Good day, ladies and gentlemen, and welcome to the Block Second Quarter 2024 Earnings Conference Call. Today's call will be 45 minutes. And 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 second quarter 2024 earnings call. We have Jack and Amrita with us today. We will begin this call with some short remarks before opening the call directly to your questions. During Q&A, we will take questions from conference call participants. We would also like to remind everyone that we will be making forward-looking statements on this call. All statements other than statements of historical fact could be deemed to be forward-looking. These forward-looking statements include discussions of our outlook, strategy, and guidance, as well as our long-term targets and goals. These statements are subject to risks and uncertainties. Actual results could differ materially from those contemplated by our forward-looking statements. Reported results should not be considered an indication of future performance. Please take a look at our filings with the SEC for a discussion of the factors that could cause our results to differ. Also, note that the forward-looking statements on this call are based on information available to us as of today's date. We disclaim any obligation to update any forward-looking statements, except as required by law. Further, discussion during this call of Cash App’s banking services refers to those offered through our bank partners. Within these remarks, we will also discuss metrics related to our investment framework, including Rule of 40. With Rule of 40, we are evaluating the sum of our gross profit growth and adjusted operating income margin. Also, we will discuss certain non-GAAP financial measures during this call. Reconciliations to the most directly comparable GAAP financial measures are provided in the Shareholder Letter, and our Historical Financial Information spreadsheet on our Investor Relations website. These non-GAAP measures are not intended to be a substitute for our GAAP results. Finally, this call in its entirety is being audio webcast on our Investor Relations website. An audio replay of this call and the transcript for Jack and Amrita’s opening remarks will be available on our website shortly. With that, I would like to turn it over to Jack.

Thank you all for joining us. I focused my shareholder letter this quarter on our go-to-market strategy for Square and our efforts to improve acquisition across sales, partnerships, marketing, and product. If you haven’t yet, please read that letter for details. As part of this, I’m thrilled to share that Nick Molnar, the CEO and Co-Founder of Afterpay, will be leading a centralized sales function across Block, working across Square, Cash App, and Afterpay. Nick shaped Afterpay’s high-performing sales culture, and we’re excited for him to raise the bar for Square and across Block. This aligns with our recent decision to reorganize our company’s reporting structure by function, enabling more collaboration across our different ecosystems. This will also help our people get to true mastery of their craft and open up opportunities for mobility within disciplines. We plan to execute this change this month with minimal disruption. The new reporting structure does not impact our strategy, roadmaps, or financial goals. Instead, we believe it will allow us to move with greater speed, agility, and efficiency on the growth initiatives we have discussed. Similar to prior quarters, we’re going to keep our remarks brief to focus on your questions. With that, I'll now turn it over to Amrita.

Thanks, Jack. We delivered strong results across the company during the second quarter. Gross profit was $2.23 billion, up 20% year over year. By business, Square gross profit was $923 million, up 15% year-over-year and Cash App gross profit was $1.3 billion, up 23% year-over-year. Both businesses showed strength in areas aligned to our strategies. Gross profit outperformance compared to our guidance was mostly driven by Cash App. We saw strength across Cash App Card, Cash App Borrow, and buy now, pay later. Inflows per active saw healthy growth, up 10% year-over-year in the quarter, and was consistent quarter over quarter despite coming off the first quarter seasonal benefit of tax refunds. Square’s gross profit was in line with our expectations, with strength in software and integrated payments, and banking. GPV growth in the quarter was up 8% year-over-year as strength from our markets outside the U.S. was offset by a continued moderation in U.S. same-store sales growth, consistent with broader macro data points. From a profitability perspective, we saw a significant increase on a year-over-year basis, with meaningful margin improvement, due to our improved efficiency and discipline on expenses. Adjusted EBITDA was $759 million, nearly doubling year-over-year, and adjusted operating income was $399 million, up 16 times year-over-year. For the 12 months ending in June, adjusted free cash flow was $1.43 billion, which was up more than two times versus the prior 12 months and represented 57% of adjusted EBITDA, an improvement compared to the 44% conversion rate in the prior period. Our strong profitable growth shows that our ecosystems continue to serve our customers with differentiated value, and our teams are operating with purpose and efficiency. As Jack noted, our shift to a functional organizational structure is about deepening collaboration across our ecosystems. What doesn't change is our commitment to our long-term target of achieving Rule of 40 in 2026 and our reporting of gross profit by business segment. We'll also continue to hold our leaders accountable to our existing product roadmap and go-to-market timelines. Turning to our expectations for the remainder of the year. We are raising our full year 2024 guidance for both gross profit and profitability, reflecting not only outperformance in the second quarter, but also increased expectations for the remainder of the year. For full year 2024, we are now expecting gross profit of at least $8.89 billion or 18% growth year-over-year. This reflects our strong top line momentum as we head into the back half of the year. We expect Cash App to deliver strong gross profit growth in the back half of the year with growth expected to moderate only slightly from the second quarter's 23%, even as we fully lap the benefit from improvements to our structural costs in the second half. For Square, we expect year-over-year gross profit growth for the back half of the year to be relatively in line with the second quarter's growth rate. We remain focused on cross-selling banking and software further into our seller base, and optimizing our processing value chain. In the back half of the year, we expect GPV growth to be relatively stable, although we are mindful that the backdrop for consumer discretionary spending continues to be dynamic. Our focus is on the things we can control, including executing against our product strategy and the go-to-market approach Jack outlined in his letter. Over the past year, our discipline on operating expenses has driven significant operating leverage in our business. While we do not share segment-adjusted operating income, we wanted to share a view of the business-level profit margins we expect this year. For 2024, we expect each of Cash App and Square's adjusted operating income margins to be in the high-teens range, delivering meaningful improvement in the underlying profitability of these businesses each of the last two years. Across both ecosystems, our efforts are centered on initiatives that improve our product and go-to-market velocity, and which we expect to benefit us into 2025. For Cash App, we continue to round out the features that support our bank the base strategy, and are starting to increase marketing investment behind them. For Square, we're excited about our partnership strategy and planned product launches post-completion of the orders migration work this summer. Sellers will start to see our single point of sale app before year end, which will be a significant unlock for simplifying our value proposition. From a profitability perspective, we are now expecting at least $1.44 billion in adjusted operating income in 2024, or 16% margins on gross profit, with efficiency initiatives underway to improve our structural costs and corporate overhead. This also reflects plans for a step-up in sales and marketing in the back half for both Square and Cash App, as we invest behind the strong unit economics and margins in each business to drive growth into 2025. Our updated guidance now implies Rule of 35 for full year 2024, a significant improvement compared to 2023, and progressing us towards our goal of achieving Rule of 40 in 2026. Finally, as our margins and free cash flow generation have improved, we also plan to return more capital to shareholders. We very recently completed our inaugural $1 billion share repurchase authorization. And today, we're excited to announce an incremental $3 billion share repurchase program. With that, I'll now turn it back to the operator to start the Q&A portion of the call.

And your first question comes from Tien-Tsin Huang with JPMorgan. Your line is open.

Thanks a lot. Great results here. I did like the go-to-market discussion in the letter here, Jack, and definitely excited for Nick to lead sales. But I want to ask you, Jack, just curious what inspired this shift to a functional org structure? Why now? What outcomes do you, or should we expect from the change in the short to mid-term? Is it more collaborative products, or is it just more products? And what are the risks? Because whenever we think about these kind of changes, I always worry about the risks and I'm sure you have some guardrails in place. So anything you could share would be terrific. Thanks.

The short answer is that this will lead to improved technology, design, and ultimately a better product. I want us to be able to accelerate our progress with new technologies, especially the AI models that are emerging in the market, which level the playing field for us. Viewing this technology through the perspective of an engineering and design-focused organization, rather than through separate business units, will enhance our ability to move efficiently and quickly. Currently, we have several business units, each representing different brands and clients. As we've discussed, our strength lies in combining these units, and I strongly believe that this new model will offer us greater flexibility and foster collaboration. The main advantage, in my opinion, lies in concentrating on superior technology, design, and products by placing engineering, design, and product at the forefront of the company. Additionally, centralizing sales will bring about a significant change in our approach to Square's market strategy, which complements the work we've been doing on the product front. I am truly excited about this. In terms of risk, we've taken measures to mitigate it by focusing on revamping the reporting structure. Previously, each business unit was organized functionally. This change effectively removes the business unit lead structure, appoints a new functional lead, and moves forward. Most employees will not notice any change; however, it allows us to concentrate on our disciplines and enhance our talent and execution, especially through the lens of technology and design. I believe we have addressed the risks effectively. Our goals remain unchanged, as do the assignments tied to products and projects. As we gain confidence, we will evolve our operating model and improve our collaborative processes. For now, this is simply a shift in reporting that will enable us to concentrate on our areas of expertise and significantly enhance them, achieving the outcomes we desire. Therefore, I see little risk in this move as we remain committed to our established goals.

Glad to hear it. Thanks.

And your next question comes from the line of Timothy Chiodo with UBS. Your line is open.

Great. Thank you for taking the question. I really want to dig in on the US GPV trends within the seller. So, two factors that have impacted growth in the recent past have been discretionary spend, which you called out earlier, particularly you called out earlier, the 2021 and '22 cohorts. And also, there's been the weakness in the MKE, which was in the shareholder letter. But looking ahead, you have a combination of easing comps, you have the pre-auth and product work done, you have sales force hiring ahead. You mentioned reinvestment in marketing, distribution partnerships. Granted, many of these factors are more 2025 or 2026 drivers, but with that in mind, maybe you could touch a little bit around, or expand upon the second half GPV expectations, and then somehow these initiatives would be more supportive for next year? Thanks a lot.

I can begin with this, and then Amrita can add. We have a great opportunity for Square right now. For the past few months, we have concentrated on establishing our product priorities, simplifying our product approach, and ensuring we have a more cohesive, understandable, and intuitive system. We are examining every aspect of our offerings, from onboarding and acquisition to the dashboard for sellers, as well as our products and hardware, and how we approach marketing. Everything has been reviewed and improved, including our orders migration, the platform, and unlocking features to ensure we are competitive. With sales now centralized under Nick, I feel we have a solid solution. All the components are in place and I believe most of them will come together towards the end of this year, particularly from late summer to the year's end, and will really come to fruition next year. These changes will result in a much stronger foundation for us, allowing us to effectively compete with our peers in a way we haven’t in years. I’m confident in the moves we’ve made, especially in prioritizing onboarding and products to support the acquisition and retention of our sellers. We are ensuring we have a robust and reliable platform that offers features comparable to our competitors, while also improving our go-to-market strategy, including newer initiatives like field sales that our peers have successfully utilized despite having a weaker product. With these strengths in place, I believe we are well-positioned for excellent results moving forward.

And, Tim, I'll just add some color as well with respect to GPV trend lines that we're seeing. For the second quarter, GPV was up 8% year-over-year, which is a slight moderation from the 9% year-over-year growth rate that we saw in the first quarter. And as we look towards the back half of the year, we expect to see stability in that GPV growth rate compared to what we saw in the second quarter as I noted earlier. When you unpack some of what's going on there, it is very consistent trend lines with both what we've called out over the past couple of quarters as well as what we're seeing externally. We're seeing relatively consistent trends from a churn and customer acquisition standpoint, with more of the moderation coming from same-store growth or GPV per seller, which continue to moderate a bit on a year-over-year basis. And we've seen many other companies note similar softness from a discretionary consumer spend perspective as we look at external data points, showing a dynamic macro backdrop, whether it's slower new business formations or industry-specific data across the verticals that we serve. Now, with that backdrop, we have still been able to grow the Square business strongly from a gross profit perspective, a 15% growth in the second quarter, and with outsized growth in the areas that we are really strategically inflecting, whether it's our vertical points of sale, which grew 21% on a gross profit basis in the second quarter, or our banking products, which grew 27%, or our international markets, which grew 34%. Each of those areas showing strong product market fit with those customers that we're serving. And so what we're focused on more than anything at this point, as Jack noted, is what we can control, which is improving GPV growth and ultimately gross profit growth by investing across partnerships, ramping our marketing spend, simplifying our onboarding tools, and launching new products.

Thank you, Jack. Thank you, Amrita.

And your next question comes from the line of Darrin Peller with Wolfe Research. Your line is open.

Thank you, everyone. Great job. I want to discuss the new distribution partners you've mentioned, like US Foods, which are significant additions. You noted that they represent about 40% coverage of the restaurant sector. Could you elaborate on the potential impact of this on actual GPV over time? How does this align with your strategic roadmap and timeline? Additionally, are there any other partnerships we might expect in the near future, domestically or internationally? It seems like a valuable enhancement.

We have been rethinking our approach, including our partnerships. We’re focusing on three types of partners: those that are specific to certain industries like food and beverage, those that have a broader reach across various regions and business sectors, and third-party sales organizations. Regarding food, we’ve made significant strides, particularly in the food and beverage space, and have signed on US Foods. This partnership allows us to serve about 40% of restaurants in the United States, which is quite substantial. We also have a solid pipeline of vertical and horizontal partners domestically. On the international front, we are making considerable progress, especially with bank partnerships outside the US, and we are looking to sign more of these. Additionally, we are investigating third-party sales internationally, as this approach seems more promising than what we currently experience in the US, where we believe we can achieve the greatest impact.

That's great. Thanks, Jack.

Thank you.

And your next question comes from the line of Ken Suchoski with Autonomous Research. Your line is open.

Hey, good afternoon. Thanks for taking the question. Direct deposit has been a focus for the company for some time. I don't think I saw it in the letter, but I think we're still at a few million recurring paycheck direct depositors. One of your main competitors has, call it, 4 million to 5 million direct depositors. What's it going to take to push this number meaningfully higher? What's working? What's not working? And is there any way to think about the adoption curve around direct depositors and the visibility you have into that? Thanks so much.

Yeah, I can start and Amrita can follow up, but there's three main ways that we believe we will drive direct deposit and this is all captured in our bank the base strategy, which we referenced in earlier earnings letter. The first is packaging, the second is around marketing, and the third is products. I'll start with packaging. We want to make sure that the benefits of depositing your paycheck is super clear in the app. So, one of the things we're doing is those who deposit $300 each month get access to free overdraft coverage up to a certain amount, 4.5% savings yield, priority phone support, which is really important and free in-network ATM withdrawals, in addition to early access to the paycheck. So, making sure that those incentives are clear. Marketing is another one. We're investing in the back half of the year as we've been further refining our strategy based on the impact that we're seeing. Again, like, the incentives matter here. So, we have deep expertise in peer-to-peer referrals and Cash App Card with Boost. We're starting a test this past quarter and seeing some strong results around our marketing and just like marketing those incentives. And we're cross selling direct deposit through in-app messages as well. And then finally, in products, we want to add spending insights to the Cash App Card so customers can make more informed financial decisions, improving our web experience to look at balances and review statements. That's what a lot of our customers expect from their bank and they should expect it from Cash App as well. And then, integrating commerce by expanding buy now, pay later on the Cash App Card later this year. These are all ways that people can make their money work more for them, and reasons why they just want to direct deposit their entire paycheck to cash up that they have much better utility. So, that's how we think about driving it. And again, it all goes back to the bank the base strategy. And I'll let Amrita follow up.

I would add that we're focusing on two key metrics to evaluate our performance against our banking strategy, which aims to make Cash App our customers' primary financial tool. The short-term metric is inflows per active user, while the medium to long-term metric relates to paycheck deposit actives. In terms of inflows per active, we've seen strong engagement momentum in the first half of this year, with double-digit growth in both the first and second quarters driven by our banking products, particularly Cash App Card and Cash App Borrow. The Cash App Card often serves as the initial entry for our customers into banking with Cash App, and as its utility grows, we expect a higher percentage of inflows from those users. Cash App Borrow offers customers access to small-dollar credit, similar to working capital, which is essential for establishing a primary banking relationship. Enhancing engagement and the adoption of these key financial services is leading to improved engagement and higher inflows per active user. Regarding paycheck direct deposit actives, this is a long-term strategy that we have clarified throughout the first half of this year. As Jack mentioned, we've made significant progress in packaging, marketing, and product features. The approximately $2 million in paycheck deposit actives has primarily grown organically, and that number continues to rise each quarter and year-over-year as we've increased penetration into our Cash App Card user base, even during the second quarter. Additionally, as noted by Jack, we have more developments planned from both a product and marketing standpoint that we believe will enhance our overall banking products and support the long-term goal of capturing their paycheck deposits.

Great. Thanks so much.

And your next question comes from the line of Jason Kupferberg with Bank of America. Your line is open.

Hi, guys. So, lots of balls in the air at Square. We've gone through a lot of it. I'm curious, as you look ahead to 2025, which of these newer product and go-to-market initiatives are really best positioned ultimately to move the needle on GPV growth, if you had to highlight maybe the top couple or so?

I believe the most crucial aspect is our platform and ensuring its reliability. We have faced challenges in the past when our service was unavailable, making this our top priority. It's essential that we maintain uptime for our sellers without impacting their operations. This involves not just keeping our servers running but also offering features that enable offline functionality, letting them continue making sales even during Wi-Fi outages. We've been discussing orders migration, which involves transitioning our system to a newer framework for adding features like pre-auth and deposits. The recently launched Square Kiosk is built on this new platform, and we plan to scale it to all our features by the end of summer, which is on schedule. Currently, we're testing pre-auth capabilities with select sellers through bar tabs, allowing us to cater to a broader range of sellers including more bars, full-service restaurants, and omni-channel retailers. Onboarding has been a major focus as noted in the shareholder letter; we've reduced the signup process from over 10 minutes and 30 steps to just four. This allows users to access the dashboard immediately, explore our full product range, and start using our services. More importantly, this gives them a sense of what Square offers, making it easier for them to engage with us. Additionally, we are consolidating our apps from four or five to just one, simplifying our go-to-market strategy. Users will only need to download the Square app from the App Store or Google Play, which will then customize itself based on their preferences and usage within their business role. We're leveraging advanced technology to personalize the user experience across our apps, hardware, and dashboard. In summary, we are focused on product development and customer acquisition and retention. By centralizing sales and having a unified go-to-market strategy with strong leadership, we believe these efforts will yield significant results and position us ahead of our competitors.

Thank you.

And your next question comes from the line of Ramsey El-Assal from Barclays. Your line is open.

Hi, Jack and Amrita. Thanks a lot for taking my question this evening. I wanted to follow up on some of your responses around the orders migration and replatforming project. And could you help us think through the incremental sort of market opportunity that it opens for you guys, and maybe also comment on the sales strategy to sell in the new capabilities? Will you be leveraging inside sales, or cross-sell, or how do you kind of proactively get that to market expeditiously?

Yeah…

Go ahead, Jack.

I believe the most significant aspect of the orders migration is that it provides us with a more flexible and reliable platform for development. This upgrade unlocks numerous features that align us with, and even surpass, our competitors, particularly in the food and beverage sector. As mentioned earlier, features like pre-authorization and bar tabs have been previously restricted due to this work. However, it’s not solely about these specific features; it's about achieving a greater rate of development because we now have a stable, cohesive, and enabling platform. This allows us to accelerate our pace and enhance our products. Our product has always been our strength, and I believe its quality significantly exceeds that of most of our competitors. Historically, we've struggled to align this product strength with our go-to-market strategy, and we're in the process of updating our approach, especially in light of our competitors' actions. Customer acquisition has been challenging because we’ve implemented too many steps for sellers. We are either launching or preparing to launch all of these improvements, which positions us to make Square a leader for sellers once again, something we haven't experienced in quite some time.

I can provide some insight into the significance of the orders migration for us. This transition shifts us from a payment-focused platform to one that emphasizes sales. Most of our products were designed around the idea that a single payment was central to a transaction, but as we know, commerce has become much more intricate. For example, when you order online and pick up in-store, the order and payment can occur separately. Similarly, at a full-service restaurant, placing an order and completing the payment can be two distinct steps. If a customer purchases five items from an online seller and wants to return two, we need separate processing for the order and payment for each item. Furthermore, if a service provider requires a deposit before commencing work, the order represents the foundation of their business, allowing for multiple payments as we implement the orders migration. This change empowers our sellers to be more versatile in their sales approach, operate more efficiently, reclaim time, and utilize data to better meet customer needs. Recently, this migration enabled us to launch our kiosk product, which is significant for the food and beverage industry where sellers using kiosks or drive-throughs need to manage orders that may exist both during and after a transaction. These examples highlight how the orders migration benefits various sectors, including food and beverage, services, and retail.

Thank you very much. Appreciate it.

And your next question comes from the line of Harshita Rawat with Bernstein. Your line is open.

Hi, good afternoon. Can you give us some more color on the Core Scientific deal? How do you think about the opportunity within Bitcoin mining hardware? Thank you.

I'm happy to explain. I believe this represents a significant opportunity for us. The industry is highly concentrated, primarily dominated by one provider, Bitmain. We've spent considerable time engaging with Bitmain's customers, and their feedback has been remarkably consistent. The foremost concern is reliability, as Bitmain's mining chips and rigs often experience failures. The second concern revolves around the ability to customize solutions for miners. This feedback led us to develop our own chip and take an open-source approach, allowing our customers to design their systems around any part of our offerings or to purchase a complete mining rig from us. The third major concern is the need for greater transparency in pricing. These three factors are crucial to miners and our customers. Additionally, we are among the few companies globally that can access a 3-nanometer fabrication process, while Bitmain is working with 6-nanometer chips. This advantage enables us to produce a superior product that is more reliable, open, and customizable. This has resonated with every miner we spoke to, and we are already seeing positive outcomes from a recent deal we announced, with a robust pipeline ahead. I am completely confident that this will become a significant business for us, and I believe we will capture a substantial portion of the market share.

Thank you.

And your next question comes from the line of Lafitani Sotiriou with MST. Your line is open.

Hi, everyone. Great to see the up to $3 billion reload of the share repurchase program. Can you talk to the capital intensity of Cash App and Square? And is it changing as the product mix shifts?

Thank you for the question. Regarding capital allocation, as we aim to become a Rule of 40 company, we anticipate improvements in both our margin profile and free cash flow generation. Our $3 billion share repurchase authorization, succeeding last year's $1 billion program, reflects our commitment to return more capital to shareholders than what is necessary for business operations. To support our operational expenses, we have achieved significant leverage over the past year or two in areas like personnel, overhead, and our unit economics across various businesses. We plan to maintain this focus, as evidenced by our raised profitability guidance, which highlights a strong second quarter and better expectations for the latter half of the year. We are dedicated to enhancing efficiency and discipline in our operating expenses. Additionally, our balance sheet supports lending originations tied to our core products, including Square Loans—which we mostly sell off to investors—Afterpay's buy now, pay later service, and Cash App Borrow. These products generally involve small loans averaging between $100 and $200, repaid quickly, which makes them act like working capital for our customers, allowing us to effectively utilize our balance sheet to support growth in these areas. Looking ahead, we have flexibility in our funding strategies, which could enable us to diversify our investor base for buy now, pay later and Borrow over the medium to long term. Our priority remains on the strong unit economics and favorable risk-return profiles of these products, as we aim to attract long-term investment.

So, can I summarize the capital intensity is broadly the same and we should expect to see ongoing share repurchase programs over time as the profitability improves as you move to Rule of 40?

Yeah. Our capital allocation program is, as I said, first and foremost, support the organic growth of the business, and to ensure that we can also support a diverse balance sheet, including some of these lending originations, some of which we may sell off, and then to return excess capital to shareholders, and that's what you see today with $3 billion purchase authorization.

And your next question comes from the line of Dan Dolev with Mizuho. Your line is open.

Hi, Amrita and Jack. Thank you for taking my question this evening. Great results. I wanted to ask about Cash App Pay. It looks like it continues to grow. I think you mentioned volumes up seven times year-over-year, 18% quarter-over-quarter. This seems like a huge opportunity. Can you maybe talk a little bit about the drivers and what to expect in the coming six to 12 months from that? Thank you.

Yeah, you're right. The volume was up more than 7X compared to the prior year, and 18% quarter-over-quarter. What's driving the growth is our sales team, Afterpay's enterprise sales team. As of June, Cash App Pay actives were more than 80% of the scale of Afterpay US actives compared to less than 25% a year ago. We're signing many large merchants. This past quarter, we added Google Play, which is a top merchant for Cash App Card, and we're finding that merchants value Cash App Pay because they can access all Cash App customers, our Cash App Pay actives are highly engaged and we offer competitive pricing. So the formula is working and the sales team is doing an amazing job and we'll continue to grow.

Great. Thank you so much.

And your next question comes from the line of Bryan Keane with Deutsche Bank. Your line is open.

Hi, thanks for taking the question. Can you help us understand the pricing opportunities inside of the Square seller, especially with some of the product acceleration refreshes, thinking just about pricing higher for value versus some of the pricing transparency, and potentially coming in at a lower cost of ownership that you mentioned in the shareholder letter for some of the incumbents and digital peers? Thanks.

I believe we have significant opportunities ahead. Many of our competitors are increasing their prices without necessarily improving quality or offering more products and features. We have focused extensively on enhancing our quality and expanding our offerings. Additionally, we are revising how we approach and present our pricing to customers. Currently, we are reviewing these aspects and analyzing numbers to find better ways to package and bundle our products. I am enthusiastic about starting to test these new ideas this year. Given what our competitors are doing with their pricing, we have a unique chance to capture a larger share of the market, and we plan to ensure that our pricing is not a hindrance. Simplifying our approach will allow us to bring customers in quickly so they can fully appreciate the breadth of our ecosystem and its value, supported by straightforward pricing moving forward.

Got it. Thanks so much.

And we will now take our last question from Will Nance with Goldman Sachs. Your line is open.

Hey, I appreciate you squeezing me in here. I wanted to ask a question on the Cash App monthly active this quarter. I think there was a comment in the shareholder letter about some enhancements made to promote a healthier ecosystem, as well as a strategic pullback in marketing spend. So, maybe you could kind of elaborate on what's driving those, and maybe specifically on some of the enhancements that you made? Appreciate it. And thanks for taking the question.

Sure. Thanks, Will. So, in June, we ended the quarter with 57 million monthly actives in Cash App, which was a growth of 5% year-over-year, similar to the growth rate that we saw earlier in the year as well. We see a really compelling opportunity here to drive actives on growth for consumers in the US with less than $150,000 in household income. That represents 80% of the US today. And so, there's significant opportunity to continue to gain market share. Some of the enhancements that we called out specifically in the shareholder letter are really to drive our continued focus on promoting a healthy ecosystem. So, it includes changes to the onboarding flow, which can, among other things, give us a better understanding of our customers, enable access to more products, and higher limits for those customers, and also helps create opportunities for cross-selling. We're continuing to see strong engagement as we make some of these changes. We really have focused on driving deeper engagement across our financial services and commerce products for our customers, and you see that evidenced by the strong growth of inflows per active, which grew, as I noted earlier, 10% year-over-year. From a marketing perspective, we've been fairly disciplined in marketing as we refined our bank the base strategy in the first half of the year, and we're now ready and planning to ramp spend in the back half of the year on various campaigns. And you heard about some of those earlier as we talked about our bank the base strategy, or engaging our customers in our banking products, and ultimately earning their paycheck. As we think about the opportunity ahead, we see significant opportunity to continue to grow across our base of potential customers in the United States. We know Cash App resonates strongly with Gen Z and millennials. Those customers, those demographics, make up nearly 75% of our active base, and we think there's plenty of room to grow because we estimate we're only 34% penetrated in the Gen Z segment and 25% penetrated in the millennial segment. So as we look at the long term, we see an opportunity to continue to grow our active potential base of customers for Cash App.

Appreciate it. Thanks, guys.

And ladies and gentlemen, thank you for participating in today's program. This does conclude the program, and you may now all disconnect.