Block Inc.

Hi, everyone. Thanks for joining our first quarter of 2026 earnings call. We have Jack and Amrita with us today, along with Owen Jennings, our business lead, and Nick Molnar, sales and marketing lead for Block. 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 can be considered 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 2026, 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. Within these remarks, we will also discuss metrics related to our investment framework, including Rule of Forty, With Rule 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. 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'd like to turn it over to Jack.

Thank you all for joining us. We did strong first quarter. We exceeded our guidance and are raising our full year outlook. In my letter this quarter, I focused on how the way we operate as a company is changing and what that means for what we build for our customers. Internally, the intelligence tools we've been building are now meaningfully improving how we run the company. Velocity is increasing, quality is improving, and more of our work is becoming automated. That shift is also starting to show up in our products. MoneyBot is now live across Cash App, and we're continuing to scale ManagerBot, which is already available to more than 1 million sellers and on track to reach all square sellers in June. We're seeing that when AI helps the customer take an action, they come back at much higher rates than when it only provides them with information. We think of these as protectors, systems that can help understand patterns, and prompt customers or sellers to act before small issues become much bigger ones. This model of proactive, action-oriented systems is differentiated because it fits how people make decisions in their businesses and their financial lives, and it's where we're focused. There's more detail in my letter this quarter, and I hope you get a chance to read through it all. And with that, I'll turn it over to Amrita.

Thanks, Jack. We delivered another strong quarter, outperforming our guidance across gross profit, adjusted operating income, and adjusted diluted EPS. Gross profit grew 27% year-over-year to $2.91 billion in the first quarter, driven by accelerating growth in both Cash App and Square. Adjusted operating income increased 56% year-over-year to $728 million, or 25% margin, Adjusted EBITDA reached $1 billion and adjusted diluted EPS grew 52% year-over-year to 85 cents. Each of these adjusted metrics represented all-time highs on a dollar and margin basis. Cash App gross profit growth was 38% year-over-year in the first quarter, driven by accelerating growth in both commerce enablement and financial solutions. Cash App monthly transacting actives grew 4% year-over-year as we continued to execute on our product and go-to-market strategies to strengthen network growth. We continued to deepen engagement across our active space with inflows for transacting active up 10% year-over-year and primary banking assets growth of 18% year-over-year to 9.7 million. In the first four months of the year, we profoundly expanded our product ecosystem including the ways in which Buy Now, Pay Later functionality shows up across Cash App. We launched After Pay Pre-Purchase, which allows eligible customers to pay in four using their Cash App card, and we expanded Buy Now, Pay Later functionality to cover peer-to-peer transactions and Cash App pay. MoneyBot is now generally available, and in the past week we started rolling out Cash App Score, making one of our foundational underwriting capabilities more visible and actionable for customers. Turning to Square, where gross profit and GPV growth accelerated in the first quarter to 9% and 13%, respectively. On a constant currency basis, GPV grew 11.5% year-over-year, improving across both the U.S. and internationally. We accelerated GPV growth from food and beverage sellers to 21% year-over-year, and from mid-market sellers to 22% year-over-year, both reflecting the strongest growth rates we've seen since Q1, 2023. International GPV grew 35% year over year or 26% on a constant currency basis. We sustained strong new volume added growth across both the US and internationally, reflecting the high ROI field sales investments we made throughout 2025. We are beginning to more meaningfully scale our independent sales organization or ISO partnerships and now have more than 140 active ISO partners who are ramping quickly. So far this year, we launched the next generation of square register, our flagship countertop kind of sales, and released dozens of new features designed to give sellers time back and help them grow their business. We expanded square Bitcoin payment payments into retail and services, and enabled manager bots for over 1 million sellers. Our strategy to connect sellers and consumers at scale is gaining traction. Neighborhoods expanded to sellers representing $320 million in annualized GPV, up 190% since December. In April alone, we added more sellers than in the product's entire prior history. Our transformational investments in AI are reshaping both what we build and how we operate. Production code changes per engineer increased more than two and a half times from January to April, and we've seen AI expand what it means to be a builder, both for our customers and our internal operations. Production code changes made by non-engineers at Bach were up nearly 60% in April compared to January. Turning to guidance. We are raising our full-year outlook for gross profit, adjusted operating income, and adjusted diluted EPS. reflecting strong Q1 execution and higher expectations for the rest of the year. We now expect $12.33 billion in gross profit in 2026, or 19% year-over-year growth, up one percentage point from our prior expectations, along with $3.34 billion in adjusted operating income, with margin expectations also up one percentage point relative to our prior guidance. We expect to deliver $3.85 in adjusted diluted ETF of 62% year-over-year. And we continue to expect to exit 2026 and mid-teens gross profit growth rate, consistent with our long-term guidance. For Q2, we expect gross profit of $3.04 billion, or 20% year-over-year growth. Adjusted operating income of $740 million. representing 35% growth and two points of margin expansion year over year, and adjusted diluted EPS of 86 cents or 39% growth year over year. So far in the second quarter, we've been encouraged by numerous metrics we track. In April, SquareGPV grew 12% in constant currency, with USGPV growing 9% year over year, and InternationalGPV growing 25% in constant currency. We've continued to see healthy inflows for active and monetization rates in Cash App, and underwriting outcomes are in line with our expectations. Before wrapping up and turning to questions, a few additional considerations related to our guidance and the pacing of key items throughout the year. In Q2, we intend to increase our investment and go-to-market in high ROI areas across Square and Cash App. We continue to expect low single-digit active growth, for the remainder of 2026, and we expect continued year-over-year growth in primary banking assets, with a slight seasonal sequential decline in Q2 versus Q1, consistent with typical seasonal trends and what we observed last year. We continue to expect to accelerate GPV growth in 2026 versus 2025. NDA growth should contribute to support GPV growth in 2026, despite tougher comparisons for GPV growth and effects starting in the second quarter. We saw encouraging square gross profit growth acceleration in Q1, and we continue to expect gross profit to grow roughly in line with GPV growth in the second half of the year. In the second quarter, we expect the gap between reported gross profit growth and GPV growth to narrow relative to Q1. This is net of a few one-time elements impacting gross profit growth in both directions. as we lap a network remediation payment in the second quarter of last year, and as we expect a one-time tariff refund related to Square Hardware to benefit gross profit. Finally, we expect Q2 interest expense of $55 to $60 million, and full-year interest expense of approximately $200 to $210 million. We continue to expect a mid-20% non-GAAP effective tax rate, both in the second quarter and for the full year 2026. We delivered a strong first quarter and have conviction in the path ahead. Most importantly, we are moving faster, focused on building with high quality and delivering more for our customers. With that, I'll turn the call back to the operator for Q&A.

Now we will begin the Q&A portion of the call. Please click the raise hand feature to ask a question. Please limit yourself to one question. Our first question comes from the line of Tianjin Huang from J.P. Morgan.

If you're on the line, Tianjin, we can't hear you.

We've got some harmonics.

That's about it.

Our next question comes from the line of Darren Peller with Wolf. We'll come back to you, Tension.

All right. Hey, guys. Can you hear me okay? Yeah. All right. Thanks.

Nice job on the quarter. It's great to see you raise the outlook for the year. So I'm reading not only for the beat in the quarter, but also by more than the beat on both gross profit and operating income. If you don't mind, just touching further on the areas of strength you saw in the first quarter that are informing your view on the rest of the year, maybe giving some specific examples on KPIs, what are the key drivers included in this outlook, and what's expected for the underlying segments if you don't mind sharing that as well. Thanks again, guys.

Hey, Darren. Thanks for the question. We had a great start to the year here, came out the gate strong. Obviously, you saw acceleration in gross profit growth. We saw us meaningfully beat our guidance, you know, and grew our adjusted profitability at roughly twice the rate of gross profit with discipline as we continue to invest to drive future growth. We had record margin in dollars in terms of adjusted profitability. I think what's most important, though, in all of that from the Q1 results is that we saw broad-based underlying strength across each of our two ecosystems. So for Cash App, if you look from an inflows framework perspective, we saw growth on each of the key metrics from active at 4% to inflows per active at 10% to meaningful compounding continued growth in our monetization rates. That's really a reflection of engagement across our ecosystem and for our customers across multiple products. And so you saw that flow through in the volumes we were able to produce across each of our core verticals, from consumer of lending originations up 82% to commerce enablement volumes up 18% to banking engagement, you know, with primary banking actives up 18% as well. Similarly, from a square perspective, we were really encouraged to see not only the acceleration in GPV and also on a constant currency basis, but also, importantly, the plus 20% growth in each of the three areas of focus for us, from food and beverage to mid-market to international growth. And importantly, the drivers of growth there, you know, being new volume added and net volume retention, where we saw improving net volume retention in the first quarter, both on a year-over-year and sequential basis, and continued strong growth in NVA as we bring new sellers into the platform. So those are kind of the key things that we saw driving the first quarter therein. And as we look to the remainder of the year, you know, had the confidence to raise our outlook. So, our new full-year outlook here is, you know, an added point of growth to 19% and an added margin point of growth or an extra point of margin, I should say, to 27% margin. As we look at Q2, as I noted, you know, we've started April with continued healthy trends, you know, and strong momentum. even as we expect borrow growth to normalize as we now begin to lapse some of the very exceptional growth that we've seen for borrow over this past year. And as, you know, we go throughout the remainder of the year, I'll call it a couple things that we're watching as we look at the second half and that we're excited about across Square and Cash App. But all of that ladders up to in our guidance, you know, and expectations. a continued expectation that we'd exit the year in that mid-teens gross profit growth range, which is consistent with what we shared back in November at Investor Day. Even as one of these big drivers of growth for us with borrow continues to normalize throughout the remainder of the year. The other key thing that I'd point at as we look at the back half is that we expect to see expanding margins in each of Q3 and Q4. And that's even as we step up our investment in go-to-market channels that have sort of proven high ROI for us, that we'd expect to drive growth not only in the back half but in the next year. Maybe just to end, Darren, like, you know, a couple of the key things that we're excited about as we look at the back half for each of Square and Cash App. From a Square perspective, you know, we're expecting to accelerate our gross profit growth in the back half. Pretty excited about some of the pricing and packaging initiatives, both some of the initiatives we already launched and are still in the process of expanding as well as new initiatives. And then, of course, the key drivers of compounding GPV growth continue to flow through is go-to-market channels ramping, like field sales, ISO partnerships, and marketing, as well as continued product velocity growth. And from the Cash App perspective, again, strong underlying drivers of growth there. We continue to expect low single-digit active growth as we look at the back half of the year, with Cash App Green continuing to drive deeper engagement for us and ramp over time, as well as this broader infrastructure that we're building now around consumer lending integrated into our full product stack across the breadth of the Cash App platform, including embedded in some of the commerce vehicles that we have, you know, really just getting started on that and seeing growth continue and momentum continue into the back half.

Our next question comes from the line of Xinxin Wang with J.P. Morgan.

All right, trying again. Sorry about that, guys. Jack, I just wanted to ask you. Sorry. Yeah, thanks, Ben. I just wanted to ask you, Jack, just wanted to get a postmortem maybe of the reorg so far. I'd love to get your thoughts, just what's worked better than expected, where you're seeing challenges or any regrets, and in the near term, beyond the cost savings and achieving guidance that you guys laid out, what are you tracking? What are you watching for? What do we watch for as proof points that you get into where you want to go?

Yeah. I would say our expectations were extremely high, and that's the only reason we were able to take the action that we took. which was a fairly monumental and foundational for us. And I believe we hit all those expectations. There is a bunch of challenges that we assumed we would come up through, but I think, you know, the most important thing is we were prepared as a team and as a company to see everything through. And, you know, we had specific principles that we wanted to guide towards around reliability. around making sure that we were committed to all of our regulatory and trust commitments and that we could continue to grow the business and we've been able to hit all of those. I think some of the challenges in terms of just moving the company and continuing the ship resulted more in, you know, as we have more and more code. There's a bit of an echo on your line. As we've been writing a lot more code with the help of AI agents, we have a lot more PRs, and in order to merge them into the mainline code base, it puts a greater burden on reviewing those. But we've managed to figure that one out and really focus our focus on the most important aspects of that so we can really focus on our priorities and shift much faster. And I think the thing to expect going forward is we still have some work to do on the organization in terms of, you know, we really want a flatter organization. And that means that more of our people are closer to our customers and closer to decisions and have a lot more agency to take on the work, especially as these tool harnesses are getting more and more mature and more sophisticated. That allows us to make much faster decisions. That was one of the strongest outcomes of the action we took is just the speed of decision making and the ability to, like, act on that decision through the tools. So that's something to watch for and continue to increase our product velocity. All that matters to our customers is that we're staying ahead of their needs. And that's both on the seller side and also on the Cash App customer side and throughout our ecosystem. And now that these AI tools are handling more of the mundane tasks and we're automating a lot more, we can focus on being a lot more creative and being a lot more innovative again and continuing to have the breadth of our ecosystems such that, you know, we can be a one-stop shop for both sellers and for individuals. And then really making sure that we're delivering intelligence as our future product, delivering intelligence based on our understanding of our sellers, based on our understanding of our cash-out customers. I think the concept of products and apps is changing very quickly. I think the lines are blurring. And a lot of the future expectation that our customers will have is around being delivered intelligence based on a very deep understanding. And that we're able to do that proactively, I think is the thing that will set us apart from all of our competitors. And that's what we want to prove this year. And MoneyBot and ManagerBot are just the first manifestations of that.

Our next question comes from the line of Tim Chiodo with UBS.

Great. Thank you. So a common investor discussion topic is around the cash out growth as we get into 2027 and into 2028, so basically the rest of the median term guide. And we're often asked, what are some of the big drivers once we get past the state's expansion for cash out borrow, to which we typically have an answer of at least three things. There's borrow loan sizes increasing as a part of cash out growth. There's the continued growth of post-purchase BNPL, and then more recently, as you mentioned in your remarks, around pre-purchase BNPL. And then, of course, other factors. I was hoping you could expand on some of those items that I listed and maybe others to talk about the cash-out growth drivers in 27 and really into 28. Thanks.

Nathan, thanks for the question. You know, maybe just to go back to where I started the last response as well, which is we've got a broad multivariable platform with Cash App where we're delivering value to customers across multiple ways of conducting commerce and financial services. And ultimately, the thing that underpins each of those different product types is network virality, the interconnections between customers on our platform and engagement, how they use different products and how ultimately some of those products engage with each other and integrate with each other. Those are the core long-term drivers of growth for Cash App. And again, in Q1, as I noted, we've seen strength there in those underlying drivers from active to inflows proactive to double-digit growth on card spend proactive as well. What we're seeing now with some of the lending products, as you noted, is that we're actually starting to embed and integrate that core capability into other cash-out products that ultimately make those products more valuable to our customers. Some examples of that, obviously, are embedding lending into peer-to-peer, that buy-now-pay-later functionality into peer-to-peer, which is a differentiator for that network-driven product. We've got commerce enablement, which has been a strong driver of growth for us. Also, integrating lending into our solutions there, whether it's Buy Now, Pay Later integrated into Cash App Card through post-purchase and pre-purchase, as well as now into Cash App Pay. And we've got Borrow integrated into Cash App Green, which, of course, is our membership program that drives greater banking activity across our platform. And it shows kind of that broader interplay of lending across commerce, across peer-to-peer, across banking. All of which is underpinned by our core sort of singular platform that, you know, makes up our underwriting capability and expertise. As we look at some of those individual products and kind of the key going forward growth drivers for lending, first on borrow, even as growth normalizes, we see opportunities to continue to scale here and scale meaningfully in a disciplined way. through greater integration with Cash App Green, through higher limits with some of our mature customers and established customers where we see repeated healthy and responsible behavior, and through product innovations in the core borrow product itself, where we have a number of different variables at play still yet to explore. So we're excited about borrow's continued growth within the Cash App ecosystem. Secondly, we're early stage. on what we think is a really massive potential for us, which is to extend buy now, pay later functionality across Cash App. You noted after pay post purchase, which is the product that we've had in market now for over a year. And we've seen that that product has grown faster than even borrow grew at a similar point in its life. In fact, each of our lending products has grown faster than the prior one. at a similar point in life. It shows the compounding nature of the sort of knowledge that we're building up in the models that we have here. And what's also really encouraging for us about after-pay post-purchase is that the growth that we're seeing there is primarily driven by net new DNPL customers. So it means that it gives us the opportunity to expand the overall after-pay customer base. Pre-purchase, as you noted, is another lever of growth. It's even earlier in its life. Only a couple months in, we're excited by what we see in these early days, excited to ramp that into the future. And I would also urge you to think about core afterpay and network growth, where we have, we believe, an opportunity to really reinvigorate. We saw that in Q1 with accelerated growth in core afterpay, and we've got a lot of product initiatives to come that we think can drive future growth. Maybe final thing I'll note here is that we think there's net new opportunities for Cash App, and some of which you've started to hear about that drive the innovation engine for the future, Cash App Score being one of them, which we think helps create more informed financial behavior on our platform, but also potentially meaningful monetization opportunities that expand access for our customers, too.

Our next question comes from the line of Ramsey LSL with Cantor Fitzgerald.

Hi, thanks for taking my question this evening. Jack, AI is really becoming the kind of predominant theme of your shareholder letters and the glue that seems to connect everything from now the back office to, you know, the back office to all the way to the front end, you know, consumer experience, consumer interactions, or customer interactions, I should say. Can you take a step back and give us an overview of your overarching AI strategy, and I guess, is the end state that Block evolves primarily into an AI company? Thanks.

Yes, I believe we do. I mean, I would say that we evolve into an intelligence company, and I think the way we think about the future of our services is not necessarily in these app packages that we know today, where you have a traditional navigation that we sweat every detail to get the pixels in the right place. But instead, we're looking deeply at our understanding of our sellers and our cash-out customers, and we're delivering them exactly what they need at the right moment. And we can be fairly accurate in terms of predicting what they might need based on our understanding of them in real time. And we're starting to test a lot of this in both MoneyBot and ManagerBot. And as we get better and better at that, we can help automate more of that. In commerce and AI right now, there's a lot of conversation around agentic commerce. And there's a lot of fairly phenomenal future forward stories that I know will be part of our reality going forward. But They're a little bit far out, but the ones that aren't in the use case that doesn't feel that far out is one that sellers have to deal with every single day, which is around vendors. And you can imagine setting up agentic commerce and agents to purchase things on your behalf from your vendors because it's either on a regular basis or it's triggered by certain inventory or certain demand or certain trends happening. And that's just one example of where we can intersect with a lot of these technologies and actually solve problems for customers. We've talked a lot about Goose in the past. Our entire foundation is built on Goose and our early move there. But internally, we've been using it in a form of what we're calling Builder Bot. It allows anyone in our company to use Slack and effectively build or fix any feature they want in the service. Now, the extent of that and the future of that is that our sellers could use that directly. If we are lacking a particular service or a feature and we have the capability to deliver it, they can build a customization for themselves and we can deliver it right into their interface. That is our goal. And to me, that's what it means to be a more intelligence-forward company is that we're enabling our customers to create whatever value they want in the interface that we've already provided them. And our roadmap is no longer the limiting factor. That's our ultimate vision and our ultimate goal. And I don't think we're that far off from getting there. We just have to put these pieces together.

Our next question comes from the line of Dan Dolove with Mizuho.

Hey, guys. Really nice start to the year. Congrats here. So maybe a question for you, you know, Jack and Irina. It looks like the product velocity is starting to, you know, take up and doing really well. You're shipping a lot more products. I mean, the question that we have and we're getting a lot from investors is, you know, what is driving the uptake in product velocity? What is supporting it? Thank you so much.

Hey, Dan. This is Owen. Thanks for the question. Product development velocity for us, I think, is ultimately what matters most, obviously for customers, but then also to drive our business forward. And that's why on the development side, the kind of internal drumbeat continues to be high velocity, high quality. Right now, it really feels like we're firing on all cylinders. Of course, there's room to go, and we expect velocity to only accelerate, as Jack mentioned, but I think the proof is kind of in the pudding in terms of what we've been shipping over the past couple of months. MoneyBot is now generally available. ManagerBot is out to more than a million sellers. Afterpay on the Cash App card, pre-purchase, launched in Q1 and it's scaling now. Cash App credit score, we just started rolling out a couple of days ago. We have Cash App managed accounts for kids 6 to 12. with parental oversight that we're in the process of ramping. We have a host of meaningful improvements on the food and beverage side. Actually, earlier this morning, we had a biweekly release for Square with, I think, 13 or 14 improvements that we made. And so I think it's clear that our development velocity has increased meaningfully, even from just the back half of last year, let alone a year or two ago. In terms of the drivers of that, I think a lot of this is coming on the back of, one, the flow through from AI tools and then also the org changes that we made. On the org side, the way that we've evolved the org structure is that we have smaller teams, we have flatter teams, and that's leading to more autonomy, more flexibility, and honestly just like less red tape. at Block to get things done. And we're going to continue to push there. We think we can continue to get flatter and lean into our DRI, our directly responsible individual model. And then from an AI tooling perspective, I think, you know, as we talked about at last earnings, I think everything has really fundamentally changed over the past five or six months since late last year. And so we're seeing things like production code changes per engineer at Block is up more than two and a half X since the start of the year. I think we had that the letter i'm seeing on the development side all over the place products and features that were previously scoped to let's say five or six engineers and one or two quarters work i'm seeing that being completed by you know one or two engineers uh in just a matter of weeks the the recent example here um that kind of might add some color is uh we're working on buy now pay later for for cash app pay so similar product to what we have for cash app card but for cash app pay that was scoped to roughly three months and five to six engineers. And then what actually happened in late March and April is two machine learning engineers who had actually like no prior exposure to these services, they built it and shipped it all in three or four weeks, inclusive of all the quality testing that we needed to do. And so I think that demonstrates kind of where we are in this cycle, but we're going to expect that rate of change to only compound further as we move ahead and the tools get better, Goose gets better. and the foundational models get better as well.

Our next question comes from the line of Brian Bergen with T.G. Cohen.

Hey, all. Good afternoon. Thank you. I wanted to ask my manager about, so just with the broader rollout across the 1 million plus sellers and understanding it so early, I was hoping you could talk a little bit about what you're seeing in terms of any early impact on retention, cross-sell, DPV, And really curious on what early usage is telling you that might inform your product roadmap, given it's obviously a differentiated solution.

Sure. Thanks for the question. First, I just want to step back a bit and just talk about ManagerBot and MoneyBot overall, and then I can get into some specifics for ManagerBot as well as MoneyBot. I think there's a few kind of critical things to call out. I think first, as Jack mentioned, both ManagerBot and MoneyBot, as well as BuilderBot, they're all built on the same foundation. And so we started working on Goose in 2024. And Goose was the first model agnostic agent harness that was used at scale at a technology company. And we've been using it for years now. And so the benefit that we get there is when we make an improvement on the manager bot side, it flows through to money bot and builder bot or vice versa. I think second, we're really leaning into proactive intelligence versus reactive chat. And that means ManagerBot and MoneyBot are able to take actions on our customers' behalf. And then third, I think to your question, I think we'll start to see ManagerBot and MoneyBot flow through across the different parts of the business, from acquisition to engagement, driving cross-sell and up-sell, as well as retention. But as you said, it is early. These products have been at scale for several weeks. On the manager bot side, essentially what we've rolled out is a tool that has more than 100 local agents that are working on behalf of a seller. And they're able to really act as a protector for that seller. They have access to your sales data, your catalog data, customer management tools, reporting tools, etc. It's been really interesting to see how our sellers have been using this over the past several weeks. Just some examples for what folks are building. I think There's a lot of views and automations around who are my top team members, what are the top items that are selling in a category, what's happening with my revenue from a new customer versus an existing customer perspective, revenue projections for what I should expect this week, what I should expect this month, sales trackers, appointment reminders. The list goes on. We're really giving these tools to our sellers and allowing them to automate a lot of the menial work that they face on a recurring basis so they can focus on doing what they love and running their business. I think ultimately we talk about it as basically a COO in your pocket or really a protector for our sellers. One of the interesting things that we're seeing is that I think retention within the ManagerBot product has surprised to the upside. So we're seeing that for sellers who come in and they use ManagerBot, the rate at which they're coming back in a subsequent week or subsequent month is quite high and has surprised to the upside. And so now there's a lot of runway in order to ensure that more and more sellers are getting exposed to ManagerBot. And then I just wanted to touch on the MoneyBot side. as well, because I think it's a pretty similar story in terms of what we're seeing. We're really focused on the proactive intelligence side. We launched an experiment a couple of weeks ago with a push notification alerting a certain cohort of customers to potential cash flow deficits that they might have in the future. I think that this is fundamentally – and the response and engagement was fantastic. I think this is fundamentally different than kind of a reactive – chat-based UI where a given customer has to know the perfect question that they want to ask. And then it's really exciting on the money bot side from a cross-sell perspective, what we're seeing is that for more than a third of customers who are making a money movement via money bot, that money movement is them attaching to a new product. So I think across these intelligence products, including manager bot and money bot, I think we have a huge opportunity ahead in order to drive cross-sell, up-sell, and engagement, but we're just getting started. We just rolled out MoneyBot to GA. We haven't done any marketing in the app or outside of the app, and we've already had a million actives use MoneyBot over the past week or so. So we're really excited about the runway ahead, and we're going to continue investing here.

Our next question comes from the line of Andrew Schmidt with KeyBank.

Andrew, we can't hear you if you're trying to talk.

Can you hear me okay? Yep. Awesome. Hey, Jack. I'm ready to see you. Thanks for taking the question. Amrita, you mentioned that SquareGP and GPD grows to conversion to backup as the processing relationship change laps. You know, on a going forward basis, obviously a few things that drive that spread, right? Pricing and packaging, seller side, geomix, value added financial services mix, et cetera. When we think about the back half and beyond, if you could discuss some of the key influences and whether the spread should fully converge, whether there's a smaller persistent spread that we should be modeling, that would be helpful. Thank you very much.

Hey, yeah, happy to jump in here on the gross profit GPV sort of metrics and how we imagine them evolving over the next couple of quarters. So first, Let's just talk about the first primary driver of gross profit, which is GPV, of course. And as we look at that longer arc, I've obviously already talked about some of the key drivers for Q1 and where we see the underlying strength there. But as we look at the longer arc here, we continue to expect to accelerate GPV growth in 26 versus 25 and believe that we're on track to accelerate GPV growth in the low to mid-teens range in 27 and 28, as we said at Investor Day in November. As we look at gross profit growth, you know, first, again, to anchor to where we are today in Q1, gross profit growth accelerated at 9%. When you exclude hardware costs, which are a key driver of customer acquisition and new sellers coming onto the platform, a really successful driver of customer acquisition for us, when you exclude hardware costs, Square gross profit growth was actually 11% in Q1, so much closer to the 13% and an 11.5% on constant currency basis GDP growth in the first quarter. We continue to expect square gross profit to grow roughly in line with GDP growth in the second half of this year. And as you noted, pricing and packaging work, both what we've already launched know but scaling that more broadly across our existing seller base as well as net new pricing and packaging opportunities are really the key drivers of that longer term framework as those two metrics kind of come back more in line with each other our next question comes from the line of harshita rawat with bernstein hi good afternoon um so i'm gonna i want to

Follow up on kind of your comments in Square, go to market. You've seen good growth and new volume added. You talked about kind of, you know, more investment in go to market going forward. Maybe talk about the different components around self-onboard, feel safe, partner channel. I think you discussed good returns and feel safe investments and good growth and early growth in ISA channel. Thank you.

Yeah, of course. Thank you so much for the question. We've had another very healthy quarter of NDA growth. You know, the last kind of 18, 24 months has really been proving that we can illustrate a strong growth from the actual year-on-year NDA growth curve and that we can build out a very diversified set of channels that we believe can sustain that growth curve into the future. We're seeing strong momentum across field sales, self-on-borders and our independent sales organisation or ISO motions. And as you referenced, payback periods across each have been strong and year-end economics have been strong. For March and April, they were both record months for new GPD that we were able to see from sellers that onboarded within those months, which is great to see. I've spoken a lot about field sales and self-on-bordered in recent quarters. That growth has continued. Marketing has continued to generate a pretty significant majority of our self-on-bordered MBA payback period still holding at four to six quarters. We've done a lot of great work in driving our conversion rate up for our self-on-bordered motion, which starts 15% year on year. And from a first-party sales perspective, we expanded our field sales team further in Q1, both in the US and internationally. So we now have a field presence in the US, the UK, Australia and Canada. And our product is continuing to resonate more and more with larger upmarket sellers and the field sales team helping us close more deals. As I mentioned in the letter, the signing of Doltek and Space Escape, We also find Birch Coffee, Asai Republic and Cinnaholic brought back 85 locations to square. So it's great to see the momentum building. The real new motion that we've been focused on building the foundations for that we're starting to see contribute this quarter is our third party sales motion. And the biggest change from last quarter is the ISO channel. It's still early, but it's definitely exceeding our expectations and it's starting to become a more meaningful contributor of NDA. We continue to push the pace of signing ISO partnerships. We've already scaled to 140 plus ISO partnerships, which is 200% quarter-on-quarter growth in new sellers coming into Square from that channel. And as I said before, unit economics and the payback periods are really strong. Just to kind of give you a relativity equation, the volume of deals signed in March by ISOs would equate to the signing we'd expect from about 70 field sellers. So it's starting to illustrate really promising signs. And what I'm the most excited about is just the diversification that we're now seeing across our MBA growth curve and the health of that MBA growth curve. So very excited for what's to come for the remainder of the year.

Our next question comes from the line of Brian Keane with Citi.

Hi, guys. Congrats on the results. I want to ask about neighborhoods. I saw in the letter as of March, it scaled to 320 million in annualized GPV. And I think April, it added more sellers than the entire history. So I guess neighborhoods is starting to feel a little more real here. We got some concrete data points. And can you just help us

understand what neighborhoods is going to mean uh for both cash app and seller as this continues to grow and and uh take hold thanks sure thanks thanks for the question i mean overall we continue to believe that we have just a really really unique ability to connect both sides of the counter with the the seller side with square and the consumer side with with cash i think right now as you said, what we're starting to see is the rate of adoption is accelerating really quickly, especially in the past several weeks. And it's accelerating in a nonlinear way. I think you can see that in the chart packs that we put out today. And so we're seeing seller locations and therefore engaged buyers on the Cash App side really starting to ramp. And this is following the auto-enrollment changes that we had and some other improvements as well. I think in 2025, I think this work was really all about ensuring that we had product market fit. And at this point, we're really confident that we found it. So just a few stats here. The spend at a seller from followers for a seller who's engaged in neighborhoods reaches about 10% of their overall GPV after a few quarters, which is pretty astonishing to see. On average for sellers in the program, they get to about 1,000 Cash App followers within the first year. And at this point, I think we have roughly 100,000 followers on Cash App as a part of this program, and about half of them were not active on Cash App in the month prior before they signed up for Neighborhoods. So if you feel really good about market fit, now all the focus is really on scaling and distribution. So the auto-enrollment changes that we were focused on in Q1 are really starting to pay dividends. Right now we're adding hundreds of sellers a week. But we think we have a pretty clear line of sight to get to thousands of sellers a week. In-store redemption is also working well. So this just expands the cam of neighborhoods and makes it so you don't necessarily have to sell online to join the neighborhoods program. And then, yeah, as you mentioned, at the end of March, more than $300 million in annualized GDP from these sellers increased. but really a really strong inflection point in April. And so in April alone, we added more sellers to neighborhoods than in the entire history of the program since inception. I think in terms of impact, we're expecting that the neighborhoods program is going to start meaningfully driving cash app actives in the back half of this year. So I think in 2H, it'll be more than just the rounding error, which is exciting. And then we continue to have a lot of runway to invest here. Right now, we're focused on expanding to more hardware types. Right now, neighborhoods works best for folks who have the square register with the buyer facing display. But we're going to expand the TAM and make neighborhoods work for more and more hardware types. We're also really investing in the messaging feature that allows sellers to get in contact with their followers. We're seeing really, really strong results there. Some recent tests from the past few weeks, we've seen that the conversion rates on these messages are about 6x the conversion rates that our sellers see on their marketing emails. And so, overall, excited to continue to invest. We expect this to flow through to, you know, higher win rates and better acquisition, better retention on the seller side, and then really driving our network growth on the consumer side. Thanks.

Our next question comes from the line of Ken Sochowski with Autonomous.

Hi, everyone. Thanks for taking the question. I wanted to ask about borrow. You had another strong quarter of borrow originations. I think borrow is driving a little bit more than half of the growth at Cash App. You continue to see healthy loss rates. Can you just remind us how we should think about penetration and adoption rates for borrow as you continue to expand eligibility into other areas like Cash App Green? And then, Emery, I think you mentioned that you're going to lapse some very exceptional growth in borrow in the back half of this year. Is there a normalized growth rate or attached metric that you could point us to as the right way to think about borrow's durable trajectory? Thank you.

Hey, Ken. Yeah, so borrow, let me first step back and just say why has this product been so attractive for our customers? How is it delivering so much value to customers? We think it's really unique in that it's helping our customers manage income variability. It's helping them maintain flexibility in between income inflows. And it crosses so many different use cases with that broader context. And so when we think about that backdrop of the value it's providing, we think that there is continued growth at scale for borrow and meaningful growth at scale for borrow. Some of the ways that we have grown, as you noted, is as we have now shifted fully to SFS or internal bank originating loans for borrow that's given us improved unit economics, which has in turn enabled us to expand eligibility to customers in new states. and also expand eligibility to customers across Cash App Green, we still have room to ramp across each of those different areas. It has also given us the opportunity, now that we've been in market for multiple years with Borrow, and we have a pattern of data for our more mature cohorts of customers to increase limits where we see we can responsibly do that based on our underwriting models. And so we still have room to go from a limits standpoint perspective across on a per, you know, active or per origination basis as well. So we continue to see expansion opportunities there. We're ultimately going to be guided by, you know, variable profit margins, which is net of risk loss and processing costs. And as we think about the future, we think that there is, you know, tremendous opportunity to grow variable profit, particularly as the next shift to more mature cohorts where we see, you know, as we noted back at Investor Day, our more mature cohorts, and you've seen this with other lending products we've had as well, like Buy Now, Pay Later, that as we get to know that customer better and can underwrite them better, we see that more mature cohorts have far lower loss rates than the newer cohorts of customers. We saw that in the first quarter as well. You know, our newest customers had just over 3%, 3.16%. risk loss rate, you know, seven to 12-month customers, so customers who had been around for a couple of quarters had about 3%, 3.01% loss rate. And our most established customers, those who had been on our platform for 13 plus months, had 2.67% loss rate. So as this product matures, we see an opportunity to drive continued variable profitability and serve these customers, you know, with continued customer value.

We will now take our last question from Will Nance at Goldman Sachs.

Hey, thanks for squeezing me in here. I wanted to ask about network density and user growth. NTUs are relatively flat sequentially this quarter, still accelerating on a year-over-year basis. And that's despite the really strong growth in primary banking actives this quarter. You mentioned some of the investments in sales and marketing in the near term. I was wondering if you could talk about how you're prioritizing more top-of-funnel initiatives like driving network density and overall NTUs versus deepening relationships with customers and driving more reoccurring activity, which, at least in our view, is measured more on PDA growth. How are you thinking about the balance there? And thanks for taking the question.

Sure. Thanks for the question. I mean, we're really happy with the pace of expansion on the active side, so as you noted, Actives grew about 4% year over year in March. And while this looks like 59 million for two quarters in a row, that's just an artifact of rounding and how we report. This is actually the fastest pace of actives growth in about a year and a half. So we continue to focus on growing the network. And we're always balanced in terms of driving net new acquisition and network expansion, as well as continuing to drive engagement. I think in the near term, in terms of how we're thinking about growing the network, There's a few key things. One is just the ongoing work around network health and peer-to-peer, things like pay links and the core peer-to-peer flow and new form factors for peer-to-peer hitting, and we launched some of those in Q1. Also, I think the managed accounts for kids launch should be a pretty meaningful tailwind here. We've had a lot of success with our teens program over the years, and this is giving even more flexibility to families and parents. I think Cash App Score also has the ability to drive not only engagement, but also the monthly active number, just as we see the potential for yearly actives and quarterly actives to become more like daily, weekly, and monthly actives. And, of course, continue to invest meaningfully on the go-to-market side across all channels, driving growth, paid, lifecycle, brand, partnerships, etc., That's on the short-term basis. From a longer-term perspective, I think Neighborhoods is probably the biggest lever that we have. I think the Neighborhoods program has the ability to just fundamentally change the size of our network and the trajectory of growth. But we're in early days there. I think MoneyBot, similarly, we're in early days. I think with MoneyBot, we have the opportunity to attract some customers from non-core demos. And then we're continuing to invest in Cash App Green, making the Cash App Card more useful, making it more appealing to bring the Cash App Card top of wallet. And we continue to invest in Bitcoin as well. We made some meaningful improvements to our Bitcoin platform earlier this year. We reduced prices meaningfully so that we can continue to compete with what we want to be the simplest, cheapest and most accessible platform out there. So those are some of the kind of longer term levers and tailwinds that we see. But overall, I think the way to think about network growth is that it just comes down to development velocity. Like the more that we can shift useful things into the hands of our customers and prospective customers, the more folks are going to choose to use Cash App and the more they're going to use it every day and every week. Thanks.

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