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01/15 10:38
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary and Q&A indicate positive developments: strong GPV growth, successful product launches (e.g., BNPL, Cash App Pay), and optimistic guidance for the second half of the year. Despite some concerns about increased costs, the company expects normalization by 2026. The focus on expanding user base and international growth further supports a positive outlook. However, lack of specific guidance on gross margins and stablecoin strategy slightly tempers enthusiasm, resulting in a 'Positive' rating.
Gross Profit $2.5 billion, up 14% year-over-year, accelerating from 9% growth last quarter. The increase is attributed to product innovation and go-to-market investments.
Adjusted Operating Income $550 million, up 38% year-over-year, with margins expanding to 22%, the highest quarterly adjusted operating income margin yet. This growth is due to efficient product delivery and value creation.
Cash App Gross Profit Growth 16% year-over-year in Q2. Growth driven by Cash App Card's healthy gross profit growth and increasing attach rates for post-purchase BNPL on Cash App Card.
Peer-to-Peer Volume $218 billion in the last 12 months. This metric highlights the scale of the peer-to-peer network driving community connection and customer acquisition.
Commerce Capabilities Volume $183 billion in the last 12 months, growing 16% year-over-year or 21% excluding Cash App Business. Growth attributed to broad commerce capabilities.
Borrow Originations $18 billion in annualized originations. Growth driven by ramping Borrow on Square Financial Services and expanding SFS originations.
Bitcoin Transactions $58 billion in Bitcoin transactions. Growth attributed to unique offerings like no fees and no spread for paycheck deposit actives buying Bitcoin.
Square GPV Growth 10% year-over-year in Q2. Growth driven by strong performance in food and beverage (up 15%) and retail (up 10%), as well as international GPV growth of 25% year-over-year.
Square AI, Square Handheld, and Square Online: Launched new products and updated existing ones to enhance operational efficiency and customer experience.
Cashbot: Introduced an AI-powered customer support agent to improve customer service.
Cash App Pools: Developed and piloted a new feature in just a few months.
Afterpay single-use payments: Launched a 'paying monthly' feature in the U.S. to enhance flexibility for users.
International GPV growth: Accelerated to 25% year-over-year, driven by expanded distribution through sales and partnerships.
Quick-serve restaurant market: Focused on winning this market with notable customer wins like Colectivo Coffee and Shane's Rib Shack.
Gross profit: Achieved $2.5 billion, up 14% year-over-year, with adjusted operating income of $550 million, up 38% year-over-year.
Cash App Card and BNPL: Gross profit reaccelerated, with Cash App Card crossing 1 million monthly actives in July.
Borrow on Square Financial Services: Meaningfully ramped up, with $18 billion in annualized originations.
Field sales expansion: Scaled aggressively, achieving the highest-ever new volume added and strong ROI.
S&P 500 inclusion: Added to the S&P 500, reflecting strong market positioning and investor confidence.
Macroeconomic Conditions: The company acknowledges risks and uncertainties related to changes in macroeconomic conditions, which could materially impact their forward-looking statements and actual results.
Borrow Expansion: The expansion of Borrow on Square Financial Services is expected to increase risk loss growth, which could impact adjusted operating income margins in Q3.
Processing Costs: A decision to increase operational flexibility at a processing partner will modestly increase processing costs, impacting Square's gross profit growth in Q3.
Hardware Investments: Further investments in hardware as a go-to-market driver for Square could impact gross profit growth in the short term.
Risk Loss Rates: While expanding Borrow, the company expects loss rates to stay within historical ranges, but this still poses a financial risk.
Q3 2025 Guidance: Gross profit expected to be $2.6 billion, growing 16% year-over-year. Adjusted operating income expected to be $460 million or 18% margin. Gross profit growth expected to accelerate to 19% by year-end with over 20% adjusted operating income margin.
Full Year 2025 Guidance: Gross profit expected to be $10.17 billion, reflecting over 14% year-over-year growth. Adjusted operating income expected to be $2.03 billion or 20% margin, expanding margins by 2 percentage points year-over-year.
Square GPV Growth: Low double-digit GPV growth expected in Q3 and Q4, with modest acceleration from 10% growth in Q2. Q3 gross profit expected in the high single-digit range, with Q4 growth tracking roughly in line with GPV growth.
Borrow Expansion: Borrow product expansion expected to impact Q3 adjusted operating income margin, with risk loss growth anticipated. Loss rates expected to remain within historical ranges.
Go-to-Market Investments: Continued aggressive ramp-up of sales personnel and scaling of independent sales organization investments expected in the coming quarters.
The selected topic was not discussed during the call.
The earnings report shows significant revenue growth (88%) and strong retail expansion (206%), along with a positive acquisition premium (64% to 102%). Despite a decline in gross margin, the strategic acquisition by ETI and the financial improvements suggest a positive outlook. The Q&A section didn't reveal any major concerns, though management's lack of clarity on ETI's U.S. strategy could be seen as a minor risk. Overall, the financial performance and acquisition terms are likely to drive a positive stock price movement.
The earnings call summary and Q&A indicate strong financial performance, with growth in gross profit and operating income, alongside strategic investments in product development, sales, and partnerships. Positive factors include robust Cash App Borrow performance, AI integration, and new Bitcoin integration. Although management was vague about some future growth timelines, the overall sentiment is optimistic with accelerated growth across key metrics. This, combined with positive guidance and strategic initiatives, suggests a positive stock price movement over the next two weeks.
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