Good day, ladies and gentlemen, and welcome to the Block First Quarter 2025 Earnings Conference Call. Today's call will be 45 minutes. 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 First Quarter 2025 Earnings Call. We have Jack and Amrita with us today. We will begin this call with some short remarks before opening the call directly to your questions. During Q&A, we will take questions from conference call participants. We would also like to remind everyone that we will be making forward-looking statements on this call. All statements, other than statements of historical fact, could be deemed to be forward-looking. These forward-looking statements include discussions of our outlook, strategy, and guidance, as well as our long-term targets and goals. These statements are subject to risks and uncertainties, including changes in macroeconomic conditions. Actual results could differ materially from those contemplated by our forward-looking statements. Reported results should not be considered an indication of future performance. Please take a look at our filings with the SEC for a discussion of the factors that could cause our results to differ. Also note that the forward looking statements including earnings guidance for 2025 discussed on this call are based on information available to us and assumptions we believe are reasonable as of today's date. We disclaim any obligation to update any forward looking statements, except as required by law. Further, any discussion during this call of our lending and banking products refer to products that are offered through Square Financial Services or our bank partners. During this call, we will also provide a preliminary estimate of GPB growth for the month of April. Actual April results may differ from this estimate and may not be reflective of performance for this full second quarter. 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 to Jack. Thank you all for joining. My letter goes through what

we've seen in our performance so far in 2025 and why we expect growth to accelerate in the second half of this year. Our work on product velocity and go-to-market is showing results as square gain share this quarter we'll keep pushing our roadmap forward at a faster pace and bring ai automation to more sellers on cash app our growth this year will be driven by increasing engagement with our base but we're focused focusing more of our efforts on expanding our network including growing with teens and families optimizing our product controls and increasing marketing spend where we'll see strong returns and with that i'll turn it over to amrita thanks jack in the first

quarter we delivered strong results in Square and demonstrated discipline across expenses with our highest adjusted operating income and adjusted EBITDA ever. While cash-up gross profit came in below expectations, we have conviction in the growth drivers for the back half of the year and our ability to drive long-term value. Let's talk about our results in the first quarter. Total block gross profit was 2.29 billion dollars, up 9% year-over-year. Square had a strong quarter with gross profit growth of 9% year-over-year, driven by GPV growth of 7.2%, with constant currency GPV growth of 8.2%, and increasing banking attach rates. We see our product and go-to-market strategies working as we expanded market share in our target verticals. We analyze incremental market share across various consumer spending and small business volume benchmarks. Across the verticals we operate in, we saw improved growth relative to these benchmarks. Our product innovation has been robust, and we're excited to host our first product release event in two weeks, where we'll showcase over 100 products and features, such as new Square Online features, improved food delivery integrations, and better support for sellers with large invoices. From a go-to-market perspective, we signed several upmarket sellers and continued to add partners across horizontal, vertical, and third-party sales organizations. Field sales and partnerships are key channels for us going forward, and we're very encouraged by recent success. Cash App gross profit was up 10% year-over-year. While gross profit per monthly transacting active reached $81 in the quarter, we saw changes to consumer spending behavior that we believe impacted inflows and cash-up card spend. Tax refunds are an important seasonal driver of cash-up inflows. This year, we saw a pronounced shift in consumer behavior during the time period that we typically see the largest disbursements, late February and into March. This coincided with inflows coming in below our expectations. During the quarter, non-discretionary cash-up card spend in areas like grocery and gas was more resilient, While we saw a more pronounced impact to discretionary spending in areas like travel and media, we believe this consumer softness was a key driver of our forecastness. From a profitability standpoint, adjusted EBITDA was $813 million, up 15% year-over-year, and adjusted operating income was $466 million, up 28% year-over-year. For the trailing 12 months ending in March, adjusted free cash flow was $1.53 billion compared to $1.07 billion a year ago. So far this year, through the end of April, we have repurchased approximately $600 million of stock, and we intend to continue returning capital to shareholders over the course of the year. Let's talk about our outlook for the rest of the year where we expect to accelerate growth across both Cash App and Square. We recognize we're operating in a more dynamic macro environment, so we've reflected a more cautious stance on the macro backdrop into our guidance. We're now expecting gross profit growth of 12% for 2025, or $9.96 billion. We expect gross profit growth of 9.5% in the second quarter. We continue to expect gross profit growth to accelerate in the back half of the year, into the low double digits in the third quarter, and end the year with mid-teens gross profit growth in the fourth quarter. Let's unpack some of our growth drivers. We hit a key milestone in March by receiving SDIC approval to use our bank, Square Financial Services, to issue consumer loans for cash at borrow nationwide. This unlocks two important benefits which we expect to have a meaningful impact starting in the third and fourth quarters. First, it roughly doubles the number of cash-up actives we can offer borrow to by enabling us to offer loans across more states. And second, it enables significantly better unit economics as we can originate and service loans in-house. Given our expectation for borrow to be a meaningful contributor to gross profit acceleration in the second half, I want to take a moment to talk through why we have such high conviction in our ability to scale this product at attractive unit economics and margins. We have a world-class underwriting team and we've maintained healthy loss rates for borrow across historical cohorts. With a weighted average duration under 30 days, we are confident in our ability to adapt to changing macro conditions. Our machine learning models leverage real-time customer data, which we believe is one of the most reliable early indicators of credit quality. We monitor performance daily, enabling us to dynamically adjust originations and exposure based on our customer underwriting scores. Another driver of growth acceleration is our retroactive BNPL product, Cash App Afterpay, launched in late February. We've seen strong early conversion and adoption in April and are excited to continue ramping this product to more actives. For Square, we expect GPV growth to improve throughout the rest of the year. We expect high single-digit GPV growth in the second quarter, with April global GPV growth expected to be 9.6% on a year-over-year basis. Our seller acquisition payback periods continue to remain within five to seven quarters despite increasing levels of investment. We're seeing traction from our investments in field sales and partnerships, and we're leaning in more. These channels have delivered strong returns, exceeding our expectations for new volume, and are foundational to our strategy of expanding upmarket and winning with more complex sellers. We expect that momentum to continue building as we move through the year. Finally, in Proto, we continue to expect to deliver our first Bitcoin mining chips and systems in the second half of the year. These growth initiatives collectively drive nearly all of the gross profit growth acceleration required to achieve our guidance. As Jack noted in his letter, we're prioritizing efforts to expand Cash App's network with initiatives spanning products and go-to-market. We're confident this work will contribute to long-term growth, but we haven't embedded these initiatives into our 2025 outlook. From a profitability perspective, we now expect adjusted operating income of $1.9 billion for the year, or approximately 19% margin. We've reflected continued investment in sales and marketing and risk loss into our profitability outlook as we expect to invest in high ROI growth initiatives across Cash App and Square. We understand the drivers behind our recent deceleration and growth, and have incorporated updated views on the macro environment into our revised guidance for the year. We're ready to navigate a range of scenarios supporting our customers while responsibly growing our business as conditions evolve. Our path forward is clear. Square is moving faster, building relevant tools, and getting them into more sellers' hands. Cash App is becoming a fundamental part of people's financial lives through accessible credit and banking tools and we are leaning in more on the power of our network to expand new active growth taken together we expect this to support sustainable growth for block over the long run we have the team strategy and organizational strength to navigate potential short-term volatility while continuing to build for our customers i'll now turn it back to the operator to start the q a portion of the call thank you and we will now begin the question

and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 a second time. If you are called upon to ask your question and are listening via speakerphone on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. To be able to take as many questions as possible, we ask that you please limit yourself to one question. Again, it is star one if you would like to join the queue. And our first question comes from the line of Tianjin Huang

with JP Morgan. Your line is open. I appreciate it. Jack, in your letter, you write quite clearly that the company is focused on all the right drivers and you're saying that you're going to call the bottom here and you're looking for acceleration. And of course, there's a lot of macro uncertainty out there so can you just give us a little more on on how you develop this view given what's happening on the ground talking to customers clients employees i'm sure you're talking to go-to-market teams and your product teams um i know the cash app surprised here uh later in the quarter first quarter so just trying to understand the path forward and

and what's driving your conviction thanks yep yeah thank you for the question so So as we've been talking about for the past year, like we have made a lot of changes internally and also to our systems, our engineering systems and technology platform. And we're finally starting to realize that in Square in particular, like Square is now gaining market share. And this is a result of all the work we did to consolidate, making sure that we're pushing on a unified interface, looking deeply at the dashboard and also looking at go-to-market and starting field sales. So I'm very excited about that. And I know we can do more and also bring that mindset more to do Cash App. To be honest, I just don't think we were focused enough and had enough attention on the network and the network density. And that is our foundation. That is our base. We, of course, want to deepen engagement with our customers through banking services and borrow. And I have no doubt we will. But at the same time, we need to make sure that we continuously grow our network and that starts with peer-to-peer. and that's doing things like looking at the density, making sure that we're going fully forward with this focus on teams, which is a natural audience for us, the families. One that we believe is massively underserved. It means that we're looking at our product controls. There are people that don't see Cash App as a bank right now because they put their money in and it blocks them from doing what they want. So there's really good customers there that just aren't able to do what they wish. And that's where the trust piece comes in. And we need to turn that around and just look critically at all of our velocity controls and making sure that we're there for good customers. And then third is just looking deeply at our marketing spend and investing in something that we know works. We know that referrals is an area that works. We want to be smarter about it. The world has changed since we launched Cash App and since we launched Peer-to-Peer, and we need to update that view. But NetNet, I believe, we just haven't put enough attention on making sure that we do the natural long-term strategic thing of increasing network density and also the expansion of such. Underpinning all this is our work on AI. As I said in my letter, we've built this tool called Codename Goose, which allows an autonomous way for agents to help our engineers be a lot more productive. But we're seeing this benefit the entire company. We have a huge number of people using this tool right now. It's model independent, so we're not dependent upon any one company for it to work. and it's focused entirely on autonomy, which ultimately means productivity. And it's something that we think we can not only continue to increase our productivity around, but also make it customer-facing. And that's within Cash App itself, and that's within Square. We're starting to see some of that work in Square today.

Actually, we rolled out to a small percentage today.

um some work that helps sellers allow to allows them to see their business in a much better way get insights deeply by just asking a question but there's a lot more to come and what excites me the most is just the velocity at which we can move it uh and that's what gives me the confidence about our growth ultimately is that we are focused on the right things and that we have

much better tools to go after them thank you and your next question comes from the line of Darren Peller with Wolf Research. Your line is open. Hey guys, thanks. Amarita, maybe you can

just give us a little bit more color on what changed over the past 90 days. I know GPV looked pretty good on the square side, so I know it was more cash app-based, but really in the consumer you're referencing having changed behavior. And then more importantly, I think looking forward, if you can give us a little bit more context and specifics into what macro assumptions are now embedded, maybe above and beyond what you're already seeing even? Is there a more conservative approach in your outlook for the rest of the year in some ways, given the guide change and any granularity on the segments or what you're including in there would be very helpful for us?

Sure, Darren. Happy to jump in here. So as I noted earlier in my prepared remarks, we saw a change in behavior in our Cash App customer base this tax refund season versus what we've seen in prior tax seasons. And our typical approach for guidance is to align closely with our internal forecasts, but we took a different approach this quarter. Our gross profit guidance here reflects the view that what we saw in Cash App in the first quarter may be a sign of a changing macro backdrop. Given that uncertainty, we've embedded macro softening, even beyond what we've seen so far, more meaningfully into our growth outlook. We have not seen that materialize through April, but we thought this approach would be prudent given the wider error bars. From a cost perspective, we wanted to maintain flexibility in our guidance to invest in ways, some of the ways that Jack was mentioning that fuel long-term growth. So we're assuming we continue to invest throughout the remainder of the year, though of course we can be nimble here and believe we have the ability to change course on growth investments quickly if our ROI thresholds are not met. But based on what we see today, we see meaningful opportunities to drive long-term growth at strong returns across our business and will be nimble to

the environment as it evolves. Your next question comes from the line of Tim Chiodo with UBS.

Your line is open. Great. Thank you for taking the question. I want to talk a little bit about the cash card afterpay functionality and some of the early results you're seeing there. So to set the stage, we gather that you have a large base of cash card volumes that gives an opportunity for this functionality to be added into, meaning post-transaction splitting of payments that are already being made or maybe even driving incremental payments. So the question I think investors have is really the first part is for the early users that are using this, just a rough sense of the adoption or the penetration of their payments, meaning how much are they splitting or opting to split. And then the second part is more of the longer term aspect, which is the game plan and to help to move some of these customers over to payroll direct deposit.

Yeah, I'll take the long-term view. So we do believe that this is a great incentive for moving customers over, and we think this is deeply strategic. We're super excited that Afterpay and the Cash App card are together as well. We have this massive distribution platform, and we see Afterpay, I should say, as an evolution of a credit function and one that has required some iteration and some invention. And this is, you know, one step along that path, but not the last step. And this is even more critical for a younger generation and specifically teens who just want different options in order to plan their payments. It's really about cash flow management more than it is anything else. and the cards that have that flexibility and have the ability to help me get to my next paycheck, which is a post-pay environment that allows me to do what I need to do but does not put too much burden on myself that I feel trapped or I don't want to use it again. That's the sweet spot, and that's what we're offering, and we're super excited to continue to build upon it now that we have this first go-out live.

Yeah, and I'll just add, Tim, you know, really we saw two meaningful integrations for Cash App and Afterpay in the first quarter. First in February, as you know, we enabled eligible actives to split purchases retroactively on their Cash App card for a small fee. We're really encouraged by the early results we've seen here with strong attach rates and healthy growth trends. And we intend to make more actives eligible, Cash App card actives eligible. We'll obviously take a test and learn approach here, starting small and scaling thoughtfully as we gather more data and build confidence behind this. But we're pretty excited by what we see in these first month or two of being out in market. The second integration, obviously, in March, we introduced Cash App Afterpay in the U.S., which is basically the integration of the two brands in a more meaningful way, allowing eligible actives within Cash App to use Afterpay's pay-in-for, pay-monthly products. It's a pretty meaningful unlock for us that deepens the connection between the ecosystems and exposes our buy now, pay later products to the 57 million monthly actives over time. Again, we'll start small and build. This is something that we think could be a more meaningful driver as we think ahead to 2026 and as we continue to expose Afterpay's extensive merchant base at online checkout to the large base of Cash App customers. So we're excited about both integrations. the product velocity that we're seeing between the two brands coming together in the recent months, and what could be ahead as we continue to ramp them.

Thank you.

And your next question comes from the line of Ramsey LFO with Barclays. Your line is open.

Hi, Jack and Amrita. Thanks for taking my question. Your roadmap to reaccelerate cash app gross profit growth later this year really leans into borrow. And Amrita, it sounds like you're comfortable expanding borrow, even if the macro deteriorates a bit further. Maybe you could add a little bit on your commentary around sort of the macro resiliency of the borrow model and also your confidence level that you're underwriting models are mature enough and well-tuned enough to really support accelerating that loan volume growth.

Sure. What I'd say, first of all, is that there are a couple of key factors that go into expanding borrow. As you heard some of them on the call, first is our TAM expansion, that now that we're serving borrow via Square Financial Services or in-house bank, we have the ability to expand the number of states and effectively double the number of actives that borrow will be made available to. That also improves our unit economics, which gives us more room within the P&L to experiment. We're also increasing borrow limits for eligible customers who receive their direct deposit within Cash App and potentially additional eligible actives as we build greater signal and data into our models. So there are a number of different things that go in to the broader-based borrow expansion in the back half of the year. Why we have confidence in that? Ultimately, we believe underwriting through real-time machine learning-based models is a core competency of the companies. We haven't seen any changes to underwriting outcomes. We've seen very consistent repayment rates. But if we did, we feel we have the ability to move quickly and manage underwriting outcomes. Not only, obviously, is the team world-class and very experienced here, but the design of our lending products with shorter duration, smaller dollar loans, no revolving balances, help us mitigate potential risk and support healthier underwriting performance. Maybe just to go a click deeper on borrow specifically, loan durations are under 30 days, which provides us with fast feedback loops to observe customer repayment activity and adjust if needed. Our models generate custom underwriting scores for our customers, which drives our underwriting decisions. Those scores are dynamic, constantly evolving based on real-time data and new information that we gather, we can take in those signals and move quickly if the risk profiles were to change. Ultimately, we have pretty early visibility into loan repayment, as early as seven days after origination. We have a good understanding of cohort level underwriting performance within a week after borrow loans are due. All of that goes towards our ability to determine eligibility and pivot quickly if we were to see a change, which we have

not yet. Very helpful. Thank you. And your next question comes from the line of Dan Dolev with

Mizuho. Your line is open. Hey, guys. Thank you so much for taking my question. Can I ask you about, Jack, about Proto? You said you continue to expect to deliver it in the second half of the year. I think a lot of people, a lot of investors in Block are looking sort of for the next cash app. And this feels like it could be one of those things, kind of like a transformational product can you maybe talk a little bit more about the vision and how big it could be uh if it becomes you know as big as we think it will thank you mr dorsey i don't know if you might be on mute i'm

sorry i was on mute sorry uh okay thank you um so uh we're super excited about preto we're on track to deliver um our chips and systems uh later this year as we said in the letter and um the reason we're so excited is because we've seen this huge opportunity with Bitcoin miners and the systems that they have to deal with on a regular basis. We focused ours on reliability. We focused it on flexibility. And we really, you know, went out and talked to the customers about what their actual needs are. And speed and technology were obviously at the top of that list as well. So we're in a very, very good position. We have very close relationships with our vendors and our manufacturers and building in the United States. So these are all things that add up to a pretty compelling product. We believe the Bitcoin hardware supply industry is a $3 to $6 billion revenue industry. And what's unique about Proto is that it's not just the common huge miner form factor, but it will allow even consumers and tinkerers to play with mining and build novel platforms and experiments and products of their own. So this is our first step. This is a completely open source initiative as well, which allows us to get a lot of the feedback from the community and also integrate any improvements right away and just build an entirely new developer ecosystem around mining, which really hasn't been done at scale before, which we're also super excited about.

I agree. Thank you.

Thank you.

And your next question comes from the line of Raina Kumar with Oppenheimer. Your line is open.

Hi, thanks for taking my question. Could you walk us through some of the products that will be the biggest driver behind Square's gross profit acceleration this year? and also give us a sense of how much of that Square gross profit acceleration will come from

the U.S. versus international. Hey, Reena, happy to start on this one. You know, first what I would say is what we've seen so far this year for Square is encouraging in terms of the share gains embedded in our Q1 numbers as we compare our growth in Q1 relative to Q4 compared to broader industry indices. We feel we're clearly gaining share, which gives us conviction to continue to invest here. Some of that growth in the first quarter was driven by strength in core verticals that are very strategic to us between food and beverage and retail, and also with upmarket sellers or mid-market seller segments greater than half a million dollars in the annualized GPV. So given the complex consumer spending backdrop, we're pretty excited by what we're seeing in the Square business. Ultimately, we think this comes down to product innovation and go-to-market enhancements. From a product innovation perspective, we've talked about some of the more recent releases that we have, whether it's the Square Online enhancements, improved delivery, you know, courier delivery integrations, better banking and invoices experiences for our sellers. We'll have also a lot more to share about at our product release event in a few weeks' time, so we hope you tune in for that. We've got some things that we're pretty excited about. And then from a go-to-market perspective, we're improving our motion to get the message out to more sellers on these product innovations with more effective sales through our field sales channel that we began really towards the end of last year and are looking to accelerate hiring around given the strong early returns, as well as the partnership motion, where again we are seeing strong returns there. And those two channels being paired with increased marketing spend as well, where we continue to be within our five to seven quarter payback thresholds. Those are kind of the key drivers that we're seeing in the near term. But clearly, the improved cadence around product velocity, product innovations paired with a more effective go-to-market channel between sales and partnerships is driving some early success here for Square. And your next question comes

from the line of Andrew Bach with Wells Fargo. Your line is open. Hey, good evening. Thanks for

taking the question. You guys beat operating income dollars, margin dollars in the quarter, I think by 30 million roughly. However, you're lowering the full year expectation by 200 million, it looks like at the midpoint. Can you unpack the components of this guide down from macro conservatism, decremental margin, incremental reinvestment? And are there any offsets that you're making on the cost-saving side, they're kind of bridging to that $200 guide down.

Sure. Let's talk to the different components, Andrew. So, as I mentioned earlier, from a gross profit perspective, we are taking a different approach to our guidance this quarter. We're embedding incremental conservatism into our gross profit guidance, whereas previously our typical approach is to share a view that's much closer to our internal forecasts. And that's just to reflect the wider error bars, frankly, with a broader macro backdrop. And through April, as I noted, we haven't yet seen that materialize, but we are taking an incrementally more cautious approach in our gross profit guidance. Obviously, our gross profit, the incremental margins on our gross profit are fairly high. And so, that's part of what's reflected in the flow through to operating income, along with strong returns on the investments that we're looking to make across go-to-market and in risk-loss areas. Overall, just stepping back for a minute on our profitability guide, we now expect full-year adjusted operating income margins of 19%. And so despite the more cautious macro outlook, we continue to expect margins to expand this year versus last year. That AOI guide gives us the flexibility to invest to drive long-term growth, especially in go-to-market and risk loss, where we continue to see strong returns. But of course, we have the conviction opportunity to be prudent in how we manage the business if the macro environment begins to impact Square or underwriting products in ways that we have not yet seen. As we look at our cost structure, our variable costs, so things like go-to-market and risk loss, make up about 35% of our overall cost base. Again, we have the discretion to dial that back if warranted based on the returns that we see. And we maintain a disciplined approach across our fixed cost base and expect to get leverage out of our fixed cost base in 2025. So those are some of the key puts and takes around the flow through of the high incremental margin gross profit dollars, the ability to invest in high return areas that should accrete

to profitable growth into the future. Yeah, sounds like a pretty balanced mix. Thank you.

And your next question comes from the line of Will Nance with Goldman Sachs. Your line is open.

Hey, guys. Appreciate you taking the question. If I can maybe dovetail off that last question, I wanted to maybe talk about your hiring on the square side of the business and particularly on field sales and direct distribution. Where are you on the process? I was wondering if there's anything you could share in terms of headcount today versus where you would like to be over time. And then just relating it back to that last question, I didn't hear anything, maybe I missed it on the headcount exercise that was reported a couple of weeks ago. So can you just talk about that? Is that included in the outlook? And I think there was some commentary around removing all outstanding positions, unfilled positions. So are you still hiring field sales? And what do you expect the pace to be as we move through the year? Thank you. Sure, Will. Maybe starting on

the second part of your question first, and then we'll come back to where we're leaning in from a sales and field sales perspective. We did have our recent reduction in force from about a month ago embedded in our earlier outlook that we had shared in February. That was consistent with our plans as we entered the year and really driven by, you know, some strategic principles around aligning our teams to our strategy and our focus, you know, raising the bar on performance and flattening the organization, reducing the number of managers in the organization. we do still have areas of investment across the business and some of those areas of investment are related to where we're seeing strong returns and that you know is clearly in our field sales team where we plan to accelerate the pace of hiring for field sales in the second half of this year on the back of the strong early returns that we're seeing we first launched the field sales efforts late last year, and we started to see those efforts pay off. As you saw in the letter, some of the recent larger sellers that we signed in the first quarter, you know, that were signed by our field sales team. Bamboo Dessert and Drink is a 60-location seller that's expanding across the U.S. this year, and they chose Square due to our ability to provide more advanced control over the franchise's back-end menu and loyalty options. That's where you see the breadth of our portfolio helping us win sales when coupled with a strong channel that's now beginning to work for us. And we've made operational changes to maximize the performance of this channel and have continued to ramp field sales hiring through Q1 and as I noted intend to accelerate that hiring on the back of strong returns in the second half of this year. Maybe also just quickly note that we're seeing also strong returns in our partnership channels where we exceeded our expectations for partner-driven leads and partner-driven volume in the first quarter. We're continuing to sign new vertical, horizontal, and third-party sales partnerships globally. And in April, we actually began piloting our first U.S. ISO partnership. It's obviously still early, but it's a channel we're excited to start exploring. So we're on track here as well to grow the number of leads and the amount of closed GPV from partners by 5 to 10 times in 2025.

Awesome. Sounds exciting. I appreciate you getting the question.

And your next question comes from the line of Adam Frisch with Evercore. Your line is open.

Thanks. Just to continue along the lines of the lending theme, two parts, are you planning on getting more aggressive with the entire base for borrow or just the consumers with direct deposit? And is Square Capital also going to lend more to the seller side? And then my second question is, in prior quarters, you disclosed the direct deposit users. I think it was $2.5 million last quarter, and it was growing 25% year over year. So sorry if I missed it in the release, but what were these data points for the March quarter? Thanks.

Sure. So for borrow, I wouldn't really characterize it as getting more aggressive with offers around borrow. The mechanics of allowing Square Financial Service to originate cash-out borrow loans is that we can expand borrow to more states. We were only in a subset of the states in the United States that we could offer borrow to. And now by expanding to more states, we can actually double the number of potentially borrow-eligible actives. So it's not really about getting more aggressive, it's just the mechanics of Square Financial Services being our originator and servicer for borrow versus the external third-party banks that we had. There are elements of borrow expansion that are around providing guaranteed access for borrow. If you're a paycheck deposit active, we think that there is a strong tie between providing credit and becoming someone's primary bank or overall bank the base strategy. these two elements of our business are inherently connected, and we think borrow being such a compelling product for many of our customers can provide an incentive for customers to explore our deeper banking features, including direct deposit. There are elements of being able to increase limits around borrow for existing actives, and I think those are in line with normal course business for us as we improve our underwriting models and gather more data about these customers. From a bank-to-base perspective, we're continuing to make progress here across our banking attach rates. And with Paycheck Deposit Actives, we continue to grow that on a year-over-year basis. It's really about exposing more of our customers to the full set of offerings that we now have. And the first quarter, we launched our first major brand campaign for Cash App, focused on banking and targeting markets where we already have strong network effects in place and so we're excited to see what more we can do here not only exposing greater awareness to our banking features but also bringing the credit elements around borrow more directly tied to direct deposit providing guaranteed access and higher limits in a way that we know our customers are pretty excited about okay so what was the

number on the in the quarter of the number of people using direct deposit i guess we didn't

provide a number this quarter uh what we're sharing is the growth on a year-over-year basis for a paycheck deposit active okay and what was that growth uh we'll share more obviously as things progress we've got a lot in the hamper in terms of what we're working on across the brand awareness campaign and ways to expand the attached rates into paycheck deposit based on the borrow

connections. Okay. I'll follow up offline. Thanks, guys. And your next question comes from the line of Harshita Rawat with Bernstein. Your line is open. Hi. Good afternoon. So, Amrita, I adjusted

for, you know, leap year and FX here, kind of second quarter guide implies a deceleration from the first quarter. And we had kind of expected acceleration because of the new product ramps you were talking about. You talked about stability in April, and I know you're kind of baking in macro softness even beyond what you saw in 1Q. But then you also have, you know, Square GPV being stable, cash-out borrow, afterpay and cash app scaling. I'm just trying to get more color on the second quarter deceleration. I know you talked a little bit about that. And also, any insights we could provide on cash app

and square gross profit growth in April? Thank you. Sure. So, we're guiding to 9.5% gross profit growth in the second quarter. And as we said, we expect the first half of this year to be, you know, the lower point from which we can accelerate with low double digits growth in Q3 and mid-teams growth in Q4, many of the acceleration drivers that we've spoken about, you know, sort of the four key drivers between borrow expansion, retroactive BNPL on cash app card, square momentum, and then the launch of Proto are really key drivers that impact our third and fourth quarter more so than the second quarter. And so second quarter is really a reflection more of the run rate business that we see coming out of Q1. And again, where we've reflected a far more cautious stance than we would typically take in our guidance approach based on what we saw around softening consumer spend in the cash-up business specifically towards the end of the quarter. Again, as I noted earlier, we haven't seen that materialize through April, but the approach that we've taken from a guidance perspective is that we see a more meaningful softening, and that's what's embedded in the guides. from the Q2 as well as full year perspective.

And we will now take our final question from Trevor Williams with Jefferies. Your line is open.

Thanks very much. And kind of along those lines, I wanted to ask on Square GPV, building in more caution on the macro end of the gross profit guide, how does that funnel down into what you're assuming for Square GPV? Because prior you'd been assuming an acceleration to low double digits by the end of the year, sounds like you're already there in April. So just anything more specific on what you're assuming from here for GPV would be helpful.

Yeah, as we look forward, we expect square GPV growth to accelerate to high single digits on a reported basis for Q2. And as we noted in April, we saw what we expect to have seen is 9.6%. And we continue to expect GPV growth improvement from here throughout the end of the year. Obviously, we're making a number of product investments. I'm going to be exposing that innovation along with the future roadmap to our sellers in our announcement on May 13th. And those investments are paired with our go-to-market enhancements across sales and partnerships. So that's what we're executing against. from a guidance perspective, we have taken more of a cautious approach as we think about the broader macro backdrop. Based on what we see in our business so far and the conviction that we have behind the investments we're making, we're pretty encouraged about the trajectory of the

square business. And ladies and gentlemen, this concludes today's call, and we thank you for your participation. You may now disconnect.