What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-22 compared with 2023-02-23 · 391 added, 521 removed, 1379 unchanged (40% of the section changed)

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(the Company) as of December 31, 2023 and 2022, and the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with U.S.

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with U.S.

generally accepted accounting principles.

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Our responsibility is to express an opinion on the Company's financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

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Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management as well as evaluating the overall financial statement presentation.

Our audits also included evaluating the accounting principles used and significant estimates made by management as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The following critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the following critical audit matters, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Business Combinations - Valuation

Description of the Matter As discussed in Notes 1 and 9 to the consolidated financial statements, the Company completed an acquisition of Afterpay Limited during 2022 for consideration of $13.8 billion.

The Company accounted for this acquisition as a business combination.

Auditing the Company’s accounting for the acquisition was complex due to the estimation uncertainty in the Company’s determination of the fair value of acquired identifiable intangible assets, which principally consisted of customer assets, trade names, and technology assets, of $1.4 billion, $386.0 million, and $239.0 million, respectively.

The estimation uncertainty for the acquired intangible assets was primarily due to the underlying assumptions about the future performance of the acquired business, which were utilized in determining the fair value of the acquired intangible assets.

The significant assumptions used by management included discount rates and certain assumptions that form the basis of the forecasted results, including revenue growth rates.

These significant assumptions were forward-looking and could be affected by future economic and market conditions.

Addressed the

Matter in Our

Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of the Company’s controls over its accounting for the acquisition.

This included testing controls over the estimation process supporting the recognition and measurement of the intangible assets, and management’s review and evaluation of underlying assumptions and estimates with regards to the determination of the fair value of the intangible assets.

To test the Company’s estimated fair value of the acquired intangible assets, our audit procedures included, among others, reading the underlying agreements, and involving a valuation specialist to assist us in evaluating the Company’s selected valuation methodologies and testing the significant assumptions, including discount rates and revenue growth rates, used in those methodologies.

We compared revenue growth rates against historical trends and to those of guideline public companies and other industry participants.

We also tested the completeness and accuracy of the underlying data supporting the assumptions and estimates.

Accrued Transaction Losses

Description of the Matter As discussed in Notes 1 and 12 to the consolidated financial statements, the Company is exposed to transaction losses from chargebacks, which represent fraudulent transactions, potential losses due to disputes between a seller and its customer or disputes between peer-to-peer users.

The Company established a reserve for these estimated potential losses of $64.5 million at December 31, 2022.

The Company’s reserve is estimated based on available data as of the reporting date, including expectations of future chargebacks and historical trends related to loss rates.

Auditing management’s estimate of the reserve for transaction losses was challenging because management’s estimate required a high degree of judgment in evaluating historical trends related to loss rates and expectations of future chargebacks and the need for a qualitative adjustment.

Addressed the

Matter in Our

Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of the Company’s controls over the process for determining the reserve for transaction losses.

For example, we tested controls over management’s review of the methodology to determine estimated losses, the completeness and accuracy of underlying loss rate data used in the estimation of potential losses from chargebacks, and the assumptions made about future chargebacks.

To test the Company’s reserve for transaction losses, our audit procedures included, among others, evaluating the Company’s methodology and testing the underlying data and assumptions used by management to estimate potential losses.

We compared the Company’s historical estimated potential losses with actual results to assess the Company’s methodology to estimate potential losses.

We evaluated the completeness and accuracy of the loss rate data used in the calculation of the Company’s reserve for transaction losses by comparing such data to third-party data.

In addition, we evaluated adjustments made by management to the Company’s methodology to estimate potential losses, to reflect expectations of future chargebacks including the basis for concluding whether such adjustments were warranted.

We also reviewed subsequent events, which included actual chargebacks, and considered whether they corroborated the Company’s conclusion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Allowance for Credit Losses related to Consumer Receivables

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Measurement of Credit Losses on Financial Instruments.

The Company estimates the allowance for credit losses related to consumer receivables using both quantitative methods, which consider historical losses and recoveries, recent and historical trends in delinquencies, past-due receivables and charge-offs, and qualitative methods, which consider consumer behavior, current and historical macroeconomic trends, along with other factors.

The Company estimates the allowance for credit losses related to consumer receivables using both quantitative methods, based on historical payment patterns including losses and recoveries, recent and historical trends in delinquencies, past-due receivables and charge-offs, and qualitative methods, which consider consumer behavior, current and historical macroeconomic trends, along with other factors.

Auditing management’s estimate of the allowance for credit losses related to consumer receivables was challenging because management’s estimate required a high degree of judgment in evaluating historical trends related to loss rates and an assessment of a need for a qualitative adjustment in the Company’s expected credit loss methodology.

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Matter in Our

Audit To test the Company’s allowance for credit losses related to consumer receivables, we involved EY specialists in testing management’s methodology and key assumptions.

Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of the Company’s controls over the process for determining the allowance for credit losses related to consumer receivables.

This includes testing controls over management’s review of the methodology to determine estimated losses, the completeness and accuracy of historical losses and recoveries, past-due receivables and charge-offs, and management’s qualitative assumptions on future losses.

To test the Company’s allowance for credit losses related to consumer receivables, we involved EY specialists in testing management’s methodology and key assumptions.

Our audit procedures included, among others, evaluating the Company’s methodology as well as performing procedures over historical losses incurred by the Company by aging category and testing recoveries.

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CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

(In thousands, except per share data)

Current assets:

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Safeguarding obligation liability related to bitcoin held for other parties 1,038,585 428,243

PPP Liquidity Facility advances 16,840 497,533

Total current liabilities 9,921,629 8,434,516

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Total net revenue

21,915,623 17,531,587 17,661,203

Cost of revenue:

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Operating income (loss) ( 278,839 ) ( 624,532 ) 161,112

Interest expense, net 36,228 33,124 56,943

Interest expense (income), net ( 47,221 ) 36,228 33,124

Other income, net ( 202,475 ) ( 95,443 ) ( 29,474 )

Income (loss) before income tax ( 29,143 ) ( 565,317 ) 157,462

Provision (benefit) for income taxes ( 12,312 ) ( 1,364 ) 2,862

Benefit for income taxes ( 8,019 ) ( 12,312 ) ( 1,364 )

Net income (loss) ( 21,124 ) ( 553,005 ) 158,826

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(In thousands, except for number of shares)

Class A and B common stock Additional paid-in Accumulated other comprehensive Accumulated Noncontrolling Total stockholders’

Shares Amount capital income (loss) deficit interests equity

Balance at December 31, 2019 432,796,720 $ — $ 2,223,749 $ 1,629 $ ( 510,328 ) $ — $ 1,715,050

Net income — — — — 213,105 — 213,105

Shares issued in connection with employee stock plans 19,013,638 — 161,984 — — — 161,984

Issuance of common stock in connection with business combination 607,974 — 35,319 — — — 35,319

Change in other comprehensive income — — — 21,699 — — 21,699

Share-based compensation — — 411,673 — — — 411,673

Tax withholding related to vesting of restricted stock units ( 2,852,127 ) — ( 314,019 ) — — — ( 314,019 )

Conversion feature of convertible notes, net of allocated costs — — 347,059 — — — 347,059

Purchase of bond hedges in conjunction with issuance of convertible notes — — ( 338,145 ) — — — ( 338,145 )

Sale of warrants in conjunction with issuance of convertible notes — — 232,095 — — — 232,095

Issuance of common stock in conjunction with the conversion of convertible notes 8,853,484 — 195,749 — — — 195,749

Exercise of bond hedges in conjunction with the conversion of convertible notes ( 2,234,913 ) — — — — — —

Class A and B common stock Common stock and Additional paid-in Accumulated other comprehensive Accumulated Noncontrolling Total stockholders’

Shares capital income (loss) deficit interests equity

Balance at December 31, 2020 456,185 $ 2,955,464 $ 23,328 $ ( 297,223 ) $ — $ 2,681,569

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Tax withholding related to vesting of restricted stock units ( 37 ) ( 4,735 ) — — — ( 4,735 )

Class A and B common stock Additional paid-in Accumulated other comprehensive Accumulated Noncontrolling Total stockholders’

Shares Amount capital income (loss) deficit interests equity

Issuance of common stock in conjunction with the conversion of convertible notes 20 454 — — — 454

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Balance at December 31, 2022 600,060 $ 18,314,681 $ ( 523,090 ) $ ( 568,712 ) $ 28,476 $ 17,251,355

Cumulative adjustment due to adoption of ASU 2023-08 — — — 30,511 — 30,511

Net income (loss) — — — 9,772 ( 30,896 ) ( 21,124 )

Shares issued in connection with employee stock plans 18,055 130,433 — — — 130,433

Repurchases of common stock ( 2,466 ) ( 156,812 ) — — — ( 156,812 )

Change in other comprehensive income — — 144,783 — — 144,783

Share-based compensation — 1,307,032 — — — 1,307,032

Issuance of common stock in connection with business combination 172 6,658 — — — 6,658

Balance at December 31, 2023 615,821 $ 19,601,992 $ ( 378,307 ) $ ( 528,429 ) $ ( 2,420 ) $ 18,692,836

The accompanying Notes to the Consolidated Financial Statements are an integral part of this statement.

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Amortization of discounts and premiums and other non-cash adjustments ( 984,442 ) ( 592,489 ) 31,104

Loss on extinguishment of long-term debt — — 6,651

Non-cash lease expense 144,198 129,811 83,137

Share-based compensation 1,276,097 1,071,278 608,040

Gains on revaluation of equity investments ( 73,457 ) ( 35,492 ) ( 295,297 )

Loss (gain) on revaluation of equity investments 16,523 ( 73,457 ) ( 35,492 )

Bitcoin remeasurement ( 207,084 ) — —

Transaction, loan, and consumer receivable losses 660,663 550,683 187,991

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Change in deferred income taxes ( 85,879 ) ( 69,593 ) ( 10,435 )

Goodwill impairment 132,313 — —

Changes in operating assets and liabilities:

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Cash flows from financing activities:

Proceeds from issuance of convertible notes, net — — 2,116,544

Purchases of senior note hedges — — ( 338,145 )

Proceeds from issuance of warrants — — 232,095

Proceeds from issuance of senior notes, net — — 1,971,828

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Net increase in interest-bearing deposits 25,135 82,049 59,844

Repurchases of common stock ( 156,812 ) — —

Other financing activities ( 19,977 ) ( 87,692 ) ( 9,948 )

Change in customer funds, restricted from use in the Company's operations ( 9,894 ) 349,330 793,163

Net cash provided by financing activities 97,580 2,652,034 3,676,735

Net cash provided by (used in) financing activities ( 240,137 ) 97,580 2,652,034

Effect of foreign exchange rate on cash and cash equivalents 29,156 ( 38,363 ) ( 7,066 )

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Block is comprised of two reportable segments, Square and Cash App.

Square is a cohesive commerce ecosystem that helps sellers start, run, and grow their businesses, including enabling sellers to accept card payments, provide reporting and analytics, and facilitate next-day settlement.

Square’s point-of-sale software and other business services help sellers manage inventory, locations, and employees;

access financing;

access financial services;

engage buyers;

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and grow sales.

Cash App is an ecosystem of financial products and services to help consumers manage their money by providing financial tools that allow individuals to store, send, receive, spend, and invest their money.

Cash App is an ecosystem of financial products and services focused on helping consumers make their money go further by enabling customers to store, send, receive, spend, invest, borrow, or save their money.

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

On January 31, 2022, the Company completed the acquisition of Afterpay Limited (“Afterpay”), to strengthen its position to better deliver compelling financial products and services that expand access to more consumers and drive incremental revenue for merchants of all sizes.

On January 31, 2022, the Company completed the acquisition of Afterpay Limited (“Afterpay”), a global buy now, pay later ("BNPL") platform, to strengthen its position to better deliver compelling financial products and services that expand access to more consumers and drive incremental revenue for merchants of all sizes.

Refer to Note 9, Acquisitions for further details.

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The Company evaluates these estimates on an ongoing basis.

Estimates, judgments, and assumptions in these consolidated financial statements include, but are not limited to, those related to valuation of goodwill and acquired intangible assets, accrued transaction losses, valuation of loans held for sale and investment, determination of allowance for loan loss reserves for loans held for investment, determination of allowance for credit losses for consumer receivables, pre-acquisition contingencies associated with business combinations, allocation of acquired goodwill to reporting units, assessing contingencies including the likelihood of adverse outcomes from claims and disputes, accrued royalties, income and other taxes, operating and financing lease right-of-use assets and related liabilities, and share-based compensation.

The Company's estimates of valuation of loans held for sale and investment, allowance for credit losses associated with consumer receivables, and accrued transaction losses are based on historical experience, adjusted for market data relevant to the current economic environment.

Estimates, judgments, and assumptions in these consolidated financial statements include, but are not limited to, those related to accrued transaction losses, contingencies, including outcomes from claims and disputes, valuation of loans held for sale and investment, valuation of goodwill and acquired intangible assets, determination of goodwill impairment charges, determination of allowance for loan loss reserves for loans held for investment, determination of allowance for credit losses for consumer receivables, pre-acquisition contingencies associated with business combinations, allocation of acquired goodwill to reporting units, income and other taxes, operating and financing lease right-of-use assets and related liabilities, and share-based compensation.

The Company's estimates of valuation of loans held for sale and investment, allowance for credit losses associated with consumer receivables and loans held for investment, and accrued transaction losses are based on historical experience, adjusted for market data relevant to the current economic environment.

The Company will continue to update its estimates as developments occur and additional information is obtained.

Refer to Note 5, Fair Value Measurements for further details on amortized cost over fair value of the loans;

Refer to Note 5, Fair Value Measurements for further details on amortized cost and fair value of the loans;

Note 6, Consumer Receivables, net for further details on consumer receivables;

and Note 12, Other Consolidated Balance Sheet Components (Current) for further details on transaction losses.

Reclassification to Statement of Operations

Beginning in the second quarter of 2022, the Company reclassified its consolidated statements of operations to present the amortization of acquired technology assets and amortization of customer and other acquired intangible assets as separate line items.

Previously, these expenses were classified within transaction-based costs and subscription and services-based costs in cost of revenue;

and product development and general and administrative operating expenses, respectively.

Prior period amounts have been revised to reflect these reclassifications to the presentation.

There were no changes to gross profit, total operating expenses, operating income (loss), income (loss) before income tax, or net income (loss) as a result of these reclassifications.

Concentration of Credit Risk

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As of December 31, 2023, the Compa ny had two third-party payment processors that represented approximately 46 % and 35 % of settlements receivable.

As of December 31, 2021, these two parties represented approximately 52 % and 30 % of settlements receivable.

As of December 31, 2022, the company had two third-party payment processors that represented approximately 54 % and 31 % of settlements receivable.

In both years, all other third-party processors were insignificant.

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, restricted cash, marketable debt securities, settlements receivable, customer funds, consumer receivables, loans held for sale, and loans held for investment.

The associated risk of concentration for cash and cash equivalents and restricted cash is mitigated by banking with creditworthy institutions.

At certain times, amounts on deposit exceed federal deposit insurance limits.

To mitigate the risk of concentration associated with cash and cash equivalents, as well as restricted cash, funds are held with creditworthy institutions and, at certain times, temporarily swept into insured programs overnight to reduce single firm concentration risk.

Amounts on deposit may exceed federal deposit insurance limits.

The associated risk of concentration for marketable debt securities is mitigated by holding a diversified portfolio of highly rated investments.

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Significant Accounting Policies

Principles of Consolidation

The accompanying consolidated financial statements reflect our accounts and operations and those of our subsidiaries in which we have a controlling financial interest.

In accordance with the provisions of Accounting Standards Codification ("ASC") 810, Consolidation (“ASC 810”), there are two models for determining whether a subsidiary is to be consolidated.

Under the voting interest model, we consolidate entities where we are deemed to have a controlling financial interest.

We also consolidate any variable interest entity (“VIE”) where we are deemed to be the primary beneficiary.

The primary beneficiary is the party that has the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.

As described in Note 15, Indebtedness , we have formed wholly owned "Warehouse Special Purpose Entities ("SPEs"), which qualify as VIEs under ASC 810.

We have determined that we are the primary beneficiary of all Warehouse SPEs, which we therefore consolidate.

We evaluate our relationships with all the VIEs on an ongoing basis to determine if we continue to be the primary beneficiary.

As of December 31, 2023 and 2022, the Company had $ 314.7 million and $ 276.7 million, respectively, in restricted cash related to VIE's.

All intercompany transactions and balances have been eliminated upon consolidation.

Revenue Recognition

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Subscription and Services-based Revenue

Subscription and services-based revenue is primarily comprised of revenue the Company generates from Cash App including Instant Deposit and Cash App Card, Square Loans, Afterpay's buy now, pay later ("BNPL") platform, website hosting and domain name registration services, TIDAL, and various other software as a service ("SaaS") products.

Instant Deposit is a functionality within the Cash App and the Company's managed payments solution that enables customers, including individuals and sellers, to instantly deposit funds into their bank accounts.

The Cash App Card offers Cash App customers the ability to use their stored funds via a Visa prepaid card that is linked to the balance the customer stores in Cash App.

Subscription and services-based revenue is primarily comprised of revenue the Company generates from Cash App Instant Deposit, Cash App Card, interest earned on customer funds, bitcoin withdrawal fees, Square Loans, the Company's BNPL platform, TIDAL, and various other software as a service ("SaaS") products.

The Cash App Card offers customers the ability to store funds in the Cash App and subsequently use these funds via a Visa prepaid card that is linked to the balance the customer stores in Cash App.

The Company charges the customer a per transaction fee when they instantly deposit funds to their bank account or withdraw funds from an ATM.

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These transaction and interchange fees are treated as revenue when charged.

Square Loans (formerly Square Capital) facilitates loans to qualified Square sellers through the Company's subsidiary, Square Financial Services ("SFS"), which is an industrial loan corporation.

The loans are either repaid through withholding a percentage of the collections of the seller's receivables processed by the Company or a specified monthly amount.

While the Company is restricted from using the stored funds in the Company's operations, the Company may invest a portion of these funds in short-term marketable debt securities to generate interest income which is reported as revenue.

Interest earned on customer funds was $ 153.5 million for the year ended December 31, 2023 and was immaterial for the years ended December 31, 2022, and 2021, respectively.

Bitcoin withdrawal is a functionality within the Cash App that enables customers to withdraw bitcoin stored on Cash App to a third party wallet.

The Company charges customers a fee for the option of faster withdrawal speeds.

Square Loans facilitates loans to qualified Square sellers through the Company's subsidiary, Square Financial Services, Inc.

("Square Financial Services"), which is an industrial loan company.

The loans are either repaid through withholding a percentage of the collections of the seller's receivables processed by the Company ("flex loans") or a specified monthly amount ("term loans").

The Company generally utilizes a pre-qualification process that includes an analysis of the aggregated data of the seller’s business which includes, but is not limited to, the seller’s historical processing volumes, transaction count, chargebacks, growth, and length of time as a Square customer.

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For the majority of the Company's BNPL products, consumers are not charged interest or fees, other than late fees which may be charged in certain regions by the Company as an incentive to encourage consumers to pay their outstanding balances as and when they fall due.

As of October 2022, the Company also offers the ability for consumers to pay for larger transaction sizes over a six - or twelve-month period using a monthly payment option, which includes no late fees and no compounding interest with a cap on total interest owed.

The Company also offers the ability for consumers to pay for larger transaction sizes over a six - or twelve-month period using a monthly payment option, which includes no late fees and no compounding interest with a cap on total interest owed.

TIDAL primarily generates revenue from subscriptions to its customers, and such subscriptions allow access to the song library, video library, and improved sound quality.

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The Company purchases bitcoin from private broker dealers or from Cash App customers and applies a marginal fee before selling it to its customers.

The amounts received from customers are recorded as revenue on a gross basis and the associated bitcoin cost as cost of revenues, as the Company is the principal in the bitcoin sale transaction.

The amounts received from customers and exchanges are recorded as revenue on a gross basis and the associated bitcoin cost as cost of revenues, as the Company is the principal in the bitcoin sale transaction.

The Company has concluded it is the principal because it controls the bitcoin before delivery to the customers, it is primarily responsible for the delivery of the bitcoin to the customers, it is exposed to risks arising from fluctuations of the market price of bitcoin before delivery to customers, and has discretion in setting prices charged to customers.

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Hardware Costs

Hardware costs consist of all product costs associated with contactless and chip readers, Square Stand, Square Register, Square Terminal, and third-party peripherals.

Hardware costs consist of all product costs associated with magstripe readers, contactless and chip readers, Square Stand, Square Register, Square Terminal, and third-party peripherals.

Product costs include third-party manufacturing-related overhead and personnel-related costs, certain royalties, packaging, and fulfillment costs.

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These costs fluctuate in line with bitcoin revenue.

Amortization of Acquired Technology Assets

Amortization of acquired technology assets is primarily comprised of amortization related to the acquired technology assets from the acquisition of Afterpay.

Generally, other costs such as personnel-related costs, rent, and occupancy charges are not allocated to cost of revenues and are reflected in operating expenses and are not material.

Severance and Other Restructuring Expenses

The Company records severance-related expenses once they are both probable and estimable in accordance with the provisions of the applicable accounting guidance for severance provided under an ongoing benefit arrangement.

One-time involuntary benefit arrangements and other costs are generally recognized in the period in which the liability is incurred.

The Company recorded $ 104.0 million of severance and other related expenses for the year ended December 31, 2023 as part of product development, sales and marketing, and general and administrative within the Company's operating expenses, of which $ 70.2 million related to severance was recognized in the fourth quarter of 2023 when all the criteria for recognition were met.

The Company also assesses its assets for impairment in connection with restructuring and other exit activities when the carrying amount of the related assets may not be fully recoverable, in accordance with the appropriate accounting guidance.

Sales and Marketing Expenses

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Generally, share-based compensation expense is recorded on a straight-line basis over the requisite service period.

RSUs and RSAs typically vest over a term of four years .

The Company accounts for forfeitures as they occur.

Interest Income and Expense

Interest income consists of interest income from the Company's investment in marketable debt securities and interest expense relating to the Company's long-term debt.

Interest income and interest expense were both immaterial for the years ended December 31, 2022, 2021, and 2020.

Interest income consists of interest income from the Company's investment in marketable debt securities and was $ 126.6 million for the year ended December 31, 2023.

Interest income was immaterial for the years ended December 31, 2022 and 2021.

Interest expense consists primarily of the Company's long-term debt and was immaterial for the years ended December 31, 2023, 2022, and 2021.

Foreign Currency

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Restricted Cash

The Company records restricted cash amounts as a current asset on the consolidated balance sheets if the restriction expires in less than 12 months, or as a non-current asset if the restriction is 12 months or longer.

If there is no minimum time frame during which the cash must remain restricted, the nature of the transactions related to the restriction determine the classification.

The Company's short-term restricted cash was $ 770.4 million and $ 639.8 million as of December 31, 2023 and 2022, respectively.

The balance as of December 31, 2022 was primarily comprised of cash held by the wholly-owned consolidated entities used in the warehouse funding facility arrangements.

The balance as of December 31, 2023 was primarily comprised of the wholly-owned consolidated entities used in the warehouse funding facility arrangements.

This restricted cash will be used to pay the borrowings under the warehouse funding facilities or will be distributed to the Company.

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Customer funds represent customers' stored balances that customers would later use to send money or make payments, or customers cash in transit.

Under the terms of service associated with these funds, the Company is restricted from using the funds in the Company's operations.

Interest income from customer funds is recorded as a component of subscription and services-based revenue on the consolidated statements of operations, and was immaterial for the year ended December 31, 2022.

The Company may invest a portion of these stored balances in short-term marketable debt securities.

As discussed under section titled Subscription and Services-based Revenue accounting policy above, under the terms of service associated with these funds, the Company is restricted from using the funds in the Company's operations, but may invest these funds in short-term marketable debt securities to earn interest.

Refer to Note 4, Customer Funds for more details.

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Customer Loans

The Company's loan products consist primarily of flex loans, term loans and Cash Borrow which are described in detail under the section titled Subscription and Services-based Revenue above.

The Company classifies customer loans as loans held for sale when the Company has the intent to sell all of its rights, title, and interest in these loans to third-party investors, and there is an available market for such loans.

The Company classifies customer loans as loans held for investment when the Company has both the intent and ability to hold for the foreseeable future, or until maturity or payoff.

The Company designates all its loans as held for sale upon origination, of which the majority are sold.

Loans held by Square Financial Services that are not sold within one to two business days from origination are reclassified as held for investment, while all the other loans continue to be classified as held for sale.

For the year ended December 31, 2023, $ 201.9 million of total loan balances was reclassified from loans held for sale to loans held for investment.

For the years ended December 31, 2023, 2022 and 2021, net gains on sales of loans were $ 196.1 million, $ 164.3 million, and $ 95.5 million respectively.

Since the loans are classified as held for sale at origination, all the cash flows associated with these loans are disclosed as a component of cash flows from operating activities.

Loans Held for Sale

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A loan that is initially designated as held for sale may be reclassified to held for investment if and when the Company's intent for that loan changes.

For the year ended December 31, 2022, $ 357.4 million of total loan balances was reclassified from loans held for sale to loans held for investment.

Upon origination, the Company's loans are designated as available for sale.

The majority of loans are subsequently sold.

For the years ended December 31, 2022 and 2021, net gains on sales of loans were $ 164.3 million and $ 95.5 million, respectively.

Net gains on sales of loans were immaterial in the year ended December 31, 2020.

Loans that are not sold within one to two business days from origination are reclassified as held for investment.

Loans Held for Investment

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The Company’s intent and ability to designate loans as held for investment in the future may change based on changes in business strategies, the economic environment, and market conditions.

The Company calculates an allowance for losses on the loans held for investment portfolio in accordance with ASU No.

Allowance for loans losses

The Company calculates an allowance for losses on the loans held for investment portfolio in accordance with Accounting Standards Update ("ASU") No.

2016-13, Financial Instruments - Credit Losses (Topic 326):

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This includes, but is not limited to, historical loss and recovery experience, recent and historical trends in delinquencies, past-due loans and charge-offs, borrower behavior and repayment speed, underwriting and collection management changes, changes in the legal and regulatory environment, changes in risk and underwriting standards, current and historical macroeconomic conditions such as changes in unemployment and GDP, and various other factors that may affect the sellers’ ability to make future payments.

Settlements Receivable

Settlements receivable represents amounts due from third-party payment processors for customer transactions.

Settlements receivable are typically received within one or two business days of the transaction date.

No valuation allowances have been established, as funds are due from large, well-established financial institutions with no historical collections issue.

Consumer Receivables

The Company evaluates the consumer receivables as a single homogeneous portfolio as it is comprised of a single product type, point-of-sale unsecured installment loans.

The Company evaluates its consumer receivables as a single homogeneous portfolio as it is comprised of a single product type, point-of-sale unsecured installment loans.

The Company classifies consumer receivables as held for investment when the Company has the intent and ability to hold these investments for the foreseeable future or until maturity or payoff.

The Company classifies consumer receivables as held for sale when the Company has the intent to sell all of its rights, title, and interest in these receivables to third-party investors, and there is an available market for such receivables.

For the year ended December 31, 2023, $ 437.5 million of consumer receivables were reclassified from loans held for investment to loans held for sale and sold to third parties.

Net losses on sales of consumer receivables were immaterial for the years ended December 31, 2023, 2022 and 2021.

Consumer receivables are reported at amortized cost, which includes the cost to originate the consumer receivables, adjusted for unearned merchant fees, origination costs, charge-offs, and the allowance for credit losses.

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Consumer receivables are charged off when management considers amounts to be uncollectible, which is generally determined by the number of days past due and is typically no later than 180 days past due.

Settlements Receivable and Settlements Payables

Settlements receivable and settlements payable represents amounts due from or due to third-party payment processors for customer transactions.

Settlements receivable and settlements payable are typically received or paid within one or two business days of the transaction date.

Under the terms of arrangements, some of the processors may process both transaction receivables and payables.

Additionally, the terms may allow processors the right of offset for the amounts due to and due from the Company.

No valuation allowances have been established for settlements receivable, as funds are due from large, well-established financial institutions with no historical collections issue.

Inventory consists of contactless and chip readers, chip card readers, Square Stand, Square Register, Square Terminal, and third-party peripherals, as well as component parts that are used to manufacture these products.

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The Company's inventory is held at third-party warehouses and contract manufacturer premises.

Investment in Bitcoin

Bitcoin is a cryptocurrency that is considered to be an indefinite-lived intangible asset because bitcoin lacks physical form and there is no limit to its useful life.

Accordingly, the Company's investment in bitcoin is not subject to amortization but is tested for impairment on a daily basis.

The Company has concluded that because bitcoin is traded in an active market where there are observable prices, a decline in the quoted price below cost is generally viewed as an impairment indicator.

If the fair value of bitcoin decreases below the carrying value during the assessed period, an impairment charge is recognized at that time.

After an impairment loss is recognized, the adjusted carrying value becomes the new accounting basis of the Company's investment in bitcoin.

Impairment losses cannot be reversed for any subsequent increase in fair value until the sale of the asset.

The Company's investment in bitcoin does not include any bitcoin held for other parties.

Company Owned Bitcoin

The Company holds bitcoin for long term investment purposes ("bitcoin investment"') and also holds bitcoin for the facilitation of customer sales and purchases of bitcoin on Cash App ("bitcoin for operating purposes").

The Company accounts for its bitcoin as an indefinite-lived intangible asset in accordance with ASC 350, Intangibles—Goodwill and Other and has ownership of and control over its bitcoin.

The Company early adopted ASU No.

2023-08, Accounting for and Disclosure of Crypto Assets ("ASU 2023-08") in the fourth quarter of 2023 using a modified retrospective approach.

ASU 2023-08 provides guidance on accounting and disclosure of crypto assets and requires an entity to (i) subsequently remeasure crypto assets at fair value at each measurement date with changes recognized in net income, (ii) present the changes in fair value separately from changes in the carrying amount of other intangible assets in the income statement, and (iii) present crypto assets measured at fair value separately from other intangible assets on the balance sheet.

Prior to the adoption of ASU 2023-08, the Company's bitcoin investment was subject to impairment losses if the fair value decreased below the carrying value during the assessed period.

Impairment losses on the Company's bitcoin investment could not be recovered for any subsequent increases in fair value until the asset was sold.

Upon adoption of ASU 2023-08, the Company recognized a cumulative-effect adjustment increasing bitcoin value and retained earnings by $ 30.5 million as of the beginning of fiscal year 2023.

The Company’s bitcoin investment is initially recorded at cost, inclusive of transaction costs, and the Company uses the ‘first-in, first-out’ method to determine the cost basis.

Subsequently, the Company remeasures its bitcoin investment at fair value at the end of each reporting period with changes recognized in net income through “Other income, net” in the Company’s consolidated statements of operations.

As of December 31, 2023, the Company has purchased an approximate cumulative $ 220.0 million in bitcoin for investment purposes.

For the year ended December 31, 2023 the Company recognized a $ 207.1 million gain from the remeasurement of the Company's bitcoin investment.

The Company’s bitcoin for operating purposes is initially recorded at cost, inclusive of transaction costs, and the Company uses ‘first-in, first-out’ as its method of determining the cost basis.

Subsequent to purchase, any sales related to bitcoin occur at its current market price, plus a small margin.

As such, any change in fair value of bitcoin purchased and sold for customer orders is captured within bitcoin revenue.

Given the small amount of bitcoin for operating purposes held at any time, and that the bitcoin is held for a relatively short period of time, typically being purchased and sold within a day, the changes in fair value are not material to the Company.

Bitcoin trades in an active market which is not centrally managed or provided by one particular exchange.

We determine the fair value of bitcoin at each period end in accordance with ASC 820, Fair Value Measurement, based on observed prices from active exchanges that the Company has determined are its principal market for bitcoin.

Refer to Note 13, Other Consolidated Balance Sheet Components (Non-Current) and Note 14, Bitcoin , for more information.

Bitcoin Held for Other Parties

The Company adopted the SEC's Staff Accounting Bulletin No.

121 ("SAB 121"), that was released in March 2022.

SAB 121 expressed the views of the SEC staff regarding the accounting for obligations to safeguard crypto-assets an entity holds for users of its crypto platform and requires entities that hold crypto-assets on behalf of platform users to recognize a liability to reflect the entity’s obligation to safeguard the crypto-assets held for its platform users.

The liability should be measured at initial recognition and each reporting date at the fair value of the crypto-assets that the entity is responsible for holding for its platform users.

The entity should also recognize an asset at the same time that it recognizes the safeguarding liability, measured at initial recognition and each reporting date at the fair value of the crypto-assets held for its platform users, subject to adjustments to reflect any actual or potential safeguarding loss events.

The entity should also describe the asset and the corresponding liability in the footnotes to the financial statements and consider including information regarding who (e.g., the company, its agent, or another third party) holds the cryptographic key information, maintains the internal recordkeeping of those assets, and is obligated to secure the assets and protect them from loss or theft.

Refer to Note 14, Bitcoin, for more information.

Property and Equipment

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The Company records the amortization of the ROU asset and the accretion of lease liability as a component of rent expense in the consolidated statements of operations.

The Company evaluates ROU assets related to leases for indicators of impairment whenever events or changes in circumstances indicate that the carrying amount of an ROU asset may not be recoverable.

The Company evaluates ROU assets related to leases for indicators of impairment whenever events or changes in circumstances indicate that the carrying amount of a ROU asset may not be recoverable.

When a decision has been made to exit a lease prior to the contractual term or to sublease that space, the Company evaluates the asset for impairment and recognizes the associated impact to the ROU asset and related expense, if applicable.

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If, after assessing the totality of events or circumstances, the Company determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is unnecessary.

For the periods presented, the Company recorded no impairment charges.

Acquired intangible assets consist of acquired technology and customer relationships associated with various acquisitions.

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The payable amount consists of amounts owed to customers due to timing differences as the Company typically settles within one business day, amounts held by the Company in accordance with its risk management policies, and amounts held for customers who have not yet linked a bank account.

This balance also includes the Company's liability for customer funds held on deposit in the Cash App.

This balance also includes the Company's liability for customer funds held on deposit in the Cash App and balances related to Square Card.

Accrued Transaction Losses

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Additions to the reserve are reflected in current operating results, while realized losses are offset against the reserve.

These amounts are classified within transaction, loan, and consumer receivable losses on the consolidated statements of operations, except for the amounts associated with the peer-to-peer service offered to Cash App customers for free that are classified within sales and marketing expenses.

Share Repurchases

Share repurchases under the Company's share repurchase authorization may be made from time to time through open market purchases or through privately negotiated transactions subject to market conditions, applicable legal requirements and other relevant factors.

The Company's policy is to deduct the par value from common stock and to reflect any excess of cost over par value as a deduction from additional paid-in capital.

The Company reports its segments to reflect the manner in which the Company's chief operating decision maker ("CODM") reviews and assesses performance.

The Company has two reportable segments, Square (formerly Seller) and Cash App.

The results of Afterpay have been equally allocated to the Cash App and Square segments as management has concluded that Afterpay's BNPL platform will contribute equally to both the Cash App and Square platforms.

Rather, the operations of Afterpay are managed by the segment managers of Cash App and Square, who are responsible for allocating resources and evaluating the performance of Afterpay.

Products and services that are not assigned to a specific reportable segment, including but not limited to TIDAL, TBD, and Spiral, are aggregated and presented within a general corporate and other category.

In the fourth quarter of 2023, the Company reorganized its business structure and moved the business activities, management, and the financial results of the Company's BNPL platform fully into Cash App.

Accordingly, the segment results below include the financial results of the BNPL platform solely within the Cash App segment.

Products and services that are not assigned to a specific reportable segment, including TIDAL and other emerging ecosystems, are aggregated and presented within a general corporate and other category.

Square and Cash App are defined as follows:

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Cash App also includes Cash App Card which is linked to customer stored balances that customers can use to pay for purchases or withdraw funds from an ATM.

Cash App also includes the BNPL platform.

• Square includes managed payment services, software solutions, hardware, and financial services offered to sellers, excluding those that involve Cash App.

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Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In July 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No.

2021-05, Leases (Topic 842):

Lessors—Certain Leases with Variable Lease Payments ("ASU 2021-05"), which amends the lease classification requirements for lessors with certain leases containing variable payments.

In accordance with ASU 2021-05, a lessor should classify and account for a lease with variable lease payments that do not depend on an index or a rate as an operating lease if both of the following criteria are met:

1) the lease would have been classified as a sales-type lease or a direct financing lease;

and 2) the lessor would have otherwise recognized a day-one loss.

The amendments in ASU 2021-05 are effective for fiscal years beginning after December 15, 2021, with early adoption permitted.

The Company adopted this guidance effective January 1, 2022, and has applied the guidance prospectively.

The adoption of this guidance did not have a material impact on the Company’s financial statements and related disclosures.

In May 2021, the FASB issued ASU No.

2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2021-04”), which provides guidance on modifications or exchanges of a freestanding equity-classified written call option that is not within the scope of another Topic.

An entity should treat a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange as an exchange of the original instrument for a new instrument, and provides further guidance on measuring the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange.

ASU 2021-04 also provides guidance on the recognition of the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange on the basis of the substance of the transaction, in the same manner as if cash had been paid as consideration.

The amendments are effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years.

Early adoption is permitted.

The Company adopted this guidance effective January 1, 2022, and has applied the guidance prospectively.

The adoption of this guidance did not have a material impact on the Company’s financial statements and related disclosures.

In March 2022, the SEC staff released Staff Accounting Bulletin No.

121 ("SAB 121"), which expressed the views of the SEC staff regarding the accounting for obligations to safeguard crypto-assets an entity holds for users of its crypto platform.

This guidance requires entities that hold crypto-assets on behalf of platform users to recognize a liability to reflect the entity’s obligation to safeguard the crypto-assets held for its platform users.

The liability should be measured at initial recognition and each reporting date at the fair value of the crypto-assets that the entity is responsible for holding for its platform users.

This guidance is effective from the first interim period after June 15, 2022 and should be applied retrospectively.

The Company adopted this guidance effective June 30, 2022.

Refer to Note 14, Bitcoin Held for Other Parties for more details.

Recently Issued Accounting Pronouncements Not Yet Adopted

In March 2022, the FASB issued ASU No.

In addition to the recently adopted accounting pronouncements below, the Company also adopted ASU No.

2023-08, Accounting for and Disclosure of Crypto Assets, and the SEC's Staff Accounting Bulletin No.

121, see above for more details.

In March 2022, the Financial Accounting Standards Board ("FASB") issued ASU No.

2022-01, Derivatives and Hedging (Topic 815):

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The amendments allow nonprepayable financial assets to be included in a closed portfolio hedge using the portfolio layer method.

ASU 2022-01 also allows for multiple hedged layers to be designated for a single closed portfolio of financial assets or one or more beneficial interests secured by a portfolio of financial instruments The amendments are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

Early adoption is permitted.

The Company does not expect the adoption to have a material impact on the Company's financial statements.

The Company adopted this guidance effective January 1, 2023, and has applied the guidance prospectively.

The adoption of this guidance did not have a material impact on the Company's financial statements and related disclosures.

In March 2022, the FASB issued ASU No.

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ASU 2022-02 also enhances disclosure requirements for certain loan refinancing and restructurings made to borrowers experiencing financial difficulty and requires disclosure of current period write-offs by year of origination for financing receivables.

The amendments are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

Early adoption is permitted.

The Company does not expect the adoption to have a material impact on the Company’s financial statements.

The Company adopted this guidance effective January 1, 2023, and has applied the guidance prospectively.

The adoption of this guidance did not have a material impact on the Company's financial statements and related disclosures.

Recently Issued Accounting Pronouncements Not Yet Adopted

In June 2022, the FASB issued ASU No.

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The Company does not expect the adoption to have a material impact on the Company's financial statements.

In November 2023, the FASB issued ASU No.

2023-07, Improvements to Reportable Segment Disclosures (“ASU 2023-07”).

The amendments expand segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the CODM, the amount and description of other segment items, permits companies to disclose more than one measure of segment profit or loss, and requires all annual segment disclosures to be included in the interim periods.

The amendments do not change how an entity identifies its operating segments, aggregates those operating segments, or applies quantitative thresholds to determine its reportable segments.

The amendments are effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

The adoption of ASU 2023-07 will impact the Company’s disclosures only and the Company is evaluating the effect of adopting the new disclosure requirements.

In December 2023, the FASB issued ASU No.

2023-09, Improvements to Income Tax Disclosures (“ASU 2023-09”).

The amendments expand income tax disclosure requirements by requiring an entity to disclose (i) specific categories in the rate reconciliation, (ii) additional information for reconciling items that meet a quantitative threshold, and (iii) the amount of taxes paid disaggregated by jurisdiction.

The amendments are effective for fiscal years beginning after December 15, 2024.

Early adoption is permitted.

The adoption of ASU 2023-09 will impact the Company’s disclosures only and the Company is evaluating the effect of adopting the new disclosure requirements.

NOTE 2 - REVENUE

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Total net revenue $ 21,915,623 $ 17,531,587 $ 17,661,203

(i) Subscription and services-based revenue from other sources relates to revenue generated from the Company's Square Loans and, for 2022 amounts, also includes revenue generated from consumer receivables originated through the BNPL platform, following the acquisition of Afterpay.

(i) Subscription and services-based revenue from other sources relates to revenue generated from the Company's Square Loans, interest income earned on customer funds, and interest income earned on funds held by Square Financial Services.

For 2022 and 2023 amounts, this also includes revenue generated from consumer receivables originated through the BNPL platform, following the acquisition of Afterpay.

NOTE 3 - INVESTMENTS IN DEBT SECURITIES

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Long-term debt securities:

agency securities $ 74,097 $ — $ ( 3,782 ) $ 70,315

Corporate bonds $ 94,564 $ 809 $ ( 45 ) $ 95,328

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government securities 152,549 875 ( 37 ) 153,387

Foreign government securities 1,000 — ( 58 ) 942

Total $ 249,608 $ 1,739 $ ( 220 ) $ 251,127

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Long-term debt securities:

agency securities $ 11,501 $ ( 20 ) $ 58,814 $ ( 3,762 ) $ 70,315 $ ( 3,782 )

Corporate bonds 11,819 ( 31 ) 2,274 ( 14 ) 14,093 ( 45 )

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government securities 28,474 ( 37 ) — — 28,474 ( 37 )

Foreign government securities — — 942 ( 58 ) 942 ( 58 )

Total $ 41,269 $ ( 92 ) $ 2,657 $ ( 126 ) $ 43,926 $ ( 218 )

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Corporate bonds 34,795 ( 423 ) 320,748 ( 7,052 ) 355,543 ( 7,475 )

Municipal securities 587 ( 13 ) 5,811 ( 178 ) 6,398 ( 191 )

government securities 146,974 ( 839 ) 394,880 ( 8,098 ) 541,854 ( 8,937 )

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1,028,754 580,045

Short-term debt securities:

agency securities — 29,994

government securities — 360,060

Total $ 3,180,324 $ 2,830,995

Total customer funds $ 3,170,430 $ 3,180,324

(i) The Company has accounted for the reverse repurchase agreement with a third party as an overnight lending arrangement, collateralized by the securities subject to the repurchase agreement.

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The amortized cost of investments classified as cash equivalents approximated the fair value due to the short-term nature of the investments.

The Company did not hold any investments within customer funds as of December 31, 2022.

The Company's investments within customer funds as of December 31, 2021 were as follows (in thousands):

Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value

Short-term debt securities:

agency securities $ 30,002 $ — $ ( 8 ) $ 29,994

government securities 360,251 — ( 191 ) 360,060

Total $ 390,253 $ — $ ( 199 ) $ 390,054

The gross unrealized losses and fair values for those investments that were in an unrealized loss position as of December 31, 2021, aggregated by investment category and the length of time that individual securities were in a continuous loss position, were as follows (in thousands):

December 31, 2021

Less than 12 months Greater than 12 months Total

Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses

Short-term debt securities:

agency securities $ 29,994 $ ( 7 ) $ — $ — $ 29,994 $ ( 7 )

government securities $ 360,060 $ ( 191 ) $ — $ — $ 360,060 $ ( 191 )

Total $ 390,054 $ ( 198 ) $ — $ — $ 390,054 $ ( 198 )

NOTE 5 - FAIR VALUE MEASUREMENTS

The Company measures its cash equivalents, customer funds, short-term and long-term marketable debt securities, and marketable equity investment at fair value.

The Company measures its cash equivalents, customer funds, short-term and long-term marketable debt securities, marketable equity investments, and bitcoin investment at fair value.

The Company classifies these investments within Level 1 or Level 2 of the fair value hierarchy because the Company values these investments using quoted market prices or alternative pricing sources and models utilizing market observable inputs.

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agency securities — — — — 7,923 —

Certificates of deposit — — — — 4,983 —

government securities 29,788 — — — — —

Commercial paper — 4,993 — — 25,080 —

Corporate bonds — 699 — — — —

Restricted Cash:

Money market funds 291,374 — — — — —

Customer funds:

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Reverse repurchase agreement 1,028,754 — — 580,045 — —

agency securities — — — — 29,994 —

government securities — — — 360,060 — —

Short-term debt securities:

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Investment in marketable equity security 8,267 — — 11,092 — —

Bitcoin investment (i)

339,898 — — 102,303 — —

Safeguarding asset related to bitcoin held for other parties — 1,038,585 — — 428,243 —

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Total assets (liabilities) measured at fair value $ 3,356,213 $ 415,335 $ — $ 3,602,989 $ 860,954 $ —

(i) The Company holds an immaterial amount of bitcoin for operating purposes and, given the bitcoin is held for a relatively short period of time, typically being purchased and sold within a day, the fair value approximates carrying value.

Refer to Note 1, Description of Business and Summary of Significant Accounting Policies and Note 14, Bitcoin for more details.

The carrying amounts of certain financial instruments, including settlements receivable, consumer receivables, loans held for investment, accounts payable, customers payable, accrued expenses, and settlements payable, approximate their fair values due to their short-term nature.

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2023 Convertible Notes — — 460,356 480,925

2022 Convertible Notes — 455 3,192

Total $ 4,120,091 $ 3,768,179 $ 4,570,185 $ 3,989,994

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Total $ 1,023,055 $ 1,042,148 $ 597,995 $ 617,929

As of December 31, 2022 and 2021, $ 19.9 million and $ 364.8 million of the carrying value of loans held for sale were attributable to loans under the Paycheck Protection Program ("PPP"), respectively.

The PPP was intended to provide relief to eligible businesses impacted by COVID-19, and to incentivize businesses to keep their workers on the payroll.

These loans are guaranteed by the U.S.

government and are eligible for forgiveness if the borrowers meet certain criteria.

As the loans under the PPP qualify for forgiveness if certain criteria are met or are guaranteed by the U.S.

government through the Small Business Administration ("SBA"), the related credit losses as of December 31, 2022 were immaterial.

For the years ended December 31, 2023, 2022, and 2021, the Company recorded incremental charges for the excess of amortized cost over the fair value of the loans of $ 35.1 million, $ 27.5 million, and $ 6.4 million, respectively.

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Further discussed in Note 1, Description of Business and Summary of Significant Accounting Policies , consumer receivables are classified as held for investment.

These receivables are interest free and are generally due within 14 to 56 days.

These receivables are typically interest free and are generally due within 14 to 56 days.

The Company closely monitors credit quality for consumer receivables to manage and evaluate its related exposure to credit risk.

The criteria the Company monitors when assessing the credit quality and risk of its consumer receivables portfolio is primarily based on internal risk assessments, as they provide insight into customer risk profiles and are useful as indicators of potential future credit losses.

Consumer receivables are internally rated as "Pass" rated or "Classified." Pass rated consumer receivables generally consist of consumer receivables that are current or up to 60 days past due.

Classified consumer receivables generally comprise of consumer receivables that are 60 days or greater past due and have a higher risk of default.

Consumer receivables are internally rated as "Pass" or "Classified." Pass rated consumer receivables generally consist of consumer receivables that are current or up to 60 days past due.

Classified consumer receivables are generally comprised of consumer receivables that are greater than 60 days past due and have a higher risk of default.

Internal risk ratings are reviewed and, generally, updated at least once a year.

As of December 31, 2022, the amortized cost of Pass rated consumer receivables was $ 1.9 billion and the amount of Classified consumer receivables was less than $ 0.1 billion.

As of December 31, 2023, the amortized cost of Pass rated consumer receivables was $ 2.5 billion and the amount of Classified consumer receivables was $ 0.1 billion.

The following table presents an aging analysis of the amortized cost of consumer receivables by delinquency status (in thousands):

December 31, 2022

December 31, 2023 December 31, 2022

Non-delinquent loans $ 2,074,532 $ 1,643,874

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Total amortized cost $ 2,629,969 $ 2,022,450

The amount listed as 1 - 60 days past due in the above table includes $ 224.9 million of cash in transit, which reflects ongoing repayments from consumers that have been sent from consumers’ bank accounts but have not yet been received at the Company’s bank account as of the date of the financial statements.

This cash in transit as of December 31, 2022 represents 11.1 % of the total amortized cost of consumer receivables.

For consumer receivables, an allowance for credit losses is determined based on the probability of a default event occurring over the life of the receivables.

When a consumer has not paid by the due date, it is an indication that credit risk has increased.

As a result, the allowance for credit losses for that receivable is measured at an amount equal to the lifetime allowance for credit losses for increased credit risk.

Lifetime allowance for credit losses is the expected credit losses that result from all possible default events over the expected life of the receivables.

The allowance for credit losses on consumer receivables is a valuation account that is deducted from the carrying value of the consumer receivables.

Consumer receivables are charged off when they are over 180 days past due and the Company has no reasonable expectation of recovery.

The amount listed as 1 - 60 days past due in the above table includes $ 365.4 million and $ 224.9 million of cash in transit as of December 31, 2023 and December 31, 2022, respectively, which reflects ongoing repayments from consumers that have been sent from consumers’ bank accounts but have not yet been received at the Company’s bank account as of the date of the financial statements.

This cash in transit as of December 31, 2023 and December 31, 2022 represents 13.9 % and 11.1 %, respectively, of the total amortized cost of consumer receivables.

Consumer receivables are charged off when they are over 180 days past due as the Company has no reasonable expectation of recovery.

When consumer receivables are charged off, the Company recognizes the charge against the allowance for credit losses.

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Any subsequent recoveries following charge-off are credited to transaction, loan, and consumer receivable losses on the consolidated statements of operations in the period they were recovered.

The amount of recoveries for the year ended December 31, 2022 was immaterial.

The amount of recoveries for the year ended December 31, 2023 and December 31, 2022 were immaterial.

The following table summarizes activity in the allowance for credit losses subsequent to the acquisition of Afterpay (in thousands):

From Acquisition on

Year Ended December 31, 2023 From Acquisition on

January 31, 2022 to

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Allowance for credit losses, beginning of the period (i)

$ 151,290 $ 115,552

Provision for credit losses 261,296 203,670

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For PCD consumer receivables, the initial estimate of expected credit losses is recognized in the allowance for credit losses on the date of acquisition using the same methodology as other consumer receivables.

NOTE 7 - LOANS HELD FOR INVESTMENT

In April 2021, the Company began originating loans in the U.S.

through its wholly-owned subsidiary bank, Square Financial Services.

NOTE 7 - CUSTOMER LOANS

Loans Held for Investment

The Company originates loans in the U.S.

through its wholly-owned subsidiary, Square Financial Services.

The Company sells the majority of the loans to institutional investors with a portion retained on its balance sheet.

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Amortized cost basis represents principal amounts outstanding, net of unearned income, unamortized deferred fees and costs on originated loans, premiums or discounts on purchased loans and charge-offs.

The allowance for loan losses and amount of charge offs recorded as of December 31, 2022 were immaterial.

Recoveries recorded as of December 31, 2022 were immaterial.

The allowance for loan losses, amount of charge offs recorded, and amount of recoveries as of December 31, 2023 were immaterial.

The Company considers loans that are greater than 60 days past due to be delinquent, and loans 90 days or more past due to be nonperforming.

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The criteria the Company monitors when assessing the credit quality and risk of its loan portfolio is primarily based on internal risk ratings, as they provide insight into borrower risk profiles and are useful as indicators of potential future credit losses.

Loans are internally rated as "Pass" rated or "Classified".

Loans are internally rated as "Pass" or "Classified".

Pass rated loans generally consist of loans that are current or up to 60 days past due.

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As of December 31, 2023, the amortized cost of Pass rated loans was $ 261.4 million and the amount of Classified loans was immaterial.

Loans Held For Sale

The Company classifies loans as held for sale when there is an available market for such loans and it is the Company’s intent to sell all of its rights, title, and interest in these loans to third-party investors.

Loans held for sale primarily include Square Loans and Cash App Borrow products.

Square Loans are loans facilitated by Square Financial Services to qualified Square sellers, while Cash App Borrow is a credit product for consumers that allows customers to access short-term loans for a small fee.

Loans held for sale are recorded at the lower of amortized cost or fair value.

As of December 31, 2023 and December 31, 2022 the Company had $ 775.4 million and $ 474.0 million, respectively, of loans held for sale, as disclosed in the Company's consolidated balance sheets.

The Company aggregates loans held for sale by the intended customer of the loan product.

Commercial loans held for sale include Square Loans, Consumer loans held for sale include loans initiated through Cash App Borrow, and Other loans held for sale include loans outside of consumer and commercial loans.

The following table presents the Company’s loans held for sale aggregated by category (in thousands):

December 31, 2023 December 31, 2022

Commercial $ 478,128 $ 327,449

Consumer 274,630 120,870

Other 22,666 25,717

Total $ 775,424 $ 474,036

NOTE 8 - PROPERTY AND EQUIPMENT, NET

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2023 December 31,

Leasehold improvements $ 228,634 $ 208,228

Computer equipment 224,959 174,004

Capitalized software $ 243,214 $ 197,420

Computer equipment 224,127 224,959

Leasehold improvements 123,218 228,634

Office furniture and equipment 28,798 45,836

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$ 1.1 billion based on the closing exchange rate on the acquisition date) remained outstanding, and were redeemed on March 4, 2022.

The acquisition meets the criteria to be accounted for as a business combination in accordance with ASC 805, Business Combinations (“ASC 805”).

As of December 31, 2023, the Company's purchase price allocation was complete and the measurement period was closed.

The acquisition meets the criteria to be accounted for as a business combination in accordance with ASC 805, Business Combinations.

This method requires, among other things, that assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date and that the difference between the fair value of the consideration paid for the acquired entity and the fair value of the net assets acquired be recorded as goodwill, which is not amortized but is tested at least annually for impairment.

In the first quarter of 2022, the Company prepared an initial determination of the fair value of the assets acquired and liabilities assumed as of the acquisition date using preliminary information.

This included the recognition of $ 131.0 million of deferred tax assets and a corresponding valuation allowance of $ 131.0 million in Australia.

Subsequently in 2022, the Company recognized measurement period adjustments to the assets acquired and liabilities assumed, including adjustments to the value of the deferred and contingent consideration liability assumed through the acquisition.

The Company also refined its analysis of the value of the tax basis of certain acquired intangible assets of the Afterpay entities in Australia, and completed its determination of the allocation of goodwill and certain intangible assets acquired to various operating units.

This resulted in a reduction to the preliminary estimate of the deferred tax asset and a reversal of the valuation allowance of $ 131.0 million.

The Company also completed its evaluation of unrecognized tax benefits and tax contingencies, resulting in an increase in the assumed liabilities.

The net effect of the adjustments recorded in the year ended December 31, 2022 resulted in an increase in current and other non-current liabilities assumed of $ 52.8 million, a decrease in deferred tax liabilities assumed of $ 44.3 million, a decrease in intangible assets acquired of $ 22.0 million, and a net increase in goodwill of $ 30.5 million.

There was no impact to the consolidated statements of operations as a result of these adjustments.

As of December 31, 2022, the Company's purchase price allocation is complete and the measurement period is closed.

The table below summarizes the consideration paid for Afterpay and the assessment of the fair value of the assets acquired and liabilities assumed at the closing date (in thousands, except share data):

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Intangible technology assets 239,000

Intangible trade names 386,000

Intangible trade name

Other non-current assets 74,232

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(ii) Refer to Note 15, Indebtedness for further details.

Goodwill from the acquisition was primarily attributable to the value of expected synergies created by incorporating Afterpay's BNPL platform, its business, and operations into the Company's Cash App and Square ecosystems and the value of the assembled workforce.

Goodwill from the acquisition was primarily attributable to the value of expected synergies created by incorporating Afterpay's BNPL platform, its business, and operations into the Company's Cash App ecosystem and the value of the assembled workforce.

The goodwill has no amortizable basis for income tax purposes.

Pro Forma Financial Information

The following table summarizes the unaudited pro forma consolidated financial information of the Company as if the Afterpay acquisition had occurred on January 1, 2021.

Pro forma adjustments have been made to reflect, among other things, the incremental intangible asset amortization to be incurred based on the values of each identifiable intangible asset, stock-based compensation expense related to replacement equity awards, and the tax effects of such adjustments for the respective periods.

The unaudited pro forma financial results are as follows (in thousands):

Year Ended December 31,

Net revenue $ 17,601,817 $ 18,494,077

Net loss $ ( 356,568 ) $ ( 183,616 )

The unaudited pro forma financial information is not intended to present or be indicative of what the results of operations or financial position would have been had the events actually occurred on the dates indicated, nor is it meant to be indicative of future results of operations or financial position for any future period or as of any future date.

The unaudited pro forma financial information does not give effect to the potential impact of current financial conditions, or any anticipated revenue enhancements, cost savings, or operating synergies that may result from the acquisition.

Pro forma net loss for the year ended December 31, 2022 excludes $ 42.4 million of transaction costs incurred by Block directly attributable to the acquisition, as well as $ 66.3 million of incremental stock-based compensation expense incurred by Block, that were included in the determination of the Company's net loss for the year ended December 31, 2022.

Pro forma net loss for the year ended December 31, 2021 includes an adjustment of $ 45.9 million of transaction costs directly attributable to the acquisition incurred by both Afterpay and Block, and $ 66.3 million of incremental stock-based compensation expense.

On April 30, 2021, the Company acquired an 86.8 % ownership interest in TIDAL, a global music and entertainment platform that brings fans and artists together through unique music, content, and experiences.

The acquisition extends the Company's purpose of economic empowerment to musicians.

The Company has the option, but not the obligation, to acquire any portion of the remaining noncontrolling interest any time after a three-year period has elapsed from the execution of the merger agreement at a price based on the fair value of TIDAL shares.

The purchase consideration was comprised of $ 223.1 million in cash and 41,138 shares of the Company’s Class A common stock with an aggregate fair value of $ 10.1 million based on the closing price of the Company’s Class A common stock on the acquisition date.

Third-party acquisition related costs were immaterial.

The results of TIDAL’s operations have been included in the consolidated financial statements since the closing date.

The acquisition was accounted for as a business combination.

The table below summarizes the consideration paid for TIDAL and the fair value of the assets acquired and liabilities assumed at the closing date (in thousands, except share data).

Consideration:

Cash $ 176,663

Deferred consideration 46,475

Stock ( 41,138 shares of Class A common stock)

Total consideration $ 233,209

Recognized amounts of identifiable assets acquired and liabilities assumed:

Current assets (inclusive of cash acquired of $ 12,358 )

Intangible customer assets 69,000

Intangible technology assets 29,000

Intangible trade name 35,000

Intangible other assets 8,000

Other non-current assets 33,443

Accrued expenses and other current liabilities ( 67,789 )

Other non-current liabilities ( 52,759 )

Total identifiable net assets acquired 83,516

Noncontrolling interests ( 48,192 )

Goodwill 197,885

Total $ 233,209

Goodwill from the acquisition was primarily attributable to the value of expected synergies created by incorporating TIDAL product and operations into the Company's technology platform and the value of the assembled workforce.

An estimated amount of approximately $ 70.7 million of the goodwill generated from the TIDAL acquisition and approximately $ 126.7 million of the acquired intangible assets are expected to be deductible for US tax purposes based on the preliminary values.

Additionally, the acquisition would have resulted in the recognition of US deferred tax assets;

however, the realization of such deferred tax assets depends primarily on the Company's ability, post-acquisition, to generate taxable income in future periods of which there is not sufficient evidence of such income as of December 31, 2022.

Accordingly, a valuation allowance was recorded against the net acquired deferred tax asset in accounting for the acquisition.

Deferred consideration in the aggregate amount of $ 46.5 million primarily relates to pre-acquisition contingencies, and includes a portion of purchase consideration withheld, for a period of up to four years , as security for TIDAL's indemnification obligations related to general representations and warranties, in addition to certain potential exposures.

The Company recognized certain liabilities for acquired pre-existing potential exposures, and an indemnification receivable in the amount of $ 22.8 million has been recorded related to such exposures in accordance with the terms of the indemnification agreement.

The amounts have been determined in accordance with ASC 740, Income Taxes , and ASC 450, Contingencies .

In addition to the deferred consideration, an additional amount of $ 32.2 million in purchase consideration has been withheld related to defined post-acquisition activities.

Because these amounts relate to post-acquisition activities, in accordance with ASC 805, Business Combinations , such amounts will be recognized as expenses in future periods, as incurred.

The noncontrolling interest was recorded based on the fair value on the date of acquisition.

The acquisition of TIDAL did not have a material impact on the Company's consolidated financial statements.

Accordingly, pro forma financial information has not been presented.

Other Acquisitions

During the years ended December 31, 2023, 2022, and 2021, the Company completed certain acquisitions for a total consideration of $ 14.2 million, $ 46.0 million, and $ 253.7 million, respectively, which resulted in the recognition of additional intangible assets and goodwill.

These acquisitions were not material and therefore pro forma financial information has not been presented.

These acquisitions did not have a material impact to the Company's consolidated financial statements, and therefore pro forma financial information has not been presented.

None of the goodwill generated from the acquisitions or the acquired intangible assets are expected to be deductible for tax purposes.

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Acquisitions 11,761,866

Other adjustments ( 504 )

Foreign currency translation adjustments ( 314,381 )

Balance at December 31, 2022 11,966,761

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Foreign currency translation adjustments 77,351

Impairment charge ( 132,313 )

Balance at December 31, 2023 $ 11,919,720

As defined further in Note 21, Segment and Geographical Information , the Company has two reportable segments, Square and Cash App.

Goodwill arising from the acquisition of Afterpay has been equally allocated to Square and Cash App as management has concluded that the BNPL platform will contribute equally to each of these segments.

As discussed further in Note 21, Segment and Geographical Information , the Company has two reportable segments, Square and Cash App.

In the fourth quarter of 2023, the Company reorganized its business structure and moved the business activities and management of the Company's BNPL platform fully into Cash App.

In connection with this reorganization, the Company reallocated the goodwill associated with the BNPL platform from Square to Cash App using the relative fair value approach.

Additionally, the Company assessed goodwill for impairment for Square and Cash App immediately before and immediately after the reorganization and concluded that there was no goodwill impairment, as their estimated fair values exceeded their carrying values both immediately before and after the reorganization.

The Company also performed a goodwill impairment testing of its other reporting units and recognized an impairment charge of 132.3 million related to TIDAL in the fourth quarter of 2023.

The impairment charge was as a result of changes in TIDAL's strategic focus, including terminations of certain revenue arrangements and investment into new product areas.

This charge was included within general and administrative expenses in the Company's statements of operations.

The fair value of the TIDAL reporting unit was estimated using the income approach, which was based upon the present value of estimated future cash flows.

The change in the carrying value of goodwill allocated to the reportable segments was as follows (in thousands):

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Acquisitions 5,882,133 5,879,733 — 11,761,866

Other adjustments ( 504 ) — — ( 504 )

Foreign currency translation adjustments ( 157,537 ) ( 156,844 ) — ( 314,381 )

Balance at December 31, 2022 5,852,930 5,915,946 197,885 11,966,761

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Foreign currency translation adjustments 77,351 — — 77,351

Reallocation between segments (i)

720,847 ( 720,847 ) — —

Impairment charge — — ( 132,313 ) ( 132,313 )

Balance at December 31, 2023 $ 6,651,128 $ 5,195,099 $ 73,493 $ 11,919,720

Additionally, the Company performed its annual goodwill impairment assessment as of December 31, 2022.

(i) Represents effects of the reallocation of goodwill due to the reorganization of the Company's business structure in the fourth quarter of 2023.

The Company performed its annual goodwill impairment assessment as of December 31, 2023 and concluded no additional goodwill impairment should be recognized.

For purposes of completing the impairment test, the Company performs either a qualitative or a quantitative analysis on a reporting unit basis.

Through qualitative analysis, the Company concluded that it was more likely than not that the fair value of the reporting units were greater than their carrying amounts.

As a result, the two-step goodwill impairment test was not required, and no impairments of goodwill were recognized during the year ended December 31, 2022.

NOTE 11 - ACQUIRED INTANGIBLE ASSETS

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Other Current Assets

The following table details other current assets (in thousands):

The following table presents the detail of other current assets (in thousands):

2023 December 31,

Inventory, net $ 97,703 $ 77,058

Restricted cash 639,780 18,778

Restricted cash (i)

$ 770,380 $ 639,780

Short term deposits (ii)

397,630 25,555

Processing costs receivable 365,153 298,568

Prepaid expenses 141,262 63,341

Accounts receivable, net 140,508 89,702

Loans held for investment, net of allowance for loan losses (i)

Loans held for investment, net of allowance for loan losses (iii)

247,631 123,959

Accounts receivable, net 134,824 140,508

Inventory, net 110,097 97,703

Prepaid expenses 100,770 141,262

Other 227,003 159,930

Total $ 2,353,488 $ 1,627,265

(i) Refer to Note 7, Loans Held for Investment for further details .

(i) Includes a portion invested in money market funds.

Refer to Note 5, Fair Value Measurements for further details.

(ii) Includes a $ 350.0 million deposit held by a processor to meet requirements related to processing volumes under an arrangement that was executed in the fourth quarter of 2023.

This activity is included within cash flows from operating activities within the Company's consolidated statements of cash flows.

(iii) Refer to Note 7, Customer Loans for further details .

Accrued Expenses and Other Current Liabilities

The following table details accrued expenses and other current liabilities (in thousands):

The following table presents the detail of accrued expenses and other current liabilities (in thousands):

2023 December 31,

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In addition to amounts reflected in the table above, the Company recognized additional provision for transaction losses that was realized and written-off within the same period.

Such losses are primarily related to Cash App transactions, such as peer-to-peer transactions and negative balances, that are uncertain in nature.

The Company recorded $ 405.6 million and $ 411.7 million for the years ended December 31, 2023 and 2022, respectively, for such losses.

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Other Non-Current Assets

The following table details other non-current assets (in thousands):

The following table presents the detail of other non-current assets (in thousands):

2023 December 31,

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$ 205,268 $ 208,880

Investment in bitcoin, net (ii)

Bitcoin investment (ii)

339,898 102,303

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Adjustments are recorded within other expense (income), net on the consolidated statements of operations.

During the year ended December 31, 2022, the Company recorded unrealized gains of $ 96.1 million arising from the revaluation of certain non-marketable investments, resulting in cumulative unrealized gains of $ 115.2 million as of December 31, 2022.

Unrealized losses were immaterial as of December 31, 2022.

(ii) As of December 31, 2022, the Company has purchased a cumulative $ 220.0 million in bitcoin for investment purposes.

Investment in bitcoin is accounted for as an indefinite-lived intangible asset, and does not include any bitcoin held for other parties, which is further described in Note 14, Bitcoin Held for Other Parties .

Investment in bitcoin is subject to impairment losses if the fair value of bitcoin decreases below the carrying value during the assessed period.

Impairment losses cannot be recovered for any subsequent increase in fair value until the sale of the asset.

The Company recorded impairment losses of $ 46.6 million in the year ended December 31, 2022, due to the observed market price of bitcoin decreasing below the carrying value during the period.

As of December 31, 2022, the cumulative impairment losses to date were $ 117.7 million and the fair value of the investment in bitcoin was $ 132.7 million based on observable market prices, which was $ 30.4 million in excess of the Company's carrying value of $ 102.3 million after impairment charges.

NOTE 14 - BITCOIN HELD FOR OTHER PARTIES

Unrealized gains and losses were immaterial in the year ended December 31, 2023.

(ii) Refer to Note 14, Bitcoin for further details.

NOTE 14 - BITCOIN

A) Company Owned Bitcoin

Bitcoin investment

As of December 31, 2023, the Company held approximately 8,038 bitcoins for investment purposes with a fair value of $ 339.9 million, which is included within the Company’s “Other non-current assets” on the consolidated balance sheets.

The following table summarizes the changes in the Company’s bitcoin investment (in thousands, except number of bitcoin):

Amount of bitcoin

Balance at December 31, 2022

8,038 $ 102,303

Cumulative effect of adoption of ASU 2023-08

Remeasurement gain

Balance at December 31, 2023

8,038 $ 339,898

Bitcoin for operating purposes

The Company holds a small amount of bitcoin for operating purposes, at any time, to facilitate the purchases and sales of bitcoin on behalf of Cash App customers.

The bitcoin for operating purposes is reflected on the consolidated balance sheets within “Other current assets”.

The following table summarizes the changes in the Company's bitcoin for operating purposes (in thousands, except number of bitcoin):

Amount of bitcoin

Balance at December 31, 2022

335,213 9,369,762

( 335,467 ) ( 9,364,010 )

Balance at December 31, 2023

Given the Company holds a small amount of bitcoin for operating purposes and such bitcoin is held for only a short period, typically less than a day, any remeasurement gains or losses on the Company's bitcoin for operating purposes were immaterial.

B) Bitcoin Held for Other Parties

The Company allows its Cash App customers to store their bitcoin in the Company’s digital wallets free of charge.

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The Company occasionally engages third-party custodians to store and safeguard bitcoin on the Company's behalf.

As of December 31, 2022, no bitcoin custodied for customers was held by third-party custodians.

As of December 31, 2023, an immaterial amount of the bitcoin was held by third-party custodians on the Company's behalf.

As of the adoption of SAB 121, the Company records a bitcoin safeguarding obligation liability and a corresponding bitcoin safeguarding asset based on the fair value of the bitcoin held for other parties at each reporting date.

The Company was not aware of any actual or possible safeguarding loss events as of December 31, 2023 or December 31, 2022, and accordingly, the bitcoin safeguarding obligation liability and the associated bitcoin safeguarding asset were recorded at the same value.

The balance sheet as of December 31, 2021 has been revised to reflect the adoption of SAB 121.

The adoption of SAB 121 had no impact on previously reported consolidated statements of operations, statements of cash flows, or statements of stockholders' equity.

The following table summarizes the Company’s bitcoin held for other parties (in thousands, except number of bitcoin):

2023 December 31,

Approximate number of bitcoin held for customers 25,850 23,360

Approximate number of bitcoin held for trading partners 62 458

Total approximate number of bitcoin held for other parties 25,912 23,818

Approximate amount of bitcoin held for customers 24,570 25,850

Approximate amount of bitcoin held for trading partners — 62

Total approximate amount of bitcoin held for other parties 24,570 25,912

Safeguarding obligation liability related to bitcoin held for customers $ 1,038,585 $ 427,221

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NOTE 15 - INDEBTEDNESS

Revolving Credit Facility

A) Revolving Credit Facility

In May 2020, the Company entered into a revolving credit agreement with certain lenders, which provided a $ 500.0 million senior unsecured revolving credit facility (the "2020 Credit Facility") maturing in May 2024.

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On January 28, 2022, the Company entered into a fifth amendment to the Credit Agreement to permit certain existing obligations of Afterpay and its subsidiaries to remain outstanding as of and after the completion of the Afterpay acquisition.

On February 23, 2022, the Company entered into a sixth amendment to the Credit Agreement to, among other things, provide for a new tranche of unsecured revolving loan commitments in an aggregate principal amount of up to $ 100.0 million (the "Tranche B Loans).

On June 9, 2023, the Company entered into a seventh amendment to the Credit Agreement to, among other things, extend the maturity date of the loans advanced to June 9, 2028 and provide for additional unsecured revolving loan commitments in an aggregate principal amount of up to $ 175 million.

The Credit Agreement also contains a financial covenant that requires the Company to maintain a quarterly minimum liquidity amount (consisting of the sum of Unrestricted Cash and Cash Equivalents plus Marketable Securities, each as defined in the Credit Agreement) of at least $ 250.0 million, tested on a quarterly basis.

The Company is obligated to pay customary fees for a credit facility of this size and type including a commitment fee of 0.15 % per annum on the undrawn portion available under the 2020 Credit Facility.

The Company is obligated to pay customary fees for a credit facility of this size and type including a commitment fee of 0.10 % to 0.20 % per annum on the undrawn portion available under the 2020 Credit Facility.

To date, no funds have been drawn and no letters of credit have been issued under the 2020 Credit Facility.

As of December 31, 2022, $ 600.0 million remained available for draw.

As of December 31, 2023, $ 775.0 million remained available for draw subject to compliance with our covenants.

The Company incurred immaterial unused commitment fees during the years ended December 31, 2023, 2022, and 2021.

As of December 31, 2022, the Company was in compliance with all financial covenants associated with the 2020 Credit Facility.

Loans under the 2020 Credit Facility, excluding the Tranche B Loans, bear interest at the Company's option of (i) a base rate based on the highest of the prime rate, the federal funds rate plus 0.50 %, and the adjusted LIBOR rate plus 1.00 %, in each case, plus a margin ranging from 0.25 % to 0.75 % or (ii) an adjusted LIBOR rate plus a margin ranging from 1.25 % to 1.75 %.

The Credit Agreement includes provisions allowing the Company to replace or update LIBOR with a replacement rate.

The margin is determined based on the Company’s total leverage ratio, as defined in the Credit Agreement.

The Tranche B Loans bear interest at the Company's option of (i) an annual rate based on the forward-looking term rate based on the Secured Overnight Financing Rate ("Term SOFR") or (ii) a base rate.

Tranche B Loans based on Term SOFR shall bear interest at a rate equal to Term SOFR plus a margin of between 1.25 % and 1.75 %, depending on the Company's total net leverage ratio.

Tranche B Loans based on the base rate shall bear interest at a rate based on the highest of the prime rate, the federal funds rate plus 0.50 %, and Term SOFR with a tenor of one-month plus 1.00 %, in each case, plus a margin ranging from 0.25 % to 0.75 %, depending on the Company's total net leverage ratio.

As of December 31, 2023, the Company was in compliance with all financial covenants associated with the 2020 Credit Agreement.

Loans under the 2020 Credit Agreement bear interest at the Company's option of (i) an annual rate based on the forward-looking term rate based on the Secured Overnight Financing Rate ("Term SOFR") or (ii) a base rate.

Loans based on Term SOFR shall bear interest at a rate equal to Term SOFR plus a margin of between 1.25 % and 1.75 %, depending on the Company's total net leverage ratio.

Loans based on the base rate shall bear interest at a rate based on the highest of the prime rate, the federal funds rate plus 0.50 %, and Term SOFR with a tenor of one-month plus 1.00 %, in each case, plus a margin ranging from 0.25 % to 0.75 %, depending on the Company's total net leverage ratio.

The Credit Agreement also contains customary affirmative and negative covenants typical for a financing of this type that, among other things, restricts the Company and certain of its subsidiaries’ ability to incur additional indebtedness, create liens, merge or consolidate or make certain dispositions, pay dividends and make distributions, enter into restrictive agreements, enter into agreements with affiliates, and make certain investments and acquisitions.

Warehouse Funding Facilities

B) Warehouse Funding Facilities

Following the acquisition of Afterpay, the Company assumed Afterpay's existing warehouse funding facilities.

The Company has financing arrangements with financial institutions in Australia, New Zealand, the United States, and the United Kingdom (collectively, the “Warehouse Facilities”).

The Warehouse Facilities have been arranged utilizing wholly-owned and consolidated entities formed for the sole purpose of financing the origination of consumer receivables to partly fund the Company's BNPL platform.

The Warehouse Facilities have been arranged utilizing wholly-owned and consolidated entities (collectively, the "Warehouse Special Purpose Entities ("Warehouse SPEs") formed for the sole purpose of financing the origination of consumer receivables to partly fund the Company's BNPL platform.

Borrowings under the Warehouse Facilities are secured against the respective consumer receivables.

These Warehouse Facilities have maturity dates ranging from December 2023 to December 2024.

As of December 31, 2022, the aggregate commitment amount of the Warehouse Facilities, using the respective exchange rates at perio d-end, was $ 1.7 billion on a revolving basis, of which $ 1.3 billion was drawn and $ 0.4 billion remained available.

All facilities contain portfolio parameters based on performance of the underlying consumer receivables, which each respective region has satisfied as of December 31, 2022.

While the Warehouse SPEs are included in our consolidated financial statements, they are separate legal entities that maintain legal ownership of the receivables they hold.

The assets of the Warehouse SPEs are not available to satisfy our claims or those of our creditors.

These Warehouse Facilities have maturity dates through June 2026.

As of December 31, 2023, the aggregate amount of the Warehouse Facilities, using the respective exchange rates at perio d-end , was $ 1.7 billion on a revolving basis, of which $ 1.6 billion was drawn and $ 99.4 million remained available .

All Warehouse Facilities contain portfolio parameters based on performance of the underlying consumer receivables, which each respective region has satisfied as of December 31, 2023.

None of the Warehouse Facilities contain corporate financial covenants.

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Borrowings under these facilities bear interest at (i) a base rate aligned to either the local risk free rate, such as Term SOFR and the Sterling Overnight Index Average ("SONIA") or similar, and (ii) a margin which is set for the term of the availability period.

In addition, each facility requires payment of immaterial commitment fees.

The table below summarizes the amounts drawn on these facilities by year of maturity (in thousands):

Total funding debt, net of deferred debt issuance costs $ 1,338,306

(i) Disclosed as warehouse funding facilities, current portion within total current liabilities on the consolidated balance sheet.

Paycheck Protection Program Liquidity Facility

On June 2, 2020, Square Capital was approved to borrow under the PPPLF with the Federal Reserve Bank of San Francisco (“First PPPLF Agreement”), at an annual interest rate of 0.35%.

The PPPLF extends credit to eligible financial institutions that have originated or purchased PPP loans.

Advances under the PPPLF are non-recourse and are secured by a pledge of PPP loans held by Square Capital.

The maturity date of any PPPLF loan will be the maturity date of the PPP loans pledged to secure such PPPLF loan.

The maturity date of any PPPLF loan will be accelerated on and to the extent of (i) the date of any loan forgiveness reimbursement by the SBA for any PPP loan securing such PPPLF loan;

or (ii) the date of purchase by the SBA from Square Capital of any PPP loan securing such PPPLF loan to realize on the SBA’s guarantee of such PPP loan.

The maturity date of all PPPLF loans shall be accelerated upon the occurrence of certain events of default by Square Capital, including but not limited to the failure to comply with a requirement of the PPPLF agreement or any representation, warranty, or covenant of Square Capital under the PPPLF agreement being inaccurate on or as of the date it is deemed to be made or on any date on which an PPPLF loan remains outstanding.

The Company can also at its option prepay the advances in full or in part without penalty.

Square Capital also shall prepay PPPLF loans so that the amount of any PPPLF loans outstanding does not exceed the outstanding amount of PPP loans pledged to secure such PPPLF loans.

On January 29, 2021, Square Capital entered into a second PPPLF agreement with the Federal Reserve Bank of San Francisco (“Second PPPLF Agreement”) to secure additional credit collateralized by loans from the subsequent rounds of the PPP program in an aggregate principal amount of up to $ 1.0 billion under both PPPLF agreements.

As of December 31, 2022, $ 16.8 million of PPPLF advances were outstanding and are, generally, collateralized by the same value of PPP loans.

Any differences between the amounts are generally due to the timing of PPP loan repayment or forgiveness, and repayment of PPPLF advances.

The interest expense incurred on the Company's Warehouse Facilities is included within general and administrative as part of the Company's operating expenses.

Interest expense on the Company's Warehouse Facilities was $ 65.9 million and $ 16.2 million for the years ended December 31, 2023 and 2022, respectively.

The Company did not have any interest expense on the Company's Warehouse Facilities in 2021.

In addition, each Warehouse Facility requires payment of immaterial commitment fees.

The table below summarizes the future scheduled principal payments of amounts drawn on the Company's Warehouse Facilities (in thousands):

2024 (i) (ii)

Total $ 1,607,917

(i) Includes $ 140.0 million of future scheduled principal payments related to a Warehouse Facility that matured in December 2023.

The amount drawn at maturity remained outstanding as of December 31, 2023 as the Company had four months following the termination to repay the facility upon maturity.

The amounts were repaid in January 2024.

(ii) Disclosed as warehouse funding facilities, current portion within total current liabilities on the consolidated balance sheet.

Senior Unsecured Notes due in 2026 and 2031

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Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of its Class A common stock, or a combination of cash and shares of its Class A common stock, at the Company’s election.

The circumstances required to allow the holders to convert their 2026 Convertible Notes and 2027 Convertible Notes were not met during the year ended December 31, 2022.

On or after November 5, 2023 for the 2026 Convertible Notes, and on or after November 5, 2024 for the 2027 Convertible Notes, the Company may redeem all or a portion of each series of convertible notes for cash at its option, if the last reported sale price of the Company's Class A common stock has been at least 130 % of the conversion price for the relevant series of notes then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100 % of the principal amount of the 2026 Convertible Notes and 2027 Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

In accounting for the issuance of the 2026 Convertible Notes and 2027 Convertible Notes, prior to the adoption of ASU No.

2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity's Own Equity ("ASU 2020-06"), the Company separated the relevant series of convertible notes into liability and equity components.

The carrying amount of the liability component was calculated by measuring the fair value of a similar debt instrument that does not have an associated convertible feature.

The carrying amount of the equity component representing the conversion option was $ 198.0 million and was determined by deducting the fair value of the liability component from the par value of the 2026 Convertible Notes and the 2027 Convertible Notes.

The equity component was not remeasured as long as it continued to meet the conditions for equity classification.

The excess of the principal amount of the liability component over its carrying amount ("debt discount") was amortized to interest expense at an effective interest rate of 3.35 % and 3.66 % for the 2026 Convertible Notes and 2027 Convertible Notes, respectively.

Upon adoption of ASU 2020-06 on January 1, 2021, the Company reversed the separation of the debt and equity components and accounted for the 2026 Convertible Notes and 2027 Convertible Notes wholly as debt.

The Company also reversed the amortization of the debt discount, with a cumulative adjustment to retained earnings on the adoption date.

Debt issuance costs related to the 2026 Convertible Notes and 2027 Convertible Notes were comprised of discounts and commissions payable to the initial purchasers of $ 17.5 million and third party offering costs of $ 1.0 million.

Prior to the adoption of ASU 2020-06, the Company allocated the total amount incurred to the liability and equity components of the 2026 Convertible Notes and 2027 Convertible Notes based on their relative values.

Issuance costs attributable to the liability component were $ 15.4 million and were amortized to interest expense using the effective interest method.

Issuance costs attributable to the equity component were netted with the equity component in stockholders’ equity.

Upon adoption of ASU 2020-06 on January 1, 2021, the Company reversed the allocation of the issuance costs to the equity component and accounted for the entire amount as debt issuance cost that will be amortized as interest expense at an effective interest rate of 0.30 % and 0.49 % for each of the respective terms of the 2026 Convertible Notes and 2027 Convertible Notes, respectively, with a cumulative adjustment to retained earnings on the adoption date.

Upon adoption of ASU 2020-06, the difference between the estimated fair value and the carrying value upon conversion is accounted for as a reduction to the related debt issuance costs, with the remainder recognized as additional paid in capital to reflect the par value of the shares issued.

As of December 31, 2022, no principal had converted on either the 2026 Convertible Notes or 2027 Convertible Notes.

As of December 31, 2022, the if-converted value of the 2026 Convertible Notes and 2027 Convertible Notes did not exceed the outstanding principal amount.

The circumstances to allow the holders to convert their 2026 Convertible Notes and 2027 Convertible Notes were not met during the year ended December 31, 2023.

As of December 31, 2023, no principal had converted and the if-converted value did not exceed the outstanding principal amount of either the 2026 Convertible Notes or 2027 Convertible Notes.

Convertible Notes due in 2025

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The Company may redeem for cash all or any part of the 2025 Convertible Notes, at its option, on or after March 5, 2023, if the last reported sale price of the Company's Class A common stock has been at least 130 % of the conversion price for the 2025 Convertible Notes then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100 % of the principal amount of the 2025 Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

The circumstances to allow the holders to convert their 2025 Convertible Notes were met in the first quarter of 2021 and continued to be met through March 31, 2022.

The circumstances were not met in the second, third, and fourth quarters of 2022.

As of December 31, 2022, certain holders of the 2025 Convertible Notes had converted an immaterial aggregate principal amount of their 2025 Convertible Notes.

The circumstances to allow the holders to convert their 2025 Convertible Notes were met in the first quarter of 2021 through the first quarter of 2022.

The circumstances were not met in the second through fourth quarters of 2022 and the year ended December 31, 2023.

As of December 31, 2023, certain holders of the 2025 Convertible Notes converted an immaterial aggregate principal amount of their 2025 Convertible Notes.

The Company has settled the conversions through the issuance of an immaterial amount of shares of the Company's Class A common stock.

In accounting for the issuance of the 2025 Convertible Notes, prior to the adoption of ASU 2020-06, the Company separated the 2025 Convertible Notes into liability and equity components.

The carrying amount of the liability component was calculated by measuring the fair value of a similar debt instrument that does not have an associated convertible feature.

The carrying amount of the equity component representing the conversion option was $ 154.6 million and was determined by deducting the fair value of the liability component from the par value of the 2025 Convertible Notes.

The equity component was not remeasured as long as it continued to meet the conditions for equity classification.

The debt discount was amortized to interest expense over the term of the 2025 Convertible Notes at an effective interest rate of 3.81 % over the contractual terms of the 2025 Convertible Notes.

Upon adoption of ASU 2020-06 on January 1, 2021, the Company reversed the separation of the debt and equity components and accounted for the 2025 Convertible Notes wholly as debt.

The Company also reversed the amortization of the debt discount, with a cumulative adjustment to retained earnings on the adoption date.

Debt issuance costs related to the 2025 Convertible Notes were comprised of discounts and commissions payable to the initial purchasers of $ 14.3 million and third party offering costs of $ 0.9 million.

Prior to the adoption of ASU 2020-06, the Company allocated the total amount incurred to the liability and equity components of the 2025 Convertible Notes based on their relative values.

Issuance costs attributable to the liability component were $ 12.8 million and will be amortized to interest expense using the effective interest method over the contractual term.

Issuance costs attributable to the equity component were netted with the equity component in stockholders’ equity.

Upon adoption of ASU 2020-06 on January 1, 2021, the Company reversed the allocation of the issuance costs to the equity component and accounted for the entire amount as debt issuance cost that will be amortized as interest expense over the remaining term at an effective interest rate of 0.43 % for the 2025 Convertible Notes with a cumulative adjustment to retained earnings on the adoption date.

As of December 31, 2022, there has been an immaterial aggregate principal amount converted on the 2025 Convertible Notes.

As of December 31, 2022, the if-converted value of the 2025 Convertible Notes did not exceed the outstanding principal amount.

As of December 31, 2023, the if-converted value did not exceed the outstanding principal amount of the 2025 Convertible Notes.

Convertible Notes due in 2023

On May 25, 2018, the Company issued an aggregate principal amount of $ 862.5 million of convertible senior notes ("2023 Convertible Notes").

The 2023 Convertible Notes mature on May 15, 2023, unless earlier converted or repurchased, and bear interest at a rate of 0.50 % payable semi-annually on May 15 and November 15 of each year.

The 2023 Convertible Notes are convertible at an initial conversion rate of 12.8456 shares of the Company's Class A common stock per $1,000 principal amount of 2023 Convertible Notes, which is equivalent to an initial conversion price of approximately $ 77.85 per share of Class A common stock.

Holders may convert their 2023 Convertible Notes at any time prior to the close of business on the business day immediately preceding February 15, 2023 only under the following circumstances:

(1) during any calendar quarter (and only during such calendar quarter), if the last reported sale price of the Company’s Class A common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130 % of the conversion price on each applicable trading day;

(2) during the five business day period after any five consecutive trading day period (the "measurement period") in which the trading price (as defined in the indenture governing the 2023 Convertible Notes) per $1,000 principal amount of 2023 Convertible Notes for each trading day of the measurement period was less than 98 % of the product of the last reported sale price of the Company’s Class A common stock and the conversion rate on each such trading day;

or (3) upon the occurrence of specified corporate events, including certain distributions, the occurrence of a fundamental change (as defined in the indenture governing the 2023 Convertible Notes) or a transaction resulting in the Company’s Class A common stock converting into other securities or property or assets.

On or after February 15, 2023, up until the close of business on the second scheduled trading day immediately preceding the maturity date, a holder may convert all or any portion of its 2023 Convertible Notes regardless of the foregoing circumstances.

Upon conversion, the Company will deliver shares of its Class A common stock.

The circumstances to allow the holders to convert their 2023 Convertible Notes were met in the fourth quarter of 2020 and continued to be met through the first half of 2022.

The circumstances were not met in the third and fourth quarters of 2022.

As of December 31, 2022, certain holders of the 2023 Convertible Notes had converted an aggregate principal amount of $ 401.9 million of their 2023 Convertible Notes, all of which was converted during the year ended December 31, 2022.

The Company has settled the conversions through the issuance of 5.2 million shares of the Company's Class A common stock.

In accounting for the issuance of the 2023 Convertible Notes, prior to the adoption of ASU 2020-06, the Company separated the 2023 Convertible Notes into liability and equity components.

The carrying amount of the liability component was calculated by measuring the fair value of a similar debt instrument that does not have an associated convertible feature.

The carrying amount of the equity component representing the conversion option was $ 155.3 million and was determined by deducting the fair value of the liability component from the par value of the 2023 Convertible Notes.

The equity component was not remeasured as long as it continued to meet the conditions for equity classification.

The debt discount was amortized to interest expense over the term of the 2023 Convertible Notes at an effective interest rate of 4.69 % over the contractual terms of the 2023 Convertible Notes.

Upon adoption of ASU 2020-06 on January 1, 2021, the Company reversed the separation of the debt and equity components and accounted for the 2023 Convertible Notes wholly as debt.

The Company also reversed the amortization of the debt discount, with a cumulative adjustment to retained earnings on the adoption date.

Debt issuance costs related to the 2023 Convertible Notes comprised of discounts and commissions payable to the initial purchasers of $ 6.0 million and third-party offering costs of $ 0.8 million.

Prior to the adoption of ASU 2020-06, the Company allocated the total amount incurred to the liability and equity components of the 2023 Convertible Notes based on their relative values.

Issuance costs attributable to the liability component were $ 5.6 million and will be amortized to interest expense using the effective interest method over the contractual term.

Issuance costs attributable to the equity component were netted with the equity component in stockholders’ equity.

Upon adoption of ASU 2020-06 on January 1, 2021, the Company reversed the allocation of the issuance costs to the equity component and accounted for the entire amount as debt issuance cost that will be amortized as interest expense over the remaining term at an effective interest rate of 0.66 % for the 2023 Convertible Notes with a cumulative adjustment to retained earnings on the adoption date.

As of December 31, 2022, the if-converted value of the 2023 Convertible Notes did not exceed the outstanding principal amount.

Convertible Notes due in 2022

On March 6, 2017, the Company issued an aggregate principal amount of $ 440.0 million of convertible senior notes ("2022 Convertible Notes").

As of the maturity date on March 1, 2022, holders of the 2022 Convertible Notes had converted the full aggregate principal amount of $ 440.0 million of the 2022 Convertible Notes, of which $ 0.5 million was converted in 2022.

The conversions that occurred during 2022 were settled entirely in shares of the Company's Class A common stock.

The 2022 Convertible Notes, 2023 Convertible Notes, 2025 Convertible Notes, 2026 Convertible Notes, and 2027 Convertible Notes (collectively, the “Convertible Notes”), together with the Senior Notes, are collectively referred to as the “Notes.”

As of the maturity date on May 15, 2023, certain holders of the 2023 Convertible Notes had converted an aggregate principal amount of $ 401.9 million of their 2023 Convertible Notes, none of which was converted during the year ended December 31, 2023.

The Company settled the conversions through the issuance of 5.2 million shares of the Company's Class A common stock and paid a total of $ 461.8 million in cash to settle the remaining unconverted principal balance, and interest, as of May 15, 2023.

The 2023 Convertible Notes, 2025 Convertible Notes, 2026 Convertible Notes, and 2027 Convertible Notes (collectively, the “Convertible Notes”), together with the Senior Notes, are collectively referred to as the “Notes.”

The following table summarizes the Company's Notes as of December 31, 2023 (in thousands):

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2025 Convertible Notes 1,000,000 ( 3,563 ) 996,437

2023 Convertible Notes (i)

460,630 ( 274 ) 460,356

Total $ 4,150,000 $ ( 29,909 ) $ 4,120,091

(i) Net carrying value disclosed as current portion of long-term debt within total current liabilities on the consolidated balance sheet.

The following table summarizes the Company's Notes as of December 31, 2022 (in thousands):

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2025 Convertible Notes 1,000,000 ( 6,606 ) 993,394

2023 Convertible Notes 460,630 ( 1,012 ) 459,618

2022 Convertible Notes 455 — 455

2023 Convertible Notes (i)

460,630 ( 274 ) 460,356

Total $ 4,610,630 $ ( 40,445 ) $ 4,570,185

(i) Net carrying value disclosed as current portion of long-term debt within total current liabilities on the consolidated balance sheet.

The following table summarizes the interest expense of the Notes (in thousands):

The Company recognized interest expense on the Notes as follows (in thousands):

Year Ended December 31,

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Contractual interest expense $ 65,566 $ 66,910 $ 44,141

Amortization of debt discount and issuance costs (i)

Amortization of debt issuance costs

10,538 10,979 9,823

Total $ 76,104 $ 77,889 $ 53,964

(i) Upon adoption of ASU 2020-06 on January 1, 2021, the debt discount associated with the equity component on convertible debt outstanding was reversed, which resulted in a decrease in the amount of non-cash interest expense to be recognized going forward.

Convertible Note Hedge and Warrant Transactions

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The net costs incurred in connection with the 2025 Convertible Note Hedges and 2025 Warrants were recorded as a reduction to additional paid-in capital on the consolidated balance sheets.

In connection with the offering of the 2023 Convertible Notes, the Company entered into convertible note hedge transactions ("2023 Convertible Note Hedges") with certain financial institution counterparties ("2023 Note Hedge Counterparties") whereby the Company has the option to purchase a total of approximately 11.1 million shares of its Class A common stock at a price of approximately $ 77.85 per share.

The total cost of the 2023 Convertible Note Hedges was $ 172.6 million.

In addition, the Company sold warrants ("2023 Warrants") to the 2023 Note Hedge Counterparties whereby the 2023 Note Hedge Counterparties have the option to purchase a total of 11.1 million shares of the Company’s Class A common stock at a price of approximately $ 109.26 per share.

The Company received $ 112.1 million in cash proceeds from the sale of the 2023 Warrants.

Taken together, the purchase of the 2023 Convertible Note Hedges and sale of the 2023 Warrants are intended to reduce dilution from the conversion of the 2023 Convertible Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of the converted 2023 Convertible Notes, as the case may be, and to effectively increase the overall conversion price from approximately $ 77.85 per share to approximately $ 109.26 per share.

As these instruments are considered indexed to the Company's own stock and are considered equity classified, the 2023 Convertible Note Hedges and 2023 Warrants are recorded in stockholders’ equity, are not accounted for as derivatives, and are not remeasured each reporting period.

The net costs incurred in connection with the 2023 Convertible Note Hedges and 2023 Warrants were recorded as a reduction to additional paid-in capital on the consolidated balance sheets.

The Company also exercised a pro-rata portion of the 2023 Convertible Note Hedges to offset the shares of the Company's Class A common stock issued to settle the conversion of the 2023 Convertible Notes.

The Company has received 3.0 million shares of the Company's Class A common stock from the 2023 Note Hedge Counterparties, of which 1.0 million shares were received in the year ended December 31, 2022.

In connection with the offering of the 2022 Convertible Notes, the Company entered into convertible note hedge transactions ("2022 Convertible Note Hedges") with certain financial institution counterparties ("2022 Note Hedge Counterparties") whereby the Company had the option to purchase a total of approximately 19.2 million shares of its Class A common stock at a price of approximately $ 22.95 per share.

The total cost of the 2022 convertible note hedge transactions was $ 92.1 million.

In addition, the Company sold warrants ("2022 Warrants") to the 2022 Note Hedge Counterparties whereby the 2022 Note Hedge Counterparties had the option to purchase a total of 19.2 million shares of the Company’s Class A common stock at a price of approximately $ 31.18 per share.

The Company received $ 57.2 million in cash proceeds from the sale of the 2022 Warrants.

Taken together, the purchase of the 2022 Convertible Note Hedges and sale of the 2022 Warrants were intended to reduce dilution from the conversion of the 2022 Convertible Notes and/or offset any cash payments the Company was required to make in excess of the principal amount of the converted 2022 Convertible Notes, as the case may be, and to effectively increase the overall conversion price from approximately $ 22.95 per share to approximately $ 31.18 per share.

As these instruments were considered indexed to the Company's own stock and were considered equity classified, the 2022 Convertible Note Hedges and 2022 Warrants were recorded in stockholders’ equity, were not accounted for as derivatives, and were not remeasured each reporting period.

The net costs incurred in connection with the 2022 Convertible Note Hedges and 2022 Warrants were recorded as a reduction to additional paid-in capital on the consolidated balance sheets.

The Company exercised all of the 2022 Convertible Note Hedges to offset the shares of the Company's Class A common stock issued to settle the conversion of the 2022 Convertible Notes discussed above.

The 2022 Convertible Note Hedges were net share settled, and as of the 2022 Convertible Notes maturity date of March 1, 2022, the Company received 15.0 million shares of the Company's Class A common stock from the 2022 Note Hedge Counterparties, of which 0.2 million shares were received in 2022.

In connection with the offering of the 2023 Convertible Notes, the Company entered into convertible note hedge transactions ("2023 Convertible Note Hedges"), resulting in the receipt of 3.0 million shares of the Company's Class A common stock from certain financial institution counterparties and, as of December 31, 2023, the Convertible Note Hedges were completely settled and no longer outstanding.

In addition, the warrants entered into in connection with the issuance of the 2023 Convertible Notes expired evenly over a 60 trading day period starting on August 15, 2023 and ending on November 7, 2023.

None of the warrants were exercised over the trading day period.

NOTE 16 - INCOME TAXES

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Foreign ( 2,275 ) ( 2,007 ) ( 8,448 )

Total deferred provision for income taxes ( 69,593 ) ( 10,435 ) ( 8,016 )

Total provision (benefit) for income taxes $ ( 12,312 ) $ ( 1,364 ) $ 2,862

Total deferred benefit for income taxes ( 85,879 ) ( 69,593 ) ( 10,435 )

Total benefit for income taxes $ ( 8,019 ) $ ( 12,312 ) $ ( 1,364 )

The following is a reconciliation of the statutory federal income tax rate to the Company's effective tax rate:

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Change in uncertain tax positions ( 27.4 ) ( 1.5 ) 5.0

Loss inclusions of US foreign subsidiaries 2.1 0.9 —

Income/loss inclusions of U.S.

foreign subsidiaries ( 216.5 ) 2.1 0.9

Non-deductible executive compensation ( 9.2 ) ( 0.3 ) 5.9

Non-deductible acquisition related costs ( 15.0 ) ( 3.0 ) 5.9

Foreign exchange gain/loss 174.1 ( 0.2 ) —

Impairment loss ( 60.8 ) — 0.1

Return to provision adjustments 26.9 — —

Intercompany transactions — — 3.8

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Share-based compensation 45,153 72,128

Deferred interest — 34,475

Other 61,489 6,199

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Property, equipment and intangible assets ( 332,512 ) ( 452,658 )

Indefinite-lived intangibles ( 1,309 ) ( 867 )

Unrealized gain on investments ( 25,618 ) ( 29,554 )

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Safeguarding asset related to bitcoin held for other parties ( 257,503 ) ( 110,150 )

Cryptocurrency investment ( 29,711 ) —

Total deferred tax liabilities ( 705,944 ) ( 689,256 )

Net deferred tax assets (liabilities) $ ( 118,607 ) $ 74

Net deferred tax liabilities $ ( 26,298 ) $ ( 118,607 )

On October 31, 2023, the Company completed certain internal restructuring steps resulting in certain U.S.

domiciled Afterpay entities (collectively "Afterpay U.S.") integrating into the Block, Inc.

federal consolidated filing group (the "Company's U.S.

consolidated group").

The intention of the integration is to improve U.S.

tax compliance efficiencies and optimize funding opportunities for Afterpay U.S.

The Company recognized a one-time tax benefit of $ 29.1 million in the year related to the internal restructuring.

The integration may result in a change to the taxes owed by the Company's U.S.

consolidated group in future years.

This will be dependent on the income or loss generated by Afterpay U.S.

or if certain conditions are met that enables the utilization of the carried over tax attributes of Afterpay U.S., which have utilization restrictions within the U.S.

consolidated group post-integration.

Realization of deferred tax assets is dependent upon the generation of future taxable income, the timing and amount of which are uncertain.

The Company's deferred tax assets and liabilities are primarily related to U.S.

As of December 31, 2022, the Company has two separate U.S.

federal corporate income tax filing groups:

& Subsidiaries and Afterpay US, Inc.

In 2022, the Block Inc.

& Subsidiaries group generated a current tax provision resulting from the requirement to capitalize research and development expenses under Internal Revenue Code ("IRC") Section 174 starting in 2022 and a decline in stock-based compensation deductions.

& Subsidiaries has significant deferred tax assets in the form of net operating loss carryovers, tax credit carryovers, capitalized costs resulting from the IRC Section 174 capitalization requirement, and other tax deductible temporary differences.

Due to the history of tax losses generated by Block Inc.

& Subsidiaries, the Company believes it is not more likely than not that the deferred tax assets as of December 31, 2022 will be realized.

Accordingly, the Company retained a full valuation allowance on the deferred tax assets in Block Inc.

& Subsidiaries.

In 2022, Afterpay US Inc.

generated a tax loss.

Afterpay US Inc.

has significant deferred tax liabilities in relation to acquired intangible assets, which can be used as a source of future income to realize its deferred tax assets as of December 31, 2022.

Accordingly, the Company has not recognized a valuation allowance in Afterpay U.S.

In 2023, the Company's U.S.

consolidated group generated a current tax provision resulting from the requirement to capitalize research and development expenses under Internal Revenue Code ("IRC") Section 174 and a decline in stock-based compensation deductions.

The Company's U.S.

consolidated group has significant deferred tax assets in the form of net operating loss carryovers, tax credit carryovers, capitalized costs resulting from the IRC Section 174 capitalization requirement, and other tax deductible temporary differences.

Due to the history of tax losses generated by the Company's U.S.

consolidated group, the Company believes it is not more likely than not that the deferred tax assets as of December 31, 2023 will be realized.

Accordingly, the Company retained a full valuation allowance on the deferred tax assets of the Company's U.S.

consolidated group.

The Company also has a history of tax losses in certain foreign jurisdictions, which it believes are not more likely than not to be realized as of December 31, 2023.

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The amount of deferred tax assets considered realizable in future periods may change as management continues to reassess the underlying factors it uses in estimating future taxable income.

The valuation allowance increased by approximately $ 213.3 million and $ 649.1 million during the years ended December 31, 2022, and 2021, respectively.

The valuation allowance decreased by approximately $ 98.9 million and increased by $ 213.3 million during the years ended December 31, 2023, and 2022, respectively.

As of December 31, 2023, the Company had $ 2.4 billion of federal, $ 4.6 billion of state, and $ 1.6 billion of foreign net operating loss carryforwards.

In 2022, $ 1.7 billion of federal net operating losses from tax years 2009 through 2018 are estimated to be utilized.

The remaining carryforward amount from tax years 2018 through 2020 have no expiration date.

The state and foreign net operating loss carryforwards will begin to expire in 2023.

The remaining carryforward amounts have no expiration date.

The state operating losses will begin to expire in 2025 and the foreign net operating loss carryforwards will begin to expire in 2024.

As of December 31, 2023, the Company had $ 377.6 million of federal, $ 264.7 million of state, and $ 57.5 million of foreign research credit carryforwards.

In 2022, $ 30.6 million of federal research credits from tax years 2009 through 2017 are estimated to be utilized.

The remaining federal research credit carryforward for tax years 2017-2021 will begin to expire in 2037.

The remaining federal research credit carryforwards will begin to expire in 2038.

The state and foreign credit carryforwards have no expiration date.

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The Company is subject to taxation in the United States and various state and foreign jurisdictions.

The Company is currently under examination in California for tax years 2013, 2014, and 2016 and in Texas for tax years 2015-2019.

The Company is currently under examination in California for tax years 2013, 2014, and 2016 and in Texas for tax years 2015 to 2019.

The Company’s various tax years starting with 2009 to 2022 remain open in various taxing jurisdictions.

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NOTE 17 - STOCKHOLDERS' EQUITY

Convertible Preferred Stock

As of December 31, 2022, the Company is authorized to issue 100,000,000 shares of preferred stock, with a $ 0.0000001 par value.

No shares of preferred stock are outstanding as of December 31, 2022.

The Company has two classes of authorized common stock outstanding:

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The holders of Class A common stock and Class B common stock have no preemptive or other subscription rights and there are no redemption or sinking fund provisions with respect to such shares.

As of December 31, 2022, the Company was authorized to issue 1,000,000,000 shares of Class A common stock and 500,000,000 shares of Class B common stock, each with a par value of $ 0.0000001 per share.

As of December 31, 2022, there were 539,408,009 shares of Class A common stock and 60,651,533 shares of Class B common stock outstanding.

Following the Company's initial public offering in 2015, all new stock options and stock-based awards are granted in Class A common stock.

Additionally, holders of Class B common stock are able to convert such shares into Class A common stock.

In conjunction with the 2023 Convertible Notes offering, the Company sold the 2023 Warrants whereby the counterparties have the option to purchase a total of approximately 11.1 million shares of the Company’s Class A common stock at a price of $ 109.26 per share.

The 2022 Warrants expired evenly over a 60 trading day period starting on June 1, 2022 and ending on August 25, 2022.

During the year ended December 31, 2022, all 2022 Warrants were exercised on a net share settlement basis for 10.9 million shares.

The 2023 Warrants expire evenly over a 60 trading day period starting on August 15, 2023.

The 2023 Warrants expired evenly over a 60 trading day period starting on August 15, 2023 and ending on November 7, 2023.

None of the warrants were exercised as of December 31, 2023.

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Conversion of Convertible Notes and Exercise of Convertible Note Hedges

In connection with the conversion of certain of the 2022 Convertible Notes, the Company issued an aggregate 16.5 million shares of Class A common stock as of the maturity date on March 1, 2022, of which an immaterial number of shares were issued in the year ended December 31, 2022.

The Company also exercised all of the 2022 Convertible Note Hedges and received 15.0 million shares of Class A common stock from the counterparties to offset the shares issued, which is inclusive of 0.2 million shares that were received in the year ended December 31, 2022.

In connection with the conversion of the 2023 Convertible Notes, the Company has issued an aggregate 5.2 million shares of Class A common stock as of December 31, 2022, of which an immaterial number of shares were issued in the year ended December 31, 2022.

The Company also exercised a pro-rata portion of the 2023 Convertible Note Hedges and received 3.0 million shares of Class A common stock from the 2023 Note Hedge Counterparties to offset the shares issued as of December 31, 2022, which is inclusive of 1.0 million shares that were received in the year ended December 31, 2022.

In connection with the conversion of the 2023 Convertible Notes, the Company has issued an aggregate 5.2 million shares of Class A common stock as of December 31, 2023, of which no shares were issued in in the year ended December 31, 2023.

No shares were received in the year ended December 31, 2023.

Share Repurchase Program

In October 2023, the board of directors of the Company authorized the repurchase of up to $ 1 billion of the Company’s Class A common stock.

Repurchases may be made from time to time through open market purchases or through privately negotiated transactions subject to market conditions, applicable legal requirements and other relevant factors.

The repurchase program does not obligate the Company to acquire any particular amount of its Class A common stock and may be suspended at any time at the Company’s discretion.

The timing and number of shares repurchased will depend on a variety of factors, including the stock price, business and market conditions, corporate and regulatory requirements, alternative investment opportunities, acquisition opportunities, and other factors.

During the year ended December 31, 2023, we repurchased 2.5 million shares of our Class A common stock for an aggregate amount of $ 156.8 million.

As of December 31, 2023, $ 843.2 million remained available and authorized for repurchases.

The Company maintains two share-based employee compensation plans:

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Since November 17, 2015, no additional awards have been nor will be granted in the future under the 2009 Plan.

As of December 31, 2022, the total number of shares subject to stock options, RSAs, and RSUs outstanding under the 2009 Plan was 3,730,601 shares.

As of December 31, 2023, the total number of shares subject to stock options, RSAs, and RSUs outstanding under the 2009 Plan was 2 million shares.

Under the 2015 Plan, shares of the Company's Class A common stock are reserved for the issuance of incentive and nonstatutory stock options ("ISOs" and "NSOs", respectively), restricted stock awards ("RSAs"), restricted stock units ("RSUs"), performance shares, and stock bonuses to qualified employees, directors, and consultants.

The awards must be granted at a price per share not less than the fair market value at the date of grant.

Initially, 30,000,000 shares were reserved under the 2015 Plan and any shares subject to options or other similar awards granted under the 2009 Plan that expire, are forfeited, are repurchased by the Company or otherwise terminate unexercised will become available under the 2015 Plan.

The number of shares available for issuance under the 2015 Plan has been and will be increased on the first day of each fiscal year, in an amount equal to the least of (i) 40,000,000 shares, (ii) 5 % of the outstanding shares on the last day of the immediately preceding fiscal year, or (iii) such number of shares determined by the administrator of the Plan.

Initially, 30 million shares were reserved under the 2015 Plan and any shares subject to options or other similar awards granted under the 2009 Plan that expire, are forfeited, are repurchased by the Company or otherwise terminate unexercised will become available under the 2015 Plan.

The number of shares available for issuance under the 2015 Plan has been and will be increased on the first day of each fiscal year, in an amount equal to the least of (i) 40 million shares, (ii) 5 % of the outstanding shares on the last day of the immediately preceding fiscal year, or (iii) such number of shares determined by the administrator of the Plan.

The administrator consists of the Board of Directors who then delegates the responsibilities to the Compensation Committee.

As of December 31, 2022, the total number of shares subject to stock options, RSAs, and RSUs outstanding under the 2015 Plan was 31,308,210 shares, and 117,238,742 shares were available for future issuance.

As of December 31, 2023, the total number of shares subject to stock options, RSAs, and RSUs outstanding under the 2015 Plan was 43 million shares, and 121 million shares were available for future issuance.

A summary of stock option activity for the year ended December 31, 2023 is as follows (in thousands, except share and per share data):

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Aggregate intrinsic value represents the difference between the Company’s estimated fair value of its common stock and the exercise price of outstanding, in-the-money options.

Aggregate intrinsic value for stock options exercised for the years ended December 31, 2022, 2021, and 2020 was $ 0.2 billion, $ 1.1 billion, and $ 1.2 billion, respectively.

Aggregate intrinsic value for stock options exercised for the years ended December 31, 2023, 2022, and 2021 was $ 96.1 million, $ 211.0 million, and $ 1.1 billion, respectively.

The total weighted-average grant-date fair value of options granted was $ 39.13 , $ 73.31 , and $ 131.57 per share for the years ended December 31, 2023, 2022, and 2021, respectively.

Restricted Stock Activity

The Company issues RSAs and RSUs under the 2015 Plan, which typically vest over a term of four years .

Activity related to RSAs and RSUs during the year ended December 31, 2023 is set forth below:

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Unvested, end of the period 40,099 $ 74.76

The total fair value of shares vested was $ 724.2 million, $ 1.6 billion, and $ 817.5 million in the years ended December 31, 2022, 2021, and 2020, respectively.

As of December 31, 2023, all remaining RSAs were vested and there were no RSAs outstanding.

The total fair value of shares vested was $ 873.0 million, $ 724.2 million, and $ 1.6 billion in the years ended December 31, 2023, 2022, and 2021, respectively.

Employee Stock Purchase Plan

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Employees are able to purchase shares at 85 % of the lower of the fair market value of the Company’s common stock on the first trading day of the offering period or the last trading day of the purchase period.

The number of shares available for sale under the ESPP will be increased annually on the first day of each fiscal year, equal to the least of (i) 8,400,000 shares, (ii) 1 % of the outstanding shares of the Company’s common stock as of the last day of the immediately preceding fiscal year, or (iii) such other amount as determined by the administrator.

As of December 31, 2022, 7,153,108 shares had been purchased under the ESPP and 25,703,532 shares were available for future issuance under the ESPP.

The number of shares available for sale under the ESPP will be increased annually on the first day of each fiscal year, equal to the least of (i) 8.4 million shares, (ii) 1 % of the outstanding shares of the Company’s common stock as of the last day of the immediately preceding fiscal year, or (iii) such other amount as determined by the administrator.

As of December 31, 2023, 9 million shares had been purchased under the ESPP and 30 million shares were available for future issuance under the ESPP.

Share-Based Compensation

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The Company recorded $ 63.3 million, $ 61.4 million, and $ 34.9 million of share-based compensation expense related to the Company's 2015 Employee Stock Purchase Plan during the years ended December 31, 2023, 2022 and 2021, respectively.

The total share-based compensation expense for the year ended December 31, 2022 also includes a $ 66.3 million one-time charge related to the acceleration of various share-based arrangements associated with the acquisition of Afterpay.

The total share-based compensation expense for the year ended December 31, 2022 includes a $ 66.3 million one-time charge related to the acceleration of various share-based arrangements associated with the acquisition of Afterpay.

The Company capitalized $ 30.9 million, $ 20.7 million, and $ 15.1 million of share-based compensation expense related to capitalized software during the years ended December 31, 2023, 2022, and 2021, respectively.

As of December 31, 2022, there was $ 2.7 billion of total unrecognized compensation cost related to outstanding stock options and restricted stock awards that are expected to be recognized over a weighted-average period of 2.9 years.

As of December 31, 2023, there was $ 2.9 billion of total unrecognized compensation cost related to outstanding stock options and restricted stock awards that are expected to be recognized over a weighted-average period of three years .

NOTE 18 - NET INCOME (LOSS) PER SHARE

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On January 2, 2023, the Company notified the lessor of its intention to exercise the early termination option with respect to approximately 48 % of the leased space, effective December 31, 2023.

As a result, the Company will pay a termination penalty of approximately $ 5.2 million to exercise the option.

As a result, the Company paid a termination penalty of approximately $ 5.2 million to exercise the option.

NOTE 20 - COMMITMENTS AND CONTINGENCIES

26 unchanged sentences

Amount representing interest 48,177

Leases executed but not yet commenced 8,024

Lease incentives and transfer to held for sale 1,996

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The Company is currently subject to, and may in the future be involved in, various litigation matters, legal claims, investigations, and regulatory proceedings.

The Company received Civil Investigative Demands (“CIDs”) from the Consumer Financial Protection Bureau (“CFPB”), as well as from Attorneys General from multiple states, seeking the production of information related to, among other things, Cash App’s handling of customer complaints and disputes.

The Company is cooperating with the CFPB and the state Attorneys General in connection with these CIDs.

The Company received Civil Investigative Demands (“CIDs”) from the Consumer Financial Protection Bureau (“CFPB”), as well as subpoenas from Attorneys General from multiple states, seeking the production of information related to, among other things, Cash App’s handling of customer complaints and disputes.

In December 2023, the CFPB notified the Company, pursuant to the CFPB’s discretionary Notice and Opportunity to Respond and Advise (“NORA”) process, that the CFPB’s Office of Enforcement is considering recommending that the CFPB take legal action against the Company related to the topics addressed in its CIDs.

The purpose of a NORA is to provide a party being investigated an opportunity to present its position to the CFPB before an enforcement action may be recommended or commenced.

The Company is unable to predict the likely outcome of this matter and cannot provide any assurance that the CFPB will not ultimately take legal action against the Company or that the outcome of any such action, if brought, will not have a material adverse effect on the Company.

The Company is cooperating with the CFPB and the state Attorneys General in connection with these inquiries.

The Company has accrued a liability for an estimated amount in connection with these CIDs in accordance with ASC 450-20, Contingencies:

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The eventual outcome of these matters may differ materially from the estimates the Company has currently accrued in the financial statements.

On December 16, 2021, H&R Block, Inc.

and HRB Innovations, Inc.

(collectively, “HRB”) filed a complaint for trademark infringement against the Company in the United States District Court for the Western District of Missouri.

HRB alleges that the Company’s rebranding to Block, Inc.

and use of a green square logo in connection with the Company’s Cash App Taxes product infringe HRB’s trademarks and are likely to cause consumer confusion.

HRB demands that the Company stop using the Block name and associated branding, and further demands that the Company stop using the green square Cash App logo.

A preliminary injunction granted by the trial court on April 28, 2022 preventing the Company from using its Block, Inc.

name in connection with Cash App Taxes was stayed by the appellate court on June 8, 2022 for the duration of the Company's appeal of the preliminary injunction.

On January 24, 2023, the Eighth Circuit reversed and vacated the injunction granted by the trial court.

On February 21, 2023, HRB filed a petition for rehearing en banc, which is now under consideration by the Eighth Circuit.

The Company continues to believe this lawsuit is without merit and intends to vigorously defend itself in this matter.

In addition, the Company is subject to various legal matters, investigations, claims, and disputes arising in the ordinary course of business.

The Company cannot at this time fairly estimate a reasonable range of exposure, if any, of the potential liability with respect to these matters.

Although occasional adverse decisions or settlements may occur, the Company does not believe that the final disposition of any of these other matters will have a material adverse effect on its results of operations, financial position, or liquidity.

The Company cannot give any assurance regarding the ultimate outcome of these matters, and their resolution could be material to the Company's operating results for any particular period.

In addition, the Company is subject to various legal matters, investigations, subpoenas, inquiries or audits, claims, lawsuits and disputes, including with regulatory bodies and governmental agencies.

For example, the Company received inquiries from the SEC and Department of Justice shortly after the publication of a short seller report in March 2023.

The Company believes the inquiries primarily relate to the allegations raised in the short seller report.

The Company cannot at this time fairly estimate a reasonable range of exposure, if any, of the potential liability, if any, with respect to any of these matters.

Although the Company may be subject to an adverse decision or settlement, it does not believe that the final disposition of any of these other matters will have a material adverse effect on its results of operations, financial position, or liquidity.

However, the Company cannot give any assurance regarding the ultimate outcome of any of these matters, and their resolution could be material to the Company's operating results.

Other Contingencies

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Accordingly, the Company has two reportable segments, Square and Cash App.

The financial results of the Company's BNPL platform have been allocated equally to the Cash App and Square segments as management has concluded that the BNPL platform will contribute equally to both the Cash App and Square platforms.

Further, Afterpay does not have a segment manager who reports to the CODM.

Rather, the operations of Afterpay are managed by the segment managers of Cash App and Square, who are responsible for allocating resources and evaluating the performance of Afterpay.

Accordingly, the segment results below include the financial results of the BNPL platform solely within the Cash App segment.

Products and services that are not assigned to a specific reportable segment, including but not limited to TIDAL and other emerging ecosystems, are aggregated and presented within a general corporate and other category.

Square and Cash App are defined as follows:

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Cash App also includes Cash App Card which is linked to customer stored balances that customers can use to pay for purchases or withdraw funds from an ATM.

Cash App also includes the BNPL platform.

• Square includes managed payment services, software solutions, hardware, and financial services offered to sellers, excluding those that involve Cash App.

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Bitcoin revenue 9,498,302 — — 9,498,302

Segment revenue (ii)

Segment revenue

14,681,686 7,033,384 200,553 21,915,623

Segment gross profit (iii, iv)

Segment gross profit (ii)

$ 4,323,463 $ 3,128,654 $ 52,769 $ 7,504,886

6 unchanged sentences

Segment revenue 11,031,804 6,294,137 205,646 17,531,587

Segment gross profit (iv)

Segment gross profit (ii)

$ 3,245,044 $ 2,706,901 $ 39,947 $ 5,991,892

6 unchanged sentences

Segment revenue 12,315,499 5,193,348 152,356 17,661,203

Segment gross profit (iv)

Segment gross profit (ii)

$ 2,070,847 $ 2,316,671 $ 32,305 $ 4,419,823

(i) Corporate and other represents results related to products and services that are not assigned to a specific reportable segment, and intersegment eliminations.

(ii) The revenue for both Cash App and Square for the year ended December 31, 2022 included $ 405.7 million each, from Afterpay post-acquisition results following the closing of the acquisition.

(iii) The gross profit for both Cash App and Square for the year ended December 31, 2022 included $ 294.1 million each, from Afterpay post-acquisition results following the closing of the acquisition.

(iv) Segment gross profit for Cash App for the years ended December 31, 2022, 2021, and 2020 included $ 32.1 million, $ 10.5 million, and $ 5.4 million of amortization of acquired technology assets expense, respectively.

(ii) Segment gross profit for Cash App for the years ended December 31, 2023, 2022, and 2021 included $ 56.1 million, $ 53.9 million, and $ 10.5 million of amortization of acquired technology assets expense, respectively.

Segment gross profit for Square for the years ended December 31, 2023, 2022, and 2021 included $ 10.6 million, $ 10.5 million, and $ 8.3 million of amortization of acquired technology assets expense, respectively.

10 unchanged sentences

Amortization of customer and other intangible assets 174,044 138,758 15,747

Interest expense, net 36,228 33,124 56,943

Other income (loss), net ( 95,443 ) ( 29,474 ) ( 291,725 )

Interest expense (income), net ( 47,221 ) 36,228 33,124

Other income, net ( 202,475 ) ( 95,443 ) ( 29,474 )

Income (loss) before applicable income taxes $ ( 29,143 ) $ ( 565,317 ) $ 157,462

32 unchanged sentences

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 8. Financial Statements and Supplementary Data