What changed in this filing

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Item 1. Business

2024-02-22 compared with 2023-02-23 · 116 added, 118 removed, 303 unchanged (44% of the section changed)

At Block, we are building an ecosystem of ecosystems, and are focused on creating ecosystems for distinct customer audiences.

At Block, Inc.

(together with its subsidiaries, "Block" or "we"), we are building an ecosystem of ecosystems, each focused on distinct customer audiences.

We define an ecosystem as a set of tools and services that work together cohesively, often positively reinforcing one another.

An ecosystem helps create a resilient customer relationship as customers can use our tools and services to satisfy multiple needs.

Our ecosystems are united by our shared purpose of economic empowerment.

This helps create resilient relationships with customers as they use our tools and services to satisfy multiple needs.

Our ecosystems are united by our shared purpose of economic empowerment, with each ecosystem serving different people — sellers, consumers, artists, fans, and developers.

As we scale, we are focused on investing in developing connections between our ecosystems and by creating more connections to increase the resilience of our overall company.

On December 1, 2021, we changed our corporate name from Square, Inc.

to Block, Inc.

(together with its subsidiaries, "Block" or "we").

Block is the name for the company as a corporate entity.

The Square name has become synonymous with our Seller business, and this move allowed the Seller business to own the Square brand it was built for.

The change to Block acknowledges our multidimensional growth.

Since our start in 2009, we have added Cash App, TIDAL, and TBD as businesses, and the name change created room for further growth.

Block is an overarching ecosystem of many businesses united by our purpose of economic empowerment, and serves many people — sellers, consumers, artists, fans, and developers.

Since our start in 2009 with the Square business, we have added Cash App, TIDAL, and TBD as businesses.

Our two reportable segments are Square, formerly referred to as Seller, and Cash App, which reflects our two primary ecosystems and the manner in which the Company's chief operating decision maker ("CODM") reviews and assesses performance.

Square and Cash App have demonstrated the benefits and scale of our ecosystem model.

We have historically allocated the financial results from our buy now, pay later ("BNPL") platform equally to the Cash App and Square segments.

In the fourth quarter of 2023, we changed our management reporting structure and moved the business activities and management of our BNPL platform fully under Cash App.

We believe that this transition will allow us to better focus on consumer based commerce as well as the development of its financial tools within Cash App.

Square Ecosystem

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Cash App’s goal is to redefine the world’s relationship with money by making it more relatable, instantly available, and universally accessible.

While Cash App started with the single ability to send and receive money, it now provides an ecosystem of financial services focused on helping consumers make their money go further — whether that's by storing, sending, receiving, spending, or investing their money with Cash App.

While Cash App started with the single ability to send and receive money, it now provides an ecosystem of financial services focused on helping consumers make their money go further by enabling customers to store, send, receive, spend, invest, borrow or save their money with Cash App.

Emerging Ecosystems

We are also making modest investments in two more nascent and emerging ecosystems related to TIDAL and bitcoin, in order to serve new audiences.

We are also making modest investments in two relatively nascent and emerging ecosystems related to TIDAL and bitcoin, in order to serve new audiences.

TIDAL Ecosystem

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Bitcoin Ecosystem

Our bitcoin ecosystem includes Spiral, an independent team focused on contributing to bitcoin open source work;

TBD, an open developer platform focused on making the decentralized financial world accessible for everyone;

and our bitcoin hardware projects, which include a self-custody bitcoin wallet and a bitcoin mining system.

Our bitcoin ecosystem includes TBD, which is an open developer platform focused on making the decentralized financial world accessible for everyone, our bitcoin hardware projects, which include Bitkey, a self-custody bitcoin wallet, a bitcoin mining system, Spiral, an independent team focused on contributing to bitcoin open source work.

We believe our bitcoin ecosystem can help address inefficiencies in the current financial system, especially with respect to identity and trust.

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We believe the diversity of our sellers underscores the accessibility and flexibility of our offerings.

We are also increasingly serving mid-market and larger sellers, which we define as sellers that generate more than $500,000 in annualized Square Gross Payment Volume (“Square GPV”).

We are able to service mid-market sellers due to our ability to offer more flexible and complex solutions than traditional alternatives, as well as a growing product suite.

GPV from mid-market sellers represented 39% of Square GPV in the fourth quarter of 2022, up from 37% in the fourth quarter of 2021 and 30% in the fourth quarter of 2020.

For the years ended December 31, 2022, 2021, and 2020, none of our customers accounted for greater than 5% of Square GPV or our total net revenue.

We are also increasingly serving mid-market sellers, which we define as sellers that generate more than $500,000 in annualized Square Gross Payment Volume (“Square GPV”), due to our ability to offer more flexible and complex solutions than traditional alternatives, as well as a growing product suite.

For the years ended December 31, 2023, 2022, and 2021, none of our customers accounted for greater than 5% of Square GPV.

We define Square GPV as the total dollar amount of all card payments processed by sellers using Square, net of refunds, and ACH transfers.

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These sales transactions originated from 733 million payment cards, across 271 million buyer profiles.

As of December 31, 2022, there were more than 2 million employees working for Square sellers.

The charts below show the percentage mix of our Square GPV by seller industry and seller size for the year ended December 31, 2023:

Our Cash App Customers

As of December 2022, Cash App had more than 51 million monthly transacting actives across the United States and Europe.

In 2022, across the iOS App Store and Google Play, Cash App was the number one finance app and the number ten app overall, based on downloads in the United States.

As of December 2023, Cash App had 56 million monthly transacting actives across the United States and the U.K.

In 2023, across the iOS App Store and Google Play, Cash App was the number one finance app and the number ten app overall in the United States, based on downloads.

Cash App has a diverse mix of customers, and in the United States, Cash App had monthly transacting actives in each of the 50 states and nearly every county as of December 2023.

In 2023, Cash App transacting actives brought more than $248 billion in inflows into Cash App.

Customers can fund their Cash App accounts with inflows in a variety of ways:

peer-to-peer transfers, transactions on bitcoin or stocks, cash added from a debit card or bank account into a Cash App balance, and through direct deposits including recurring paychecks or one-time deposits.

Customers can fund their Cash App accounts with inflows in a variety of ways, including by receiving money from another Cash App customer through the app’s core peer-to-peer transfer service, transferring money from a bank account, depositing mobile checks, adding physical cash at participating retailers, and receiving a recurring paycheck by direct deposit.

In 2023, each Cash App monthly transacting active brought in an average of $384 of inflows in a given month during the year.

A transacting active is a Cash App account that has at least one financial transaction using any product or service within Cash App during the specified period.

Examples of transactions include sending or receiving a peer-to-peer payment, transferring money into or out of Cash App, making a purchase using Cash App Card, earning a dividend on a stock investment, and paying back a loan, among others.

Certain of these accounts may share an alias identifier with one or more other transacting active accounts.

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Our products are designed to be self-serve and intuitive to make initial setup and new employee training fast and easy, although we also offer full-service setup and support.

They are also flexible enough to serve the needs of both small, single location and large, complex multi-location sellers.

Our products are integrated to create a seamless experience and enable a holistic view of sales, customers, employees, and finances.

Our open developer platform enables integrations with third-party applications as well.

We believe the breadth and depth of our products and services provide us unique advantages in best serving the needs of our sellers through a holistic view of their businesses.

We supplement these first party capabilities with our open developer platform that enables integrations with third-party applications.

We monetize these products through a combination of transaction, subscription, and service fees.

Strategic Priorities:

Our focus for Square is on four priorities:

maintaining our secure, and flexible multi-product platform, providing a “local” experience to sellers of all sizes, growing with artificial intelligence (“AI”), and further developing our banking offering.

It is critical that we have a strong foundation to build upon to serve external customers through our developer platform and partner ecosystem, and our internal team's first party products.

This includes increasing reliability of our platform and also introducing products and features that are most important to our customers.

Our go-to-market strategy is focused on verticals with a local approach, specifically restaurants and services-based businesses.

Growing upmarket has shown us that even larger sellers want to feel authentic to their buyers.

We can enable this type of robust offering through our technology and by improving the onboarding process through sales and account management.

• Artificial Intelligence (AI):

We are focused on enabling growth by leveraging AI to increase productivity and outcomes for our sales and marketing, customer service, and engineering efforts, in addition to building features that help sellers grow their businesses.

Our robust banking offering primarily helps our sellers manage cash flow and grow their business through our lending capabilities.

We will continue to drive trust with our sellers, and build products and features that help with sellers accessing funds securely and timely.

Square's commerce products help sellers make sales and track orders, inventory, and fulfillment across in-person and online channels, as well as first-party and third-party channels.

Most software products have a free tier (without a subscription fee), which we monetize only through transaction fees on card payments.

Most of our Square software products have a free tier (without a subscription fee), which we monetize only through transaction fees on card payments.

Most software products also have premium tiers with additional functionality, which we monetize through subscription fees in addition to transaction fees on payments.

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Square Appointments includes a free online booking site so buyers can easily schedule appointments and select their preferred time, service, and staff member.

It is also integrated with Square Assistant, an artificial intelligence-enabled automated messaging tool that responds to buyers efficiently and professionally, saving sellers' time and helping prevent missed appointments.

It is also integrated with Square Assistant, an AI-enabled automated messaging tool that responds to buyers efficiently and professionally, saving sellers' time and helping prevent missed appointments.

• Square for Retail is a vertical solution tailored for sellers in the retail industry.

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We typically monetize these products via service and software fees.

• Afterpay drives net new demand to sellers via discovery in the Afterpay app and has historically increased average conversion rates and average transaction sizes for new and existing customers across online and in-store channels.

• BNPL helps drive net new demand to sellers via discovery in the Afterpay app and has historically increased average conversion rates and average transaction sizes for new and existing customers across online and in-store channels.

• Square Loyalty helps sellers keep their buyers coming back.

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The Square Team App enables team members to clock in and out, view and adjust their schedules, and see timecards, hours worked, and estimated pay from their mobile phone.

• Square Payroll makes it easy to pay employees in minutes.

Payroll allows sellers to pay wages and associated employee taxes, and offer employee benefits (e.g.

• Square Payroll allows sellers to pay wages and associated employee taxes, and offer employee benefits (e.g.

401(k) accounts).

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We offer a growing number of banking services that make it easier for sellers to manage cash flow and get faster access to funds.

• Square Loans (formerly Square Capital) facilitates loans to qualified Square sellers through our subsidiary Square Financial Services (“SFS”), which is an industrial loan corporation (“ILC").

• Square Lending provides a platform of lending products to qualified Square sellers .

Square Loans (formerly Square Capital) facilitates loans to qualified Square sellers through our subsidiary Square Financial Services, Inc.

(“SFS Financial Services”), which is an industrial loan company (“ILC").

Square Loans eliminates the lengthy (and often unsuccessful) loan application process.

We are able to approve sellers for these loans by using our unique data set of the seller’s Square transactions to help facilitate loan underwriting and collections, which mitigates risks.

The terms are straightforward for sellers, and once approved, they get their funds quickly, often the next business day.

Generally, for loans to Square sellers, loan repayment occurs automatically through a fixed percentage of every card transaction a seller takes.

Loans are sized to be less than 20% of a seller's expected annual Square GPV and, by simply running their business, sellers historically have repaid their loan in less than nine months on average.

Generally, loan repayment occurs automatically through a fixed percentage of every card transaction a seller takes.

Loans are sized to be less than 20% of a seller's expected annual Square GPV and, by simply running their business, sellers historically have repaid their loans within nine months on average.

We currently fund a majority of these loans from arrangements with institutional third-party investors who purchase these loans on a forward-flow basis, which mitigates our balance sheet and liquidity risk.

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This includes approximately 150,000 loans to small businesses representing more than $1.5 billion of Paycheck Protection Program (“PPP”) loans facilitated in 2020 and 2021, excluding canceled loans.

We launched Square Credit Card in 2023 to provide another lending option.

• Instant Transfer enables sellers to receive funds from their payments instantly or later that same day.

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We use our inflows framework to assess the performance of Cash App across actives, inflows per active, and the monetization rate on inflows.

Customers can use Cash App to inflow funds in a variety of ways, including by receiving money from another Cash App customer through the app’s core peer-to-peer transfer service, transferring money from a bank account, depositing mobile checks, adding physical cash at participating retailers, and through other inflow channels.

These funds can then be sent to another customer through the app, spent anywhere that accepts Visa cards, withdrawn from an ATM using the Cash App Card, invested in stocks or exchange-traded funds (“ETFs”), used to buy bitcoin, or transferred to a bank account (either instantly for a fee or for free in one to three days).

We are investing in the following development pillars for Cash App to drive the business forward:

Community, Financial Services, Crypto, Operating System, Trust, Commerce, and Global.

Peer-to-peer payments form the basis of our Community development pillar because customers engage in financial transactions with other members of the Cash App community.

When customers use peer-to-peer, they are inviting their friends, family, and coworkers to download Cash App so that they can send each other money.

Peer-to-peer becomes more useful for our customers as their communities expand, so our customers are naturally incentivized to bring more people into their networks.

We offer the peer-to-peer service to our Cash App customers for free when a linked debit account is used to fund a transaction, as we consider peer-to-peer to be a marketing tool to encourage Cash App usage.

We charge a fee to the sender when transactions are funded using a credit card, and a fee to the recipient if it is a business account.

Instant Deposit was the first feature we started monetizing on Cash App.

Customers are able to instantly transfer funds from Cash App to a bank account for a small fee.

We believe our customer base values fast access to funds, and this speed is one example of how we differentiate our ecosystem.

Strategic Priorities

Cash App sits at the intersection of three traditionally-distinct use cases:

financial services, community based transactions (peer-to-peer payments) and commerce.

Our approach for Cash App is to combine these three areas together in a unique manner to define a new product category and reinvent banking for our customers.

Our primary focus with Cash App, in alliance with our bank partners, is on earning the primary banking relationship of our existing customer base in the U.S.

These funds can then be sent to another customer through the app, spent anywhere that accepts Visa cards or Cash App Pay, withdrawn from an ATM using the Cash App Card, invested in stocks or exchange-traded funds (“ETFs”), used to buy bitcoin, or transferred to a bank account (either instantly for a fee or for free in one to three days).

Financial Services

• Cash App Card is a debit card linked directly to a customer’s Cash App balance.

We serve our customers through a broad suite of financial services, and earning their trust is a key factor in how we can deepen our financial relationship with them.

The breadth of our financial service offerings allows us to increase our share of wallet as well as expand our customer base to serve a wider variety of demographics.

We develop trust with customers by offering reliable, easy, and secure access to their accounts and convenient support.

We also adapt the amount of funds a customer can bring in through specific channels based on risk profile, and as we improve our understanding of a customer’s identity.

We believe building and maintaining deep trust with our customers will drive greater product adoption and increased inflows into our ecosystem.

Banking Services

• Cash App Card is a debit card, issued by our bank partner, and linked directly to a customer’s Cash App balance.

Customers can order a Cash App Card for free and use it anywhere that accepts Visa cards to make purchases, drawing down from the funds stored in their Cash App balance.

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Customers can select new or promotional Cash App Card designs for a fee, and can also withdraw funds from an ATM using the Cash App Card.

In the fourth quarter of 2022, we launched gift cards, which allow customers to send gift cards at specific merchants to other customers and for recipients to spend them with their Cash App Card.

Customers can also purchase and send gift cards at specific merchants to other customers, and recipients can spend them with their Cash App Card.

• Direct deposit capabilities, in alliance with our partner bank and system processor, allow customers to receive their recurring paycheck, tax refund, or government disbursement into their Cash App account, which they can then use to send, spend, store, or invest.

• Savings allows customers to hold a separate savings balance at our bank partner, and easily set and track towards financial goals.

Customers can add money to Savings using their Cash App balance, a linked debit card, or through Round Ups on purchases with Cash App Card.

• Cash Boost is a free and instant rewards program that offers customers discounts at specific businesses (e.g., 10% off a purchase on DoorDash) or at certain business types (e.g., grocery stores).

Customers can select the Cash Boost they want to apply to their Cash App Card through Cash App, and the discount is instantly applied to their Cash App balance for eligible transactions.

Customers can select the Cash Boost they want to apply to their Cash App Card, and the discount is instantly applied to their Cash App balance for eligible transactions.

Some Cash Boosts are selected and funded by Cash App, while others are funded by our partners.

Costs related to the Cash Boost rewards program that are funded by Cash App are recognized as reductions to revenue.

• Direct deposit capabilities allow customers to receive their recurring paycheck, tax refund, or government disbursement into their Cash App account, which they can then use to send, spend, store, or invest the funds.

• Savings was launched in January 2023, allowing customers to hold a separate savings balance, and easily set and track towards financial goals.

Customers can add money to savings using their Cash App balance, a linked debit card, or through Round Ups on purchases with Cash App Card.

We believe credit is an area within our financial services offerings where we can provide simple, fair, and accessible products that promote financial health.

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Tax Preparation

In the first quarter of 2021, we launched Cash App Taxes, which provides a seamless, mobile-first solution for consumers to file their taxes for free.

Cash App Taxes provides a seamless, mobile-first solution for consumers to file their taxes for free.

Stock Brokerage

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Once the order is filled, all investments are viewable through the stocks applet.

Within Cash App, we have focused on developing two core product applications for bitcoin.

In early 2018, we started with a simple bitcoin exchange and custody solution that provides customers with an onramp and offramp to buy and sell bitcoin with Cash App for as little as $1 and a custodial account to store it securely without needing to keep track of any private keys.

Over the past few years, we have added investing features including auto buys and custom limit orders.

We also allow customers to use direct deposit to auto-convert their paycheck into bitcoin and earn instant bitcoin rewards on Cash App Card purchases.

We have a simple bitcoin exchange and custody solution that provides customers with an onramp and offramp to buy and sell bitcoin with Cash App for as little as $1 and a custodial account to store it securely without needing to keep track of any private keys.

Our solution offers features that allow customers to complete auto buys and custom limit orders, as well as direct deposit to auto-convert their paycheck into bitcoin and earn instant bitcoin rewards on Cash App Card purchases.

We have also focused on payments through bitcoin.

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The Lightning Network is a second layer technology applied to the bitcoin blockchain that enables faster transactions with little to no fees.

We serve our customers through a broad suite of financial services, and earning their trust is a key factor in how we can deepen our financial relationship with them.

This includes increasing our share of customers’ inflows for each service as well as expanding our customer base to serve a wider variety of demographics.

We develop trust with customers by offering customers reliable, easy, and secure access to their accounts and convenient customer support.

We also adapt the amount of funds a customer can bring in through specific channels based on risk profile, and as we improve our understanding of a customer’s identity.

We believe building and maintaining deep trust with our customers will drive greater product adoption and increased inflows into our ecosystem.

Operating System

With Cash App's operating system, we are building the foundation for Cash App to become a scalable app encompassing a broad range of financial products and services.

This includes building out shared frameworks, applications, and systems that can allow us to scale new services within one app and drive broader engagement across our offerings with a cohesive product experience.

Peer-to-peer payments form the basis of our Community development pillar because customers engage in financial transactions with other members of the Cash App community.

When customers use peer-to-peer, they are inviting their friends, family, and coworkers to download Cash App so that they can send each other money.

Peer-to-peer becomes more useful for our customers as their communities expand, so our customers are naturally incentivized to bring more people into their networks.

We charge a fee to the sender when transactions are funded using a credit card, and a fee to the recipient if it is a business account.

Instant Deposit was the first feature we started monetizing on Cash App.

Customers are able to instantly transfer funds from Cash App to a bank account for a small fee.

We believe our customer base values fast access to funds, and this speed is one example of how we differentiate our ecosystem.

Cash App is focused on driving greater commerce between consumers and merchants.

On January 31, 2022, we completed the acquisition of Afterpay Limited ("Afterpay”), which is a global buy now, pay later ("BNPL") platform that facilitates commerce between retail merchants and consumers by allowing its retail merchant clients to offer their customers the ability to buy goods and services on a BNPL basis.

We acquired Afterpay to connect our Cash App and Square ecosystems and are integrating the BNPL platform into each ecosystem.

Our BNPL platform will allow us to build out a marketplace in Cash App that acts as a shopping destination for consumers to search for merchants and find offers.

Launched in the third quarter of 2021, Cash App Pay is a simple, mobile-friendly way for Cash App customers to pay at merchants across online and in-person channels.

As of December 2022, Cash App Pay is enabled for a subset of Square sellers that are using certain Square hardware and software products, as well as a subset of Afterpay merchants, and we intend on expanding it to other merchants over time.

With Cash App Pay, Cash App customers can pay by simply scanning a QR code or tapping a button on their mobile device at checkout.

Cash App allows business accounts to collect payments for their business by accepting peer-to-peer transactions for a fee, while allowing higher weekly limits and providing relevant tax reporting forms.

We are expanding Cash App’s ecosystem by reaching more customers globally.

Cash App primarily serves customers in the United States where the full breadth of its products are available, and also provides certain services to customers in Europe, primarily with Cash App in the United Kingdom and Verse in Spain.

In addition, we offer cross-border payments between the United States and the United Kingdom, allowing customers to instantly transfer funds between these countries using real-time exchange rates with no fees.

Connecting our Ecosystems

As we scale our ecosystems, we are focused on investing in developing connections between our ecosystems.

By creating more connections between our ecosystems, we have an opportunity to increase the resilience of our overall company.

BNPL Platform

Our BNPL platform facilitates commerce between retail merchants and consumers by allowing its retail merchant clients to offer their customers the ability to buy goods and services on a BNPL basis.

Our BNPL platform serves as a connection point between our Square and Cash App ecosystems as we build out a marketplace that acts as a shopping destination for consumers to search for merchants and find offers.

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• Monthly Payment Solution:

In October 2022, we also launched the ability for consumers to pay for larger transaction sizes over a six- or twelve-month period using a monthly payment option.

We also offer the ability for consumers to pay for larger transaction sizes over a six- or twelve-month period using a monthly payment option.

The structure of the product includes no late fees and no compounding interest with a cap on total interest owed.

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Our BNPL platform generates hundreds of millions of leads each year for merchants and has channeled this demand towards scaling an ads and affiliate program for its merchants:

for affiliate relationships, we are paid a commission when a consumer begins their shopping journey in the Afterpay App and makes a purchase.

for affiliate relationships, we receive a commission when a consumer begins their shopping journey in the Afterpay App and makes a purchase.

We may also receive digital advertising revenue based on clicks to a merchant site from the Afterpay App as well as flat fees for premium ad placements.

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The Afterpay Plus Card is currently available to select Afterpay consumers for a monthly fee and allows them to shop in-store anywhere that Apple Pay or Google Pay is accepted.

We have been integrating our BNPL platform into our Cash App and Square ecosystems, strengthening the connection between these ecosystems, expanding access to more sellers and consumers, and helping drive more commerce between our sellers and consumers.

Our BNPL platform has been integrated into Square’s online and in-person checkout solutions, strengthening Square’s omnichannel platform.

Consumers will be able to manage their installments and repayments directly within Cash App, with the ability to drive increased engagement, while the commerce discovery from the Afterpay App will be integrated with Cash App to help drive lead generation for merchants and customer engagement.

We intend to enable greater search and discovery within Cash App, building new and stronger connections between merchants and consumers.

The financial results from our BNPL platform have been allocated equally to the Cash App and Square segments.

Cash App Pay is a simple, mobile-friendly way for Cash App customers to pay at merchants across online and in-person channels.

As of December 2023, Cash App Pay is enabled for a subset of Square sellers that are using certain Square hardware and software products, as well as a subset of Afterpay merchants, and most recently launched with large payment service providers who can offer it to their merchants.

With Cash App Pay, Cash App customers can pay by simply scanning a QR code or tapping a button on their mobile device at checkout.

Business Accounts

Sales and Marketing

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The Square ecosystem has a strong brand affinity among its sellers.

Our Net Promoter Score (“NPS”) has averaged nearly 61 over the past four quarters, which is approximately double the average score for banking providers.

Our Net Promoter Score (“NPS”) has averaged 54 over the past four quarters, which is nearly double the average score for banking providers.

Our high NPS means Square sellers recommend our services to others, which we believe strengthens the Square brand and helps drive efficient customer acquisition.

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Through the Square App Marketplace, Square partners are able to expand their own addressable market by reaching the millions of sellers using Square.

As of December 31, 2022, Square had more than 900 managed partners connected to its platform.

As of December 31, 2023, Square had nearly 1,000 managed partners connected to its platform.

Cash App Ecosystem

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Cash App also uses paid marketing, including referrals, advertising spend, partnerships, and social media campaigns, to expand its network, as these programs help reach new customers, enhance its brand, and improve retention among existing customers.

Additionally, we see the launch and advertising of new Cash App features as an important way to attract new customers.

Additionally, we see the launch and advertising of new Cash App features as an important way to attract new customers and engage existing customers.

Features such as Cash App Card and Boost rewards, bitcoin buying and selling, investing in stocks and ETFs, cross-border payments, Cash App Pay, and a tax preparation service enhance Cash App’s utility for customers and provide reasons for consumers to try Cash App.

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Competitors that overlap with certain functions and features that we provide include:

• Pen and paper, manual processes, and paper currency;

• Business software providers such as those that provide point of sale, website building, inventory management, employee management, customer relationship management invoicing, and appointment booking solutions;

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• Banks that provide payment processing, checking, savings, loans, and payroll;

• Pen and paper, manual processes, and paper currency;

• Payroll processors;

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Cash App Ecosystem

Cash App competes with other companies in the peer-to-peer payments, debit and prepaid cards, credit card rewards, stock trading, tax filing, digital wallet, bitcoin exchanges, and shopping and consumer demand generation spaces.

Cash App competes with other companies in peer-to-peer payments, debit and prepaid cards, credit card rewards, stock trading, tax filing, digital wallet, bitcoin exchanges, BNPL providers, and shopping and consumer demand generation.

Our competitors include money transfer apps, prepaid debit card offerings, brokerage firms, tax firms, financial technology apps, banks, and crypto trading services.

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We have developed a patent program and strategy to identify, apply for, and secure patents for innovative aspects of our products, services, and technologies where appropriate.

In addition to our existing patents, we intend to file additional patent applications as we continue to innovate through our research and development efforts and to pursue additional patent protection to the extent we deem it beneficial and cost-effective.

We actively pursue registration of our trademarks, logos, service marks, trade dress, and domain names in the United States and in other jurisdictions.

From time to time, we also incorporate certain intellectual property licensed from third parties, including under certain open source licenses.

Even if any such third-party technology did not continue to be available to us on commercially reasonable terms, we believe that alternative technologies would be available as needed in every case.

We also actively pursue registration of our trademarks, logos, service marks, trade dress, and domain names in the United States and in other jurisdictions.

We intend to file additional patent applications as we continue to innovate through our research and development efforts and to pursue additional patent protection to the extent we deem it beneficial and cost-effective, including acquiring patent assets or licensing patent rights from third parties.

In addition, we participate in a number of industry organizations that facilitate patent pools or non-assertion commitments, such as the Cryptocurrency Open Patent Alliance that we co-founded, LOT Network, and Open Invention Network.

Government Regulation

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Department of Treasury’s Financial Crimes Enforcement Network ("FinCEN").

These licenses and registrations subject us, among other things, to record-keeping requirements, reporting requirements, bonding requirements, limitations on the investment of customer funds, and inspection by state and federal regulatory agencies.

These licenses and registrations subject us, among other things, to record-keeping requirements, reporting requirements, bonding requirements, limitations on the investment of customer funds, and examination by state and federal regulatory agencies.

Outside the United States, we provide localized versions of some of our services to customers, including through various foreign subsidiaries.

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These agencies have broad consumer protection mandates, and they promulgate, interpret, and enforce rules and regulations that affect our business.

Anti-Money Laundering

We are subject to anti-money laundering ("AML") laws and regulations in the United States and other jurisdictions.

We have implemented an AML program designed to prevent our payments network from being used to facilitate money laundering, terrorist financing, and other illicit activity.

Our program is also designed to prevent our network from being used to facilitate business in countries, or with persons or entities, included on designated lists promulgated by the U.S.

Department of the Treasury’s Office of Foreign Assets Controls and equivalent applicable foreign authorities.

Our AML compliance program includes policies, procedures, reporting protocols, and internal controls, including the designation of an AML compliance officer, and is designed to address these legal and regulatory requirements and to assist in managing risk associated with money laundering and terrorist financing.

Anti-Money Laundering, Anti-Corruption, and Sanctions

We are subject to anti-money laundering ("AML"), anti-corruption, and economic, trade and sanctions laws and regulations in the United States and other jurisdictions in which we operate.

The anti-corruption laws, such as the U.S.

Foreign Corrupt Practices Act and the U.K.

Bribery Act, generally prohibit companies from making or offering improper payments to foreign government officials and political figures for the purpose of obtaining or retaining business or to gain an unfair business advantage.

Economic and trade sanctions programs that are administered by the U.S.

Department of the Treasury’s Office of Foreign Assets Controls and equivalent applicable foreign authorities prohibit or restrict transactions to or from, or dealings with, specified countries, governments, individuals and entities that are specially designated nationals of those countries, including narcotics traffickers and terrorists or terrorist organizations.

We have implemented an AML program designed to comply with the laws and regulations to which we are subject.

Bank Regulation

We obtained approval from the Federal Deposit Insurance Corporation ("FDIC") and the Utah Department of Financial Institutions to open an industrial loan corporation ("ILC") in 2021.

The opening of Square Financial Services, our ILC, in March 2021 subjects us to direct state and federal regulatory supervision and requires compliance with applicable banking regulations and requirements.

We obtained approval from the Federal Deposit Insurance Corporation ("FDIC") and the Utah Department of Financial Institutions to open an ILC.

The opening of Square Financial Services, Inc., our ILC, in March 2021 subjects us to direct state and federal regulatory supervision and requires compliance with applicable banking regulations and requirements.

Lending Regulation

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We are subject to certain licensing and supervisory frameworks as a result of our Cash App offering, through which customers can use their stored funds to buy, hold and sell bitcoin, and transfer bitcoin to and from Cash App.

We currently hold a New York State BitLicense.

We currently hold a New York State BitLicense and a Virtual Currency Business License in Louisiana.

The laws and regulations applicable to virtual currency are evolving and subject to interpretation and change.

Therefore, our current and future virtual currency services may be or become subject to additional licensing and regulatory requirements by other state and federal authorities.

Therefore, our current and future virtual currency services may be or become subject to additional licensing, regulatory requirements and oversight by other state and federal authorities.

Protection and Use of Information

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Additional Developments

Various regulatory agencies in the United States and elsewhere in our international markets continue to examine a wide variety of issues that could impact our business, including products liability, import and export compliance, accessibility for the disabled, insurance, marketing, privacy, data protection, information security, and labor and employment matters.

As our business continues to develop and expand, additional rules and regulations may become relevant.

For example, if we choose to offer Square Payroll in more jurisdictions, additional regulations, including tax rules, will apply.

Historically, for our Square ecosystem transaction-based revenue has been strongest in our fourth quarter and weakest in our first quarter, as our sellers typically generate additional GPV during the holiday season.

Various legislative bodies and regulatory agencies in the United States and elsewhere in our international markets continue to examine a wide variety of issues that could impact our business, including privacy, data protection, information security, virtual currencies, identity theft, tax, marketing, and labor and employment matters.

As our business continues to develop and expand, additional laws, rules and regulations may become relevant.

Historically, transaction-based revenue for our Square ecosystem has been strongest in our fourth quarter and weakest in our first quarter, as our sellers typically generate additional GPV during the holiday season.

Subscription and services-based revenue generally demonstrates less seasonality than transaction-based revenue.

Hardware revenue generally demonstrates less seasonality than transaction-based revenue, with most fluctuations tied to periodic product launches, promotions, or other arrangements with our retail partners.

In 2020 and 2021, typical seasonality trends for the Square ecosystem were impacted as a result of the COVID-19 pandemic and related shelter-in-place restrictions.

Historically, our Cash App ecosystem has experienced improvements in revenue and gross profit related to the distribution of government funds as customers have deposited more funds into Cash App during these times, including during the first quarter when U.S.

tax refunds are typically distributed.

During the year ended December 31, 2022, typical seasonality trends for the Cash App ecosystem were impacted by a decline in bitcoin revenue.

The primary drivers of bitcoin revenue are customer demand and the current market price of bitcoin, and as such, may not be indicative of future performance and skew typical seasonality trends in the Cash App ecosystem.

Certain products within Cash App may also experience stronger fourth quarters and weaker first quarters, such as our BNPL platform, which typically generates additional revenue and gross profit during the holiday season.

Typical seasonality trends for the Cash App ecosystem are also impacted by bitcoin revenue, which is driven by customer demand and the current market price of bitcoin, and as such, may not be indicative of future performance and skew typical seasonality trends in the Cash App ecosystem.

Human Capital

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We also engage temporary employees and consultants as needed to support our operations.

In November 2023, we announced we would implement an absolute cap of 12,000 on the number of employees we have at our company.

We plan to operate below this cap through a combination of performance management, centralizing teams and functions to reduce duplication, and prioritization of our scope.

We expect to keep this cap in place until we believe the growth of the business has meaningfully outpaced the growth of our company.

We have a purpose-driven culture, with a focus on employee input and well-being, which we believe enables us to attract and retain exceptional talent.

We offer learning and development programs for all employees, as well as a robust manager training program.

Employees are able to actively voice their questions and thoughts through many internal channels, including our company townhall meetings and bi-annual employee engagement surveys.

While we have been in support of a distributed work model for years, in the COVID-19 pandemic we were able to increase our focus on this model more quickly.

For Block, the distributed work model means that we no longer have a designated headquarters location and, for the vast majority of roles, employees have the flexibility to work within or outside a Block office space.

This model has unlocked opportunities to hire and retain talent in more locations, as we can hire employees in locations where we do not have office space, and employees can continue to work for us if they need or want to relocate.

Employees have the opportunity to actively voice their questions and thoughts through many internal channels, including our company townhall meetings and bi-annual employee engagement surveys.

Our distributed work model means that we no longer have a designated headquarters location and, for the vast majority of roles, employees have the flexibility to work within or outside a Block office space.

Our distributed work model has unlocked opportunities to hire and retain talent in more locations, as we can hire employees in locations where we do not have office space, and employees can continue to work for us if they need or want to relocate.

A key focus of our human capital management approach is our commitment to promoting inclusion and diversity in our workplace.

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The 2023 report is available at:

https://block.xyz/inclusion/workforce-data-2022.

https://block.xyz/inside/report-workforce-data-2023.

The contents of the report and our websites are not incorporated by reference into this Annual Report on Form 10-K.

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In 2020, we adopted a distributed work model and we no longer have a designated headquarters location.

Our principal executive office, which we are required to identify under Securities and Exchange Commission rules, is 1955 Broadway, Suite 600 Oakland, CA 94612.

Our telephone number is (415) 375-3176.

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Additionally, we provide notifications of news or announcements regarding our financial performance, including SEC filings, investor events, press and earnings releases, and blogs as part of our investor relations website.

We have used, and intend to continue to use, our investor relations website, as well as the Twitter accounts @Blocks and @BlockIR, as means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD.

We have used, and intend to continue to use, our investor relations website, as well as the X (formerly known as Twitter) accounts @Blocks and @BlockIR, as means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD.

Further corporate governance information, including our board committee charters, code of business conduct and ethics, and corporate governance guidelines, is also available on our investor relations website under the heading “Governance Documents.” The contents of our websites are not intended to be incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC, and any references to our websites are intended to be inactive textual references only.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business