Good day, ladies and gentlemen and welcome to the Square Third Quarter 2021 Earnings Conference Call. I would now like to turn the call over to your host, Nikhil Dixit, Head of Investor Relations. Please go ahead..

Hi, everyone. Thanks for joining our third quarter 2021 earnings call. We have Jack and Amrita with us today. We will begin a call with some short remarks before opening the 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. Recorded 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 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 the forward-looking statements except as required by law.

During this call, we will provide preliminary gross profit growth results for the month of October. These represent our current estimate for October performance, as we have not yet closed our accounting financials for the month of October and our monthly results are not subject to interim review by our auditors.

As a result, actual October results may differ from these estimates. Also, we will discuss certain non-GAAP financial measures during this call. The 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 our GAAP results. 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 would like to turn it over to Jack..

Thank you all for your time today. In our seller ecosystem, we continue to build upon our omnichannel capability and those efforts have enabled us to attract and retain larger sellers while also helping our existing sellers grow our market. This quarter, we enhanced our square invoices product to help sellers more efficiently run their business.

Square invoices enables sellers to easily build clients and get paid quickly, in person, online or over the phone. In the third quarter, we introduced Square Invoices Plus, a new subscription product with more advanced features designed for larger and more complex businesses.

We also continue to expand our geographic reach, launching a full stack of integrated seller tools in France in September,, our most robust market launch yet.

French businesses can now sell online and in person with Square's integrated suite of products, including Square Point of Sale, Square For Restaurants, Square Online, Square Terminal, Square Stand, Square Reader and more.

We're excited about France given its strong small business environment, increased usage in contactless payments and it's fast growing eCommerce sector. Switching to Cash App, we reached some major milestone in this quarter in expanding our offerings to families by serving teams and entirely new demographic for Cash App.

With this launch customers in the US between the ages of 13 and 17 get access to Cash Apps, massive P2P network, the cash card, direct deposit and boost, all with parental or guardian approval.

By lowering the age barrier, we hope to expand access to the financial system to 20 million teams in the US and equip them with the tools they need to participate in the cashless economy, which is especially important now, as transacting with physical cash becomes less relevant in the increasingly digital world.

With Cash App, families can help their teams learn about how to manage the money they earn from the allowance, jobs and chores with the appropriate protections in place. As we've talked about, our string flies in our ecosystem model, especially as our ecosystems connect together.

In the third quarter, we launch Cash App pay in the US a new contactless payment method for online and in person transactions with Cash App pay individuals can seamlessly pay with their Cash App account as Square sellers using the QR code, they're tapping a button on their mobile device of checkout.

As contactless options into ours have become more mainstream Cash App pay has become a top requested feature by both Cash App customers and Square sellers. This integration further expands Cash App's commerce capabilities, and helps us meet customers where they are providing more flexibility in their payment options.

Cash App pay also enables us to offer sellers a new and innovative way to bring commerce to life for their customer. Lastly, we continue to serve our purpose of economic empowerment and all that we do, but we want to build on that strength to explore opportunities beyond our existing ecosystems to serve new markets.

We have a few emerging initiatives who are investing behind into 2022. For example, with the acquisition of TIDAL, we're building tools for artists, starting with new additions.

We also recently created a business called TBD in order to build an open developer platform with the sole goal of making it easy to create non-custodial permissionless and decentralized financial services with a focus on Bitcoin. We plan to share detailed plans with a white paper later this month.

We announced two more Bitcoin initiatives as well, a consumer Bitcoin hardware wallet, and a Bitcoin mining system, both are focused on helping Bitcoin reach a mainstream audience while at the same time, strengthening the network and ecosystem.

We'll build both in the open in collaboration with the community, sharing all of our decisions, progress and questions along the way. We see each of these long term opportunities that we'll be learning from over multiple years. And with that, I'll turn it over to Amrita..

Thanks Jack. There are three topics I'd like to cover today. First, a look at our performance in the third quarter of 2021; second, an update on our seller and Cash App ecosystems in October and third, a look at where we intend to invest in the fourth quarter of 2021 and in 2022, given the compelling growth opportunities ahead.

In the third quarter, gross profit was $1.13 billion, an increase of 43% year-over-year or 51% on a two year CAGR basis. Adjusted EBITDA was $233 million. Both Seller and Cash App showed strong fundamentals during the quarter. Seller generated gross profit of $606 million of 48% year over year or 29% on a two year CAGR basis.

A few growth drivers to call out here. First we've made strides growing up market as our ecosystem has resonated with larger sellers.

In the third quarter, mid-market sellers are those with more than $0.5 million in annualized GPV, grew gross profit, nearly twice as fast as our overall seller business on a two year CAGR basis and have surpassed micro sellers make up our largest segment of GPV.

Our momentum with mid-market sellers in recent quarters has been driven by acquisition of larger sellers, as well as our ability to help small sellers grow on our platform.

Second, software and integrated payments remain the fastest growing product in the seller ecosystem on a gross profit basis as sellers value the breadth of our ecosystem, Square invoices in particular experienced strong growth processing, $12 billion in GPV the last 12 months up nearly 2X from two years ago.

Cash App generated gross profit of $512 million up 33% year over year or 104% on a two year CAGR basis with strong engagement in inflows, inflows or money pulled into our ecosystem, achieved strong growth on a two-year CAGR basis even as most government disbursement programs ended.

Product adoption has been a key driver of overall inflows, and we continue to see an increase in attach rate for products using cash cards. In the third quarter, cash card active brought in approximately 70% more inflows each month than non-cash card actives.

We also saw an increase in paycheck deposits as we've made direct deposit and bank transfers easier and more visible to customers. Next, we wanted to share an update on our business through October and what we're seeing real time. As a reminder, we believe two year CAGRs will better reflect underlying trends in our business.

For Seller, we expect gross profit in October to grow by 45% year over year or approximately 30% on a two year CAGR basis relatively in line with growth in third quarter. Fellow GPV was up 24% on a two year CAGR basis.

We've been encouraged by relatively stable growth rates in the past few quarters though, we recognize there are still impacts from COVID in certain parts of the US and our international markets, which could impact GPV trends.

For Cash App in October, we expect gross profit growth of greater than 35% year over year or greater than 90% on a two year CAGR basis. As we had expected, we saw normalization in the two-year gross profit CAGR from July to October as government disbursements ended.

On a year over year basis, gross profit growth has been relatively stable around the 35% range from August through October.

We've seen strong engagement here across our broader ecosystem of products and are enthusiastic about our recent launches and product roadmap, which brings me to our intended investments for the fourth quarter of 2021 and the preliminary view of our focus areas for 2022.

In the fourth quarter, we expect to increase non-GAAP operating expenses, excluding risk loss by approximately $115 million compared to the third quarter. Looking to 2022, we see significant investment opportunities across our business and remain focused on driving long term profitable growth.

Next year, we expect to grow non-GAAP operating expenses by approximately 40% year over year compared to 2021. We're approximately $1.3 billion of incremental spend across product development to build out our team, sales and marketing to drive acquisition and G&A to expand support in each of our ecosystems.

This figure excludes impacts from after pay, which we expect to close in the first quarter of 2022. Let's take a look at where we're focused, where we're focusing our investment. For Seller, we'll be investing behind our strategic priorities of enabling omnichannel, growing globally and growing up market with larger Seller.

Given the strong growth and lifetime value and gross profit per customer that we've seen over time in our seller business more comfortable, lengthening our payback periods up to the six quarter range as we scale sales and marketing and increase our mix of go to market investments across international, brand awareness and our sales teams.

For Cash App, our strategic priorities remain strengthening our network, driving engagement and attracting more inflows into our ecosystem. Heading into 2022, we're focused on advancing these priorities by investing behind new and emerging product areas.

First enabling more commerce for our customers, including our recent launch of Cash App pay and potential future opportunities with after pay, following the closing of the transaction.

Second, providing more financial services by expanding our product set and unlocking new info channels in the Cash App and third, improving the health of our platform and promoting positive behavior by growing support and expanding access.

Finally, as Jack mentioned, we now also have emerging areas of growth that we're investing behind and we'll be tracking the progress against milestones over multiple years.

These include Title, TBD, the hardware wallet and Bitcoin mining, which we expect will an aggregate represent roughly 5% of our incremental step up next year, for approximately $140 million in overall non-GAAP OpEx. As we look ahead, we're excited for what the future holds for our company.

We are going after a large and growing addressable market, and we see strong signals on how our products resonate for our customers with compelling unit economics. As a result, we are deliberately investing to reach new audiences, increase the utility for existing customers and expand our products set as we have done over time.

I'll now turn it back to the operator to start the Q&A portion of the call..

[Operator instructions] We have the first question come from the line of Tien-Tsin Huang with JPMorgan. Your line is now open. You may ask your question,.

Thanks so much. And thanks for the update. I wanted to ask about Cash App pay if that's okay. And I know Jack, you've been talking about connecting the two ecosystem.

So how important is this in that effort? And what's the strategy to grow this payment method overall, I've been thinking that you'll need to drive more inflows like direct deposit to really get it going. So maybe if you don't mind updating us on the inflow strategy, that'd be great. Thanks..

Yeah. So I would foresee this as a focus on the importance of Cash App moving more and more into commerce relationship. So, we have these incredible firewall loop and network effects and peer to peer, and now we get to look forward towards being more of a commerce front end.

Fortunately, we have another ecosystem at scale that focuses on Sellers and omnichannel commerce. So it's easy for us to test a lot of these theories out and actually scale them up over time. Obviously, we do believe that having these multiple ecosystems is our ultimate superpower and differentiator.

So, have both ends of the counter two different audiences and sellers and individuals is really important. There's a thesis behind after pay as well.

And that probably represents some largest potential for connecting the ecosystems, but any connection we make between these ecosystems strengthens the overall value of a broader ecosystem and we think our value to customers and the company generally as well. In terms of direct deposit, direct deposit is one form of info.

We've done a lot to make sure that we are making it more accessible. We're putting it more upfront in the interface. You'll, notice a bunch of navigational changes that we made.

So more of a focus on direct deposit, but generally, there's a number of ways people get money into cash out, not just the pay check, but tax refund, stimulus checks and we want to make sure that it's intuitive and easy for all those and be ready for when people on scale.

I think, the other announcement to look towards in this light is what we just did for families.

So allowing any parent or guardian to turn on Cash App for their kids who can also use peer to peer direct deposit and the cash card unlocks an entirely new population for us and will still benefit it from those base level network effects that have grown and Cash App in the first place.

So we have a -- we're going after this problem in multiple ways in our phase new products and features like Cash App for families. And then taking every opportunity we have to connect our ecosystem.

But the, the thing that I think is most interesting here in cash pay is that it really allows us to open the door around Cash App being a commerce front end..

And next question, we have the line of Darrin Peller of Wolfe Research. Your line is now open. You may ask a question..

Hey, thanks guys. Nice trends. I just want to start off and kind of follow up on tangents question around Cash App a bit, just given the impact of stimulus.

It's likely running off a bit now and it's, I think it's still impressive to see two year CAERS at a hundred, 4%, but just really love to hear what your view is on the drivers of incremental engagement per user, like sort of touching on the new capabilities and strategies from here on, out for Cash App really pre after pay along with the potential levels, we'd be able to reach just thinking about what the potential engagement, transaction levels, revenue per user, where that can go over the next couple years..

Thanks guys. Hey, Darren, happy to take that one. I think it's instructive to look at where Cash App is focusing from a priority perspective, both an aggregate across the ecosystem, as well as from a product development perspective, to inform where we could see potential future growth.

So as ever in, as we head into the fourth quarter and into 2022, our strategic priorities remain strengthening our overall network, driving engagement and attracting more in flows and to advance these priorities, we'll continue investing behind product development, sales, and marketing for customer acquisition and support and operations, which underpins the entire platform from a product development perspective.

We're prioritizing a few longer term focus areas, which I think really get to your question around how we drive long term growth RPO and my 10 value for our customers by ultimately driving greater utility for our customers.

So first from a commerce perspective, as you've heard from Jack at the beginning of building out a commerce platform for Cash App, you see that with Cash App pay, you see that with teams, you see that with what we're going to be doing in the future with after pay and other new experiences to of greater utility and engagement from a financial services perspective, we're expanding our banking capabilities, including new info channels into Cash App and exploring new products like borrow to help drive engagement and attract more inflows into the network from a health perspective, we're scaling support or expanding acts us.

And we're doing this responsibly to encourage good behavior on our platform, which again, further strengthens the network effects and, and the ability for people to bring funds in and use them across multiple products. And we're building out fulls stack teams dedicated to each of these areas in 2022.

And you'll see that in our hiring plans in product to drive continued product roadmap, velocity, from a marketing perspective, we're investing to drive acquisition for new customers, with a focus on reaching higher lifetime value customers and newer demographics.

And as we've seen gross profit and lifetime value per customer grow historically, we've be to increase our customer acquisition costs above the historical $5 range which we believed is too efficient. Given the opportunities that we see ahead.

So some of the levers that go into that to drive investment in 2022 and future growth, paid marketing, this is where we can ramp our paid channels.

And as a grow portion of our spend referrals, which makes enhancement to, we're going to make an enhancement to the overall referral program and use it as a way to cross-sell our ecosystem as well and awareness, which grows the ability to, for people to come in and, and adopt products beyond peer to peer and, and includes reaching CU new types of customers beyond our existing demographics.

And it advances Cash App life, lifestyle brand as a true differentiator and finally support. And the, and the foundation on which our platform is built. The growth of Cash App has outpaced our investment, frankly with customers are adopting, adopting more and more products. And in 2022, we're going to grow our health team.

We'll continue to build out our support and our infrastructure to align with Cash App to sound and growth. Part of that is deposits and limits initiatives to reduce friction around inflow sources and add new inflow channels.

And part of it is, some of the more recent things you've seen, like we recently launched in-app support messaging to all customers and that's quickly become the majority of inquiries.

We'll be dynamic with the spend we'll track returns, but we're excited about these initiatives strategic initiatives and investment areas to drive future growth for us, ultimately driving utility and engagement with the Cash App ecosystem..

Thank you. Next question we have a question from [indiscernible]. Your line is now open. You may ask a question..

Hello, my name is Andrea. I'm a business owner here in San Antonio, Texas. I owned a crafted donut shop and we use mainly all Square features available at the moment. My question was like growing from a food truck to a brick and mortar location, as we continue to expand.

One of the most important things is to ensure that we have all the integrated products we need to roll up market and do you -- can we expect to see Square introduce features as we look to expand?.

Yeah. A 100% and thank you for using square. So, we built ecosystem with exactly this in mind. We, we started close to 13 years ago with a very simple solution of accepting credit cards. And that was meant for, so proprietors and the smallest of businesses, but we wanted to make sure that we were able to scale ahead of our seller's ambitions.

So if they decided to get a physical location, they decided to have multiple locations hire more employees, all those things we, we didn't want to get in the way of that. So all of our tools are meant to scale from the very small, to the very large and progressively disclose more or sophistication as the complexity of your business increases.

One, one of recent areas that we wanted to help solve is around employee management.

And we acquired this company called crew that allows us to that, that allows our sellers to have a mess platform so that they can help manage all of their employees and, and all their needs so they can continue to focus on what's most important, which is their, their customers.

So it's really important to us that we're not getting in the way of any of our seller growth. And I think we, we show that by being of, of live very small, but also of the largest, like stadiums who have thousands of vendors of all sizes working..

Thank you. We have, the next question comes on the line of Lisa Ellis with MoffettNathanson. Your line is now open. You may ask a question.

Good afternoon. Thanks. I'm going to switch over to the seller ecosystem. You called out Sellers international expansion in the prepared remarks, particularly the recent expansion into France.

Can you just remind us how much of Sellers' GP is derived from ex US markets and how fast that piece is growing and looking forward, maybe for Amrita where your priority investment areas are looking internationally as you look into '22, thank you?.

Maybe I'll start this off and Amrita make a follow. So as we look at a new market for, for sellers we want to make sure that we're number one looking at the, the market and understanding like the level of small businesses and entrepreneurship with one and then we want to invest in brand and product awareness.

And then after that, it's not just launching one product, but getting to parody across all of our products across all of our global geos. And then finally, like look at expanding into new markets where we think there's a high potential for success.

Because, we do require a, a partnership with a, a local bank and there's differences in local regulatory. This has to be a very deliberate decision. So we've made very conscious choices around what markets square in and why.

And there's still a lot of opportunity for us to open more of our products in more of the markets that we're already in, such as square loans in more of the places that we already exist. So that is our focus.

So it's a balance between getting into parity in the markets that we're in with all of our products, but also looking at, at entirely new markets as well, France being the, the most..

And Lisa I'll add that, our markets outside the us have seen strong growth in the third quarter, despite periodic lockdowns. We saw those markets growing faster than the us, so they are growing cause within our national markets are growing as a mix of our seller business.

And they continue to, to your point about next year and our future strategic priorities, they continue to be a key focus area for us in investment opportunity for the future. As I said, sellers, strategic priorities.

As we look ahead are enabling omnichannel going global and growing up market on the going global piece to your question, it's a key part of our sales and marketing initiatives for next year and a key piece of why we're comfortable expanding our paybacks up to the six quarter range.

As we see a greater mix of spend in sales and marketing towards brand spend and international areas, what those key sales and marketing investments are brand and awareness to drive, reach, and top of funnel demand, particularly with larger sellers and across the breadth of the ecosystem for which continues to be our largest percentage of mix.

And then global, scaling sales and marketing in these markets outside the us, where which is growing faster than the us and where we've seen paybacks improve over time, where we'll be ramping our spend in these markets outside the us in 2022, given the new geographies that we're in, include France Ireland and with the beta in Spain, as well as potential new launches for the future.

We expect these areas to have lower ROI in early years and improve our over time. And we see them as a critical strategic area for us for the future that we want to invest into given the strong product market fit and how our products are resonating in these markets.

It's also a key piece of the investments we make, of course, in product development to localize and expand these services and features for each of these markets closing the product app that Jack was talking about these international markets and from a support perspective, to make sure that these sellers can reach us with any of their needs across international, as well as the us.

So key focus area for us, and very strategic for the future..

Thank you. Next question comes from the line of Timothy Chiodo with Credit Suisse. Your line is now open. You may ask a question..

Great, thank you for digging the question. I want to dig into the large seller approach in 2022 and beyond. And I'm really bringing this up in light is the potential for a more bundled approach to work with those large sellers. And that's including some of the big online enterprise customers that have relationships with after pay.

So I was hoping we could talk just a little bit about that full suite or bundle of offerings that could be sold into those large seller, whether, whether it's by now pay later the Cash App pay button or your more traditional payments processing or unbranded, if you will.

And then of course, other services that square offers and really the thought being there is it might allow square to have a more competitive or sort of a unique angle when talking with those large enterprises..

Yeah, this is exactly it. As I said earlier, this is one of our, one of our biggest strengths is that we, we do have ecosystems that are cohesive. They're very broad in their tool sets. So it allows us to reach sellers in a much more cohesive way, especially given the maturity of our developer platforms or the I, or your seller.

And I have legacy tools or tools I that are very custom and specific to me. I can still integrate with square in a way that that's needed are definitely point to the number of stadiums that we've turned on as proof of that.

And that also shows like the potential for, for bundling, as you say we believe that after closing the transaction, after they can add really drive commerce across both sellers and individuals we think it's a really smart connection between the two ecosystems, obviously after pay is has done very well with larger retailers.

And that's both on the seller side and also on the individual side where I think there's natural homes within the, our seller business and also cash up. So back to the comment on cash app.

Hey, like the more word cash app is seen as a commerce front end from discovery to transactions the stronger our relationship the brain, and that's not just on the cash app side, but also on the square seller side. And as we worked to integrate app with the transaction closes, we have even more opportunity..

Thank you. Next question we had the line of Trevor Williams of Jefferies. Your line is now open. You may ask your question..

Great, thanks. Good afternoon. And I'll throw another one in on the cash app.

So as we look at the size of your user base at $40 million monthly actives that puts you at a scale that very few thanks or close to I mean, how do you think of the benefits of scale or what competitive advantage a larger user base gives you beyond just having more users to monetize when you have network effects on the peer-to-peer side.

But just trying to get at how a larger user base can unlock a higher level of monetization. I mean, the benefit from when you plug in after Afterpay, that seems pretty clear, but just thinking more on cash app as a standalone today, really what the scale advantages are. Thanks so much..

Yeah, I think number one, like it, it gives us a lot more opportunity to strengthen our existing products, but also create new products on top of cash up as the foundation. And, and those can be products for both individuals and customers, but also for sellers as well as more and more commerce moves online and purely digital and is not found offline.

We, do have businesses using cash app because it's the way for them to transact and it's familiar for their customers and even that builds upon the network effect. But I, guess I would directionally point you back to discovery with a larger base of customers, we get more opportunities to introduce discovery features to our network.

And, we have the starts of those things and boost for instance where a we can, we can highlight a particular activity or a particular seller whether it be in your neighborhood or nationwide.

And I think there's a lot more to come there and we have the benefit of again, having a seller network and ecosystem that we can further turn on to all of our passionate customers.

And as we have no more as we have a compelling product experience around discovery local and businesses around me become really important and they, and they open access even the, to it to an even greater degree.

So I think there's, there's a lot of potential and having the scale we have, but I, I, I feel we can go much, much higher and that's the intention then, especially as we think about cash up outsides the US and UK, which for insights me as well as being more global..

And I have Trevor that I think a key focus area for us is the engagement of this customer base. as we said, back in June, nearly two thirds of those $40 million monthly actives that you referenced transacted each week on average across our cash app ecosystem.

So the more we can do there to make this a daily utility to make our ability to provide customers value on a regular basis.

And throughout the day, the more opportunity we have to drive further network effects, drive further engagement and ultimately drive higher lifetime values, which then enables us to invest back into the ecosystem and provide differentiated value to these customers.

So I think both the reach of the network and the driving continued engagement are key priorities for us..

Thank you. Next question comes from the line of Harshita Rawat at Bernstein. Your line is now open. You may ask a question..

Good afternoon. Thanks for taking my question. Jack, I wonder follow-up in your prepared remarks regarding Bitcoin. Are you looking to expand into crypto beyond Bitcoin, buy and sell, for example, buy and sell other cryptocurrencies and also enabling your users to kind of engage in defined NSP assistance. Thank you..

We're not. Our focus is on helping Bitcoins become the native currency for the internet. And we want to, we have a number of initiatives towards that goal cash app is just one. We're going to be building a hardware wallet, they're exploring Bitcoin mining, a consumer device to, to mind the claim at home or in a business our solid businesses.

In fact we, we believe, this focus is important. We believe it's right. And a lot of it has to do with the, the resilience, the fundamentals, the principles that Bitcoin offers. And we also want to make sure that we're giving back to the community as much as possible in this is also reflected in our approaches for Bitcoin wallet, Bitcoin mining.

And our new business unit called TBD, which is focused on building a developer platform to enable more ideas around decentralized finance on the Bitcoin stack and all that stability that offers and, all the resilience that's had over the decade plus.

So we're going to release more details on what TBD is steering with a white paper on November 19 and we're really excited about the direction and excited about our focus..

Thank you. Next question comes from the line of Josh Beck of KBCM. Your line is now open. You may ask a question..

Thank you team for taking the question. I wanted to shift gears back to cash app. Obviously the demographic on the age is expanding and certainly getting into that 13 plus category. So I'm curious what you view as the defining elements of cash app for that segment.

Obviously there are a couple of five and companies also focus on teens and tweens, if you will. So just curious on how you frame that and where you see that opportunity in the next few years..

Yeah. This is a really big launch for us because we're, it's been a huge request by Cash customers. But we're there we're finally able to fulfill obviously the sister must have a larger population now we don't have access to before 29 teens in the United States. But then it's going to our fundamentals that are showing the peer to peer fundamentals.

Just receiving family, received money from your friend who send money to your friends or from your, your parents being able to get a cash card design a cash app card, even the cash card that goes in the dark and being able to use it and take my parents can send me my allowance or I can own the workforce and actually use the direct deposit function on it.

So most everything that you would expect from cash app will exist with this feature side, but you will have controls for the parents or guardian. So we think it's a great way to get into the space. It's a start. We, we definitely have to expand it.

But all the strength that we have in building the network effects of art or business and all the products that we, that we offer we benefit now from a much larger audience and we'll continue to take on the responsibility and health we have with things like the claim and the savings account and cash card and stocks as we, as we have with the main cash app.

So we always want to provide as much information as possible, so people can be responsible and healthy with their finances. And in we'll definitely include, probably think about cash up for families in pertains.

Josh. I would, I would just add that.

I think some of the key differentiating factors for cash app here is the scale of the network effects, which the utility ultimately for these teams and for their families and the aspirational brand that cash app has cultivated through the years, which is truly authentic, certainly with gen Z and certainly with this audience.

And then third, as Jack said, the strength of the broader network, the fact that it's not just cash card, it's not just peer to peer, but there's so many other things that you'll be able to do over time which enables that sort of financial inclusion for this audience.

And those are the things that truly differentiate cash app for, for this product and for this audience..

Thank you. We have the next question comes into the line of Ramsey El-Assal of Barclays. Your line is now open. You may ask a question..

Hi, thanks so much for taking my question this evening. I wanted to ask about an ACH acceptance tool that I think you guys announced earlier in the year in partnership with Platt, and it's sort of at a high level.

What are your thoughts more broadly on pay by bank and other types of payments that don't rely on the traditional card rails? And maybe if I can tack one on, are you planning to offer a pay with Bitcoins feature through cash app pay at some point next?.

Yeah, so I think what you're referencing is maybe the sellers accepting bank transfer payments which definitely have a lower processing piece. So we're, we're always looking for opportunities to add efficiency to the sack, both for sellers and for cash up.

As soon as we have, as we have the foundational infrastructure and interface in place we find ways to make it even more efficient, cheaper for our customers in terms of cash app pay in Bitcoin and specifically lightning functionality probably not rum. It's definitely something that the foundation will allow.

And we're, as I said before, like our focus is on helping Bitcoin to be the native currency in that. So currency aspects of it in the network are really important to us. And we're going to do more in that space..

Thank you. We have, the next question comes from the line of Bryan Keane with Deutsche Bank. Brian, you may ask your question..

Hi guys. And thanks for taking the question. Just want to ask it about on the, how much stimulus is still impacting the numbers. Just curious on the saving rate for cash app users and their balances right now. And I know you guys are doing several things to get balances up on cash app. So just be interested in figuring out a little bit about that..

Hey, happy to take this one. Maybe we'll hit balance as quickly. First we saw customer balances slightly down quarter, over quarter of 143% on a year over year basis. We would really warrant you though to look at info inflows more broadly. As balances are just a measure of growth at a snapshot in time at the end of the quarter.

And so what we really orient to as we think about the health of the network is of course, as we said, overall, network size engagement, but also inflows.

What we've seen is that as we had expected as the government disbursements came to the end, largely during the third quarter, we found normalization in the two year K the rate on gross profit from July to October on a year over year basis, always seen relative stability from August to October in around that 35% range on a year-over-year basis.

In October, we expect growth on gross profit of greater than 35% year over year and greater than 90% on a two year CAGR basis.

And then as we look ahead, of course, when we think about our customer spending power, which is ultimately what impacts inflows what we're focused on for the long-term is all those key priorities that we laid out for the year ahead around commerce platform that we're building around financial services around the health of the network, which enables us to ultimately bring more, deposits, more inflows into the ecosystem and enables our customers to then use them in more ways across the ecosystem.

And I think ultimately that's in the medium to long-term. What drives inflows for cash app..

Thank you. We have the next question comes from the line of David Togut of Evercore ISI. Your line is now open. You may ask a question..

Thanks so much. I'd like to better understand your closed loop strategy with Afterpay. We've been following your BNP L pilot and cash app, which appears to be defaulting payments to store balances. Given your stored balances were around 2 billion at the end of 2020, and constantly being refilled.

It seems it be NPL with Afterpay at square sellers could generate significant transaction margin benefits.

Can you help us better understand your closed loop strategy with Afterpay?.

Sure. I can jump in on this one. I think what we're focused on ultimately is the product experience for our customers and the commerce platform that we're building, which, this payment type enables us to drive things like in-app discovery within cash.

And as we've seen with Afterpay that with their own app, they've been driving historically a million leads a day to some of their enterprise merchants. So when you think about beyond just the payment type that B NPL enables, or even things like cash app pay enables, really the strategic imperative here for us is the commerce enablement.

At the, that the integration of Afterpay enabled for us with, with both cash app and with our seller ecosystem, of course, there will be opportunities to think about cost savings over time, but the street needed focus is on commerce and in app discovery for us..

Thank you. We have the next question come from the line of George Mihalos of Cowen. Your line is now open. You may ask a question..

Great. Thanks for taking my question.

Just wanted to ask as it relates to cash app and the importance of the cash card, can you remind us how penetrated cash card is within the cash app ecosystem and then maybe emerita, you can kind of update us on the breakdown of different revenue sources within cash app the instant PDP cash card and the like, thank you..

Sure. So to hit cash card first, we continue to see strong adoption here for cash card with our customers. It is our highest attached product upside a peer-to-peer and what we had shared back in March is that 7 million customers within cash up or using cash card on a weekly basis, we're seeing it drive regular utility for our customers.

That rate of weekly usage had nearly doubled year over year, going faster than the monthly active cash card customers. They're using cash. Our customers are using the card for everyday purchases for food, for transportation at major retailers, really signaling that customers want to use cash card to manage their everyday expenses.

Obviously, boost is a piece of that with a unique rewards and offerings that we have here to drive that utility and awareness around card. And we've also been working on expanding functionality for cash card globally as a third quarter. Customers can now use cash card in-person and online in many countries outside the us.

And when we think about the importance of driving attached to products like cash card, what we see is that these customers are highly engaged across our ecosystem on other products. Historically, we've seen cash card access dots, nearly twice the number of products as non-cash card customers, which has led to greater money brought into cash app.

Overall, obviously we shared that stat that in this quarter cash card active brought 70% more inflows into the ecosystem on average than non-cash card active. And it was a key driver of overall info growth for us.

So we see a real opportunity here to grow engagement and monetization, both with cash card and beyond cash card buy as customers take on more and more products like investing in direct deposit and on, I think the second part of your question is the breakdown of revenue sources.

We continue to see a diversification in how the utility of the different products we have within cash app. And it's a key focus area for us to drive that product adoption across cash app, as well as to drive ultimately monetization and regular engagement.

And that is something that, especially as we look ahead, when we look at the product roadmap ahead, we expect to see even greater diversification over time..

Thank you. And we have time for one last question. And that line comes from Ryan Klein [ph]. Your line is now open. You may ask a question,.

Hey, thinks. It's actually [indiscernible] here. Sorry for the mess up from Mizuho. Thanks for taking my question. So really quickly on, can you maybe quantify the potential upside from a credit online tax for next year for the cash app, if any, thank you..

Yeah, just to, just to start, the reason we did this as it helps expand our direct deposit charges and brings more implosion, the catch up gives more information to customers to understand how tax filing will work on cash up.

This is tax season and we think there's a lot of opportunity to simplify a bunch of tasks that one has to do in the financial system taxes is a big one. And we want to make sure that we have a successful product launch ahead of the tax refund season.

So customers have a really seamless experience and we're highlighting direct, positive and another potentially powerful info for us..

Thank you. That would be the last question. Ladies and gentlemen, thank you for participating into this program. This concludes the program. You may all disconnect..