Block Inc.

Good day, ladies and gentlemen, and welcome to the Square Second Quarter 2020 Earnings Conference Call. I would now like to turn the call over to your host, Jason Lee, Head of Investor Relations. Please go ahead, sir.

Hi, everyone. Thanks for joining our Second Quarter 2020 Earnings Call. We have Jack and Amrita with us today. We'll begin this call with some short remarks before opening call directly to your questions. During Q&A, we will take questions from our customers in addition to questions from conference call participants. We would also 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, and report results should not be considered as an indication of future performance. Please take a look at our filings with the SEC for a discussion of the factors that could cause a result 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. Also, we will be discussing certain 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. Additionally, in the second quarter of 2020, we changed our offering segments to reflect how we review and assess our operations and began reporting on seller and cash app as separate segments. As such, we introduced additional disclosures in the shareholder letter on our investor relations website as well as our quarterly report on form 10Q for the quarter ended June 30th, 2020 for revenue and gross profit for our seller and cash app offering reporting segment. As a reminder, we discontinued the use of adjusted revenue in the third quarter of 2019 following the receipt of and comment letter from and discussions with the SEC. Our statement of operation continues to disclose total net revenue, transaction-based costs, and Bitcoin costs determined in accordance with GAAP, which are the key components of adjusted revenue. There are no changes to any other GAAP or non-GAAP metrics. We have posted a spreadsheet on our investor relations website with our historical financials and additional details related to our income statement. Finally, this call in its entirety is being audio webcast on our investor relations website. An audio replay of this call will be available on our website shortly. With that, I'd like to turn it over to Jack.

Good morning, everyone, and thank you for joining us so early today. Due to the media's early release of our quarterly financials, we moved up our investor call to this morning. We're conducting an investigation into this early release and consultation with both internal and external counsel. COVID-19 continues to be at the top of our minds as economies close, reopen, and close yet again. This has been extremely hard on the people we serve, our sellers, their employees, and all the individuals who use Cash App. Folks right now are struggling to keep their businesses open, pay their employees, pay rent, and even buy food for their families. We're doing our best to learn and build to support our customers, but this is obviously much bigger than us at Square. Parts of the world lack a coordinated strategy to get out of this crisis, and that hurts more people every single day. It's up to all of us to take whatever action we can to end this, from wearing a mask to protect ourselves and our families, to using whatever platform we have to demand that our elected officials coordinate better. This can't wait for an election day. On top of that, the fear, pain and suffering our black customers, employees and neighbors have felt every day for the past hundreds of years due to racist systems and policies must be acknowledged and fixed. We're seeing a bit more acknowledgement, but not nearly enough change. This also can't wait for an election day. We're taking action as an employer, we're investing in black and racial and ethnic minority communities. And we're looking for ways to drive racial justice through our business and products. I will also be personally putting more funds into organizations driving policy change through the Start Small initiative I announced months ago. We're always open to feedback and ideas on ways we can do our part on these issues. Please let us know if you have any. And now some updates on our business before I turn to Amrita and your questions, starting with the Cash App. In June, Cash App had more than 30 million active customers transacting on our service. And in July, we expect to achieve gross profit growth of more than 200% year over year. We saw our customers increasingly use their cash card as their primary spending device. Seven million people paid with their cash card in June, double compared to last year. We also saw an increase in people using direct deposit for recurring paychecks, strengthened by stimulus and unemployment checks and tax refunds. Cash App is culture and continue to show this with creative approaches to marketing. We announced we ride with Bubba Wallace and you'll see his Cash App design car in uniform throughout the NASCAR season. And we partnered with Hood by Air, a phenomenal streetwear brand, to create a limited edition HBA cash card you can purchase with proceeds going to black and LGBTQA communities. As I mentioned earlier, Our sellers have had to navigate an immense amount of uncertainty and challenges. They've used our ecosystem to reach their customers in new ways. And in the second quarter, GPV from online channels was up more than 50% year over year. One in three new online sellers onboarded in the second quarter were entirely new to Square. And many of these sellers adopted other parts of our ecosystem, including in-person commerce. For example, the coffee tree roasters in Pittsburgh joined Square by launching an online store. previously never having a website. This quarter, they converted their five locations to square hardware for their in person point of sale system. We're also seeing an increase in contactless payment, as customers don't want to use paper cash during due to COVID risk. In March, one in 12 of our sellers were cashless. And by the end of the June, that shifted to one in four of our sellers operating cashless. We launched on demand delivery functionality, which enables sellers to take control of their fulfillment process by offering delivery to their customers directly from their websites. And our sellers gain the benefit of SquareScale by retaining more of the economics compared to using a third-party delivery service. During the quarter, we facilitated Paycheck Protection Program loans, providing a financial lifeline to more than 80,000 small businesses around the country for a total of $873 million in PPP loans. Through the program, we reached traditionally underserved sellers. The average PPP loan through Square Capital was less than $11,000, or one-tenth the average small business administration loan. And finally, we're saying goodbye to Aaron Zamos, our head of communications and people, who's been helping us not only with this call since our IPO, but has been helping us build Square for close to nine years. Aaron made us better every day. We love you, Aaron, and we thank you. I'm Rita.