Block Reports Q2 Growth; Announces Reorganization and Banking Ambitions

The theme of digital-first infrastructure and value-added services built atop it is one that Block , owner of Cash App , Square , and Tidal, leaned into during Thursday’s (Aug. 1) second quarter 2024 earnings call.

Block delivered year-over-year improvement across all profitability measures in the second quarter of 2024, with the financial technology firm also raising its earnings outlook for the year. The company’s second quarter gross profit grew 20% year over year to $2.23 billion. Block’s Square business generated gross profit of $923 million, up 15% year over year, while Cash App generated gross profit of $1.3 billion, up 23% year over year.

And the company used Thursday’s investor call to announce an internal reorganization designed to continue growth and accelerate go-to-market strength.

“We are moving Block to a functional organization, meaning an employee’s discipline (e.g. engineering, design, product, or sales), will drive who they report to and how they work. In line with this change, Nick Molnar, co-founder of Afterpay, will be elevated to be our Head of Sales across Block,” the company said in a statement provided to PYMNTS.

“We can realize better engineering, design and product by putting engineering, design and product at the top of the company,” Jack Dorsey , Block head, Square head, chairman and co-founder of Block, said to investors.

Read also: Cash App Exiting UK to Increase Focus on US

Block Wants to be a Bank

Per its materials , Block believes there is an opportunity to make Cash App the primary financial services partner of choice for families earning up to $150,000 by driving paycheck deposit adoption and increasing inflows.

The company refers to this as its “bank the base” strategy and recently started testing incentives to drive new paycheck deposit actives as a growth strategy.

“The incentives matter here,” Dorsey said.

“It is about making Cash App our base’s primary financial tool,” Block CFO Amrita Ahuja added. “Which ultimately leads to stronger engagement and stronger inflows.”

The Cash App Card reached 24 million monthly actives in June, up 13% year over year, while inflows per active user saw healthy growth, up 10% year over year in the quarter.

Block’s overall transaction-based revenue was $1.71 billion in the second quarter of 2024, up 5% year over year, and transaction-based gross profit was $713 million, up 4% year over year.

“The most important thing is our platform and making sure we have something that is reliable. … We’ve taken hits in the past when the service goes down,” said Dorsey. “We do not want to take any time away from our businesses.”

The company’s subscription and services-based revenue was $1.79 billion in the second quarter of 2024, up 22% year over year, and subscription and services-based gross profit was $1.5 billion, up 27% year over year.

Read more: Block Says Bitcoin Holdings Allow It to Study Technology’s Potential

Square’s card-present gross payment volume (GPV) was up 9% year over year, while card-not-present GPV was up 4% year over year. Square GPV is defined as the total dollar amount of all card payments processed by sellers using Square, net of refunds, and ACH transfers.

Gross profit from Square’s vertical point-of-sale solutions, including Square Appointments, Square for Restaurants, and Square for Retail, was up 21% year over year, while gross profit from Square’s banking products, which primarily include Square Loans, Instant Transfer, and Square Debit Card, grew 27% year over year.

This strength was driven by “continued strong demand for loans and our ability to find opportunities to deliver lending solutions to our customers while maintaining underwriting discipline,” the company noted in its materials. During the second quarter, Square Loans facilitated approximately 142,000 loans totaling $1.45 billion in originations, up 32% year over year.

Notably, little time on Thursday’s call was devoted to discussion of crypto, a favorite topic of Dorsey’s, with Block’s balance sheet holding a significant amount of bitcoin. Instead, executives stressed to investors Block’s recent agreements with prominent food distributors, including US Foods, noting that the company’s food and beverage partnerships provide access to up to 40% of restaurants in the U.S.