Block $SQ (-6.52%) Letter to shareholders Q4 2024 - Summary

Corporate strategy and developments

Block made extensive structural changes in 2024 to accelerate growth and product development. Square's technological foundation has been overhauled, transforming the platform from a payment system to a complete commerce platform. This realignment enables faster development of new features for online and offline commerce and gives sellers more flexibility with orders and customer service.

Onboarding of new sellers has been improved by streamlining the registration process and introducing the new Square Point of Sale app. This app combines the functions of five separate applications into one and has already been adopted by half of the new sellers. Existing sellers are also being gradually migrated to the new platform.

In parallel, Block has further developed the Cash App to offer a leading banking solution. New features include high-interest savings accounts, free ATM withdrawals, the ability to invest salary payments in stocks or Bitcoin, overdraft protection and a free tax filing option. In addition, Cash App Borrow has been expanded to a loan volume of USD 9 billion to provide small, easily repayable loans.

Block has also optimized its organizational structure to enable more efficient collaboration between Square and Cash App.

Q4 2024 financial results

Financial metrics show strong growth:

• Total gross profit: USD 2.31 billion (+14% year-on-year)
• Cash App gross profit: USD 1.38 billion (+16%)
• Square gross profit: USD 924 million (+12%)
• Operating income: USD 13 million (1% margin)
• Adjusted operating income: USD 402 million (7% margin)
• Net income: USD 1.95 billion
• Adjusted EBITDA: USD 757 million
• The strong performance is based on a combination of higher payment income, improved monetization of Cash App and the expansion of the BNPL business (Buy Now, Pay Later).

Strategic goals for 2025 and beyond

Block has three main goals for the coming year:

1. expanding access to the global economy: Block wants to connect sellers, buyers and communities more closely through a "neighborhood network". Small businesses and restaurants in particular are to be supported by Square.

2. increasing openness and flexibility for customers: Block is increasingly focusing on open source technologies and developing new solutions for cryptocurrencies, including bitcoin mining chips and a non-custodial bitkey wallet.

3. automation and artificial intelligence: The use of AI-supported tools is intended to reduce manual tasks in order to increase efficiency for customers and internal teams.

Outlook for 2025

Block expects gross profit growth of at least 15 % year-on-year.

The expected figures for the year:

Gross profit: USD 10.22 billion

Adjusted operating income: USD 2.1 billion (21% margin)

Target for 2026:

Achieve the "Rule of 40" (sum of gross profit growth and operating margin).

Investments in sales and marketing will be increased, especially for Square and Cash App The introduction of Afterpay for the Cash App Card and the expansion of Cash App Borrow should further accelerate growth.

Overall, Block plans to establish itself as a leading provider of financial technologies by integrating commerce, payment and banking services.