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Operator
Good day, ladies and gentlemen. Thank you again for your cooperation. Welcome to the Square second quarter 2021 earnings conference call. I would now like to turn the call over to your host today, Jason Lee, Head of Investor Relations.
Jason Lee
Hi, everyone. Apologies for the delay. We were just experiencing technical difficulties with the conference line. Thanks for joining our second quarter 2021 earnings call, during which we will discuss Square's plan acquisition of Afterpay. We have Jack and Amrita with us today. Also joining us on the call is Nick Molnar, co-CEO and co-founder of Afterpay. We will begin this call with some remarks before opening the call directly to your questions. We would 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. Report results should not be considered as an indication of future performance. Please take a look at our filings with the SEC in the investor deck and press release about our plan acquisition on our IR website for 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. During this call, we will provide preliminary gross profit growth results for the month of July. These represent our current estimate for July performance, as we have not yet closed our accounting financials for the month of July, and our monthly results are not subject to interim review by our auditors. As a result, actual July results may differ from these estimates. We may also discuss financial metrics for afterpay, which are available in afterpay's public balance. Also, we will discuss our non-GAAP financial measures during this call. 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 GAAP results. Finally, we are providing a slide presentation to accompany our commentary on the transaction. This conference call is also being webcast, and both the presentation and the call are available through the investor relations section on our website. An audio replay of this call will be available on our website shortly after the conclusion of the call. With that, I'd like to turn it over to Jack.
Jack
Thanks, Jason, and thank you everyone for joining us today. Before we discuss our plans to acquire Afterpay, which we announced yesterday, I'd like to first share two highlights from the quarter. Continuing our commitment to expand access to financial tools and services, in July we launched Square Banking for our U.S. sellers. This new suite of products will help business owners better manage their cash flow and get more out of their money. Square Banking now includes three core products, two deposit accounts, Square Savings and Square Checking, Joining Square's existing lending products now called Square Loans. By offering essential banking tools that integrate seamlessly with seller solutions like payments and Square Payroll, sellers now have a unified view of the payments, balances, expenses, and financing options. We also announced the launch of a new business at Square. Its name is TBD, which will focus on building an open developer platform with the goal of making it easy to create non-custodial, permissionless, and decentralized financial services. Our primary focus is on Bitcoin, driven by our belief that Bitcoin has massive potential to level the playing field for all. We're going to make our development process completely transparent to the public. We plan to share updates publicly in real time as we have them. Now on to yesterday's acquisition announcement. Today is an important day for Square, for Afterpay, and for what we can do together to better serve our customers. Through this transaction, we will be uniting two companies with a shared focus on economic empowerment and financial inclusion and taking the important opportunity to connect our two largest business units, Seller and Cash App. By integrating Afterpay into Seller and Cash App, we plan to combine complementary businesses while also accelerating even stronger connections and driving more commerce across both ecosystems. Increasingly, we're seeing strong demand for buy now, pay later for both merchants and consumers. and rapid adoption amongst both, especially among younger consumers. This new financial service gives more control to individuals and merchants and is one we want to make part of our combined ecosystem. It's a simple idea, enable a seller's customers to pay for purchases later, interest-free, without having to use traditional credit sources while helping to drive more omni-channel sales to the seller. Afterpay has built this out as a seller tool and combine that with a flexible, responsible payment method for consumers that also includes merchant discovery. As of June 30th, Afterpay served more than 16 million consumers and nearly 100,000 merchants globally. It's a huge opportunity for growth on both sides, and growth in one helps the other, just like the rest of our ecosystem today. Beyond the compatibility of our businesses, we've been drawn from the start to Afterpay's founder-led entrepreneurial teams. Afterpay's co-founder and co-CEO, Nick and Ant, have built an authentic, thoughtful, and visionary team focused on economic empowerment. It's been incredible to witness how effortlessly our conversations flowed around shared ideas and visions. Every conversation has raised the bar on what we can all do together, and our strong collaboration will well serve our integration process. I'm thrilled that upon closing, Nick and Ant will join Square and help lead Afterpay's respective merchant and consumer efforts as part of Square's Stellar and Cash App teams. And I'm excited to see what we can build together. With that, I'd like to turn the call over to Nick to tell you more about Afterpay.
Jason
Thank you very much, Jack. Hi, everyone. It's an absolute pleasure to be here today, back in the U.S. and just in time to co-announce the next phase of our incredible journey. I'm here today because of my co-founder and co-CEO, Anthony Eisen, who only a few years ago sat down with me over some Vegemite on toast around his kitchen table to discuss how we could improve the financial wellbeing of the next generation, to empower them to spend responsibly without having to revolve in debt, interest payments or service fees. I'm thankful every day that Ant and my paths crossed and that we and our families have had the privilege to go on this journey together. It's been an incredible six or so years since, ending our fiscal year 2021, nearly doubling our business year on year, building a loyal base of afterpayers who love the product and a network of more than 100,000 merchants who see increased retail opportunity through our partnership and notwithstanding the recent challenges in the global economy. I couldn't be more proud of what we've achieved so far and know that yesterday's announcement, there is so much more to come. We've been long admirers of the Square team and in many ways have lived parallel journeys as entrepreneurs focused on creating financial empowerment for consumers and businesses alike. As we've gotten to know each other better, the scale and shape of our businesses, the synergies in our products and our shared purpose, it's abundantly clear that we're at the start of an amazing partnership. And I know our team across the globe will share my excitement and enthusiasm at the opportunity to come. We started Afterpay having met by chance as neighbours in Sydney. Both Ant and I were passionate about developing an alternative to traditional finance and credit products. Having seen firsthand the impact of the global financial crisis and knowing that many millennial and Gen Z consumers were looking out for an alternative to traditional credit, we saw a way to empower consumers to responsibly buy what they wanted with their own money and to drive incremental value to merchants. Since then, Afterpay has become a leader in the global buy now, pay later space. We have flipped the traditional credit model on its head to drive significant value to both merchants and consumers. Our product and approach is simple to sign up within minutes, make your first purchase via in-store, online or app and repay in four equal installments. When you sign up to Afterpay, we don't conduct a credit check or ask you to jump through any hoops. Our model is based on trust. You start with a lower spending limit that increases over time and reflects good repayment behaviour. Afterpay consumers share a deep loyalty and affinity with our product and brand. They afterpay their purchases frequently across many retailers and verticals. It's this frequency with which our consumers use Afterpay that truly differentiates us and shows the power of our product and platform. On average, our top 10% of consumers globally used us to pay more than 30 times in the US and 60 times in Australia in financial year 2021. And for merchants, whether they're large enterprise or small to medium-sized businesses, we truly partner to help grow their business. We have driven higher average order values, greater basket sizes, and the additional new and repeat customers often who, within 24 or 48 hours of going live, Above the value of our core payment proposition, in FY21, Afterpay drove over 1 million leads on average per day and acts as a key marketing customer acquisition channel for our global retailers in attracting this highly valuable next generation consumer. As Ant and I have gotten to know the Square team better, what's become clear is how aligned we are, not just in our business, but the way we think, live and breathe our mission. In almost every conversation, we've been focused on creating a better way for people to spend, save and do business with the intent of building greater financial well-being. And the brilliant thing is that both of our companies share this commitment. By bringing together our platform with Square, we know we can leverage our combined strengths to continue to connect both sides of the economic equation so that everyone shares in great outcomes. As we look forward, there are a number of ways in which our businesses can achieve shared and even greater success. Our businesses are highly complementary across segments, products, channels and geographies. This combination will further expand our combined opportunity across small, medium and enterprise businesses, consumer banking and financial services, wider retail categories and both online and in-person commerce. Both Square and Afterpay resonate strongly with the millennials and Gen Z consumers, and we're excited at the opportunity for the Afterpay product to be offered to a growing base of more than 70 million annual active Cash App customers whose lifestyles, preferences, and views are shared and very familiar with us. These consumers will increase the reach for our retail partners and the marketing value we can drive to their businesses. Likewise, our merchant bases are very complementary to the millions of sellers that use Square to run and grow their businesses today. We believe we can introduce a number of upmarket and global sellers to the Square business. And as merchants and consumers increasingly look for seamless in-store and online experiences, I am confident that together we can really maximize the strength of our omnichannel offerings, complementary technology and expertise. Yesterday's announcement marked the start of an incredible opportunity to unlock the next phase of growth in our business. The compelling transaction provides our shareholders with the opportunity to participate in the future growth of an innovative company aligned with our vision. Importantly, our Australian Afterpay shareholders will still be able to maintain exposure to the growth and value creation of the combined company through owning Square shares or CDIs. I know both Ant and I are incredibly excited to join the Square team upon completion of the transaction and help lead Afterpay's respective merchant and consumer efforts as part of the Square seller and cash app efforts. Thank you to the Square team for picking up a conversation with two Aussie entrepreneurs and seeing the strength of our combined opportunity. I can't wait to see where we take this. And now over to Amrita.
Jack
Thanks, Nick. We believe this is a transformative opportunity for our combined companies, and there are three topics I'd like to cover regarding the proposed Afterpay acquisition. First, the strengths of the Afterpay business. Second, the complementary aspects of our merchant and consumer ecosystems. And third, the profound growth opportunity we see together. Afterpay has distinguished itself as a category leader in buy now, pay later with a product that is well positioned for secular shifts among merchants and consumers. First, greater consumer and merchant adoption has enabled Afterpay to deliver remarkable growth with revenue up approximately four times over the last two years. We see a number of levers to help drive continued growth for Afterpay, first in terms of ongoing secular growth of buy now, pay later in e-commerce, and second in terms of Afterpay's future growth adjacencies. Second, Afterpay's business has strong cohort economics, providing a durable foundation for growth. Across its merchant and consumer base, Atropay has delivered positive GMV retention and increased purchase frequency over time with strong paybacks and returns on acquisition spend. These fundamentals mirror the dynamics in our cash app and seller ecosystems around growing engagement and strong returns. Next, we're excited by our compelling cross-sell opportunities. By integrating Afterpay directly into our Cash App and seller ecosystems, we can expand each brand's customer base, strengthen each other's products, and build connections. On the consumer side, the addition of Afterpay embeds commerce more directly into Cash App. Afterpay's merchant base will have access to four times more consumers, and Cash App will have access to 16 million Afterpay consumers who represent a complementary demographic base. On the merchant side, we'll introduce square sellers to Afterpay's Buy Now, Pay Later offering, which expands Afterpay more deeply into new verticals and in-person commerce. Turning to the financial impact from the deal, we're excited about the meaningful growth opportunity Afterpay will add. With year-over-year gross profit growth of 96% in the last 12 months ended June 30, we expect Afterpay to be accretive to gross profit growth in the first year after closing. Afterpay is a younger business and earlier in ramping its profitability, so we expect a modest decrease to adjusted EBITDA margins in the first year after closing. Historically, our investments behind strong cohort economics have driven compounding profitable growth. We similarly intend to invest behind Afterpay's strong returns to unlock the significant synergies we see ahead. Under the terms of the agreement, Square will acquire Afterpay for approximately $29 billion U.S., where Afterpay shareholders will receive a fixed exchange ratio of 0.375 shares of Square Class A common stock for each ordinary share of Afterpay they own. The transaction is expected to close in the first quarter of 2022, subject to customary closing conditions, including regulatory approval and approval by shareholders of both companies. And of course, the stock-based consideration of this transaction not only strongly aligns management incentives, but also enables shareholders of both Square and Afterpay to participate in future upside opportunity. We believe the combination of Square and Afterpay will benefit our customers in the long-term profitable growth of our company. I'll now provide a brief overview of Square's financial results in the second quarter before we take your questions. In the second quarter, our ecosystems delivered gross profit of $1.14 billion, an increase of 91% year-over-year, which was our strongest quarterly gross profit growth as a public company. On a two-year compound annual growth rate or CAGR basis, which helped normalize for the impact of the pandemic on 2020 results, this was an increase of 57%, a slight improvement from the first quarter. Net income was $204 million and adjusted EBITDA was $360 million. Taking a look at performance for each ecosystem, Cash App generated growth profit of $546 million, an increase of 94% year-over-year or 128% on a two-year CAGR basis. Growth from the quarter benefited from Cash App's growing and engaged base of customers. We ended the quarter with 40 million monthly transacting actives in June, with nearly two-thirds of our monthly actives being weekly actives, an engagement figure we've seen increase over time. We also saw a significant increase in annualized gross profit for monthly actives, which was $55 in the second quarter, up two-and-a-half times from two years ago and up a third from two quarters ago, primarily driven by growth and inflows. Now to our seller business, which generated gross profit of $585 million, an increase of 85% year over year, or 30% on a two-year CAGR basis. Even as we saw regional reopenings and a strong recovery in card present volumes during the quarter, GPV from online channels has continued to remain strong, growing nearly 50% in the second quarter. We also continue to make progress driving growth with larger sellers. In the second quarter, mid-market GPV doubled from the same period in 2019, representing more than one-third of total seller GPV. Next, we wanted to share trends for both ecosystems in July. For Cash App, we expect gross profit growth of greater than 110% on a two-year CAGR basis or approximately 20% year-over-year. Remember, July is our toughest year-over-year comp for Cash App this year. On a two-year CAGR basis, we saw some moderation in Cash App's growth from 128% in the first quarter, and this may continue to normalize in future quarters, depending on how consumer spending power trends. And for Seller, we expect gross profit growth of more than 45% year-over-year, and a two-year CAGR of 29%, roughly in line with the 30% of the second quarter. Seller GPV trends have continued to vary by region. Although the world has experienced rising COVID cases in certain regions, particularly outside of the U.S., we haven't seen this impact overall GPV trends materially through July. We'll continue to track in real time, and we recognize further regional restrictions could affect our business performance. Finally, onto where we're focusing our investments in 2021. On the back of strong momentum in gross profit growth, profitability, and encouraging trends on investment in the returns on investment in the first half of 2021, we intend to increase our investments in the second half of the year. Across 2020-2021, we now expect to invest an incremental $1.1 to $1.2 billion in non-GAAP operating expenses, excluding risk loss. which is growth of 55% year over year at the midpoint. In summary, with the momentum we've seen in the first half of 2021, we are very excited about the opportunities that lie ahead, not only for cash app and seller ecosystems, but also the opportunities we have by integrating Afterpay across them. We believe together we can make more meaningful connections between our consumer and merchant ecosystems that ultimately serve our communities. With that, I'll turn it over to questions.
Operator
Thank you. If you'd like to ask a question, please press star followed by 1 on your telephone keypad now. When preparing to ask a question, please limit your question to 1, so allow all participants to ask a question. Please ensure your line is unmuted locally when asking your question. Thank you for your patience. Lisa, please open your line. Your line is open.
Lisa
Oh, terrific. Thank you. Can you hear me? Congratulations, and thanks for taking my question. There's a number of successful BNPL players globally, and Square also has historically built a lot of capabilities in-house. Can you just talk about what factors led you to decide that Afterpay specifically is the best fit for Square versus alternative BNPL players or doing organic investment? Thank you.
Jack
Yeah, absolutely. Thanks, Lisa. So as you mentioned, I mean, this space is getting more and more crowded, and obviously there's a lot of different services and solutions out there. We started with what Nick and Ant have built and how ambitious and entrepreneurial and innovative they've been. You know, they were extremely early in this space, helped define a lot of it. and really raise the bar on what everyone else is doing. So we were impressed by the vision, by their ambition, by the entrepreneurship. I think the other big thing for us is making sure that, you know, we've talked on this call a lot about how to connect the two, our two biggest ecosystems, seller and cash out. And this was a clear fit in a way that they built their model out. A simple market tool and some incredible discovery for consumers. um so for for consumers after pay offers truly interest-free products doesn't require any credit history something vastly different from what we've seen with other buy now pay later products and this allows broader access to consumers while helping them spend a lot more responsibly so that goes towards our purpose of economic empowerment and for merchants square has always asked the question how can we help our merchants make more sales And that was exactly the question that Afterpay has been asking, providing them a way to generate leads through the Afterpay app, which has helped them improve conversion rates, increase their transaction sizes, and led to repeat purchases and repeat customers. So this allowed Afterpay to reach more than 16 million consumers and 100,000 merchants globally. So we're looking at the field. This was an obvious connection between the seller and cash app ants Ant and Nick have built on top of an ecosystem model. There's a clear fit into our model that makes it even stronger for us. And the team they built is incredible, creative, innovative, and ambitious. And we just saw this as a perfect move for both companies.
Jack
And Lisa, I'd add a few comments to that as well. We've been really impressed. with the strong business fundamentals that Afterpay has demonstrated. Of course, we look at the combination of both growth and cohort economics. And what we see here in the cohort economics is growing engagement amongst consumers. After onboarding, consumers transact more frequently each year that they're on the platform, with some of the older cohorts from Australia and New Zealand transacting 30 times per year. We also look at the international expansion that this team has executed and demonstrated. Afterpay has shown an ability to grow quickly in new regions, including the U.S., which has been its fastest growing market to date. And then the alignment to the strategic priorities of cash app and seller, where Afterpay's Buy Now, Pay Later products can help strengthen our existing ecosystems and we can help Afterpay expand with small and medium-sized businesses and in-person and additional verticals. So, you know, these volume metrics that Afterpay has demonstrated with merchants, whether it's 25% uplift in transaction size or 20% uplift in conversion rates and in purchase frequency, and the lead generation they've demonstrated for merchants with a million leads per day, as Nick said, these are stats of a healthy foundation on which we can build together to accelerate growth across both the Afterpay ecosystem as well as cash and seller. Thank you, and congrats again.
Operator
Thank you. Our next question comes from Tianxing Hang from JP Morgan. Tian, please go ahead. Your line is open.
Tianxing Hang
Thanks so much, and definitely congrats on the deal here. A lot of synergies to think about. So I was hoping to get Nick, good to have you on the call. Nick, your perspective on what synergies you're most excited about And it's maybe the same thing for me, Jack. What are you excited about from a Synergy standpoint, if you can rank the top things? And just curious, how long will the after-pay founders stay on the deal as we're thinking about integration here? Thanks. Yeah, absolutely.
Jason
Thanks, Timson. Nice to hear from you. So from an after-pay perspective, Square absolutely helps us accelerate our priorities of long-term growth, and particularly in the US. If you think of both sides of the equation, Square's seller business can help us drive a more diverse set of retail verticals beyond just retail where we're primarily orientated. So to have millions of sellers on one side of the equation to help us expand further into in-person commerce and serving SMB merchants is a critical focus for us on the merchant side. then when you think about the the cash app consumer side of the equation cash app brings us a highly engaged customer base an annual transacting of 70 million um and that broad ecosystem the product allows us to you know really lean into how we drive value for both our consumers and our retailers so you know where as amrita mentioned before Afterpay on average delivered a million leads per day as a result of 16 million annual active consumers over the last 12 months. So to be able to have a partner like Cash App that has a significantly larger consumer base, we firmly believe we can drive significantly increased value to our retailers beyond what we do today. And just the second question, just on Ant and myself, and I hope Ant will okay me speaking on his behalf, but... We've been just increasingly excited as conversations progress. We're as excited today as the day we started the organisation. I really think that's a testament to Jack Amrita, Brian Alyssa and the whole Square team. The alignment of mission, vision, culture and values was just imminently apparent the more we got to know each other and can't wait to take this partnership long into the future.
Jack
And from our side, I think, you know, as I said in my last answer, we get the question all the time on this call, like what are some ways that you are thinking about connecting the seller and the cash app ecosystem? And this one is massive and also obvious. We think, you know, from a seller perspective, the most obvious point is this is yet another tool to help drive more sales to a seller, and also help us reach sellers that we have not been able to serve in the past. And that includes larger, more enterprise, global retail sellers. And for us to be able to scale from the smallest of shops in your neighborhood up to the largest of retailers in the world with one solution that brings people to the rest of our ecosystem is exactly our ecosystem strategy, and this gives us a lot of fuel to continue to expand that. On the Cash App side, this is a new payment capability, so adding more capabilities to Cash App customers that they can have a choice on how they're interacting with the economy is pretty incredible. But also, given that a lot of the consumer side is going to be focused on discovery first and foremost, It gives the cash app a way to provide more daily value, something that people want to open up every single day to check out what's new and to see our entire ecosystem of services within the cash app as well. So you combine these two together, you get a strong connection between ecosystems, but even if they weren't connected, you have a lot of strength for each ecosystem. But, again, I think the power and the true value of our company over the long term how we connect all these systems all these ecosystems together starting with seller and cash output obviously goes bigger than that years ahead yep grateful for the comments congrats again thank you very much our next question comes from darren peller from wolf research darren please go ahead your line is open
spk10
All right. Thanks, guys. Congrats on this. You know, you clearly have reformed again in cash app, closed profit, and it was pretty clear that it was engagement levels. We look at the comments you made of two-thirds of users transacting every week. When we consider that in another combination with Afterpay, if you could just, A, touch on what's really driving that incremental engagement on the cash app side, how much more room it has, and then probably more importantly, you think of the integration with Afterpay and what that can mean after-pays revenue per user is even higher, I think. Can you just touch on the work that has to get done to actually integrate the two together, what we can envision and timing around it, and then what that means for engagement opportunities between the two?
Jack
Thanks, Darren. I can kick us off on this one. I'll start with sharing a bit more about that growing engagement we've seen on Cash App and then share more about what that means in integration with Afterpay. From a Cash App perspective, we've seen that as we've added that weekly and daily utility with additional products and features and functionality to Cash App, that our customers have exhibited growing engagement with us. Weekly actives have steadily increased as a percent of monthly actives over time, with nearly now two-thirds of our monthly 40 million monthly actives using Cash App each week on average in June. This engagement has in turn driven monetization as inflows and product adoption has increased. Gross profit per transacting active was up two and a half times from two years ago in the quarter and up a third from just two quarters ago. Historically, what we've seen is that the average customer who adopts two or more products in Cash App generates three to four times the gross profit compared to the average peer-to-peer customer. And we believe that integrating the Afterpay app into cash app has the opportunity to drive that commerce discovery that jack was speaking to to drive further consumer engagement that also benefits merchants in the form of lead generation this means that consumers will be able to browse merchants purchase goods or services within cash app and use buy now pay later at the checkout, allowing the consumer to pay in for interest-free installments directly from Cash App, again, driving that recurring engagement. And we see this has a natural extension. This really represents a natural extension of Cash App's current ecosystem around spending and rewards. Obviously, from a spending perspective, we've seen strong adoption with Cash Card at 10 million monthly active as of March and 7 million weekly active with spend per customer increasing over time. And from a rewards perspective, Boost is currently an engagement and merchant marketing tool, and it could be used at scale as a compelling acquisition tool for Afterpay's enterprise merchants while also providing that increased utility for Cash App customers. So we see the potential in the integration of Afterpay into Cash App to drive greater utility for our customers and ultimately greater lifetime value in ARPU for us over time.
Operator
Darren, does that answer your question? Yeah, no. OK, we'll move on to the next question. Thank you. Our next question comes from Timothy from Credit Suisse. Timothy, please go ahead.
Darren
Great. Thanks a lot for taking the question. I want to dig in a little bit an area of synergy that you highlighted a few times in the prepared remarks and also in the letter last night or the slides around the larger seller opportunities. So the opportunity to introduce the Square ecosystem to those larger merchants that work with Afterpay. Maybe we could just bring that to life a little bit more. What aspects of the ecosystem might be most appealing and what that roadmap might look like?
Jack
Yeah, thanks for the question, Tim. This is obviously an area that gets us really excited because, you know, the more we can expand the boundaries of what types of merchants and what sizes of merchants we can offer our products to, the better off our ecosystem is. So there's millions of sellers who use Square to run their business. Today, across large stadiums to small e-commerce sites, restaurants, offering pickup and delivery. We have a larger in-person presence than Afterpay has today, and 60 billion of in-person volumes, but with 80 billion in omni-channel volumes going quickly. But Afterpay can provide access to a number of, as I said in my previous answer, enterprise and retail merchants with a global presence. But Seller can help move to omni-channel, expand to more in-person commerce. So a big part of our thesis and strategy around our ecosystem today is making sure that we have a service, a feature, or a product that a seller can hire. And it may be specific to them, but that allows the door to open to the rest of our ecosystem. And we want to make sure that all of our products and services, all of our features, scale from the smallest to the very largest. So it doesn't matter how they come in. We want to make sure that once they do come in, they see everything that else we had to offer, and they're hiring us for multiple jobs, not just the one that they came into the system for. So we have a similar play on the consumer side with cash up, but this on the seller side gives us a greater tool to sell to enterprise, larger, global retail merchants in a way that we just haven't had in the past. And again, why that matters is because we can introduce them to the larger ecosystem as well.
Darren
Excellent. Thank you, Jack. Thank you.
Operator
Thank you. Our next question comes from Brian Queen from Deutsche Bank. Brian, please go ahead.
Brian Queen
Hi, guys. Congrats on the deal for me as well. You know, thinking about this space, there's lots of large players entering this attractive BNPL sector, PayPal, Amex, and even Apple. So how does Afterpay Square differentiate its solution versus the competition and make sure that, you know, overall in the industry we just don't see further competition pushing take rate down lower? Thanks.
Jack
I can start with this. I think, first and foremost, Where we believe we're most differentiated is our combined ecosystem strategy. So, you know, we see a lot of competitors with a seller ecosystem or a consumer ecosystem, but there are very, very few with both together. And as you look at the market, you know, having the ability for a seller to come in for buy now, pay later but also have the entire suite of tools they need to run the rest of their business is pretty magical. And it's magical because it saves them a lot of time. They don't have to spend a lot of time connecting different vendors together. They can focus entirely on just building their business. And while it seems that's important for the smaller companies, it's even more critical for the larger companies, even the enterprise global retailers as well. Our model and our strategy is really focused on this fundamental principle of we have two ecosystems at scale serving both sides of the counter. And the more we can connect them together to be seamless, the more value we can create both for the merchants, for the individuals, their customers, and also for our company as well. Maybe Nick can speak to this as well.
Jason
Yeah, absolutely. Thanks, Jack. Look, from my perspective, you know, we've differentiated ourselves over the years by providing, looking at it through the lens of what value can we drive to the retailer. So naturally, you know, our retailers see value in our core payment platform and it delivers, you know, higher average order value, increased return rates, lower return rates, increased conversion rates. But the undercurrent here of how retailers really assess us in the business performance is can we actually drive new business to their platform? Can we act as a customer acquisition channel for the retailer and drive business to them? And as I mentioned before, on average, sending a million leads per day over the course of the last 12 months to our retailers shows that we can perform not just through the core payment platform, but actually add value directly. And there aren't a lot of... payment providers that have successfully built a platform that has the ability to drive new business to retailers. So when I think about what we've been able to achieve as a result of reaching 16 million annual active consumers, the ability to couple that with 70 million annual active cash out consumers and the ecosystem that unfolds as a result of that the value we can drive to our retailers, I believe, is demonstrably greater than the existing strong results that we've been able to perform. So really excited about it from that perspective on our side.
Brian Queen
Got it. Very helpful. Thanks so much.
Operator
Thank you very much. Our next question comes from Ramsey from Barclays. Please go ahead, Ramsey. Your line is open.
Ramsey
Thanks for taking my question. I wanted to ask about how Afterpay kind of advances the Square international market strategy. Can we expect you to build out a broader presence for Square, for example? You know, Square products in global markets where Afterpay may already be operating, where maybe Square isn't. Any color around international strategy would be appreciated.
Jack
Sure. Thanks for the question, Ramzi. Maybe I can kick off and make you can add in. Global expansion has been a top priority, as you know, for Cash App and Seller. And we see our geographic presence as complementary with Afterpay. Afterpay has driven strong growth across Australia, New Zealand, and more recently, U.S. and Canada and the U.K., with recent launches as well across Europe, you know, in Spain, France, and Italy. And Afterpay has grown both its consumer and merchant presence in these markets. We see that that growing global presence allows for easier entry into new markets and helps us potentially expand in markets where we already exist but have a smaller presence, as well as potentially those new markets. The vast majority of cash app assets and seller GPV are from the U.S. today. But we're already on that pathway of growing in existing markets. Sellers for markets outside the U.S. are achieving close to U.S. payback levels on investment. We're closing the product parity gap. We're seeing growth rates in those markets at 2x the U.S. And we're now launching in new markets, most recently in Ireland and with the France beta as well. So Afterpay's footprint and expertise can further enable our expansion, whether in geographies where we're both present, as well as new geographies together. And that opportunity to strengthen our combined product offering and acquire new customers together is profound when you think globally.
Jason
And Amrita, if I can add, from an Afterpay perspective, we're being focused on global expansion as well. As Jack mentioned earlier, that strength from an enterprise retail perspective and the ability to go global with your global retailers has been tremendous. a core focus for us. Since launching in North America just three years ago we've seen very strong growth in the region and particularly in the US. The US now for us represents our largest consumer base from any country in FY21 and it's been our fastest growing geo on a volume basis so know we want to focus more investment in the us which is why we see such a strategic opportunity to join square and the combination with cash app and seller as i've spoken about a few times i think provides the two sides of the equation and similarly you know we recently announced the launch of money by after pay you know been experiencing so we have this existing in geos where Cash App doesn't exist today, which we can, you know, help leverage to help Cash App reach more geography. So, you know, together, I believe there's a long-term opportunity here to explore and learn about new geographies.
Ramsey
Great. Thanks so much.
Operator
Thank you. Our next question comes from Jason Kupferberg from Bank of America. Jason, please go ahead.
Jason Kupferberg
Great. Good morning, guys. Thanks for all the color here. I wanted to follow up on the earlier question just about fivers filled and maybe you can talk more specifically about the pros and cons that you may have considered of entering the DNPL space by buying as opposed to building. Wondering if you actively considered the latter options and square obviously has a strong legacy of organic innovation.
Jack
Yeah, I mean, um, We're always considering the options we have before us, but in this particular case, it really came back to Nick and Ann and the team and how innovative they've been and how early they were in the space and how strong their ambition is and how much it complements our strategy. It allows us to move much faster, achieve a bunch of our goals in terms of expanding our the types and sizes of merchants that we can reach. And there was just an obvious connection into our current ecosystem that made us all even stronger. So I think, you know, we get a lot of wisdom, a lot of knowledge, a lot of customer understanding by going this route. And You know, that will set us up for a much stronger future where we can move much, much faster if we were to just start from scratch. And we get two incredible leaders in the company to continue to build out not just after pay, but have opinion on the rest of our business as well and continue to raise the bar on what we're able to do.
Jason
And Jack, maybe I can add from an afterpay perspective, you know, we're certainly at the early days for buy now, pay later, you know, being at 2% penetration of e-com and even less of, you know, the overall credit card spend. So, you know, from Ant and my perspective, the combination of of our companies aligns with our long-term objectives of financial inclusion. And as Jack just mentioned, during our conversation, we've discovered an incredibly strong alignment between the leadership teams. It's one thing to have on paper what your values, mission and vision look like, but the way that each of our teams live and breathe Our missions of economic empowerment and financial inclusion was incredibly clear and apparent. So, yeah, look, we see huge opportunity in our combined, our combination, you know, accelerating our shared mission and long-term vision and growth, and we're excited about this announcement today. I think this is really exciting for shareholders of both companies.
Jason Kupferberg
Thanks, Jack. Thanks, Nick.
Operator
Thank you. That's the time for the questions we'll be taking today. So I'll hand back over to the management team for any closing remarks. Many thanks.
spk07
Thank you, everyone, for joining our second quarter Urges call. And that concludes this call. Thank you.
Operator
Thank you all for joining the call today. Have a lovely rest of your day. You may now disconnect your lines.
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