

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

Jack Dorsey

and few it and before for everyone, comments questions. pass afternoon, joining to thanks I your A us. Good Amrita we answer

What us makes our tools more ecosystem reinforce robust for on folks to which Square critical is An another. a one ways, focus unique ecosystem. solve importantly, problems a building in remarkable set of and is

their fastest seller Square and a one online, might in-store, employees register For find Cash to get the instance, most are on their pay because and payroll tools, to loan, a move, most website come through countertop, put as instantly the sell that capital elegant we manage and a to way builder such advanced to set to of to payments a broader quick they via App. their

also employer. send to a then and they way Cash yoga Card everywhere comes called their purchases, to from money, way a do program for even Bitcoin, teacher Boost, or quickly stock some walker. to and friends because to Visa and fastest in rewards way the use some dog Likewise, a Not pay market or the invest can received a money they or an free find in individual their money they new receive App but only a

but scale with is and interact strengthen each of ecosystems having these of profound. two other can one is Having incredible, that

how at complete, we’ve DoorDash look deeply sale these to forward. the of guide With the to to Caviar best taken opportunity

full ecosystem, an Compare has of and expected XX% the adjusted the EBITDA time of With for of this long-term seller margin to that nearly IPO. shown a one business, XXXX. X% XXXX, at year our built profitable negative margin in we’ve a

payback in this ROI tools and into ecosystem, our significantly and for this XXXX. marketing to the efficient efforts we’ve and Given the year periods grow decided sales

grow will network bringing in we Our available our be addition run first payments, expectations. beyond and investments managing investments the more sellers focused entire we will all to awareness to prioritize tools to business, to to their make our on to seller software continue their

has another Cash been story. incredible

App to of $XXX also portfolio has in million other, up App the of much use. that them Like Cash this Cash we easier was successfully to Bitcoin, revenue all and app find Excluding redesigned reinforce each tools seller, broad to a and QX, XXX% quarter year-over-year. make

is but store closed, the Cash App you opened we is quarter, to for solve we the when instantly scheduled a Adding this introduced much in a and market free to believe stock on new send, we did spend, so we a and it’s bigger investing, when or transformational. capability way wanted problem purchase Today, saw. can

company Most own. of one buy they people the even afford to can’t want share to

So the from market. took stock everything we we learned Bitcoin fractionalize and

sell the the believes needs Berkshire your above Others will A, ability one worth it this at eventually, this will match Hathaway that Now currently $X in most fact app even none $XXX,XXX, past. of the in or and trading ease or of company, $XX hold offer serves any our bank did who can someone buy but or point. the

of had services, make work. Cash of more financial the apps replacement many the App best is many to we otherwise the folks introduction mainstream, they to a it’s to together the For first in and cobble for serve, for number

XX We paid and rich all shown one building to and a to investments only has ago business. excited with ecosystems ecosystem far grow of the We hopes had. a ourselves thoughtful serve to accelerate ecosystems. that to really solving the started we’ve positive over off. years deliberate multiple I’m our those really need around ended we’ve to approach this together. come, of signals we’ve and up critical these everything in needs given our two proven sellers what proud and opportunity of company build I’m Finally, saw how

businesses have massive being Each work new greatest on alone, fundamentally how a taken they ecosystem really magic but the idea is focus lies in all our and together. now most inclusive of when needs. is This and will the serve these entire potential to financial

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

Amrita Ahuja

highlights Thanks Jack. that want key four There are share to today. I

growth sale the to we Caviar. the quarter drive and completed First, recently revenue continue in of strong third

team’s Second, investments product return in profile given prioritize to are attractive we aligning in sellers’ XXXX. returns, highest our profitability and also and strong our the efforts increasing go-to-market opportunities

has years. over business three past has it and cohort preliminary for improved growth outlook profitability scaled, the with providing of economics compelling margins our the are in have XXXX. built strong years, on ecosystem we a raising a the as service the Fourth, ex-Caviar three and guidance Third, our App business in last each model Cash XXXX, that

the quarter. cash billion. First, net and seller grew Caviar million. Adjusted million, to grew revenue growth. revenue revenue total from and We strong the to offsetting our gross third XX% year-over-year $XXX profit to strength In the continued quarter, businesses, $X.XX year-over-year in grew underperformance from XX% XX% saw $XXX

timing by our as had EBITDA a the of quarter, core business certain the sizable also as performance, expenses. in We driven beat well

the to financials be quarter for included the quarter. of and completed XX. the sell reported DoorDash is will Caviar our to on entire part in fourth October transaction in third We Caviar included

first have respectively. of year-over-year revenue point the adjusted total from our Caviar by and one revenue points seen growth XXXX, Excluding quarters net three we and for increase would two

in compelling $XXX invest are strong Second, our XX% ecosystem the we profitability, the gross a increased of which In XXXX. quarter address to seller team to and product third million capturing profit, of given opportunities of return generated return XX% opportunity revenue million year-over-year and $XXX the net respectively. orienting the sellers and total XXXX, highest

of to more As results, a go-to-market, we’re examples. and out wanted I good seeing investing early call in couple we’re

an First, indicators; campaigns across key have and revenue seller our new this marketing cohorts. driven web traffic year contribution awareness, from including up-lift

Second, ecosystem. of resulted unit product priorities are From we uplift Register and bringing seller has do of services. devices, omni-channel, in ahead in key to teams as a is have new Terminal, to financial aligning which XXXX, global newer our perspective, sellers work hardware Square Square on reducing we the our into the an our pricing and in sales, think our we

recently have that the resources product pull back XXXX. on marketplace to Eventbrite’s in We decided supports processing volumes online core

to with although near term. opportunities partner expect be we meaningful Eventbrite, other exploring to in are GPV don’t these We the to

While the revenue the de-minimis. contributed originally to have would have contemplated Eventbrite would been impact GPV, deal to

opportunities on our meaningful contribute our down multiple double potential to return revenue our areas, to higher platform and decided strengthen core have to customers who our address ability focus in to we growth. this, Given

economics. Third, business model Cash with App strong a compelling cohort has

seller efficient the customer with with business, As acquisitions. starts it

effects. For through this Cash network comes peer-to-peer App

new money then base us the retains product App Cash redesign through average across and products our customers our which features more higher movement We and seller, of do customer, like our appeal. will more drive effectively. strong help tabs active our per new Next, revenue majority our cross-sell to

of compelling All App combined from new business. revenue still of we cohorts grow retention have since another Cash for would did to very are monthly seller cash customer achieved payback with economics’ acquisition base. seen positive each differently, revenue acquire its this positive Said retention to if customer leads customer, XXXX. having not revenues cohorts costs similar Low that in drive dynamics the existing the what and

has and strong growth, efficient expanding a scaled. as rapid This App has provided while foundation Cash for margins

dynamics continue improve customer Investing. to to and launch like base expect We products our scale new we as

XXXX, are raising revenue and initial business for outlook XXXX. the profitability in our and in guidance ex-Caviar for Fourth, our we providing

be transitional guiding measures to only Jason as as longer We quarter, As next bridge. adjusted a will reminder, or certain quarter no a adjusted reporting this we noted, revenue. starting revenue provide

Investor additional Relations change and can our information shareholder letter this in You on on find website. our

There of revenue. to impacting $X.XX two in billion XXXX year billion factors are updated guidance $X.XX adjusted full our

the First, Cash million. our by in of underlying top $XX and seller ecosystems end increased trends App guidance our

the of a reduced by its result XXXX is fourth business momentum factors with guidance. of Second, timing $XX of full are guidance our our a the going offsetting strong Though forward year end $XX decrease to and These in core net again, managing quarter. Caviar into underperformance heading million the million. we sale top what the

guidance growth we see outperformance are and We opportunity returns drive to QX given growth. future our maintaining EBITDA for We the XX% reinvest in plan adjusted to the XXXX.

profit XXXX compared gross on expect forma pro the EBITDA XX% our basis year-over-year roughly low to flat guidance. Caviar. implied and to to outlook XX% expect on XXXX adjusted adjusted adjusted our margins be updated XXXX, based achieve a In the by range, in Turning excluding margins to growth revenue we we preliminary EBITDA

We unlocked of two points margin reinvest the to expect by of EBITDA the Caviar. sale of entirety the

area XXXX ecosystem. investment A seller the into marketing includes spend in key sales and

quarters. four over invest levels, within XXXX seller million in to targeting over incremental expect payback marketing We $XX to periods and sales remain

includes expansion of XXXX office larger will Oakland as additional incremental as expenses. time one office, Additionally, operating a than expansions, to guidance $XX well an normal regional step-up our which related million add of

we to plan Investor unique and long-term cash two scales, ecosystems, ecosystems deeper our and market into Investor in an a provide sellers months. last we mid-March. revenues on Investor in strategy Since XXXX our vision, We’ll doubled for coming will and update tripled business and the long-term our our XXXX, Investor more our Day in model. In opportunity, seller Day EBITDA than model host financial more individuals. provide we information Day scaled our the Finally, gross profit our for and have and Day

operator I’ll the portion to now Q&A to the the turn of start back call. it

Operator

Tien-Tsin question first Huang of comes And line [Operator from your JP Morgan. from Instructions] the

Your line is first Huang. your of comes Tien-Tsin from line question the Again, open.

Your open. is line

Tien-Tsin Huang

can I me. hope hear you

Sorry disclosure; a the lot digest. about Thanks for that. all to

ask curious XXXX, I’m cash, give just and there, the can us idea the growth on seller some an if here. On disclosure the you between on Thanks ecosystems, you for EBITDA give margin can and seller. two us I’ll idea

margins approach quickly and is versus the ultimately margins seeing, that the seller? You can scale know you’re how App you. Thank Cash Cash App that you can

Amrita Ahuja

question, the for Tien-Tsin. Thanks

for So on I’ll off growth start between seller XXXX the and Cash.

the XX% to would adjusted profit what revenue. expected which is As gross noted similar growth, we prepared have remarks, low expecting we’re in for

the exit meaningful our quarters, a implies fourth making from XX% sales the respectively, revenue Two profit investment. things guide XXXX with excluding for And quarter caviar. XX% growth and rate payback First, the are of rate and particularly gross business, and marketing four about rate and keep in to into investments mind growth periods seller secondly, there: adjusted we

making payback. in apart XXXX it break seller, in current tend and to So QX heard cash, we’re again, of respectively. growth gross revenue investments with seller four-quarter about XX% steady expecting the a have XX% and growth you that keep profit we’re in between these that to from mind But baseline

So add to seller seeing cohorts top into the expect we ecosystem. we’d end start XXXX new the numbers line the toward of on impact as

of in rates pretty at has the with Cash than revenue rapidly. significant been expect representing over the annualized we’ve time. very third down our quarter to scale greater a and XXXX quarter now growth For $XXX growth on this App million topline, reached naturally you’d run level, over in this come The revenue rate, XXX%

The Deposit scale those Cash XXXX App, on and growing biggest on Card be focused you base two ultimately drivers a XXXX Cash here. of in know dollar basis business rapidly during ramped a and revenue growing as have off for lines Instant as larger will we’re

roadmap. acquisition think well product in in App we’re we’re our the said, both, to continuing in of of and there customer invest terms we our ecosystem, as Cash the days That ecosystem aggressively early into and as seller terms

from to App So we’d continue to growing strong forward. going and expect contributions Cash see

see margins With very long-term, of of acquisition, just to business; the because seller cash the to and and the that see efficient business similar are same customer of respect margins, years positive in last to terms what XXXX. terms quickly, in increase able we’d that in attributes retaining cash and we each the do over in customers in we’ve expect in of the we revenue retention, been to three of terms

a trajectory there well. So long-term see over positive very we the as

Tien-Tsin Huang

very Alright, you. Thank clear.

Amrita Ahuja

you. Thank

Operator

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

Your line is open.

Darrin Peller

guys. Hey, thanks

us margins. inflection the You we priorities U.S. the Seller can expecting How of know given just from help we the the appreciate XX% the that and backdrop you’re the revenue versus sale versus obviously is seller and could on the margin payback investments terms understand what that Maybe disclosure in around on omni-channel about of Caviar magnitude just lift in mean think international? and of of guidance and terms XXXX? just

Jack Dorsey

you. Thank

of as specifically Amrita But off lot on can can answers meaningful So move and ways. really a think lot found think most compelling opportunity, I’ll the that follow a we us the needle in efficiencies recognized that start for we we our pretty important in a I is and have marketing well. Seller, we and models areas found have thing of some sales and with we will within in focus

think product could So job upon identified, externally, lot awareness in importantly the awareness it’s certainly but but there, is internally a product customers continuing around a it what build do being out of our to best better to the we more today. we’ve and we much supporting

So, sales apart direct right our tools help tools job, a that’s marketing product the do as our the the a and that of experience our itself email to thing fit lot could could people better we in with both the right showing and whole and needs, also – account business, we all are the would we terms with management. team find or via and set run of entire by business, most do that sellers the where their ecosystem nature is important them response

much with and we of because more us, who seller, that services Our base. is accelerate that’s to the the we a focus the we in build really have sellers pretty value goal. relationship significant so to if is the make a But investment overall immediate opportunity see net our grow to we durable and aware them offer, have multiple our everything mainly goal products and sellers from here find

Amrita Ahuja

incremental and XXXX’s on Just marketing sizing, to seller, to increase percentage a basis. in to Xx to number both add million the just relative to non-GAAP that size a in the XXXX, incremental a Darrin, and it’s that with dollar spend XXXX, $XX respect over that of sales

attractive can about think move we hardware as marketing, sales brand three low see a market and product across seller and X%.We specifically investment see across awareness but our XX%, and cash, large that, into You both we of ways relatively our for We to pricing. invest areas tremendous fragmented seller. and on strong primary awareness know have see the opportunities to addressable of we needle of across

then Specifically initiated year million September contribution. web an and in awareness, the In and in indicators traffic across uplift results. again just we’ve set April, this awareness and seen we that some payments. of April reached our some already and on we’ve broader like encouraging marketing, early beyond product improve driven X campaigns we’re in and October, investing We campaigns businesses revenue

spend see expect, with as still to across would we investments. So around all even this four-quarter XXXX, in payback of overall elevated blended our payback a a

quarter than products Frankly, three payback today and even we a efficient believe three at some too we in less the a payback. quarter U.S. across are

So we further. to see opportunities funnel expand even here the

in as to from like prepared products see on there From sellers. a more compelling then perspective, we perspective, we so when able And want we to we remarks, we’re in attract marketing, a to in XXXX. ROI flex register, comparable the that sales see lean strong terminal mentioned and pricing hardware

three So funds look those incremental we ways are that primary the to deploy in XXXX.

Darrin Peller

Okay, guys. thanks

Operator

the comes question Calderon from from next of Your Square. line Beatrice

is line open. Your

Beatrice Calderon

good Hi, afternoon.

as I’m So Square The and and the and one is Seller, would helpful software my business am – called sales Housing The – be would the and Works report. creating a Square also see in considered retail Shop. provide a And I inventory inventory business it Has report a percentages? sales that to

Jack Dorsey

complex, for make us. we easier. and request managing inventory from thanks to know a that that that our Thanks it difficult you is job of know to get sellers a bunch Beatrice it’s the Yeah. and This pretty is lot ultimately we we and a exceedingly remove believe and using complexity

we’re we back, your if customers business. giving ultimately and can details So and more to like while time focus yet, some more broadly things your at reports looking looking and time the complexity heading adding of year I more remove and opportunities that this, you inventory full next into new share spend can’t task on to so simplify from reports, more because the we’re

Beatrice Calderon

thank Great, you.

Jack Dorsey

you. Thank

Operator

line Your KeyBanc. Josh question comes from next from the Beck of

Your is open. line

Josh Beck

Thank question. you ask for about App. Cash taking the to wanted I

very gave us time introduced could or Maybe that the products drivers are drivers there? or new either influence just the and revenue growth think help can and the as helpful, you composition trading through deposit, just the is if which how maybe You you stock growth XXX%. composition how that’s of like over changing rate ultimately design direct the app of

Amrita Ahuja

take Hey Josh, that. I’ll

year-over-year. growth at So third XXX%, even the up had profit for revenue strong quarter, Cash yes, XXX% up App with gross we actually in higher

cohort seeing We’re and unit discussed, economics as strong here. economics

The primary of a levers the them, primary dozen Card. Deposit App, across a and drivers in are but Cash of two terms Cash have half we monetization ones Instant

manage App we awareness ecosystems which when like However, engagement to other Cash both, and in for think drivers Investing levers, daily enable the Cash introduce potential and App, to our have feature into we the around raise across we the us product impacts monetization. new engagement drivers set that the things have that utility levers ecosystem then raise and about monetization the

app utility An daily provide within attach which seen example product more when a and you’re Card, of that, in the the you basis to uses rate that about we Xx you’re using finding so year when that actives recently finding that Cash Bitcoin launched on regular important have can Bitcoin is which our a more the a app, we’ve other with we means ago, app. you’re

another that, new to over And piece so products many we’ve that redesign time. the launched those discoverability provide increased TABS navigation and to of of was

Josh Beck

helpful. Thank you. very Okay,

Operator

Deutsche of the from Bryan Keane line Bank. comes question from next Your

line open. Your is

Bryan Keane

a over Yeah, GPV slight given acceleration math. our on stabilize XX% I quarter guys. at hi this saw the

growth investment from in like Just fourth it line it in similar maybe revenues slightly because see the moderated few GPV sounds XXXX past an and in curious had to in drove So seller, quarters eventually quarter expect and acceleration and Thanks. we that GPV the what in now with the you XXXX? in XXXX? been will strength, the

Amrita Ahuja

across happened in $XXX and in to what Yes, the scale new Hey both driven Bryan, GPV. strong at question. few is billion discuss the look existing we’ve over break thanks down To in billion, we quarters GPV combined, last the quarter, XX% you and for third drove up a QX, growth to at sellers. important four drivers there $XX year-over-year if

we a of on across source for to drivers new new cohorts, as three us have sellers saw Square historically they been were adding retention Existing have positive strength revenue as sellers and then all platform. sellers, with the we

mix. QX, larger up XX% of as GPV in First, comprises with XX% growth total seller year-over-year now was line and GPV a

letter expanding shareholder addressable focused like we’re Second, our an saw new calling use us our omni-channel total stadiums cases example. In market. out on as you

markets, the growth we a growth part markets in relatively these a had Third, actually small the had the our Though international second in U.S. international are to an strong of where still quarter continues from the quarter versus in third acceleration quarter. business, we outpace

a the of keep future. things GPV and course mind trajectory you the ahead to GPV, couple of but don’t we XXXX, to for As guide into look to of in on QX you in

November First in we our an business pricing implemented XXXX. present card for is, change have on and expect we’d the GPV the fourth remember and X, on quarter impact seller on transactions that growth to into

impact. Although a to neutral positive we transaction expect margin and revenue perspective, from

add then, to investments these we And sales a payback would terms term, investments GPV means incremental our range, in marketing XXXX. we’re quarter them, signs in and that thinking seller today, incremental making the into which XXXX seeing and that dollars again around absolute period fourth but early encouraging longer in we’re expect in do of the business late

Bryan Keane

much. helpful. Okay, Thanks so

Amrita Ahuja

you. Thank

Operator

from Your Ellis Lisa the next of from MoffettNathanson. comes question line

Your line is open.

Lisa Ellis

App good it’s Thank sort from that is a on App, afternoon like up or banking? a of are follow-up guys. you Hey, avalanche How And Discover differentiated of of more Cash about pipeline additional a lending Cash Direct A App. perhaps other that like Cash of the think popping then strategic maybe how offering? do be planning Chime sort question. related neo-banks the more just be offering, fractional may the Card but you’re to what ability or Credit of services launch installment Like should know broadly, the you we you a to purchase stocks, credit announced is you. expecting

Jack Dorsey

is out a you bunch and like in reasons. I’m needs of excited a point Square, things about lot complexity really and one that for of the that just critical taken question, is that on Lisa. the very what means come to thanks connecting is the it different there place, for out can together the people of as we’ve most Yeah, There one

the earlier, and a fastest way attributes pointed allows buy the people us Bitcoin, fiat some the show sending out. as come As that Cash and Amrita money, anywhere them App, can well, to Card the a to out that because it way, like or for to it’s to easiest to receiving offers money, including Cash accepted go an Visa ATM they is getting storing other use cash get paper

we’re about app look an apps. typically is thing, you what you needs traditional are have important the of but for And a this the just is a would right to that might not built one bank specific in from critical lot

app you to fractional download investing come and in shares. go the the entirely like can store, right capabilities app can have so new and and you much and you So you capabilities this incredible away,

about too. the actually think it strong together and interesting the out, how very of putting one very We of it they building other believe and ways we Square to terms it goes and in back things in experience. is competition really reinforce one these another in each story play-off So all

that’s a real think we So strength.

coming, about fractional and terms of really this are features feature. we’re In shares what excited

bring at of, there focused just this and do these and of financial do pretty what Cash to believe you that even into financial a they how of and most number exist said, is one App that’s could they left we our gives and instead the together. look more out aspect if a because services to the this together even other light transformational we have on just considering of to think more it’s how access all we As and of do, not competitors work just that system been they services within really can part things are I that strength,

And of the App, needs, how we’re looking in for or be buying instance. able just terms experience might better in we future of accessibility critical for people features generally to in of thought magnitude the order where of reinvent stocks can constantly make terms or about approach and things we for how Cash

looking that’s So we’re at. what

announce of experiments a about, have to We else bunch nothing today. we’re but excited

Lisa Ellis

clear, thank Very a Terrific! you. lot. Thanks

Jack Dorsey

you, Thank Lisa.

Operator

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

Your line is open.

Harshita Rawat

My players of in question growth has and is environment out the and that of business. there’s there POS a now cloud-based good providers integrated last terms of competitive there, years the consolidation. lot some happened over seller Hi, in lot afternoon. has a on few of course the There’s been

So a can you’re now competition about from versus ago? view talk a seeing what years you few point of

Jack Dorsey

recently it’s set think were folks and a saw building ecosystem, we on from We but is side. to the don’t on more started when company. really solutions few any who what cash of I different ecosystem continues who lot also are us parts the seller building apart, very for that of the both an the side and

make sales, which more and for for just case. and much a out make business great on focused do sellers help we use sales, grow up are the as and we because tool really do us, help or our It’s grow more them if a don’t that a else that’s really run they business, we and opportunities can on on We number seller, there. to focused see one, focused we make to tools ensure a business don’t is how one company of one we we the sales, just lot more ideally how have looking sellers, can more

don’t companies bite seller. really pairing attempting sets an what They the have equal doing of to are of are are apart out the cash. there us who individual there there ecosystem, ecosystem at if like edges even it is, like only ecosystem So with one

the app we on can bit, really ecosystem you they if scale ecosystem, what’s a strength the we same Cash buyer are been zoom an App, and while app ecosystem, powerful seller scale focus we company. have is out that the So in of seller have in and

potential So ahead. power our I our to capacity differentiation I speaks this and that think this others is very that rare, of and true true and true don’t really and our many know have

of access the said I we do invention now people, bringing guiding that’s App. individuals services, in have lot we’re and Cash and by to remarks, and As financial that more through we to sellers a believe both my more bring invention opening to

I So the think market. component and its in just it’s quite don’t I strong, see

Amrita Ahuja

Harshita, know that, a but you continue just landscape, share. to been we always gain to add it’s to competitive

average is days to relative at merchant growing on to volume of the these and the low double X% rest Our digits. growing XX% networks X%, acquirers growing

that payment to speaks to and fast So growing, are share volumes. a frankly, continuing large take we’re we in growing still just market we’re fragmented and and very

ecosystem than Jack was that Our does more saying. as much

We beyond services when at have App. ecosystem and subscription for look when levers look many more with buyer at monetization Cash you payments broader you the seller, and

Harshita Rawat

much. Thank you very

Operator

Your next RBC of the Dan from Capital question line Perlin comes from Markets.

open. is line Your

Dan Perlin

to parse it to I’m Great! to parse bit. relative verticals and know just sounds sellers I drive really talked it this larger the but to you’ve trying I to just little product awareness through the penetration. about a different or seller, incremental deeper the lot wanted like know investments I’m already, kind or capture three. deepening evening. necessary out trying a Good larger just think of it an merchants to just is product of penetration you

products those the is on the of purchased? what side United number seller, question terms just even like maybe of of And about in other the on sophistication level you quick us then the to Thanks. maybe look idea the give some can size, and States the just international cohorts relative

Jack Dorsey

thanks Yeah, Dan.

they that and mean sellers of and very of have have suite legacy, terms we small API we scale, investments, fill that where it’d whatever systems. sellers scales larger in for don’t, the in need tools believe I be inventory can whether platform or from very a large, to to, the we we hardware strategy So the of a fundamentally

play think So as little And out. to so that a pull, important. of continued our earlier, of of have a we about bunch levers strategy little has the investments, to only a is more we product we as talked awareness about – bit

restaurant, you’re seller, us, customize large solution of hardware retail lot account management around another a you’re team is a one. area see can we of can really also Sales, a whether is a and and each our that we sales potential, organization, a is this for area important and you’re independent an

sellers. that cases hopefully how guiding more make So, will of better particular sales you efficient tools company. size on your focused our more a to utilizing and your more necessarily a use and leading for the more run we’re business not of to It’s ultimately, lot and

Amrita Ahuja

that I’ll just Dan. add And to

sellers On the have the continue plan about larger larger larger are you to know traction and sellers of around year-over-year product where our vertical newer sellers, products, in restaurants retail you The growing sellers register. for point can customized developer create sale third that of and we some larger address and XX% products there quarter. strong or as terminal hardware more offerings with platforms

large tendency our sellers. campaigns to the can broad take of on focus that and more feel of so payments; can products, suite offer we the terms sellers, that larger beyond and campaign believe we ways sellers with the address the sellers resonate we products just being we have of see do we address alike, a larger In marketing and go-to-market that small large

Finally, we in complex sales and should team more expect the which larger address also XXXX needs. seller needs sellers’ growth,

international to question. customers positive thing obviously see is important us of our measure. cohorts for the to We revenue have I your address U.S., that internationally, an continue similar which to retention, did want to

launches past recently were in successful most Australia, and launched Canada product those in us. our and for We the terminal UK quarter launches this

our use that our international new We’re as we cases to we’re full unlocking market. products of seeing suite bring

doing that So in we’re XXXX. excited to continue

Dan Perlin

That’s great. Thank you.

Operator

of SunTrust. comes question next line the from Your Jeffrey from Andrew

open. is line Your

Andrew Jeffrey

I really the mean taking by and you’re I of and wonder you question. monetize into number a first deeper a the dig I little there if ways it’s foremost, flushed bit you is about beyond I that could you’ve appreciate App. is get Cash looking Instant out any to talked product I Hi, an and the think means which Deposit we if pushback advance to just that.

bank monetize be how out to elaborate account sort of to Cash that as from or bit the But this on merchants you strikes a a elaborate Square traditional long-term could Capital you for small and flywheel. ability if Could merchant a really the that receipts can substitute powerful it ecosystem. I plays think account. case tool App for wonder that who the little It on business you act me may have is just that that a where and loan pretty

Jack Dorsey

question. App I’m Card? Andrew. not following or the about Square I’m the sure your Are Cash talking you

Andrew Jeffrey

of think value know whole as to I I Card sort Square that mean Well, about being integral you proposition.

Jack Dorsey

Yes.

get spend Square serves experience, been new them run join to funds here Square functionality entirely them as sellers So to to another think to with to instantly their issue business we money also to allows amazing speak allows that one MasterCard we that a and about. One instantly. I think is ecosystem. has into reason that pretty that our offerings main two a you’re enter talking have and but or the can And their flywheel that store which Square the access and we Card product

terms the there is loyalty Boost downloads App, drive lot is potential App a on seller the usage. receipts way as Cash we’re doing between our App what In around the more side. of intersection opportunity there to between and Cash and And on a of Cash side

the are things we’d us point with, believe at So back it’s that ecosystems powerful them experiment quite broader goes these questions are that one to definitely has that and but when and another extremely reinforce reinforce these that for all of one truly ecosystems that tools it one another, that are themselves makes and scale, company incredible. two we the each to while love strong

the ecosystems the App smart together, these by two for on will continue driven seller we but needs So look on customer Cash that’s side, to also needs bring and customer ways side. to

Andrew Jeffrey

you. Thank

Operator

Citi. And your next Peter the of question Christiansen from line from comes

is open. line Your

Peter Christiansen

question. a you of question. the want Good thanks philosophical more to Jack, for I ask evening,

maturity. the are you decisioning you’re invest between How in company of as Cash some think dynamics have what both across two different investment you balancing the App, you think As broadly? does when Seller the that consider process these the phases perhaps Square about competitive and variables and about and key ecosystems, of

Jack Dorsey

Pete, thanks great Yeah, question.

The So the for opportunity important we’re this we like that felt way. from. begged a by is we’re opportunity this more just and recognize the to on we constantly investing investment. how and – all the within we’re know the about of thinking the you are table not in like thing just be you leaving seller payback It this most on learning something going is on the side ROI tools, substantial it growing focusing much periods seeing more are seeing, seller

Cash work network me understanding how a on the of where and we other what on to both of confidence been mindset pretty drive hand what has really is some first. deep to pull, have and that And levers a lot be not has and time about agile businesses for growth had we pretty can focused gives to. when when

way a I and build the that said that And come of ultimately answer, to want building I about over ecosystems. love, people to find how time think with continue between as people App we’ve network, anywhere lot long Cash that two a the but we there’s can’t my else. potential we in think previous features And

for will both the opportunities we ways connect importantly more these ecosystems, So be constantly looking grow to but together. to two

Amrita Ahuja

ecosystem deliberately see outlook, to that to invest of XXXX in strong And our Pete in tie we opportunities both to the just XXXX.

nearly from saying. we very a to as compelling we’ve able in strong of period with as full expected Jack while profitability ecosystem see XXXX XX% negative seeing year; seller, up adjusted that’s the For margins very been returns strong In X% scale short XXXX. EBITDA in and today as was disclosed time for this driving of know, we you profitability,

future for of our so efforts XXXX. margins So on growth, the the business making want we in seeing start call, that we that earlier investments intentionally to to XXXX go-to-market into expect the end and XXXX come a in these and in down as result we toward seller to returns expect do slightly outlined we we’re invest for and

economics time, past few that scaling the given expect to we’ve we as scaling given XXXX, seen, over the some even in ecosystem. given cohort we margin we’ve seen over ecosystem, of invest that the the and expansion margin the in strong the see continue to With years, Cash, continued improvement

some for investment are this how for So those model of XXXX. the plays dynamics out

Peter Christiansen

Thank helpful. very you. That’s

Jack Dorsey

you. Thank

Operator

Your the from of next comes from line George question Mihalos Cowen.

is open. line Your

Allison Jordan

earlier. Thank on my George. seller Allison taking versus like GPV you. the wanted accelerated the color Hi, category is It question. any much commentary I this from very quarter you looks and can if is you for year-over-year there? GPV provide to follow-up wondering I’m sub-XXX,XXX Thank the there on this XQ. growth for

Amrita Ahuja

were and terms XX% up also from mix terms Thanks sellers mix larger XX% Allison. was in actually GPV quarter. a perspective, of slightly in sellers in so quarter, and for quarter-over-quarter, From the the in question XX% in mix the growth quarter. second second the of third larger

and terms products see of and real as larger build of of terms to sellers So out of in continue earlier the customers. in points with to we terms mentioned platforms this address in traction to hardware, vertical sale, developer base continue of

Allison Jordan

you. Thank

Operator

America And your the of line from Merrill from Jason Lynch. next of question comes Kupferberg Bank

Your line is open.

Jason Kupferberg

quick guys, a Hey question. a on clarification just

Just here. on sure the make numbers apples-to-apples I’ve clarification, so right to got I want these

in now that XXXX same XX%, at XXXX. and XX’s on we’re So talking about ex-Caviar forecasted your growth basis in low is

on incremental international? that. And marketing, get will So sales just versus can much sense of that a to on of U.S. how $XX the clarification wanted a I million give and then, you just be us

Amrita Ahuja

Sure, I’ll Jason. take that

right year XXXX. guide is ex-Caviar full a math in have which year at ex-Caviar is is on the been rate an for midpoint, growth terms $X.X that the The billion, would growth basis. got actually which year-over-year, the same rate You’ve full that XX% of XXXX

But that the XXXX, the we’ve out the and keep coming rate on at as think you midpoint. a quarter, ahead in mind to ex-Caviar got fourth in XXXX, of XX% XX% is unadjusted rate growth rate which profit revenue, gross exit

a U.S. of about They our U.S. marketing of investments, but the markets. you are vast know majority go marketing our toward versus of percentage higher million revenues. our still international, markets will the marketing X% terms be international the investments, of investments of $XX In today our

Jason Kupferberg

you. Thank

Operator

from question Your next comes the Susquehanna. Friedman line James of from

is open. line Your

James Friedman

could just that. about to us, you some bit that timing came said it a Jamie expenses. and from of the surprise of you which some Susquehanna. of mentioned hoping core from had wanted in Hi, remarks prepared the to in I thanks. a I your you some just QX EBITDA was at came that elaborate of upside little that It’s Amrita, ask was

ask or am to Eventbrite, helpful was factor, Thank were comments you. sounded relative was you’re what just have I a if oversimplifying? but less GPV just important like the those versus about what I about interpreting And to too, I price that revenue saying

Amrita Ahuja

Sure.

as by was On right, that’s in and ecosystems, offset it well the cash first your over seller along part on question EBITDA driven over performance beat, some as Caviar, efficiencies. in our expense of with related performance both timing, underperformance the to James, by

have outperformance as do We had that sales for grow both future and expenses through quarters, long-term. we to marketing efforts to back in and materialize those plan and into the the we’ve in to expect of ecosystem any product these we most reinvest past,

think didn’t I much asking less and of Eventbrite, to you’re deal why question, like Eventbrite the rate GPV impact yes, I but quite take is respect your revenue is catch on lower. With there relative to a a

de-minimis. So that’s perspective contribution the an been perspective would why have would revenue a for there from have been impact, GPV from but a Eventbrite

James Friedman

you. thank it, Got

Operator

Barclays. from question the Ramsey next line from comes Your of El-Assal

is line Your open.

Ramsey El-Assal

Hi, my thanks question. taking for

bolt-on profile your at takes frame How I is that do kind from at meeting, you normalized of you this that? Analyst your what’s puts than you first know the our was Thanks. for And could in business you mix then how up so comment Analyst quick model I wondering stock the if a completely trading money Day would to all Given different point. you evolving that. not make on a business feature. and the thunder just steal did have but Day, and revenue just margin on

Amrita Ahuja

Sure, I can that. take

our You has a then; eye, sort a App twinkle now revenues. and last it’s Cash of quarter it at of know rapidly Investor was obviously in our grown Day, since our

I long-term model of a be in today Day business about we’ll App in margin terms I and more much roadmap so you terms you of so at clearly for think view with this and it’s know product Investor to And give premature profile. Cash you sharing next us think

XXXX At say of the about majority which you was what dynamics Investor our Day, year four all a targets, retention. long-term quarter, Investor gotten later margin better. top have three XXXX to our now and compared is So XX% to having I XX% with this half we with Seller can business largely growth line share line you stayed a talked margins. top same a in exceeded the by ecosystem, a year-end and And quarter XX% we revenue or and having the last XX% last stand know and long-term in our nearly payback achieved in as growth we to the Day here positive just

have with App And on continued last very since the years returns to economics three for App dynamics last of compelling cohort Seller then to have mentioned, Investor from scaled Day it the Cash App, margin and we and with we investments. similar dynamics ecosystem. as the rapidly similar see Very Cash in each our expansion Cash of in terms see what in

Investor you meet excited more Day. we we’re when with share to at So

product to we set and view an help driver other enables to within Cash app app investing and is today with Cash be commission With and respect line fees monetization in will the App. to Investing earlier, as daily to App. no to The Investing, build out will brokerage costs the our costs within discoverability network, and be the be We really help engagement bring streams related sales included for we product our this to for revenue of mentioned related the associated as there of utility to marketing majority us that noted growth

Ramsey El-Assal

much. so Thanks

Operator

company have turn the the all time call over like remarks. time is the I’d that for And some questions. to for to closing At back we this

Jason Lee

again will Thank be fourth for XX. our XXXX call participating February hosting like on we would that to remind our earnings quarter everyone you everyone today. Thanks joining for I call.

Operator

gentlemen, today’s today’s and call. you participating Ladies concludes program. This thank conference in for

disconnect. all may You

Block (BSQKZ) 6 Nov 192019 Q3 Earnings call transcript