BLOCK Investment & Profitability Ecosystem Overview
BLOCK
Appendix
Slide 7
"U.S. Commerce" gross profit opportunity is a combination of U.S. Payments, U.S. ACH,
and SaaS opportunities. U.S. Payments opportunity is calculated by aggregating the gross
receipts of U.S. businesses and adjusting for Square's addressable industries (2017 U.S.
Census), then applying an inflation factor, card payment mix (per December 2021 Nilson
Report), and a 1% transaction margin. The U.S. ACH opportunity uses the 2021 adjusted
gross receipts, applies ACH penetration mix (Nilson Report), a 0.92% transaction margin,
and the number of addressable businesses for Square's Invoices product as a percentage
of Square's total addressable businesses. SaaS opportunity is calculated using the 2021
gross profit per active for each of Square's SaaS products, then multiplying by the number
of addressable businesses respective to each product based on seller size and vertical.
"U.S. Banking" gross profit opportunity is defined by the aggregate sizing of Square
Loans, Square Card, and Instant Transfer. Square Card and Instant Transfer opportunities
are calculated based on 2021 seller gross profit per active multiplied by gross margin, an
estimated attach rate ceiling, and the number of addressable businesses respective to
each product based on seller size and vertical. Square Loans is calculated using
outstanding FDIC U.S. small business loans under $250,000 outstanding as of December
31, 2021, multiplied by the average of Goldman Sachs' estimated revenue rate on small
business loans of 4% to 6%.
"International" gross profit opportunity is defined by the International Payments
opportunity and then extrapolating out International SaaS and International Financial
Services based on a similar mix to the U.S. The International Payments opportunity is
calculated by aggregating 2019 HFCE data (Household Final Consumption Expenditure)
for each of Square's current international markets adjusted for applicable industries, then
converting to USD and multiplying the 2-year card penetration CAGR to each country, and
a 1% transaction margin.
Slide 11
"Community (P2P)" gross profit opportunity is calculated based on the approximate gross
profit percentage of Cash App's Community (P2P) volume opportunity. The Community
(P2P) volume opportunity is calculated based on U.S. Census data on adult population as
of 2019, adjusted for population growth, multiplied by estimated monthly peer-to-peer
volumes per individual, which is the sum of Cash App internal average volume per
monthly active, added to estimates for Zelle and Venmo monthly volume per customer
based on respective public disclosures. as of Q4 2021.
"Financial Services" gross profit opportunity is calculated by multiplying the approximate
Cash App Card gross profit percentage by total debit and prepaid transaction volumes per
The Nilson Report (December 2021).
"Bitcoin (Consumer Trading)" gross profit opportunity is calculated by taking the average
annual bitcoin trading volume between 2020-2021 per CoinGecko, adjusting for U.S.
volume and washed trades, multiplied by the approximate Cash App bitcoin gross profit
percentage.
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