What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-02-24 compared with 2024-02-22 · 340 added, 368 removed, 1402 unchanged (34% of the section changed)

16 unchanged sentences

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 24, 2025 expressed an unqualified opinion thereon.

Adoption of SAB 122

As discussed in Note 1 to the consolidated financial statements, the Company changed its method of accounting for obligations to safeguard crypto-assets held in custody on behalf of its users in 2024 due to the adoption of SAB 122.

Basis for Opinion

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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

Description of the Matter The Company’s consumer receivables and the associated allowance for credit losses were $2.6 billion and $185.3 million as of December 31, 2023, respectively.

The provision for credit losses was $261.3 million for the year ended December 31, 2023.

As discussed in Notes 1 and 6 to the consolidated financial statements, the Company has exposure to expected credit losses from consumer receivables, for which an allowance for credit losses is recorded under ASU 2016-13, Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments.

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.

Bitcoin Investment and Bitcoin Held for Other Parties

Description of the Matter As described in Notes 1, 12 and 13 to the consolidated financial statements, the Company holds bitcoin for long term investment purposes ("bitcoin investment").

The Company remeasures its bitcoin investment at fair value at the end of each reporting period and as of December 31, 2024, the fair value of the Company’s bitcoin investment was $792.3 million.

The Company also allows its Cash App customers to store bitcoin in the Company’s digital wallets.

No amounts are recognized on the consolidated balance sheets for bitcoin held for other parties.

In the event such bitcoin was lost, the Company would be required to evaluate if a liability should be recorded under ASC 450, Contingencies.

The Company has concluded that it has no probable liability for its custodial obligations to recognize as of December 31, 2024.

Bitcoin is generally accessible only by the possessor of the unique cryptographic (private) key relating to the public address on which the bitcoin is held.

To the extent any of the private keys are lost or destroyed, the Company will be unable to access the bitcoin it controls on behalf of the Company and other parties, which can result in a loss in the consolidated financial statements.

We identified the evaluation of audit evidence pertaining to the existence of bitcoin and whether the Company controls the bitcoin as a critical audit matter.

Subjective auditor judgment was involved in determining the nature and extent of audit effort required to obtain sufficient appropriate audit evidence to address the risks of material misstatement related to the Company’s ability to access and control the bitcoin investment and bitcoin held for other parties.

The nature and extent of audit effort required to address the matter includes significant involvement of more experienced engagement team members and assistance from subject matter experts.

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 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.

In addition, we evaluated and tested management’s conclusion for the need for a qualitative adjustment in the Company’s expected credit loss methodology including the examination of current macroeconomic conditions such as changes in unemployment and GDP.

We also reviewed subsequent events, which included actual collections on current and aged receivables as of December 31, 2023, to consider whether they corroborated the Company’s conclusion related to the overall allowance for credit losses related to consumer receivables.

Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls related to the ability to access and control the private keys to its wallets as well as management’s controls related to reconciling its internal books and records to the public bitcoin blockchain.

Our audit procedures included utilizing our proprietary audit tool to independently obtain evidence from the public bitcoin blockchain to test the existence of bitcoin in the Company’s custody on a sample basis, testing management’s reconciliation of its internal books and records to the public bitcoin blockchain, and testing that management has control of the private keys required to access bitcoin in its wallets through observing the movement of a sample of bitcoin from the Company’s wallets.

/s/ Ernst & Young LLP

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(the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity and cash flows for each of the three years ended December 31, 2023, and the related notes and our report dated February 22, 2024 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2024 and 2023, 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, 2024, and the related notes and our report dated February 24, 2025 expressed an unqualified opinion thereon.

Basis for Opinion

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Loans held for sale 1,111,107 775,424

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

Other current assets 2,541,704 2,353,488

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Operating lease right-of-use assets 219,954 244,701

Deferred tax assets (Note 15)

1,800,994 9,397

Other non-current assets 1,239,548 730,089

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Customers payable $ 5,837,152 $ 6,795,340

Settlements payable 8,469 462,505

Accrued expenses and other current liabilities 1,525,149 1,334,669

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Warehouse funding facilities, current 185,000 753,035

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

Total current liabilities 8,546,798 8,883,044

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Accumulated other comprehensive loss ( 1,001,065 ) ( 378,307 )

Accumulated deficit ( 528,429 ) ( 568,712 )

Retained earnings (accumulated deficit) 2,368,618 ( 528,429 )

Total stockholders’ equity attributable to common stockholders 21,267,932 18,695,256

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Total net revenue 24,121,053 21,915,623 17,531,587

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

Cost of revenue:

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Interest expense (income), net 9,302 ( 47,221 ) 36,228

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

Remeasurement gain on bitcoin investment ( 420,918 ) ( 207,084 ) —

Other expense (income), net ( 53,211 ) 4,609 ( 95,443 )

Income (loss) before income tax 1,357,154 ( 29,143 ) ( 565,317 )

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

Benefit from income taxes (i)

( 1,509,343 ) ( 8,019 ) ( 12,312 )

Net income (loss) 2,866,497 ( 21,124 ) ( 553,005 )

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Diluted 636,390 614,024 578,949

(i) Includes one-time benefits from income taxes of $ 1.9 billion in fiscal 2024 related to both the release of the Company's valuation allowance associated with certain federal and state deferred tax assets as well as the recognition of deferred tax assets as part of internal legal entity restructuring efforts.

Refer to Note 15, Income Taxes within the Notes to the Consolidated Financial Statements for further details.

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

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Net foreign currency translation adjustments ( 628,507 ) 104,728 ( 471,166 )

Net unrealized gain (loss) on marketable debt securities 40,055 ( 35,489 ) ( 15,096 )

Net unrealized gain (loss) on marketable debt securities, net of tax 5,749 40,055 ( 35,489 )

Total comprehensive income (loss) $ 2,243,739 $ 123,659 $ ( 1,059,660 )

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(In thousands, except for number of shares)

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

Cumulative adjustment due to adoption of ASU 2020-06 — ( 502,707 ) — 102,974 — ( 399,733 )

Net income (loss) — — — 166,284 ( 7,458 ) 158,826

Shares issued in connection with employee stock plans 11,976 126,829 — — — 126,829

Issuance of common stock in connection with business combination 118 28,735 — — — 28,735

Change in other comprehensive loss — — ( 39,763 ) — — ( 39,763 )

Share-based compensation — 623,067 — — — 623,067

Tax withholding related to vesting of restricted stock units ( 1,403 ) ( 323,012 ) — — — ( 323,012 )

Issuance of common stock in conjunction with the conversion of convertible notes 5,515 408,879 — — — 408,879

Exercise of bond hedges in conjunction with the conversion of convertible notes ( 7,447 ) — — — — —

Noncontrolling interests in connection with business combination — — — — 48,192 48,192

Class A and B common stock Common stock and additional paid-in Accumulated other comprehensive Retained earnings (accumulated Noncontrolling Total stockholders’

Shares capital loss deficit) interests equity

Balance at December 31, 2021 464,944 $ 3,317,255 $ ( 16,435 ) $ ( 27,965 ) $ 40,734 $ 3,313,589

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

Net income (loss) — — — 2,897,047 ( 30,550 ) 2,866,497

Shares issued in connection with employee stock plans 20,799 154,779 — — — 154,779

Repurchases of common stock ( 16,944 ) ( 1,170,339 ) — — — ( 1,170,339 )

Change in other comprehensive loss — — ( 622,758 ) — — ( 622,758 )

Share-based compensation — 1,313,947 — — — 1,313,947

Balance at December 31, 2024 619,676 $ 19,900,379 $ ( 1,001,065 ) $ 2,368,618 $ ( 32,970 ) $ 21,234,962

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

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Loss (gain) on revaluation of equity investments ( 32,245 ) 16,523 ( 73,457 )

Bitcoin remeasurement ( 207,084 ) — —

Remeasurement gain on bitcoin investment ( 420,918 ) ( 207,084 ) —

Transaction, loan, and consumer receivable losses 794,221 660,663 550,683

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Change in deferred income taxes ( 1,665,812 ) ( 85,879 ) ( 69,593 )

Goodwill impairment 132,313 — —

Goodwill and intangible asset impairment 133,853 132,313 —

Changes in operating assets and liabilities:

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Proceeds from sale of marketable debt securities 446,076 339,095 449,723

Purchases of marketable debt securities from customer funds — — ( 488,851 )

Proceeds from maturities of marketable debt securities from customer funds — — 73,000

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Purchases of property and equipment ( 153,947 ) ( 151,151 ) ( 170,815 )

Purchases of bitcoin investments — — ( 170,000 )

Purchases of other investments ( 53,934 ) ( 38,822 ) ( 56,712 )

Proceeds from sale of equity investments — — 420,644

Business combinations, net of cash acquired — — 539,453

Net cash provided by (used in) investing activities 683,201 1,225,696 ( 1,310,879 )

Net cash provided by investing activities 649,952 683,201 1,225,696

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

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Cash flows from financing activities:

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

Proceeds from issuance of senior notes 2,000,000 — —

Payments of debt issuance costs from issuance of senior notes ( 26,619 ) — —

Repayments of Paycheck Protection Program Liquidity Facility advances — ( 16,840 ) ( 480,694 )

Payments to redeem convertible notes — ( 461,761 ) ( 1,071,788 )

Proceeds from PPP Liquidity Facility advances — — 681,539

Repayments of PPP Liquidity Facility advances ( 16,840 ) ( 480,694 ) ( 648,100 )

Proceeds from warehouse facilities borrowings 1,255,745 1,387,662 1,620,805

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and grow sales.

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”), 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.

Block was founded in 2009 and has offices globally.

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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 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.

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, valuation of goodwill and acquired intangible assets, determination of goodwill and intangible asset impairment charges, determination of allowance for loan loss reserves for loans held for investment, determination of allowance for credit losses for consumer receivables, 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.

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For the years ended December 31, 2024, 2023, and 2022, the Company had no customer that accounted for greater than 10% of total net revenue.

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, 2024, the Compa ny had three third-party payment processors that represented approximately 42 %, 17 % and 13 % of settlements receivable.

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

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

Certain of the Company's products are reliant on third-party service providers such as partner banks, card issuers, and payment service providers.

The Company's relationships with third-party service providers may result in operational concentration risks for some of these products.

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.

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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 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.

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, Cash App Borrow, the Company's BNPL platform, 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 for a percentage-based fee of the amounts deposited.

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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.

Interest earned on customer funds related to Cash App Card was $ 185.2 million and $ 142.2 million for the years ended December 31, 2024 and December 31, 2023, respectively.

Interest earned on customer funds was immaterial for the year ended December 31, 2022.

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

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For the loans which are not immediately sold to third-party investors or for which the Company has the intent and ability to hold through maturity, interest and fees earned are recognized as revenue using the effective interest method.

Cash App Borrow, the Company’s first credit product for consumers, allows customers to access short-term loans for a small fee.

Cash App Borrow, the first credit product for Cash App customers, allows customers to access short-term loans for a small fee.

The loans are repaid at the end of the loan term and customers may elect to prepay all or a part of the outstanding balance.

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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 sells certain consumer receivables to a third party investor and records the gain or loss on sale as revenue within subscription and services-based revenue.

Additionally, the Company is retained to service the consumer receivables and earns a servicing fee, which is recorded within subscription and services-based revenue as the services are delivered.

Through the BNPL platform, the Company also has an ads and affiliate program for its merchants.

For affiliate relationships, the Company receives a commission when a consumer completes a purchase from within the BNPL platform, which is recognized as a fee earned in connection with the origination of a consumer receivable and recognized as revenue using the effective interest method.

The Company may also receive digital advertising revenue on clicks, typically earned on a cost per click (“CPC”) basis, to merchant sites from the BNPL platform, in addition to flat fees for premium ad placements.

Revenue from CPC arrangements are generally recognized in the period the user click is delivered.

This revenue is included within subscription and services-based revenue on the consolidated statement of operations.

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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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 recorded $ 26.8 million and $ 104.0 million of severance and other related expenses for the years ended December 31, 2024 and 2023, respectively, as part of product development, sales and marketing, and general and administrative within the Company's operating expenses.

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.

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Share-based Compensation

Share-based compensation expense relates to stock options, restricted stock awards ("RSAs"), restricted stock units ("RSUs"), and purchases under the Company’s 2015 Employee Stock Purchase Plan ("ESPP"), which is measured based on the grant-date fair value.

The fair value of RSAs and RSUs is determined by the closing price of the Company’s common stock on each grant date.

Share-based compensation expense relates to stock options, restricted stock units ("RSUs"), and purchases under the Company’s 2015 Employee Stock Purchase Plan ("ESPP"), which is measured based on the grant-date fair value.

The fair value of RSUs is determined by the closing price of the Company’s common stock on each grant date.

The fair value of stock options and ESPP shares granted to employees is estimated on the date of grant using the Black-Scholes-Merton option valuation model.

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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 .

RSUs 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 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.

Interest income consists of interest income from the Company's investment in marketable debt securities and was $ 156.2 million and $ 126.6 million for the year ended December 31, 2024 and 2023, respectively.

Interest income was immaterial for the year ended December 31, 2022.

Interest expense consists primarily of the Company's long-term debt and was $ 165.5 million for the year ended December 31, 2024.

Interest expense was immaterial for the years ended December 31, 2023 and December 31, 2022.

Foreign Currency

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The Company's short-term restricted cash was $ 902.5 million and $ 770.4 million as of December 31, 2024 and 2023, respectively.

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

The majority of the balance as of December 31, 2024 was 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 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.

Loan products consist primarily of flex loans, term loans and Cash App 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.

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The Company recognizes a charge within transaction, loan, and consumer receivable losses on the consolidated statement of operations whenever the amortized cost of a loan exceeds its fair value, with such charges being reversed for subsequent increases in fair value, but only to the extent that such reversals do not result in the amortized cost of a loan exceeding its fair value.

Loans are charged-off in accordance with our charge-off policies.

Square Loans that are 120 days or more past due, and Cash Borrow loans that are 90 days or more past due, are generally considered to be uncollectible and are charged off.

Past due status is based on the contractual terms of the loans.

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.

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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.

Settlements Receivable

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

Settlements receivable 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.

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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.

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

For the year ended December 31, 2024, the Company has purchased an approximate cumulative $ 31.5 million in bitcoin for investment purposes.

For the years ended December 31, 2024 and 2023, the Company recognized gains of $ 420.9 million and $ 207.1 million 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.

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

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

121 ("SAB 121"), in June 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.

In January 2025, the SEC staff released Staff Accounting Bulletin No.

122 (“SAB 122”), which rescinded SAB 121.

The Company early adopted SAB 122 as of December 31, 2024, resulting in the Company derecognizing the previously recognized safeguarding obligation liability related to bitcoin held for other parties and the corresponding safeguarding asset related to bitcoin held for other parties.

Refer to the Recent Accounting Pronouncements section below for further information.

Property and Equipment

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Capitalized software 18 months

Computer and data center equipment Three years

Computer equipment, data center equipment, and computer software

Furniture and fixtures Seven years

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If the evaluation indicates that the carrying amount of the ROU assets may not be recoverable, any potential impairment is measured based upon the fair value of the related ROU asset or asset group as determined by appropriate valuation techniques.

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

When lease agreements provide allowances for leasehold improvements, the Company assesses whether it is the owner of the leasehold improvements for accounting purposes.

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Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments would be recorded on the consolidated statements of operations.

Long-Lived Assets, including Goodwill and Acquired Intangible Assets

Goodwill and Long-Lived Assets, including Acquired Intangible Assets

The Company evaluates the recoverability of property and equipment and finite-lived intangible assets for impairment whenever events or circumstances indicate that the carrying amounts of such assets may not be recoverable.

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Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values, and third–party independent appraisals, as considered necessary.

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

For the periods presented, the Company recorded no material impairment charges related to intangible assets.

The Company performs a goodwill impairment test annually on December 31 and more frequently if events and circumstances indicate that the asset might be impaired.

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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.

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.

The Company's CODM is the Block Head and Chairperson.

The Company has two reportable segments, Square and Cash App.

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.

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The primary financial measures used by the CODM to evaluate performance and allocate resources are revenue and gross profit.

The CODM uses segment gross profit for each segment during the annual budgeting and forecasting process.

Further, the CODM uses gross profit as the metric to guide the business trajectory and to consider the overall gross profit growth by segment on a quarterly basis, when making decisions about the allocation of operating and capital resources to each segment.

The CODM does not evaluate performance or allocate resources based on segment asset data, and therefore such information is not included.

Recent Accounting Pronouncements

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):

Fair Value Hedging—Portfolio Layer Method ("ASU 2022-01") related to the portfolio layer method of hedge accounting.

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 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.

2022-02, Financial Instruments—Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures (“ASU 2022-02”) related to troubled debt restructuring and vintage disclosures for financing receivables.

The amendments eliminate recognition and measurement guidance for troubled debt restructurings for creditors and requires entities to evaluate if the modification represents a new loan or a continuation of the existing loan.

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 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.

2022-03, Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions ("ASU 2022-03") related to equity securities.

The amendments clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value.

An entity is prohibited from recognizing a contractual sale restriction as a separate unit of account.

ASU 2022-03 also requires specific disclosures related to equity securities that are subject to contractual restrictions, including the fair value of such equity securities, the nature and remaining duration of the corresponding restrictions, and any circumstances that could cause a lapse in the restrictions.

The amendments are effective for fiscal years beginning after December 15, 2023, 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.

In June 2022, the Company adopted Staff Accounting Bulletin No.

121 (“SAB 121”), which required accounting for obligations to safeguard crypto-assets an entity holds for users of its crypto platform.

The guidance required entities that hold crypto-assets on behalf of platform users to recognize a liability, and corresponding asset, to reflect the entity’s obligation to safeguard the crypto-assets held for its platform users and measure at the fair value at each reporting date.

Subsequently, in January 2025, the SEC staff released Staff Accounting Bulletin No.

122 (“SAB 122”), which rescinded SAB 121.

SAB 122 allows entities to apply existing accounting principles to determine the appropriate accounting treatment for obligations related to the safeguarding of crypto-assets, considering the risks and uncertainties associated with those obligations.

Existing requirements to provide disclosures that allow investors to understand an entity’s obligation to safeguard crypto-assets held for others continue to apply.

The Company early adopted SAB 122 as of December 31, 2024 and applied the guidance retrospectively, resulting in the reversal of $ 1.0 billion of the Company's safeguarding liability and corresponding asset as of December 31, 2023.

The adoption had no impact on previously reported consolidated statements of operations, statements of comprehensive income (loss), statements of stockholders' equity, or statements of cash flows.

In November 2023, the FASB issued ASU No.

2 unchanged sentences

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.

The Company adopted this guidance effective for the annual reporting period beginning January 1, 2024, and has applied the guidance retrospectively.

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

Refer to Note 20, Segment and Geographical Information for further details .

Recently Issued Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU No.

4 unchanged sentences

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.

In March 2024, the SEC adopted rules that require registrants to provide climate-related information in their registration statements and annual reports, such as disclosure of material climate-related risks, Board of Directors’ oversight and risk management activities, material greenhouse gas emissions, and material climate-related targets and goals.

The rules will also require registrants to quantify certain effects of severe weather events and other natural conditions in their audited financial statements.

On April 4, 2024, the SEC voluntarily stayed the implementation of the rules pending the judicial review of challenges to the rules in the Eighth Circuit Court of Appeals.

As proposed, the new rules would have been effective for fiscal years beginning in 2025, except for the greenhouse gas emissions disclosures, which would have been effective for fiscal years beginning in 2026.

The Company is currently monitoring the development of whether and if these rules will become effective.

In November 2024, the FASB issued ASU No.

2024-03, Disaggregation of Income Statement Expenses ("ASU 2024-03"), and in January 2025, the FASB issued ASU No.

2025-01, Clarifying the Effective Date ("ASU 2025-01").

The amendments are intended to enhance disclosures regarding an entity’s costs and expenses by requiring additional disaggregated information disclosures about certain income statement expense line items.

The amendments, as clarified by ASU 2025-01, are effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027.

Early adoption is permitted.

The Company is evaluating the effect of adopting the new disclosure requirements.

NOTE 2 - REVENUE

11 unchanged sentences

Total net revenue $ 24,121,053 $ 21,915,623 $ 17,531,587

(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.

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

NOTE 3 - INVESTMENTS IN DEBT SECURITIES

8 unchanged sentences

government securities 206,340 449 ( 4 ) 206,785

Foreign government securities 1,000 — ( 19 ) 981

Total $ 402,814 $ 713 $ ( 101 ) $ 403,426

Long-term debt securities:

agency securities $ 49,017 $ 23 $ ( 10 ) $ 49,030

Corporate bonds 195,035 693 ( 384 ) 195,344

14 unchanged sentences

Long-term debt securities:

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

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

1 unchanged sentence

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

Foreign government securities 1,000 — ( 58 ) 942

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

7 unchanged sentences

Corporate bonds 50,905 ( 93 ) 1,995 ( 3 ) 52,900 ( 96 )

Municipal securities — — 9,165 ( 231 ) 9,165 ( 231 )

government securities — — 3,994 ( 4 ) 3,994 ( 4 )

Foreign government securities — — 981 ( 19 ) 981 ( 19 )

Total $ 69,859 $ ( 94 ) $ 5,989 $ ( 7 ) $ 75,848 $ ( 101 )

Long-term debt securities:

agency securities $ 9,990 $ ( 10 ) $ — $ — $ 9,990 $ ( 10 )

Corporate bonds 80,550 ( 384 ) — — 80,550 ( 384 )

13 unchanged sentences

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 )

1 unchanged sentence

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 )

15 unchanged sentences

Total customer funds $ 4,182,872 $ 3,170,430

(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.

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

The Company classifies the amounts due from the counterparty as cash equivalents due to their short term nature.

4 unchanged sentences

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.

The Company measures its safeguarding obligation liability related to bitcoin held for other parties at the fair value of the bitcoin that the Company holds for other parties and classifies the liability within Level 2 because the Company uses observable market prices of the underlying bitcoin as an input for the valuation.

The Company also classifies its safeguarding asset related to bitcoin held for other parties within Level 2, unless the asset's carrying amount is adjusted to reflect any actual or potential safeguarding loss events, in which case it would be classified within Level 3.

The Company was not aware of any actual or possible safeguarding loss events as of December 31, 2023 or December 31, 2022.

The Company’s assets and liabilities that are measured at fair value on a recurring basis were classified as follows (in thousands):

3 unchanged sentences

Money market funds $ 857,196 $ — $ — $ 960,705 $ — $ —

agency securities — — — — 7,923 —

government securities 26,951 — — 29,788 — —

7 unchanged sentences

Short-term debt securities:

agency securities — 67,515 — — 94,441 —

government securities 206,785 — — 539,998 — —

Corporate bonds — 160,390 — — 215,227 —

agency securities — 34,468 — — 67,515 —

Commercial paper — 333 — — 15,159 —

1 unchanged sentence

Certificates of deposit — 1,051 — — 3,856 —

government securities 539,998 — — 571,637 —

Foreign government securities — — — — 981 —

Long-term debt securities:

agency securities — — — — 70,315 —

government securities 223,258 — — 153,387 — —

Corporate bonds — 195,344 — — 95,328 —

agency securities — 49,030 — — — —

Municipal securities — 4,345 — — 2,412 —

government securities 153,387 — — 255,692 — —

Foreign government securities — — — — 942 —

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

Bitcoin investment (i)

792,282 — — 339,898 — —

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

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

Investment in marketable equity securities 5,407 — — 8,267 — —

Total assets (liabilities) measured at fair value $ 3,419,298 $ 445,869 $ — $ 3,356,213 $ 415,335 $ —

1 unchanged sentence

Refer to Note 1, Description of Business and Summary of Significant Accounting Policies and Note 13, 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.

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

The carrying amounts of the Company's warehouse funding facilities approximate their fair values.

5 unchanged sentences

2031 Senior Notes 990,971 873,868 989,567 879,913

2027 Convertible Notes 569,865 468,475 568,535 433,082

2032 Senior Notes 1,975,026 1,999,220 — —

2025 Convertible Notes 999,497 991,941 996,437 979,776

23 unchanged sentences

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

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.

As of December 31, 2024, the amortized cost of Pass rated consumer receivables was $ 2.6 billion and the amount of Classified consumer receivables was $ 110.2 million.

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

6 unchanged sentences

The amount listed as 1 - 60 days past due in the above table includes $ 266.7 million and $ 365.4 million of cash in transit as of December 31, 2024 and December 31, 2023, 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.

4 unchanged sentences

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

Year Ended December 31, 2023 From Acquisition on

January 31, 2022 to

December 31, 2022

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

$ 151,290 $ 115,552

Year Ended December 31,

Allowance for credit losses, beginning of the period $ 185,275 $ 151,290

Provision for credit losses 293,921 261,296

2 unchanged sentences

Allowance for credit losses, end of the period $ 201,793 $ 185,275

(i) Consumer receivables acquired from Afterpay that reflect a more-than-insignificant deterioration of credit from origination are considered purchased credit deteriorated ("PCD") receivables.

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 - CUSTOMER LOANS

1 unchanged sentence

The Company originates loans in the U.S.

through its wholly-owned subsidiary, Square Financial Services.

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

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

1 unchanged sentence

The Company’s intent and ability in the future may change based on changes in business strategies, the economic environment, and market conditions.

As of December 31, 2023, the Company held $ 247.6 million as loans held for investment, net of allowance, included in other current assets on the consolidated balance sheets.

As of December 31, 2024 and 2023, the Company held $ 365.1 million and $ 247.6 million, respectively, as loans held for investment, net of allowance, included in other current assets on the consolidated balance sheets.

Refer to Note 11, Other Consolidated Balance Sheet Components (Current) for more details.

1 unchanged sentence

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, amount of charge offs recorded, and amount of recoveries as of December 31, 2023 were immaterial.

The allowance for loan losses, amount of charge offs recorded, and amount of recoveries as of December 31, 2024 and 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.

2 unchanged sentences

Loans are restored to performing status after total overdue unpaid amounts are repaid and the Company has reasonable assurance that performance under the terms of the loan will continue.

As of December 31, 2023, the amount of loans that were identified as nonperforming loans was immaterial.

As of December 31, 2024 and December 31, 2023, the amount of loans that were identified as nonperforming loans was immaterial.

The Company closely monitors economic conditions and loan performance trends to assess and manage its exposure to credit risk.

4 unchanged sentences

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

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

As of December 31, 2024 and 2023, the amortized cost of Pass rated loans was $ 385.2 million and $ 261.4 million, respectively, and the amount of Classified loans was immaterial for both periods.

Loans Held For Sale

3 unchanged sentences

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.

Square Loans that are 120 days or more past due, and Cash Borrow loans that are 90 days or more past due, are generally considered to be uncollectible and are written off.

Past due status is based on the contractual terms of the loans.

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.

Commercial loans held for sale include Square Loans, Consumer loans held for sale include loans initiated through Cash App Borrow and consumer lending loans, 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, 2024 December 31, 2023

Commercial $ 478,128 $ 327,449

Consumer $ 652,489 $ 274,630

Commercial 404,844 478,128

Other 53,774 22,666

11 unchanged sentences

Depreciation and amortization expense on property and equipment was $ 153.1 million, $ 172.8 million, and $ 131.5 million for the years ended December 31, 2024, 2023, and 2022, respectively.

NOTE 9 - ACQUISITIONS

On January 31, 2022 (February 1, 2022 Australian Eastern Daylight Time), the Company completed the acquisition of Afterpay, a global BNPL platform.

In connection with the acquisition, the Company issued 113,617,352 shares of the Company’s Class A common stock.

The shares issued included a deemed vested component of outstanding employee awards, based on the ratio of time served in relation to the vesting term of each award, with the unvested portion being replaced with Block’s unvested replacement awards, with the same terms.

The aggregate fair value of the shares issued was $ 13.8 billion based on the closing price of the Company’s Class A common stock on the acquisition date, of which $ 66.3 million was attributed to acceleration of various share-based arrangements and was accounted for as an expense immediately post-acquisition, included as a component of general and administrative expenses in the consolidated statement of operations.

As of the completion of the acquisition, certain convertible notes with an outstanding principal amount of AU $ 1.5 billion (U.S.

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

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.

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):

Consideration:

Stock ( 113,617,352 shares of Class A common stock, excluding value accounted as post-combination expense of $ 66,337 )

Cash paid to settle tax withholding in connection with replacement awards 8,693

Total consideration $ 13,836,622

Recognized amounts of identifiable assets acquired and liabilities assumed:

Current assets (inclusive of cash, cash equivalents, and restricted cash acquired) $ 653,709

Consumer receivables 1,245,508

Intangible customer assets 1,378,000

Intangible technology assets 239,000

Intangible trade name

Other non-current assets 74,232

Long-term debt - current (i)

( 1,058,065 )

Current liabilities ( 439,358 )

Warehouse funding facilities (ii)

Deferred tax liabilities ( 190,689 )

Other non-current liabilities ( 63,213 )

Total identifiable net assets acquired 2,117,128

Goodwill 11,719,494

Total $ 13,836,622

(i) Long-term debt - current is comprised of the aforementioned Afterpay convertible notes, which were redeemed in cash at face value on March 4, 2022.

(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 ecosystem and the value of the assembled workforce.

The goodwill has no amortizable basis for income tax purposes.

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 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.

NOTE 9 - GOODWILL

4 unchanged sentences

Foreign currency translation adjustments 77,351

Impairment charge ( 132,313 )

Balance at December 31, 2023 11,919,720

Acquisitions 7,921

Foreign currency translation adjustments ( 428,790 )

2 unchanged sentences

As discussed further in Note 20, 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.

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

In the fourth quarter of 2024 and 2023, the Company performed quantitative goodwill impairment testing of its reporting units and recognized impairment charges of $ 73.5 million and $ 132.3 million, respectively, related to the TIDAL reporting unit.

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

These charges are included within general and administrative expenses in the Company's consolidated statements of operations.

The fair value of the TIDAL reporting unit was estimated by evaluating the cost approach, based on the value of the reporting unit's net assets, and the income approach, which was based upon the present value of estimated future cash flows.

The Company performed its annual goodwill impairment assessment as of December 31, 2024 and concluded no additional goodwill impairment should be recognized.

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

3 unchanged sentences

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

Reallocation between segments 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

Acquisitions — — 7,921 7,921

Foreign currency translation adjustments ( 236,041 ) ( 192,764 ) 15 ( 428,790 )

Reallocation between segments (i)

720,847 ( 720,847 ) — —

Impairment charge — — ( 73,508 ) ( 73,508 )

Balance at December 31, 2024 $ 6,415,087 $ 5,002,335 $ — $ 11,417,422

(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.

NOTE 10 - ACQUIRED INTANGIBLE ASSETS

33 unchanged sentences

$ 902,478 $ 770,380

Short term deposits (ii)

397,630 25,555

Processing costs receivable 478,767 365,153

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

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

365,062 247,631

Accounts receivable, net 148,898 134,824

Inventory, net 110,097 97,703

Prepaid expenses 129,343 100,770

Inventory, net 104,990 110,097

Short term deposits (iii)

87,968 397,630

Other 324,198 227,003

2 unchanged sentences

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.

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

(iii) As of December 31, 2023, 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.

During the first quarter of 2024, this $ 350.0 million deposit was returned to the Company.

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

2 unchanged sentences

Accrued expenses $ 725,339 $ 538,812

Accounts payable 142,554 95,846

Customer deposits 241,884 167,028

Accounts payable 117,963 142,554

Accrued transaction losses (i)

19 unchanged sentences

2024 December 31,

Investment in non-marketable equity securities (i)

Bitcoin investment (i)

$ 792,282 $ 339,898

Bitcoin investment (ii)

Investment in non-marketable equity securities (ii)

245,557 205,268

2 unchanged sentences

Total $ 1,239,548 $ 730,089

(i) Investment in non-marketable equity securities represents the Company's investments in equity of non-public entities.

(i) Refer to Note 13, Bitcoin for further details.

(ii) Investment in non-marketable equity securities represents the Company's investments in equity of non-public entities.

These investments are measured using the measurement alternative and are therefore carried at cost, less impairment, adjusted for observable price changes from orderly transactions for identical or similar investments of the same issuer.

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

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

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

The adjustments to the carrying value of the Company's non-marketable equity securities measured using the measurement alternative were as follows (in thousands):

2024 December 31,

Carrying amount, beginning of period $ 205,268 $ 208,880

Net additions 4,500 4,500

Gross unrealized gains 70,702 —

Gross unrealized losses and impairments ( 34,913 ) ( 8,112 )

Carrying amount, end of period $ 245,557 $ 205,268

The following table summarizes the cumulative net unrealized upward and downward adjustments related to the Company's non-marketable equity securities measured using the measurement alternative (in thousands):

2024 December 31,

Upward adjustments $ 155,329 $ 115,187

Downward adjustments (including impairment) $ ( 2,061 ) $ ( 2,707 )

NOTE 13 - BITCOIN

1 unchanged sentence

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 Company's bitcoin investment, which is included within “Other non-current assets” on the consolidated balance sheets, is remeasured at fair value at the end of each reporting period.

As of December 31, 2024 and 2023, the Company held approximately 8,485 and 8,038 bitcoins for investment purposes with a cost basis of $ 251.5 million and $ 220.0 million, respectively.

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

1 unchanged sentence

Balance at December 31, 2022 8,038 $ 102,303

8,038 $ 102,303

Cumulative effect of adoption of ASU 2023-08 — 30,511

Remeasurement gain

Remeasurement — 207,084

Balance at December 31, 2023 8,038 $ 339,898

8,038 $ 339,898

Additions 447 31,466

Remeasurement — 420,918

Balance at December 31, 2024 8,485 $ 792,282

Bitcoin for operating purposes

4 unchanged sentences

Balance at December 31, 2022 638 $ 10,941

335,213 9,369,762

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

Additions 335,213 9,369,762

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

Balance at December 31, 2023 384 $ 16,693

Additions 158,775 9,940,634

Dispositions ( 159,001 ) ( 9,941,995 )

Balance at December 31, 2024 158 $ 15,332

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.

11 unchanged sentences

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

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

2023 December 31,

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

Safeguarding obligation liability related to bitcoin held for trading partners — 1,022

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

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

The Company has concluded, under ASC 450-20, Loss Contingencies, that it does not have a probable loss that would require it to recognize a custodial obligation as of December 31, 2024.

NOTE 14 - INDEBTEDNESS

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.

On May 28, 2020, the Company amended the credit agreement for the 2020 Credit Facility (the "Credit Agreement") to permit the Company’s wholly-owned subsidiary, Square Capital, LLC (“Square Capital”), to incur indebtedness in an aggregate principal amount of up to $ 500.0 million pursuant to the Paycheck Protection Program Liquidity Facility (“PPPLF”) authorized under the Federal Reserve Act of 1913.

In connection with its convertible debt offerings in November 2020, the Company entered into a second amendment to the Credit Agreement on November 9, 2020 to permit convertible debt in an aggregate principal amount not to exceed $ 3.6 billion.

On January 28, 2021, the Company entered into a third amendment to the Credit Agreement to increase the amount of indebtedness that Square Capital is permitted to incur pursuant to the PPPLF from an aggregate principal amount of up to $ 500.0 million to an aggregate principal amount of up to $ 1.0 billion.

On May 25, 2021, the Company entered into a fourth amendment to the Credit Agreement to, among other things, extend the maturity date of the loans advanced to May 1, 2024.

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.

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 0.10 % 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.

In May 2020, the Company entered into a revolving credit agreement (as amended, the "Credit Agreement") with certain lenders, which provides for a $ 775.0 million senior unsecured revolving credit facility maturing on June 9, 2028.

The Credit Agreement contains a financial covenant requiring the Company to maintain a minimum liquidity amount (consisting of the sum of Unrestricted Cash and Cash Equivalents plus Marketable Securities, each as defined in the Credit Agreement, plus undrawn available commitments under the Credit Agreement) of at least $ 250.0 million, tested on the last day of each fiscal quarter.

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 of the revolving loan commitments available under the Credit Agreement.

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

As of December 31, 2024, $ 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, 2024, 2023, and 2022.

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

As of December 31, 2024, the Company was in compliance with all financial covenants under the Credit Agreement.

Loans under the 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.

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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.

The Company also has uncommitted and unsecured lines of credit with certain third-party banks for short-term liquidity needs, subject to availability of funds, through Square Financial Services.

There were no outstanding balances as of December 31, 2024 and 2023.

B) Warehouse Funding Facilities

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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.

These Warehouse Facilities have maturity dates through September 2027.

As of December 31, 2024, 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 $ 1.5 billion was drawn and $ 253.9 million remained available .

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All Warehouse Facilities are on a variable rate basis which aligns closely to the weighted-average life of the consumer receivables they finance.

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.

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 or similar, and (ii) a margin which is set for the term of the availability period.

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.

Interest expense on the Company's Warehouse Facilities was $ 72.0 million, $ 65.9 million, and $ 16.2 million for the years ended December 31, 2024, 2023, and 2022, respectively.

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 $ 1,481,680

(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.

(i) Future scheduled principal payments in 2025 are disclosed as warehouse funding facilities, current portion within total current liabilities on the consolidated balance sheet.

Senior Unsecured Notes due in 2026 and 2031

On May 20, 2021, the Company issued an aggregate principal amount of $ 2.0 billion senior unsecured notes comprised of $ 1.0 billion of senior unsecured notes due 2026 ("2026 Senior Notes") and $ 1.0 billion senior unsecured notes due 2031 ("2031 Senior Notes" and, together with the 2026 Senior Notes, the “Senior Notes”).

On May 20, 2021, the Company issued $ 2.0 billion in aggregate principal amount of senior unsecured notes comprised of $ 1.0 billion in aggregate principal amount of senior unsecured notes due 2026 ("2026 Senior Notes") and $ 1.0 billion in aggregate principal amount of senior unsecured notes due 2031 ("2031 Senior Notes").

The 2026 Senior Notes mature on June 1, 2026, unless earlier redeemed or repurchased, and bear interest at a rate of 2.75 % payable semi-annually on June 1 and December 1 of each year.

The 2031 Senior Notes mature on June 1, 2031, unless earlier redeemed or repurchased, and bear interest at a rate of 3.50 % payable semi-annually on June 1 and December 1 of each year.

The Senior Notes are subject to optional redemption provisions.

The 2026 Senior Notes and 2031 Senior Notes are subject to optional redemption provisions.

At any time prior to May 1, 2026, in the case of the 2026 Senior Notes, and March 1, 2031, in the case of the 2031 Senior Notes, the Company may redeem the applicable series in whole or part at a price equal to 100 % of the principal amount of the notes to be redeemed plus an applicable premium and accrued and unpaid interest, if any, to but excluding the redemption date.

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At any time on or after May 1, 2026, in the case of the 2026 Senior Notes, and March 1, 2031, in the case of the 2031 Senior Notes, the Company may redeem the notes of the applicable series in whole or part at a price of 100 % of the principal amount of the notes to be redeemed plus accrued and unpaid interest, if any, to but excluding the redemption date.

If the Company experiences a change of control triggering event (as defined in the applicable indenture governing the applicable Senior Notes), the Company must offer to repurchase each series of Senior Notes at a repurchase price equal to 101 % of the principal amount of the applicable notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the applicable repurchase date.

If the Company experiences a change of control triggering event (as defined in the applicable indenture), the Company must offer to repurchase the 2026 Senior Notes or 2031 Senior Notes, as applicable, at a repurchase price equal to 101 % of the principal amount of the applicable notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the applicable repurchase date.

In the event of default, the trustee or holders of at least 25 % in aggregate principal amount of the applicable series of outstanding Senior Notes under the applicable indenture may declare all of the notes of the applicable series to be due and immediately payable.

If the event of default is the result of specified events of bankruptcy, insolvency or reorganization, all of the notes of the applicable series will become due without any declaration or action by the trustee or holders.

If there is a default in the payment of interest, the Company shall pay the defaulted interest plus, to the extent lawful, interest payable on the defaulted interest at the rate provided in the Senior Notes.

Debt issuance costs related to the 2026 Senior Notes and 2031 Senior Notes were comprised of discounts and commissions payable to the initial purchasers of $ 22.5 million and third party offering costs of $ 5.7 million.

Issuance costs are amortized to interest expense using the effective interest method at an effective interest rate of 3.06 % and 3.69 % for each of the respective terms of the 2026 Senior Notes and 2031 Senior Notes, respectively.

Senior Unsecured Notes due 2032

On May 9, 2024, the Company issued $ 2.0 billion in aggregate principal amount of senior unsecured notes due 2032 ("2032 Senior Notes").

The 2032 Senior Notes mature on May 15, 2032, unless earlier redeemed or repurchased, and bear interest at a rate of 6.50 % payable semi-annually on May 15 and November 15 of each year, commencing on November 15, 2024.

At any time prior to May 15, 2027, the Company may redeem the 2032 Senior Notes, in whole or part, at a price equal to 100 % of the principal amount of the 2032 Senior Notes to be redeemed plus an applicable premium and accrued and unpaid interest, if any, to but excluding the redemption date.

The applicable premium for the 2032 Senior Notes is the greater of (1) 1.0 % of the principal amount of such note, and (2) the excess, if any, of (a) the sum of the present values at the redemption date of (i) the applicable redemption price of such note that would apply if such note were redeemed on May 15, 2027 plus (ii) the remaining scheduled payments of interest due on such note to, and including, May 15, 2027 (excluding accrued but unpaid interest to the redemption date) discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the treasury rate (as defined in the indenture governing the 2032 Senior Notes) plus 50 basis points, over (b) the principal amount of such note to be redeemed.

On and after May 15, 2027, the Company may redeem the 2032 Senior Notes at specified prices as set forth in the indenture governing the 2032 Senior Notes plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

If the Company experiences a change of control triggering event (as defined in the indenture governing the 2032 Senior Notes), the Company must offer to repurchase the 2032 Senior Notes at a repurchase price equal to 101 % of the principal amount of the applicable 2032 Senior Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the applicable repurchase date.

In the event of default, the trustee or holders of at least 25 % in aggregate principal amount of the outstanding 2032 Senior Notes under the indenture governing the 2032 Senior Notes may declare all of the notes of the 2032 Senior Notes to be due and immediately payable.

If the event of default is the result of specified events of bankruptcy, insolvency or reorganization, all of the 2032 Senior Notes will become due without any declaration or action by the trustee or holders.

The indenture governing the 2032 Senior Notes contains covenants that, among other things, restrict the ability of the Company and/or its domestic restricted subsidiaries to create certain liens and certain indebtedness, enter into sale and leaseback transactions, or to transfer all or substantially all of the Company and its subsidiaries assets to another person.

These covenants are subject to a number of other limitations and exceptions set forth in the indenture governing the 2032 Senior Notes.

The indenture governing the 2032 Senior Notes provides for customary events of default, including, but not limited to, failure to pay principal and interest, failure to comply with covenants, agreements or conditions, and certain events of bankruptcy or insolvency involving the Company and its significant subsidiaries.

In the case of an event of default arising from specified events of bankruptcy or insolvency involving the Company, all outstanding 2032 Senior Notes will become due and payable immediately without further action or notice.

If any other event of default under the indenture governing the 2032 Senior Notes occurs or is continuing, the trustee or holders of at least 25 % in aggregate principal amount of the outstanding 2032 Senior Notes may declare all the 2032 Senior Notes to be due and payable immediately.

Debt issuance costs related to the 2032 Senior Notes were comprised of commissions payable to the initial purchasers of $ 21.0 million and third party offering costs of $ 5.6 million.

Issuance costs are amortized to interest expense using the effective interest method at an effective interest rate of 6.7 % for the term of the 2032 Senior Notes.

Convertible Notes due in 2026 and 2027

On November 13, 2020, the Company issued an aggregate principal amount of $ 1.15 billion of convertible senior notes comprised of $ 575.0 million of convertible senior notes due 2026 ("2026 Convertible Notes") and $ 575.0 million of convertible senior notes due 2027 ("2027 Convertible Notes").

On November 13, 2020, the Company issued $ 1.15 billion in aggregate principal amount of convertible senior notes comprised of $ 575.0 million in aggregate principal amount of convertible senior notes due 2026 ("2026 Convertible Notes") and $ 575.0 million in aggregate principal amount of convertible senior notes due 2027 ("2027 Convertible Notes").

The 2026 Convertible Notes mature on May 1, 2026, unless earlier converted or repurchased, and bear a zero rate of interest.

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Convertible Notes due in 2025

On March 5, 2020, the Company issued an aggregate principal amount of $ 1.0 billion of convertible senior notes ("2025 Convertible Notes").

On March 5, 2020, the Company issued $ 1.0 billion in aggregate principal amount of convertible senior notes ("2025 Convertible Notes").

The 2025 Convertible Notes mature on March 1, 2025, unless earlier converted or repurchased, and bear interest at a rate of 0.125 % payable semi-annually on March 1 and September 1 of each year.

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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.

The circumstances were not met in the subsequent periods through the year ended December 31, 2024.

As of December 31, 2024, certain holders of the 2025 Convertible Notes converted an immaterial aggregate principal amount of their 2025 Convertible Notes.

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As of December 31, 2024, 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").

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 2025 Convertible Notes, 2026 Convertible Notes, and 2027 Convertible Notes (collectively, the “Convertible Notes”), together with the 2026 Senior Notes, 2031 Senior Notes, and 2032 Senior Notes (collectively, the "Senior Notes") are collectively referred to as the “Notes.”

The following table summarizes the Company's Notes as of December 31, 2024 (in thousands):

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2031 Senior Notes 1,000,000 ( 9,029 ) 990,971

2027 Convertible Notes 575,000 ( 5,135 ) 569,865

2032 Senior Notes 2,000,000 ( 24,974 ) 1,975,026

2025 Convertible Notes (i)

1,000,000 ( 503 ) 999,497

2026 Convertible Notes 575,000 ( 2,277 ) 572,723

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Total $ 6,150,000 $ ( 44,564 ) $ 6,105,436

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

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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"), 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 15 - INCOME TAXES

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Foreign 5,592 ( 2,275 ) ( 2,007 )

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

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

Total deferred benefit from income taxes ( 1,665,812 ) ( 85,879 ) ( 69,593 )

Total benefit from income taxes $ ( 1,509,343 ) $ ( 8,019 ) $ ( 12,312 )

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

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Return to provision adjustments 0.3 26.9 —

Intercompany transactions — — 3.8

Cancellation of debt income — — 8.0

valuation allowance release ( 96.3 ) — —

Internal Restructuring ( 44.4 ) — —

Non-deductible penalties 2.6 — —

Total ( 111.2 ) % 27.5 % 2.2 %

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Share-based compensation 34,979 45,153

Intangible and other assets 375,316 —

Other 105,976 61,489

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Convertible notes 18,339 33,952

Safeguarding liability related to bitcoin held for other parties 257,503 110,150

Total deferred tax assets 2,508,096 2,423,581

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Deferred tax liabilities:

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

Intangible and other assets — ( 332,512 )

Unrealized gain on investments ( 36,582 ) ( 25,618 )

Operating lease right-of-use asset ( 52,849 ) ( 60,600 )

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

Cryptocurrency investment ( 133,883 ) ( 29,711 )

Total deferred tax liabilities ( 223,314 ) ( 448,441 )

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.

Net deferred tax assets (liabilities)

$ 1,638,559 $ ( 26,298 )

Reported on the consolidated balance sheets as (after valuation allowance and jurisdictional netting):

Deferred tax assets $ 1,800,994 $ 9,397

Deferred tax liabilities ( 162,435 ) ( 35,695 )

Net deferred tax assets (liabilities) $ 1,638,559 $ ( 26,298 )

On December 31, 2024, the Company completed certain internal restructuring steps resulting in the internal transfer of rest of world intellectual property from certain international subsidiaries into the U.S.

The result of the intellectual property integration is the generation of an Internal Revenue Code ("IRC") Section IRC 197 tax amortizable intangible for the Block, Inc.

consolidated federal tax filing.

The IRC 197 intangible is amortizable over 15 years and a deferred tax asset of $ 376 million is recognized as of December 31, 2024.

In addition, as part of the internal restructuring steps, the Company integrated into the Block, Inc.

federal consolidated tax filing group several international subsidiaries:

Clearpay S.A.U.

(Spain), Clearpay Technology SL (Spain)., Clearpay Finance Limited (UK), and Squareup Pte Ltd.

The result of the integration is the generation of additional tax amortizable IRC 197 intangibles and IRC 174 tax amortization for the Block Inc.

US consolidated federal tax filing, resulting in a deferred tax asset of $ 226 million.

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

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In 2024, 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.

consolidated group generated a current tax provision resulting from, among other factors, increased net earnings, 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.

In the fourth quarter of 2024, based on the relative weight of positive and negative evidence, we concluded that it is more likely than not that a material portion of our U.S.

federal and certain state deferred tax assets are realizable due to the following forms of positive evidence:

our emergence into a three year cumulative income position, a history of U.S.

federal and state taxable income on recent tax return filings, continued utilization and net reduction of federal and state tax attribute carryovers, reversal of deferred tax liabilities, and forecasts of worldwide and U.S.

pre-tax earnings.

Therefore, we released the valuation allowance associated with a significant portion of our U.S.

federal and certain states' deferred tax assets, resulting in a $ 1.3 billion non-cash benefit to the provision for income taxes.

Additionally, the Company has maintained a valuation allowance on certain federal deferred tax assets in the form of loss carryovers that have federal limits or restrictions on utilization, foreign tax credit carryovers, and capital losses which do not have sufficient evidence of future income of the appropriate character to recognize.

Further, the Company has maintained a full valuation allowance against its California deferred tax assets, which consist primarily of tax loss carryovers and tax credit carryovers.

The Company does not have sufficient evidence of future income to realize the California deferred tax assets on a more likely than not basis.

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, 2024.

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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 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.

The remaining carryforward amounts have no expiration date.

The valuation allowance decreased by approximately $ 1.4 billion and decreased by $ 98.9 million during the years ended December 31, 2024, and 2023, respectively.

Further, in the fourth quarter of 2024, we reached a settlement with the Singapore tax authorities in relation to historical tax losses incurred by our Singapore subsidiary.

The result is a reduction to our tax loss carryover asset of $ 140 million and a corresponding release of the uncertain tax positions and valuation allowance against the tax loss carryover asset.

As of December 31, 2024, the Company had $ 669.0 million of federal, $ 3.8 billion of state, and $ 767.5 million of foreign net operating loss carryforwards.

The remaining federal net operating loss carryforwards 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 2027.

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In conjunction with the 2025 Convertible Notes offering, the Company sold the 2025 Warrants whereby the counterparties have the option to purchase a total of approximately 8.3 million shares of the Company’s Class A common stock at a price of $ 161.34 per share.

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.

The 2025 Warrants expire evenly over a 60 trading day period starting on June 1, 2025.

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None of the warrants were exercised as of December 31, 2024.

Conversion of Convertible Notes and Exercise of Convertible Note Hedges

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.

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, 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.

On July 25, 2024, the board of directors of the Company authorized an increase to the Company's share repurchase program to repurchase up to an additional $ 3 billion of the Company’s Class A common stock.

During the year ended December 31, 2024, the Company repurchased 16.9 million shares of its Class A common stock for an aggregate amount of $ 1.2 billion.

As of December 31, 2024, $ 2.7 billion remained available and authorized for repurchases under this share repurchase program.

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.

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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, 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.

As of December 31, 2024, the total number of shares subject to stock options ("ISOs" and "NSOs", respectively), restricted stock awards ("RSAs"), and restricted stock units ("RSUs") outstanding under the 2009 Plan was 0.3 million shares.

Under the 2015 Plan, shares of the Company's Class A common stock are reserved for the ISOs and NSOs, RSAs, 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.

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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, 2023, 2022, and 2021 was $ 96.1 million, $ 211.0 million, and $ 1.1 billion, respectively.

Aggregate intrinsic value for stock options exercised for the years ended December 31, 2024, 2023, and 2022 was $ 145.1 million, $ 96.1 million, and $ 211.0 million, respectively.

The total weighted-average grant-date fair value of options granted was $ 45.81 , $ 39.13 , and $ 73.31 per share for the years ended December 31, 2024, 2023, and 2022, respectively.

Restricted Stock Activity

Activity related to RSAs and RSUs during the year ended December 31, 2023 is set forth below:

Activity related to RSUs during the year ended December 31, 2024 is set forth below:

Shares Weighted

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Unvested, end of the period 37,079 $ 70.51

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.

The total fair value of shares vested was $ 1.2 billion, $ 873.0 million, and $ 724.2 million in the years ended December 31, 2024, 2023, and 2022, respectively.

Employee Stock Purchase Plan

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The Company capitalized $ 41.2 million, $ 30.9 million, and $ 20.7 million of share-based compensation expense related to capitalized software during the years ended December 31, 2024, 2023, and 2022, respectively.

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 .

As of December 31, 2024, there was $ 2.6 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 3 years.

NOTE 17 - NET INCOME (LOSS) PER SHARE

The Company computes net income (loss) per share attributable to our common stockholders using the two-class method required for multiple classes of common stock and participating securities.

The holders of our Class A and Class B common stock (together, "common stock") have identical liquidation and dividend rights but different voting rights.

Accordingly, we present net income (loss) per share for Class A and Class B common stock together.

Basic net income (loss) per share is computed by dividing the net income (loss) by the weighted-average number of shares of common stock outstanding during the period.

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In periods when the Company reported a net loss, diluted net loss per share is the same as basic net loss per share because the effects of potentially dilutive items were anti-dilutive.

The following table presents the calculation of basic and diluted net income per share (in thousands, except per share data):

The following table presents the calculation of basic and diluted net income (loss) per share (in thousands, except per share data):

Year Ended December 31,

2024 2023 2022

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

Net loss attributable to noncontrolling interests ( 30,896 ) ( 12,258 ) ( 7,458 )

Basic net income (loss) per share:

Net income (loss) attributable to common stockholders $ 2,897,047 $ 9,772 $ ( 540,747 )

Basic shares:

Weighted-average shares used to compute basic net income (loss) per share 608,856 578,949 458,432

Diluted shares:

Shares used to compute basic net income (loss) per share 616,993 608,856 578,949

Basic net income (loss) per share $ 4.70 $ 0.02 $ ( 0.93 )

Diluted net income (loss) per share:

Net income (loss) attributable to common stockholders $ 2,897,047 $ 9,772 $ ( 540,747 )

Interest expense on convertible notes 6,216 — —

Net income (loss) used to compute diluted net income (loss) per share $ 2,903,263 $ 9,772 $ ( 540,747 )

Shares used to compute basic net income (loss) per share 616,993 608,856 578,949

Stock options, restricted stock, and employee stock purchase plan 7,289 5,168 —

Convertible notes 12,108 — —

Common stock warrants — — 25,090

Weighted-average shares used to compute diluted net income (loss) per share 614,024 578,949 501,779

Net income (loss) per share attributable to common stockholders:

Basic $ 0.02 $ ( 0.93 ) $ 0.36

Diluted $ 0.02 $ ( 0.93 ) $ 0.33

Shares used to compute diluted net income (loss) per share 636,390 614,024 578,949

Diluted net income (loss) per share $ 4.56 $ 0.02 $ ( 0.93 )

The following potential common shares were excluded from the calculation of diluted net income per share because their effect would have been anti-dilutive for the periods presented (in thousands):

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As of December 31, 2024, the Company had recorded right-of-use assets of $ 10.4 million and associated lease liabilities of $ 15.8 million related to this lease arrangement.

Under the lease agreement, the Company also has an option to terminate the lease for up to 50 % of the leased space any time between January 1, 2024 and December 31, 2026, as well as an option to terminate the lease for the entire property on January 1, 2034.

Termination penalties specified in the lease agreement will apply if the Company exercises any of the options to terminate the lease.

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 paid a termination penalty of approximately $ 5.2 million to exercise the option.

Under the lease agreement, the Company has an option to terminate the lease for the entire property on January 1, 2034.

Termination penalties specified in the lease agreement will apply if the Company exercises the option to terminate the lease.

NOTE 19 - COMMITMENTS AND CONTINGENCIES

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Amount representing interest 40,927

Lease incentives and transfer to held for sale 1,996

Lease incentives 2,642

Total $ 331,258

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Purchase Commitments

During the year ended December 31, 2022, we entered into non-cancelable purchase obligations related to cloud computing infrastructure.

From time to time, we may enter into non-cancelable purchase obligations related to cloud computing infrastructure.

The commitment amounts in the table below are associated with contracts that are enforceable and legally binding and that specify all significant terms, including fixed or minimum services to be used, and the approximate timing of the actions under the contracts.

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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 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:

Loss Contingencies.

The accrued amount was not material as of December 31, 2023.

Given the status of these matters, it is not possible to reliably determine the range of potential liability in excess of the accrued amounts that could result from these investigations.

In January 2025, the Company entered into a consent order with the Consumer Financial Protection Bureau (“CFPB”) to settle claims from the CFPB related to, among other things, Cash App's handling of customer complaints and disputes.

Pursuant to the consent order, the Company paid a $ 55 million civil monetary penalty in January 2025 and agreed to pay between $ 75 million and $ 120 million in restitution to certain Cash App customers.

The settlement amounts are reflected in the financial statements as of and for the year ended December 31, 2024.

In January 2025, the Company entered into a settlement agreement and consent order (the “settlement agreement”) with various state money transmission license regulators (the “MTL regulators”) related to aspects of its Bank Secrecy Act/anti-money laundering program.

Pursuant to the settlement agreement, the Company agreed to pay $ 80 million in administrative penalties and costs, with payments expected to be completed in or around February 2025.

The settlement amount is reflected in the financial statements as of and for the year ended December 31, 2024.

The Company is continuing negotiations with the New York State Department of Financial Services ("NYDFS"), one of its MTL and virtual currency regulators, related to, among other things, aspects of its Bank Secrecy Act/anti-money laundering and bitcoin programs.

In January 2025, NYDFS presented the Company with potential terms for resolving this matter, and the Company is engaging in conversations with NYDFS to determine whether this matter can be settled on acceptable terms.

The Company has accrued a liability for an estimated amount in connection with this matter in accordance with ASC 450.

The accrued amount was not material to the financial statements as of December 31, 2024.

The Company received 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 June 2024, the state Attorneys General presented the Company with the results of their investigations.

In December 2024, the state Attorneys General presented the Company with potential terms for resolving this matter and the Company is engaging in conversations with the state Attorneys General to determine if this matter can be settled on acceptable terms.

The Company is unable to predict the likely outcome of this matter, which may include one or more public orders, and cannot provide any assurance that the state Attorneys General will not ultimately take legal action against the Company or that the outcome of these matters will not have a material adverse effect on the Company.

The Company also received inquiries from the SEC and Department of Justice (“DOJ”) shortly after the publication of a short seller report in March 2023.

In July 2024, the Company received a follow-on inquiry from the SEC.

The Company believes these inquiries primarily relate to the allegations raised in the short seller report, the Company’s compliance and risk practices, and related disclosures.

The Company continues to cooperate with both agencies.

The Company is unable to predict the likely outcome of these matters and cannot provide any assurance that the SEC or DOJ 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.

In June 2024, the Office of the Treasurer and Tax Collector of the City and County of San Francisco (the "Tax Collector") finalized its audit and issued an assessment of San Francisco’s gross receipts tax, including interest and penalties, following its gross receipt tax audit for fiscal years 2020, 2021 and 2022.

The Tax Collector has asserted that incremental taxes are owed on a portion of the receipts generated by the Company related to sales of Bitcoin.

The Company strongly disagrees with the Tax Collector’s assessment and plans to vigorously pursue all available remedies.

In January 2025, the Tax Collector rejected the Company’s request for redetermination, and the Company paid the assessed amount of $ 71.4 million and plans to file a claim for a refund.

Given the amount must be paid to initiate the dispute process and will be returned in full or used to settle any final amount due to the Tax Collector, the Company views the amount as a deposit asset in the period the payment is made.

Should the Company not reach a settlement or prevail in its legal challenge, the Tax Collector may challenge the Company’s gross receipts tax position going forward, including for 2023 and 2024.

The Company estimates that it could incur losses associated with taxes, interest, and penalties that range from approximately $ 0 to $ 97 million in the aggregate for the fiscal years 2020, 2021, 2022, 2023 and 2024.

Additional taxes, interest, and penalties for future periods could be material as well.

Given the Company has concluded that a loss for this matter is not probable, the Company has not recorded a liability for the exposure related to the dispute with the Tax Collector on San Francisco’s gross receipts tax.

The Company regularly assesses the likelihood of adverse outcomes resulting from litigation and regulatory proceedings and adjusts the financial statements based on such assessments.

The eventual outcome of these matters may differ materially from the estimates the Company has currently accrued in the financial statements.

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.

In addition, the Company is subject to various legal matters, investigations, subpoenas, inquiries, audits, claims, lawsuits and disputes, including with regulatory bodies and governmental agencies.

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 other 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

The Company is under examination, or may be subject to examination, by several tax authorities.

These examinations may lead to proposed adjustments to the Company's taxes or net operating losses with respect to years under examination, as well as subsequent periods.

The Company regularly assesses the likelihood of adverse outcomes resulting from tax examinations to determine the adequacy of the Company's provision for direct and indirect taxes.

The Company continues to monitor the progress of ongoing discussions with tax authorities and the effect, if any, on the Company's provision for direct and indirect taxes.

Management believes that an adequate provision has been made for any adjustments that may result from tax examinations.

However, the outcome of tax audits cannot be predicted with certainty.

If any issues addressed in the Company's tax audits are resolved in a manner not consistent with the Company’s expectations, the Company could be required to adjust the Company's provision for direct and indirect taxes in the period such resolution occurs.

NOTE 20 - SEGMENT AND GEOGRAPHICAL INFORMATION

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

Accordingly, the Company has two reportable segments, Square and Cash App.

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

The Company's CODM is the Block Head and Chairperson.

The Company has two reportable segments, Square and Cash App.

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.

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The primary financial measures used by the CODM to evaluate performance and allocate resources are revenue and gross profit.

The CODM uses segment gross profit for each segment during the annual budgeting and forecasting process.

The CODM does not evaluate performance or allocate resources based on segment asset data, and therefore such information is not included.

The following tables present information on the reportable segments revenue and segment gross profit (in thousands):

The following tables present information on the reportable segments revenue and segment gross profit, as well as amounts for the "Corporate and Other" category, which includes products and services not assigned to reportable segments and intersegment eliminations (in thousands):

Year Ended December 31, 2024

Cash App Square Corporate and Other (i)

Cash App Square Corporate and Other

Transaction-based revenue $ 352,699 $ 6,260,981 $ — $ 6,613,680

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$ 16,247,880 $ 7,681,656 $ 191,517 $ 24,121,053

Segment gross profit (ii)

Cost of revenue 11,008,869 4,082,744 140,404 15,232,017

Segment gross profit

$ 5,239,011 $ 3,598,912 $ 51,113 $ 8,889,036

Interest revenue $ 185,185 $ 36,837 $ — $ 222,022

Amortization of acquired technology assets $ 55,343 $ 7,726 $ 5,295 $ 68,364

Year Ended December 31, 2023

Cash App Square Corporate and Other (i)

Cash App Square Corporate and Other

Transaction-based revenue $ 498,176 $ 5,817,125 $ — $ 6,315,301

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Segment revenue $ 14,681,686 $ 7,033,384 $ 200,553 $ 21,915,623

Segment gross profit (ii)

Cost of revenue 10,358,223 3,904,730 147,784 14,410,737

Segment gross profit

$ 4,323,463 $ 3,128,654 $ 52,769 $ 7,504,886

Interest revenue $ 142,222 $ 28,011 $ — $ 170,233

Amortization of acquired technology assets $ 56,135 $ 10,632 $ 6,062 $ 72,829

Year Ended December 31, 2022

Cash App Square Corporate and Other (i)

Cash App Square Corporate and Other

Transaction-based revenue $ 466,171 $ 5,235,369 $ — $ 5,701,540

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Segment revenue $ 11,031,804 $ 6,294,137 $ 205,646 $ 17,531,587

Segment gross profit (ii)

Cost of revenue 7,786,760 3,587,236 165,699 11,539,695

Segment gross profit

$ 3,245,044 $ 2,706,901 $ 39,947 $ 5,991,892

(i) Corporate and other represents results related to products and services that are not assigned to a specific reportable segment, and intersegment eliminations.

(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.

Amortization of acquired technology assets expense included in Corporate and Other was immaterial for the years ended December 31, 2023, 2022, and 2021.

Interest revenue $ 29,026 $ 1,193 $ — $ 30,219

Amortization of acquired technology assets $ 53,900 $ 10,494 $ 5,800 $ 70,194

The following table provides a reconciliation of total segment gross profit to the Company’s income (loss) before applicable income taxes (in thousands):

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Interest expense (income), net 9,302 ( 47,221 ) 36,228

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

Remeasurement gain on bitcoin investment ( 420,918 ) ( 207,084 ) —

Other expense (income), net ( 53,211 ) 4,609 ( 95,443 )

Income (loss) before applicable income taxes $ 1,357,154 $ ( 29,143 ) $ ( 565,317 )

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Supplemental disclosures of non-cash investing and financing activities:

Unsettled originations of consumer receivables 180,443 261,151 160,413

Right-of-use assets obtained in exchange for operating lease obligations 36,976 7,106 39,324

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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