+ Cash App demand remained strong. In 4Q22, Block’s consumer-facing Cash App division reported revenue growth of 12% YoY to US$2.9bn (73% YoY ex-bitcoin) and gross profit growth of 64% YoY to US$848mn. This was mainly driven by strength in Cash App debit card, instant deposit activity, and new savings feature. Cash App’s monthly active users (MAUs) grew 16% YoY to 51mn, with two out of three of those active users transacting on a weekly basis.
+ Square segment remained resilient. In 4Q22, Square division (point-of-sale merchant business) revenue grew by 19% YoY to US$1.8bn and gross profit grew by 22% YoY to US$801mn. The growth was driven by a 14% YoY surge in Square Gross Payment Volume (GPV) to US$48.6bn and increased origination volumes of Square Loans. Mid-market sellers (merchants that generate annualized GPV of >US$500K) accounted for 39% of Square GPV and continued to remain the fastest-growing seller segment.
– Operating expenses growth to slow, but still growing faster than revenue. Operating expenses for 4Q22 grew 45% YoY to US$1.8bn. Expenses growth was driven primarily due to higher headcount cost and loan losses. Losses increased due to the surge in volumes on Square loans and losses related to the buy-now-pay-later platform. However, total operating expenses growth did slow in 4Q22 compared with the first three quarters of FY22 (70% YoY growth in 1Q22, 66% in 2Q22, and 46% in 3Q22). Management remains committed to slowing expense growth in FY23e driven by measured hiring, real estate consolidation, and careful marketing spend across both Square and Cash App divisions. Net loss for 4Q22 was US$114mn, with FY22 net loss at US$541mn.