Good day, ladies and gentlemen and welcome to the Square Third Quarter 2021 Earnings Conference Call. I would now like to turn the call over to your host, Nikhil Dixit, Head of Investor Relations. Please go ahead.

Hi, everyone. Thanks for joining our third quarter 2021 earnings call. We have Jack and Amrita with us today. We will begin the call with some short remarks before opening the call directly to your questions. During Q&A, we will take questions from our customers in addition to questions from conference call participants. We would also like to remind everyone that we will be making forward-looking statements on this call. Actual results could differ materially from those contemplated by our forward-looking statements. Recorded results should not be considered as 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 on this call are based on information available to us as of today's date. We disclaim any obligation to update the forward-looking statements except as required by law. During this call, we will provide preliminary gross profit growth results for the month of October. These represent our current estimate for October performance, as we have not yet closed our accounting financials for the month of October and our monthly results are not subject to interim review by our auditors. As a result, actual October results may differ from these estimates. Also, we will discuss certain non-GAAP financial measures during this call. The reconciliations to the most directly comparable GAAP financial measures are provided in the shareholder letter 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 will be available on our website shortly. With that, I would like to turn it over to Jack.

Thank you all for your time today. In our seller ecosystem, we continue to build upon our omnichannel capability and those efforts have enabled us to attract and retain larger sellers while also helping our existing sellers grow our market. This quarter, we enhanced our Square Invoices product to help sellers more efficiently run their business. Square invoices enable sellers to easily build clients and get paid quickly, in person, online or over the phone. In the third quarter, we introduced Square Invoices Plus, a new subscription product with more advanced features designed for larger and more complex businesses. We also continue to expand our geographic reach, launching a full stack of integrated seller tools in France in September, our most robust market launch yet. French businesses can now sell online and in person with Square's integrated suite of products, including Square Point of Sale, Square For Restaurants, Square Online, Square Terminal, Square Stand, Square Reader and more. We're excited about France given its strong small business environment, increased usage in contactless payments and its fast-growing eCommerce sector. Switching to Cash App, we reached some major milestones this quarter in expanding our offerings to families by serving teens and entirely new demographics for Cash App. With this launch, customers in the U.S. between the ages of 13 and 17 get access to Cash App's massive P2P network, the cash card, direct deposit and boost, all with parental or guardian approval. By lowering the age barrier, we hope to expand access to the financial system to 20 million teens in the U.S. and equip them with the tools they need to participate in the cashless economy, which is especially important now, as transacting with physical cash becomes less relevant in the increasingly digital world. With Cash App, families can help their teens learn about how to manage the money they earn from allowance, jobs and chores with the appropriate protections in place. As we've talked about, our strength lies in our ecosystem model, especially as our ecosystems connect together. In the third quarter, we launched Cash App Pay in the U.S., a new contactless payment method for online and in-person transactions. With Cash App Pay, individuals can seamlessly pay with their Cash App account as Square sellers using the QR code, they're tapping a button on their mobile device at checkout. As contactless options become more mainstream, Cash App Pay has become a top-requested feature by both Cash App customers and Square sellers. This integration further expands Cash App's commerce capabilities and helps us meet customers where they are, providing more flexibility in their payment options. Cash App Pay also enables us to offer sellers a new and innovative way to bring commerce to life for their customers. Lastly, we continue to serve our purpose of economic empowerment in all that we do, but we want to build on that strength to explore opportunities beyond our existing ecosystems to serve new markets. We have a few emerging initiatives we are investing behind into 2022. For example, with the acquisition of TIDAL, we're building tools for artists, starting with new additions. We also recently created a business called TBD in order to build an open developer platform with the sole goal of making it easy to create non-custodial, permissionless and decentralized financial services with a focus on Bitcoin. We plan to share detailed plans with a white paper later this month. We announced two more Bitcoin initiatives as well, a consumer Bitcoin hardware wallet, and a Bitcoin mining system, both are focused on helping Bitcoin reach a mainstream audience while at the same time, strengthening the network and ecosystem. We'll build both in the open in collaboration with the community, sharing all of our decisions, progress and questions along the way. We see each of these long-term opportunities that we'll be learning from over multiple years. And with that, I'll turn it over to Amrita.

Thanks, Jack. There are three topics I'd like to cover today. First, a look at our performance in the third quarter of 2021; second, an update on our seller and Cash App ecosystems in October; and third, a look at where we intend to invest in the fourth quarter of 2021 and in 2022, given the compelling growth opportunities ahead. In the third quarter, gross profit was $1.13 billion, an increase of 43% year-over-year or 51% on a two-year CAGR basis. Adjusted EBITDA was $233 million. Both Seller and Cash App showed strong fundamentals during the quarter. Seller generated gross profit of $606 million, up 48% year over year or 29% on a two-year CAGR basis. A few growth drivers to call out here. First, we've made strides growing up-market as our ecosystem has resonated with larger sellers. In the third quarter, mid-market sellers, those with more than $0.5 million in annualized GPV, grew gross profit nearly twice as fast as our overall seller business on a two-year CAGR basis and have surpassed micro sellers to make up our largest segment of GPV. Our momentum with mid-market sellers in recent quarters has been driven by the acquisition of larger sellers, as well as our ability to help small sellers grow on our platform. Second, software and integrated payments remain the fastest-growing product in the seller ecosystem on a gross profit basis as sellers value the breadth of our ecosystem. Square Invoices in particular experienced strong growth, processing $12 billion in GPV in the last 12 months, up nearly 2X from two years ago. Cash App generated gross profit of $512 million, up 33% year over year or 104% on a two-year CAGR basis, with strong engagement in inflows, which are money pulled into our ecosystem, achieving strong growth on a two-year CAGR basis even as most government disbursement programs ended. Product adoption has been a key driver of overall inflows, and we continue to see an increase in attach rate for products using cash cards. In the third quarter, cash card actives brought in approximately 70% more inflows each month than non-cash card actives. We also saw an increase in paycheck deposits, as we've made direct deposit and bank transfers easier and more visible to customers. Next, we wanted to share an update on our business through October and what we're seeing in real-time. As a reminder, we believe two-year CAGRs will better reflect underlying trends in our business. For Seller, we expect gross profit in October to grow by 45% year over year, or approximately 30% on a two-year CAGR basis, relatively in line with growth in the third quarter. Fellow GPV was up 24% on a two-year CAGR basis. We've been encouraged by relatively stable growth rates in the past few quarters, though we recognize there are still impacts from COVID in certain parts of the U.S. and our international markets, which could impact GPV trends. For Cash App in October, we expect gross profit growth of greater than 35% year over year or greater than 90% on a two-year CAGR basis. As we had expected, we saw normalization in the two-year gross profit CAGR from July to October as government disbursement ended. On a year-over-year basis, gross profit growth has been relatively stable around the 35% range from August through October. We've seen strong engagement across our broader ecosystem of products and are enthusiastic about our recent launches and product roadmap, which brings me to our intended investments for the fourth quarter of 2021 and the preliminary view of our focus areas for 2022. In the fourth quarter, we expect to increase non-GAAP operating expenses, excluding risk loss, by approximately $115 million compared to the third quarter. Looking to 2022, we see significant investment opportunities across our business and remain focused on driving long-term profitable growth. Next year, we expect to grow non-GAAP operating expenses by approximately 40% year over year compared to 2021. We're approximately $1.3 billion of incremental spend across product development to build out our team, sales and marketing to drive acquisition, and G&A to expand support in each of our ecosystems. This figure excludes impacts from Afterpay, which we expect to close in the first quarter of 2022. Let's take a look at where we're focusing our investment. For Seller, we'll be investing behind our strategic priorities of enabling omnichannel, growing globally, and growing up-market with larger Seller. Given the strong growth and lifetime value and gross profit per customer that we've seen over time in our seller business, we're more comfortable lengthening our payback periods up to the six-quarter range as we scale sales and marketing and increase our mix of go-to-market investments across international, brand awareness and our sales teams. For Cash App, our strategic priorities remain strengthening our network, driving engagement and attracting more inflows into our ecosystem. Heading into 2022, we're focused on advancing these priorities by investing behind new and emerging product areas. First, enabling more commerce for our customers, including our recent launch of Cash App Pay and potential future opportunities with Afterpay, following the closing of the transaction. Second, providing more financial services by expanding our product set and unlocking new inflow channels in Cash App; and third, improving the health of our platform and promoting positive behavior by growing support and expanding access. Finally, as Jack mentioned, we now also have emerging areas of growth that we're investing behind and we'll be tracking progress against milestones over multiple years. These include TIDAL, TBD, the hardware wallet and Bitcoin mining, which we expect will collectively represent roughly 5% of our incremental step up next year, for approximately $140 million in overall non-GAAP OpEx. As we look ahead, we're excited for what the future holds for our company. We are going after a large and growing addressable market, and we see strong signals on how our products resonate for our customers with compelling unit economics. As a result, we are deliberately investing to reach new audiences, increase the utility for existing customers and expand our product set as we have done over time. I'll now turn it back to the operator to start the Q&A portion of the call.

We have the first question coming from Tien-Tsin Huang with JPMorgan. Your line is now open. You may ask your question.

Thanks so much. And thanks for the update. I wanted to ask about Cash App Pay if that's okay. And I know Jack, you've been talking about connecting the two ecosystems. So how important is this in that effort? And what's the strategy to grow this payment method overall? I've been thinking that you'll need to drive more inflows like direct deposit to really get it going. So maybe if you don't mind updating us on the inflow strategy, that'd be great. Thanks.

Yeah. So I would foresee this as a focus on the importance of Cash App moving more and more into a commerce relationship. We have these incredible network effects in peer-to-peer, and now we get to look forward toward being more of a commerce front end. Fortunately, we have another ecosystem at scale that focuses on Sellers and omnichannel commerce. So it's easy for us to test a lot of these theories out and actually scale them up over time. Obviously, we do believe that having these multiple ecosystems is our ultimate superpower and differentiator. So, having both ends of the counter with two different audiences—sellers and individuals—is really important. There's a thesis behind Afterpay as well, and that probably represents some of the largest potential for connecting the ecosystems. Any connection we make between these ecosystems strengthens the overall value of a broader ecosystem, and we think our value to customers and the company generally is significant. In terms of direct deposit, it is one form of inflow. We've done a lot to make sure that we are making it more accessible. We're putting it more upfront in the interface. You'll notice a bunch of navigational changes that we've made. So more of a focus on direct deposit, but generally, there are a number of ways people get money into Cash App—not just the paycheck, but tax refunds, stimulus checks, and we want to make sure that it's intuitive and easy for all those, especially when people are on scale. The other announcement to look towards in this light is what we just did for families. Allowing any parent or guardian to turn on Cash App for their kids who can also use peer-to-peer, direct deposit, and the cash card unlocks an entirely new population for us while still benefiting from those base level network effects that have grown in Cash App in the first place. So, we are addressing this problem in multiple ways with our phased new products and features like Cash App for families, and then taking every opportunity we have to connect our ecosystem. The thing that I think is most interesting here in Cash App Pay is that it really allows us to open the door around Cash App being a commerce front end.

And next question, we have the line of Darrin Peller of Wolfe Research. Your line is now open. You may ask a question.

Hey, thanks guys. Nice trends. I just want to start off and kind of follow up on Tien-Tsin's question around Cash App a bit, just given the impact of stimulus. It's likely running off a bit now and I think it's still impressive to see two-year CAGRs at 104%, but I really love to hear your view on the drivers of incremental engagement per user, like sort of touching on the new capabilities and strategies from here on out for Cash App really pre-Afterpay, along with the potential levels we'd be able to reach, just thinking about what the potential engagement, transaction levels, revenue per user, where that can go over the next couple of years.

Thanks guys. Hey, Darrin, happy to take that one. I think it's instructive to look at where Cash App is focusing from a priority perspective, both in aggregate across the ecosystem, as well as from a product development perspective, to inform where we could see potential future growth. So as we head into the fourth quarter and into 2022, our strategic priorities remain strengthening our overall network, driving engagement, and attracting more inflows. To advance these priorities, we'll continue investing behind product development, sales, and marketing for customer acquisition and support operations, which underpins the entire platform. From a product development perspective, we're prioritizing a few longer-term focus areas, which I think really get to your question around how we drive long-term growth, revenue per order, and my ten value for our customers by ultimately driving greater utility for our customers. First from a commerce perspective, as you've heard from Jack at the beginning of building out a commerce platform for Cash App, you see that with Cash App Pay, you see that with teams, and you see that with what we're going to be doing in the future with Afterpay—new experiences that provide greater utility and engagement. From a financial services perspective, we're expanding our banking capabilities, including new inflow channels into Cash App and exploring new products like 'Borrow' to help drive engagement and attract more inflows into the network. From a health perspective, we're scaling support or expanding access, particularly in a responsible manner to encourage good behavior on our platform, which further strengthens the network effects and the ability for more people to bring funds in and use them across multiple products. We're building out full stack teams dedicated to each of these areas in 2022, and you'll see that in our hiring plans in product to drive continued product roadmap velocity. From a marketing perspective, we're investing to drive customer acquisition, focusing on reaching higher lifetime value customers and newer demographics. As we've seen gross profit and lifetime value per customer grow historically, we've been able to increase our customer acquisition costs above the historical $5 range, which we believe is insufficient given the opportunities we see ahead. Some of the levers that go into that for investment in 2022 and future growth include paid marketing, where we can ramp our paid channels; referrals, which we’re enhancing; and growing awareness, which bolsters our ability for new customers to come in and adopt products beyond peer-to-peer and promotes Cash App as a true lifestyle brand. Finally, support, as the foundation on which our platform is built, is key. The growth of Cash App has outpaced our investment, as we've seen customers adopting more products. In 2022, we’ll grow our health team and enhance our support infrastructure to align it with Cash App's fast growth. Some initiatives include reducing friction around inflow sources and adding new inflow channels, plus launching in-app support messaging for all customers, which has quickly become the majority of inquiries. We’re excited about these strategic initiatives and investment areas to drive future growth for us, ultimately driving utility and engagement within the Cash App ecosystem.

Thank you. Our next question comes from an undetermined source. You are now permitted to ask your question.

Hello, my name is Andrea. I'm a business owner here in San Antonio, Texas. I own a crafted donut shop, and we use mainly all Square features available at the moment. My question was about growing from a food truck to a brick-and-mortar location. As we continue to expand, one of the most important things is to ensure that we have all the integrated products we need to roll up market. Can we expect to see Square introduce features as we look to expand?

Yeah, 100% and thank you for using Square. So we built the ecosystem with exactly this in mind. We started close to 13 years ago with a very simple solution for accepting credit cards that was meant for sole proprietors and the smallest of businesses. But we wanted to ensure that we were able to scale ahead of our sellers' ambitions. So if they decided to get a physical location, to have multiple locations, or hire more employees, we didn't want to get in the way of that. All of our tools are meant to scale from the very small to the very large and progressively disclose more sophistication as the complexity of your business increases. One of the recent areas that we wanted to help resolve is around employee management, and we acquired this company called Crew that allows us to enable our sellers to have a messaging platform so that they can manage all of their employees and their needs, allowing them to continue to focus on what's most important: their customers. It's vital to us that we’re not hindering any of our sellers’ growth. I think we demonstrate this by working with very small businesses, but also the largest ones, like stadiums that have thousands of vendors of all sizes working.

Thank you. We have the next question from the line of Lisa Ellis with MoffettNathanson. Your line is now open. You may ask a question.

Good afternoon. Thanks. I'm going to switch over to the seller ecosystem. You called out Sellers' international expansion in the prepared remarks, particularly the recent expansion into France. Can you just remind us how much of Sellers' GP is derived from ex-US markets and how fast that piece is growing? Looking forward, maybe for Amrita, where your priority investment areas are looking internationally as you look into '22. Thank you.

Maybe I'll start this off and Amrita can follow. As we look at new markets for sellers, we want to make sure that we're number one looking at the market and understanding the level of small businesses and entrepreneurship present. Then, we want to invest in brand and product awareness. After that, it's not just launching one product but achieving parity across all of our products in all of our global geographies. Finally, we need to look at expanding into new markets where we think there's a high potential for success. We require a partnership with a local bank, and there are differences in local regulation; this has to be a very deliberate decision. So we've made very conscious choices regarding what markets Square enters and why. There's still a lot of opportunity for us to open more of our products in markets we're already in, such as Square Loans.

And Lisa, I'll add that our markets outside the U.S. have seen strong growth in the third quarter, despite periodic lockdowns. We saw those markets growing faster than the U.S., so they are growing faster within our international markets, which comprise a growing percentage of our seller business. They continue to be a key focus area for investment opportunity in the future. As I said, our strategic priorities for sellers as we look ahead are enabling omnichannel, going global, and growing up-market. The becoming global piece is a key part of our sales and marketing initiatives for next year and a key reason why we're comfortable expanding our paybacks to six-quarters, as we see a greater mix of spend in sales and marketing towards brand spend and international areas. Our key sales and marketing investments will focus on brand and awareness to drive reach and top-of-funnel demand, particularly with larger sellers, and across the breadth of the ecosystem— which continues to be our largest percentage mix. We will ramp our spend in these international markets in 2022 given the new geographies that we're in: France, Ireland, and our beta in Spain—along with potential new launches for the future. We expect these areas to have lower ROI in the early years and improve over time. We view them as a critical strategic area for future investment, given strong product market fit, and the positive response our products have received in these markets. It's also significant for the investments we make, of course, in product development to localize and expand these services and features for each market, closing the product gaps that Jack mentioned. We need to ensure that sellers can reach us with any of their needs, both internationally and domestically—all part of our key focus area.

Thank you. Next question comes from the line of Timothy Chiodo with Credit Suisse. Your line is now open. You may ask your question.

Great, thank you for taking the question. I want to dig into the large seller approach in 2022 and beyond. I'm really bringing this up in light of the potential for a more bundled approach to work with those large sellers, including some of the big online enterprise customers that have relationships with Afterpay. I hope we could talk just a bit about that full suite or bundle of offerings that could be sold into those large sellers, whether it’s Buy Now Pay Later, the Cash App Pay button, or your more traditional payments processing or unbranded, along with other services that Square offers—with the idea that this might allow Square to have a more competitive or unique angle when talking with those large enterprises.

Yeah, this is exactly it. As I said earlier, this is one of our biggest strengths: we have cohesive ecosystems that are broad in their toolsets. This allows us to reach sellers in a much more cohesive way, especially given the maturity of our developer platforms. Whether our seller has legacy tools or custom solutions, they can still integrate with Square in a way that meets their needs. I would point to the number of stadiums we've turned on as proof of that. This shows the potential for bundling, as we believe Afterpay, once the transaction closes, can really drive commerce across both sellers and individuals. We think it is a smart connection between the two ecosystems. Afterpay has done very well with larger retailers, on both the seller side and on the individual side. There's a natural synergy within our seller business and also Cash App.

Thank you. Next question we had the line of Trevor Williams of Jefferies. Your line is now open. You may ask your question.

Great, thanks. Good afternoon. I'll throw another one in on the Cash App. As we look at the size of your user base at 40 million monthly actives, that puts you at a scale that very few banks can match. How do you think of the benefits of scale, or what competitive advantage does a larger user base give you beyond just having more users to monetize? What do you see as the network effects on the peer-to-peer side? I'm trying to understand how a larger user base can unlock a higher level of monetization. I mean, while the benefit from plugging in Afterpay seems clear, what advantages does Cash App have as a standalone today, in terms of scale?

Yeah, I think, number one, it gives us a lot more opportunity to strengthen our existing products, but also create new products on top of Cash App as the foundation. These can be products for both individuals and customers, but also for sellers as more and more commerce moves online and purely digital and is not found offline. We do have businesses using Cash App because it's a way for them to transact, and it's familiar for their customers. Even this builds upon the network effect. I guess I would directionally point you back to discovery: with a larger base of customers, we have more opportunities to introduce discovery features to our network. We have the beginnings of those initiatives in Boost, for instance, where we can highlight a particular activity or seller, whether it be in your neighborhood or nationwide. There is a lot more to come in that area, and we have the benefit of having a seller network and ecosystem that we can turn on for all of our passionate customers. As we acquire more, there is potential to leverage local businesses and allow customers to discover them—opening access to an even greater degree. I think there is a lot of potential with having the scale we have, but I feel we can go much higher, and that is our intention, especially as we think about Cash App outsides of the U.S. and U.K., which excites me alongside the prospects for global expansion.

Trevor, I think a key focus area for us is the engagement of this customer base. As we stated back in June, nearly two-thirds of those 40 million monthly actives that you referenced transact each week on average across our Cash App ecosystem. The more we can do there to make this a daily utility, to provide customers with value on a regular basis throughout the day, the more opportunity we have to drive further network effects, further engagement, and ultimately drive higher lifetime values. This then enables us to reinvest back into the ecosystem and provide differentiated value for these customers. I think both the reach of the network and driving continued engagement are key priorities for us.

Thank you. Next question comes from the line of Harshita Rawat at Bernstein. Your line is now open. You may ask a question.

Good afternoon. Thanks for taking my question. Jack, I wanted to follow up on your prepared remarks regarding Bitcoin. Are you looking to expand into crypto beyond Bitcoin, buy and sell, for example, other cryptocurrencies and also enabling your users to engage in DeFi assistance?

We're not. Our focus is on helping Bitcoin become the native currency for the internet. We have a number of initiatives toward that goal; Cash App is just one of them. We're going to build a hardware wallet and are exploring Bitcoin mining—a consumer device to mine Bitcoin at home or in a business. We believe this focus is important given the resilience and fundamentals that Bitcoin offers. We want to ensure that we're giving back to the community as much as possible, reflected in our approaches for the Bitcoin wallet and Bitcoin mining. Additionally, our new business unit—called TBD—is focused on building a developer platform to enable more ideas around decentralized finance on the Bitcoin stack, bringing stability and resilience that Bitcoin has had for over a decade. More details on what TBD is steering toward will be released with a white paper on November 19. We're really excited about the direction and our focus.

Thank you. Next question comes from the line of Josh Beck of KBCM. Your line is now open. You may ask a question.

Thank you team for taking the question. I wanted to shift gears back to Cash App. Obviously, the demographic on the age is expanding and certainly getting into that 13-plus category. I'm curious about what you see as the defining elements of Cash App for that segment. There are a couple of fintech companies also focusing on teens and tweens, if you will. So just curious on how you frame that and where you see that opportunity in the next few years.

Yeah, this is a really big launch for us because it's been a huge request by Cash App customers. We're finally able to fulfill this as there is a larger population now who didn’t have access before—20 million teens in the United States. It aligns with our fundamentals showing the peer-to-peer advantages: receiving money from family, sending money to friends, and allowances provided by parents being sent through the app. Users can design their own Cash App card, including unique features like a glow-in-the-dark cash card. Most everything you would expect from Cash App will exist with this feature, but with controls for parents or guardians. We believe this is a great way to get into the space; it’s a start. We definitely must expand this but all the strength we have in building network effects, as we do for our businesses, allows us to benefit from a much larger audience while we take on this responsibility of ensuring health with products like the cash card, stocks, and savings account, as we have with the original Cash App.

Josh, I would just add that I think some of the key differentiating factors for Cash App in this age segment are the scale of network effects which enhance utility for these teens and their families, the aspirational brand that Cash App has cultivated through the years, which resonates authentically with Gen Z, and lastly, the strength of the broader network. Cash App is not just about the cash card or peer-to-peer; it expands to many other important features over time, enabling financial inclusion for this demographic. Those are our key differentiators.

Thank you. We have the next question from the line of Ramsey El-Assal of Barclays. Your line is now open. You may ask a question.

Hi, thanks so much for taking my question this evening. I wanted to ask about an ACH acceptance tool that I think you guys announced earlier in the year in partnership with Plaid. At a high level, what are your thoughts more broadly on pay by bank and other types of payments that don't rely on the traditional card rails? And maybe if I can tack one on, are you planning to offer a pay-with-Bitcoin feature through Cash App Pay at some point next year?

Yeah, so I think what you're referencing is sellers accepting bank transfer payments, which definitely have a lower processing fee. We're always looking for opportunities to add efficiency to the stack, both for sellers and Cash App. As soon as we have the foundational infrastructure and interface in place, we find ways to make it even more efficient and cheaper for our customers. In terms of Cash App Pay and Bitcoin functionality, we're not seeing that specifically in our immediate roadmap. However, our focus is helping to position Bitcoin as the native currency in that sense. Currency aspects within the network are primary concerns. We will do more in that space for sure.

Thank you. We have the next question from the line of Bryan Keane with Deutsche Bank. Your line is now open. You may ask your question.

Hi guys, and thanks for taking the question. I just want to ask about how much stimulus is still impacting the numbers. I'm curious about the saving rate for Cash App users and their balances right now. I know you guys are doing several things to get balances up on Cash App. So I’m interested in figuring out a little bit about that.

Hey, happy to take this one. Maybe I'll hit balance as quickly. First, we saw customer balances slightly down quarter over quarter, up 143% on a year-over-year basis. We would urge you to look at inflows more broadly, as balances are just a snapshot of growth at the end of the quarter. What we really orient to as we think about the health of the network is, of course, overall network size and engagement but also inflows. What we’ve seen is as we expected—the government disbursements have largely ended during the third quarter, we've seen normalization in the two-year CAGR with gross profit from July to October on a year-over-year basis, which has remained around that 35% range. In October, we expect growth in gross profit greater than 35% year over year and greater than 90% on a two-year basis. Looking ahead, we think about customer spending power, which ultimately impacts inflows. We're focused on the long-term and key priorities we discussed for this year ahead, including building a commerce platform, enhancing financial services, and improving network health, which enables us to bring more deposits and inflows into the ecosystem. This is what drives inflows for Cash App in the medium to long term.

Thank you. We have the next question from the line of David Togut of Evercore ISI. Your line is now open. You may ask a question.

Thanks so much. I'd like to better understand your closed-loop strategy with Afterpay. We've been following your BNPL pilot in Cash App, which appears to be defaulting payments to store balances. Given your stored balances were around $2 billion at the end of 2020 and are constantly being refilled, it seems BNPL with Afterpay at Square sellers could generate significant transaction margin benefits. Can you help us better understand your closed-loop strategy with Afterpay?

Sure. I can jump in on this one. What we're ultimately focused on is the product experience for our customers and the commerce platform we're building, which BNPL options enable within Cash App. As we've seen with Afterpay in its app, there have been historical million leads a day driven to their enterprise merchants. So when you think about the value beyond just the payment type that BNPL will enable, the strategic imperative here for us is in enabling commerce. The integration Afterpay provides for Cash App and our seller ecosystem offers a unique edge and multiple enhancements—leading to cost savings over time, but our key focus is on commerce and in-app discovery.

Thank you. We have the next question coming from the line of George Mihalos of Cowen. Your line is now open. You may ask a question.

Great. Thanks for taking my question. Just wanted to ask about Cash App and the importance of the cash card. Can you remind us how penetrated cash card is within the Cash App ecosystem and maybe, Amrita, you can update us on the breakdown of different revenue sources within Cash App, the instant P2P, cash card, and the like? Thank you.

Sure. To hit cash card first, we continue to see strong adoption here among our customers. It is our highest attached product after P2P. What we shared back in March was that 7 million customers within Cash App are using the cash card on a weekly basis. This rate of weekly usage has nearly doubled year over year, which is faster than the monthly active cash card customers. These cash card customers are using the card for everyday purchases—for food, transportation, and at major retailers—signifying that they want to utilize Cash Card to manage their everyday expenses. Obviously, Boost is a component of this with unique rewards and offerings assisting in driving that utility and awareness around the card. We've also been working on expanding cash card functionality globally. Customers can now use the Cash Card in-person and online in many countries outside the U.S. When we consider the importance of driving attachment to products like the Cash Card, these customers demonstrate higher engagement across our ecosystem with other products. Historically, we’ve seen cash card actives conducting nearly twice the number of product interactions as non-cash card customers, which leads to more money brought into Cash App overall. We shared this quarter that cash card actives brought 70% more inflows into our ecosystem on average than non-cash card actives, making it a critical driver of overall inflow growth for us. We recognize significant opportunities to grow engagement and monetization, both with Cash Card and beyond Cash Card, as customers adopt more products, such as investing, direct deposit, and more. Regarding the breakdown of revenue sources, we continue to see diversification in how our customers utilize the different products within Cash App. Driving product adoption across Cash App—and consequently monetization and sustained engagement—is a key focus area for us, particularly as we look ahead and our product roadmap matures.

Thank you. We have time for one last question from Ryan Klein. Your line is now open for your question.

Thank you! This is a question from Mizuho. Can you quantify the potential upside from a credit online tax for next year for Cash App, if possible? Thank you.

Yeah, just to start, the reason we're launching this is to help expand our direct deposit options and bring more inflows into Cash App. This is key as we approach tax season, and there's ample opportunity to simplify the various tasks associated with taxes. This is a significant time for the financial ecosystem, and we want to ensure a successful product launch ahead of tax refund season, allowing customers a seamless experience while highlighting direct deposit as an additional inflow source for us.

Thank you. That would be the last question. Ladies and gentlemen, thank you for participating in this program. This concludes the program. You may all disconnect.