What changed in this filing

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Item 1A. Risk Factors

2025-11-06 compared with 2025-08-07 · 51 added, 33 removed, 863 unchanged (9% of the section changed)

15 unchanged sentences

• risks related to disruptions in or negative perceptions of the cryptocurrency market;

• development and use of artificial intelligence ("AI"), including generative AI, in our products;

• any acquisitions, strategic investments, new businesses, joint ventures, divestitures, and other transactions that we may undertake;

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We generally do not have long-term contracts with our sellers and customers, and the difficulty and costs associated with switching to a competitor may not be significant for many of the services we offer.

Our sellers’ activity with us may decrease for a variety of reasons, including sellers’ level of satisfaction with our products and services, our pricing and the pricing and quality of competing products or services, the effects of economic conditions, or reductions in the aggregate spending of our sellers’ customers.

Our sellers’ activity with us may decrease for a variety of reasons, including sellers’ level of satisfaction with our products and services, our pricing and the pricing and quality of competing products or services, conditions impacting their businesses, including the effects of economic conditions, or reductions in the aggregate spending of our sellers’ customers.

Growth in transacting actives on Cash App and customers’ level of engagement with our products and services on Cash App are important to our success and long-term financial performance.

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The growth of our business depends in part on our existing sellers and customers expanding their use of our products and services.

If we are unable to increase broader use of our products and services within each of our ecosystems by our existing sellers and customers, our growth may slow or stop, and our business may be materially and adversely affected.

If we are unable to increase broader use of our products and services, our growth may slow or stop, and our business may be materially and adversely affected.

The growth of our business also depends on our ability to attract new sellers and customers, to encourage sellers and customers to use our products and services, and to introduce successful new products and services.

88 unchanged sentences

Developments in the cryptocurrency market subject us to additional risks.

Our investments in bitcoin, our bitcoin ecosystem, and our Cash App feature that permits customers to transact in bitcoin each subject us to additional risks related to any further developments in the cryptocurrency markets and the resulting impact on customer and investor behavior.

We may experience adverse impacts to our business as a result of the actions taken by regulators, legislatures, and other government actors, including the current U.S.

administration, in the cryptocurrency industry.

For example, to the extent the United States establishes a Strategic Bitcoin Reserve, or otherwise modifies the regulatory environment for digital assets, each of which has been contemplated by executive order and legislative proposals, demand for bitcoin, and thus, supply and pricing for bitcoin may be impacted.

Our investments in bitcoin, our bitcoin ecosystem, and our Cash App and Square features that facilitate transactions in bitcoin by our customers and sellers each subject us to additional risks related to further developments in the cryptocurrency markets and the resulting impact on customer and investor behavior.

Actions taken by regulators, legislatures, and other government actors, including the current U.S.

administration, in the cryptocurrency industry, may impact market demand for bitcoin and the supply and pricing for bitcoin.

If the cryptocurrency environment deteriorates or improves based on these or other factors, our customers may wish to sell their bitcoin at a price or volume that exceeds the market demand for bitcoin, which could cause disruptions in our operations and have a material and adverse effect on our business and financial condition.

If demand increases sharply, either to buy or to sell bitcoin, we may not be able to fulfill that demand in a timely manner or at all, which could result in customer frustration or movement to other platforms.

If our customers experience losses due to market fluctuations in the prices of bitcoin, they may reduce or cease their use of Cash App, or other bitcoin-related products, which could adversely impact our results of operations.

If our customers experience losses due to market fluctuations in the prices of bitcoin, they may reduce or cease their use of our product features that facilitate transactions in bitcoin, or other bitcoin-related products, which could adversely impact our results of operations.

Further, our customers could attempt to seek compensation from us for their financial investment losses, and those claims, even if unsuccessful, would likely be time-consuming and costly for us to address.

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We may also suffer a decline in the market price of our Class A common stock due to any negative perception by our customers, investors, or the general public, of bitcoin or the cryptocurrency markets.

The development and use of AI in our products may result in reputational and competitive harm and could adversely impact our business.

We have incorporated and expect to continue to incorporate AI technologies, including generative AI and AI agents, into our products and technologies.

Our use of AI depends on third-party large language models that we do not control, and these models may generate inaccurate, biased, or unexpected outputs that conflict with our business objectives or brand standards.

Consumer and societal attitudes toward AI are evolving and there is a risk that customers, regulators or the public may perceive AI technologies negatively.

Concerns about automation, privacy, security, bias, transparency, flawed datasets, or other ethical considerations could reduce trust in our products and services or deter customer adoption of AI-enabled features in our products or services.

Our customers and sellers may become increasingly reliant on AI outputs in our products and services when making financial or operational decisions.

If such AI outputs are, or are perceived to be, inaccurate, biased, or otherwise flawed, we could face reputational harm, regulatory scrutiny, or liability claims, any of which could materially and adversely affect our business, financial condition, and operating results.

Our ability to develop and deploy AI features depends on the availability and pricing of third-party AI models, tools, and technical infrastructure, and increases in such costs or constraints on availability could adversely affect our ability to scale and our business.

Further, evolving and inconsistent legal frameworks governing AI across different jurisdictions, such as the EU AI Act, other international regimes, and emerging U.S.

state regulations may create conflicting compliance obligations, all of which may impose additional costs on us, increase our risk of liability and fines, and may require us to modify, limit, or withdraw certain AI-enabled products or services in particular markets, and adversely affect our ability to scale globally.

Our AI initiatives may not improve efficiency, performance, or profitability as expected, and may underperform or fail entirely due to technological limitations, regulatory requirements, or other factors.

If our investments in AI do not produce expected benefits, our operating results and long-term growth could be materially and adversely affected.

Acquisitions, strategic investments, new businesses, joint ventures, divestitures, and other transactions we enter into could fail to achieve strategic objectives, disrupt our ongoing operations or result in operating difficulties, liabilities and expenses, harm our business, and negatively impact our results of operations.

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• increased exposure to public health issues such as pandemics, and related industry and governmental actions to address these issues;

• regional economic and political instability and other geopolitical risks.

• economic and political instability and other geopolitical risks.

As a result of these risks, our efforts to expand our global operations may not be successful, which could limit our ability to grow our business.

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Although we rely on technology to assess repayment capability for these loan products, there can be no guarantee that such processes will always accurately predict repayments.

Miscalculation of repayment ability or a material increase in repayment failures, whether due to inflation, macroeconomic uncertainty and downturn, market volatility, or otherwise, may adversely affect our business, results of operations, and financial condition.

If our underwriting processes fail to adequately capture risks or otherwise miscalculate repayment ability, we may experience higher levels of delinquencies, default and credit losses.

As we expand into new products, customer segments, and geographies, or as inflation, economic downturns, or market volatility increases repayment failures, our ability to appropriately evaluate and manage credit risk may be further challenged, which could negatively impact our business, results of operations, and financial condition.

If consumers who have purchased products or services using our BNPL platform do not receive the products or services, they may also cease payment on their outstanding balances or request a refund on previous payments, and our business may be negatively impacted.

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If data or assets are lost or improperly accessed, misused, disclosed, destroyed, or altered or threatened to be improperly accessed, misused, disclosed, destroyed, or altered, we could incur significant financial losses and costs and liability associated with remediation and the implementation of additional security measures and be subject to claims, litigation, regulatory scrutiny, and investigations.

For example, in April 2022 we announced that we determined that a former employee downloaded certain reports of our subsidiary Cash App Investing in December 2021 that contained some U.S.

customer information without permission after the former employee’s employment ended, as disclosed in our Current Report on Form 8-K filed with the SEC on April 4, 2022.

We have incurred costs related to our investigation and response to this incident, and we could incur other losses, costs, and liabilities in connection with such incident.

Under payment card rules and our contracts with our card processors and other counterparties, if there is a breach of payment card information that we store or that is stored by our sellers or other third parties with which we do business, we could be liable to the payment card issuing banks for certain of their costs and expenses.

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As a result, our direct control over production and distribution is limited, and it is uncertain what effect such diminished control will have on the quality of our products.

If there are defects in the manufacture of our hardware products, we may face similar negative publicity, investigations, and litigation, and we may not be fully compensated by our suppliers for any financial or other liability that we suffer as a result.

Any defects in our hardware products could result in negative publicity, investigations, and litigation, and we may not be fully compensated by our suppliers for any financial or other liability that we suffer as a result.

As our hardware and software services continue to increase in size and complexity, and as we integrate new, acquired subsidiaries with different technology stacks and practices, these risks may correspondingly increase as well.

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We offer payments and other products and services to a large number of customers.

We have programs to vet and monitor these customers and the transactions we process for them as part of our risk management efforts, but such programs require continuous improvement and may not be effective in detecting and preventing fraud and illegitimate transactions.

When our payments services are used to process illegitimate transactions, and we settle those funds to customers and are unable to recover them, we suffer losses and liability.

As a greater number of larger sellers use our services, our exposure to material risk losses from a single seller, or from a small number of sellers, will increase.

Illegitimate transactions can also expose us to governmental and regulatory enforcement actions, which may impair or otherwise limit our ability to operate or provide certain services, products, or features and potentially prevent us from satisfying our contractual obligations to our third-party partners, which may cause us to be in breach of our obligations.

Illegitimate transactions and bad actors can also expose us to governmental and regulatory enforcement actions, which may impair or otherwise limit our ability to operate or provide certain services, products, or features and potentially prevent us from satisfying our contractual obligations to our third-party partners, which may cause us to be in breach of our obligations.

The highly automated nature of, and liquidity offered by, our payments and peer-to-peer services make us and our customers a target for illegal or improper uses, including scams and fraud directed at us and our customers, fraudulent or illegal sales of goods or services, money laundering, and terrorist financing.

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The risks and the potential harm to our reputation are magnified in instances of fraud or unauthorized or inappropriate transactions involving minors.

Our technologies or features may be licensed under commercial, non-commercial, or open-source terms to third parties for use in their own products and services.

Despite implementing technical safeguards and contractual restrictions, we have limited visibility into how such technologies or features are used, and any misuse for harmful, illegal, or competitive purposes could expose us to reputational, financial, or legal harm.

While we maintain a program of insurance coverage for various types of liabilities, our insurance may not be adequate or may deny coverage based on the policy.

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If we are not able to add or retain employees effectively, our ability to achieve our strategic objectives will be adversely affected, and our business and growth prospects will be harmed.

If we do not continue to improve our operational, financial, and other internal controls and systems to manage growth effectively, our business could be harmed.

If we do not continue to maintain and improve our operational, financial, and other internal controls and systems to manage growth effectively, our business could be harmed.

Our current business and anticipated growth, as well as our entry into new lines of business and our acquisitions, will continue to place significant demands on our management and other resources.

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If investors, customers or other stakeholders do not believe our reporting metrics accurately reflect our business or they disagree with our methodologies, our reputation may be harmed and our business may be adversely impacted.

Many of our key components are procured from a single or limited number of suppliers.

Many of the key components in our hardware products are procured from a single or limited number of suppliers.

Thus, we are at risk of shortage, price increases, tariffs, changes, delay, or discontinuation of key components, which could disrupt and materially and adversely affect our business.

Many of the key components used to manufacture our products, such as the custom parts of our magstripe reader, come from limited or single sources of supply.

Many of the key components used to manufacture our hardware products, such as the custom parts of our magstripe reader, come from limited or single sources of supply.

Due to our reliance on the components or products produced by third-party suppliers, we are subject to the risk of shortages and long lead times or other disruptions in the supply of certain components or products.

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Our credit agreement contains affirmative and negative covenants, including customary limitations on the incurrence of certain indebtedness and liens, restrictions on certain intercompany transactions, and limitations on dividends and stock repurchases.

The indentures pursuant to which our 2026 Senior Notes, 2031 Senior Notes, and 2032 Senior Notes (collectively, the “Senior Notes”) were issued contain covenants that restrict or could restrict, among other things, our business and operations.

The indentures pursuant to which our 2026 Senior Notes, 2030 Senior Notes, 2031 Senior Notes, 2032 Senior Notes, and 2033 Senior Notes (collectively, the “Senior Notes”) were issued contain covenants that restrict or could restrict, among other things, our business and operations.

Any debt financing obtained by us in the future could also involve restrictive covenants relating to our capital-raising activities and other financial and operational matters, which may make it more difficult for us to operate our business, obtain additional capital, and pursue business opportunities, including potential acquisitions.

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Servicing our Notes may require a significant amount of cash, and we may not have sufficient cash or the ability to raise the funds necessary to settle conversions of the Convertible Notes in cash, repay the Notes at maturity, or repurchase the Notes as required following a fundamental change.

As of June 30, 2025, we had $575.0 million outstanding aggregate principal amount of 2026 Convertible Notes, $575.0 million outstanding aggregate principal amount of 2027 Convertible Notes, $1.0 billion outstanding aggregate principal amount of 2026 Senior Notes, $1.0 billion outstanding aggregate principal amount of 2031 Senior Notes, and $2.0 billion outstanding aggregate principal amount of 2032 Senior Notes.

As of September 30, 2025, we had $575.0 million outstanding aggregate principal amount of 2026 Convertible Notes, $575.0 million outstanding aggregate principal amount of 2027 Convertible Notes, $1.0 billion outstanding aggregate principal amount of 2026 Senior Notes, $1.2 billion outstanding aggregate principal amount of 2030 Senior Notes, $1.0 billion outstanding aggregate principal amount of 2031 Senior Notes, $2.0 billion outstanding aggregate principal amount of 2032 Senior Notes, and $1.0 billion outstanding aggregate principal amount of 2033 Senior Notes.

Prior to February 1, 2026, in the case of the 2026 Convertible Notes, and August 1, 2027, in the case of the 2027 Convertible Notes, the applicable Convertible Notes are convertible at the option of the holders only under certain conditions or upon the occurrence of certain events.

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The manner in which we account for our bitcoin under applicable accounting rules has changed.

Prior to our adoption of ASU 2023-08, "Accounting for and Disclosure of Crypto Assets", which added Subtopic ASC 350-60, “Intangibles - Goodwill and Other - Crypto Asset”, to the accounting standards codification (“ASU 2023-08”), our bitcoin was accounted for as an indefinite-lived intangible asset and for each reporting period, we were required to evaluate our bitcoin for impairment and record impairment losses if the fair value decreased below the carrying value during the assessed period.

Prior to our adoption of Accounting Standards Update 2023-08, "Accounting for and Disclosure of Crypto Assets", which added Subtopic Accounting Standards Codification 350-60, “Intangibles - Goodwill and Other - Crypto Asset”, to the accounting standards codification (“ASU 2023-08”), our bitcoin was accounted for as an indefinite-lived intangible asset and for each reporting period, we were required to evaluate our bitcoin for impairment and record impairment losses if the fair value decreased below the carrying value during the assessed period.

Since impairment losses for our bitcoin investment could not be recovered for any subsequent increases in fair value until the asset was sold, our operating results were adversely affected in any period in which such impairment occurred.

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In June 2025 we filed a claim for refund for fiscal years 2020, 2021 and 2022.

In September 2025, we received a Notice of Deficiency from the Tax Collector for fiscal years 2023 and 2024 reflecting an assessment of $42.7 million, including tax, penalties and interest, which we paid in October 2025.

In October 2025, we submitted our request for redetermination for fiscal years 2023 and 2024.

The Tax Collector may also challenge our gross receipts tax position going forward.

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Additionally, tax authorities at the international, federal, state, and local levels are currently reviewing the appropriate tax treatment of companies engaged in internet commerce and financial technology and attempting to broaden the classification and definitions of activities subject to taxation.

For example, various states may attempt to broaden the definition of internet hosting, data processing, telecommunications, and other services to capture additional types of activities.

These developing changes could affect our financial position and results of operations.

For example, some jurisdictions have begun to broaden the definition of internet hosting, data processing, telecommunications, and other services to capture additional types of activities, which could affect our financial position and results of operations.

In particular, it is possible that tax authorities at the international, federal, state, and local levels may attempt to regulate our transactions or levy new or revised sales and use taxes, gross receipts, franchise, VAT, digital services taxes, digital advertising taxes, income taxes, loan taxes, streaming taxes, or other taxes relating to our activities, which would likely increase the cost of doing business.

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We have in the past recorded, and may in the future record, significant valuation allowances on our deferred tax assets, which may have a material impact on our results of operations and cause fluctuations in such results.

As of June 30, 2025, our deferred tax assets relate predominantly to the U.S.

As of September 30, 2025, our deferred tax assets relate predominantly to the U.S.

federal and state tax jurisdictions.

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These laws, regulations, and standards govern numerous areas that are important to our business, and include, or may in the future include, those relating to or placing restrictions upon banking, lending, deposit-taking, cross-border and domestic money transmission, foreign exchange, payments services (such as payment processing and settlement services), cryptocurrency, trading in shares and fractional shares, personal income tax filing, fraud detection, consumer protection, anti-money laundering, anti-bribery and anti-corruption, escheatment, sanctions regimes and export controls, AI, privacy, data protection and cybersecurity, fiscalization and compliance with the Payment Card Industry Data Security Standard, a set of requirements designed to ensure that all companies that process, store, or transmit payment card information maintain a secure environment to protect cardholder data.

These laws, rules, regulations, and standards are enforced by multiple authorities and governing bodies in the United States, including federal agencies, such as the FDIC, the SEC, the Consumer Financial Protection Bureau ("CFPB"), the Department of Justice ("DOJ") and Office of Foreign Assets Control, self-regulatory organizations, and numerous state and local agencies, such as the Utah Department of Financial Institutions.

These laws, rules, regulations, and standards are enforced by multiple authorities and governing bodies in the United States, including federal agencies, such as the FDIC, the SEC, FinCEN, the Consumer Financial Protection Bureau ("CFPB"), the Department of Justice ("DOJ") and Office of Foreign Assets Control, self-regulatory organizations, and numerous state and local agencies, such as state money transmission license regulators and virtual currency regulators.

Outside of the United States, we are subject to additional regulators, authorities, and governing bodies.

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Despite this, due to the nature of bitcoin and blockchain technology, we may not be able to prevent all such transactions, and there can be no guarantee that our measures will be viewed as sufficient.

The regulation of bitcoin, as well as cryptocurrency and digital asset platforms is an evolving area, and we could become subject to additional legislation or regulation in the future, or we might not be able to continue operating the feature in Cash App, at least in current form.

If we fail to comply with regulations or prohibitions applicable to us, we could face regulatory or other enforcement actions, potential fines, reputational harm, and other consequences.

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The European Commission may intervene at any time with respect to its adequacy decision.

The UK’s adequacy determination therefore is subject to future uncertainty and may be subject to modification or revocation in the future, particularly in light of recent updates to UK privacy law under the Data (Use and Access) Act 2025.

The UK’s adequacy determination therefore is subject to future uncertainty and may be subject to modification or revocation in the future, particularly in light of recent updates to UK data protection law under the Data (Use and Access) Act 2025 ("DUAA").

The European Commission has proposed to renew the UK’s adequacy decision after assessing the DUAA, but additional procedural steps remain, causing some uncertainty to remain regarding the UK’s adequacy determination.

These and other developments relating to cross-border data transfer could result in increased costs of compliance and limitations on our customers and us.

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have proposed or enacted laws that contain obligations similar to the CCPA that have taken effect or will take effect in coming years.

federal government also is contemplating federal privacy legislation.

Moreover, several states in the U.S.

are now contemplating new regulatory frameworks specific to the privacy of individuals under 18 years of age.

At the same time, the U.S.

federal government continues to discuss comprehensive federal privacy legislation, which may substantially increase our compliance obligations.

Additionally, the U.S.

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As a licensed money transmitter, we are subject to important obligations and restrictions.

We have obtained licenses to operate as a money transmitter (or as other financial services institutions, such as virtual currency businesses) in the U.S.

We have obtained licenses to operate as a money transmitter (including the transmission of monetary value in the form of virtual currencies) in the U.S.

and in the states where this is required, as well as in some non-U.S.

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Our subsidiary Cash App Investing is a broker-dealer registered with the SEC and a member of FINRA, and therefore is subject to extensive regulation and scrutiny.

Our subsidiary Cash App Investing facilitates transactions in shares and fractionalized shares of publicly-traded stock and exchange-traded funds by users of our Cash App through a third-party carrying broker-dealer, DriveWealth LLC (“DriveWealth”).

Cash App Investing is registered with the SEC as a broker-dealer under the Exchange Act and is a member of FINRA.

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Failure to adhere to these policies and procedures may also result in regulatory sanctions or litigation against us.

Cash App Investing also relies on various third parties, including DriveWealth, to provide services, including handling and executing customer orders, and failure of these third parties to adequately perform these services may negatively impact customer experience, product performance, and our reputation and may also result in regulatory sanctions or litigation against us or Cash App Investing.

Cash App Investing also relies on various third parties to provide services, including handling and executing customer orders, and failure of these third parties to adequately perform these services may negatively impact customer experience, product performance, and our reputation and may also result in regulatory sanctions or litigation against us or Cash App Investing.

In the event of any regulatory action or scrutiny, we or Cash App Investing could also be required to make changes to our business practices or compliance programs.

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Failure to maintain the required net capital may subject a firm to limitation of its activities, including suspension or revocation of its registration by the SEC and suspension or expulsion by FINRA, and ultimately may require its liquidation.

Currently, Cash App Investing has relatively low net capital requirements, because it does not hold customer funds or securities, but instead introduces customers and directs transactions to DriveWealth.

However, a change in the net capital rules, a change in how Cash App Investing handles or holds customer assets, or the imposition of new rules affecting the scope, coverage, calculation, or amount of net capital requirements could have adverse effects.

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Our intellectual property rights may be contested, circumvented, or found unenforceable or invalid, and we may not be able to prevent third parties from infringing, diluting, or otherwise violating them.

In some cases, our commitments to transparency regarding the circumstances in which we will enforce our intellectual property rights may limit our ability to pursue certain claims or deter misuse of our intellectual property.

Additionally, our intellectual property rights and other confidential business information are subject to risks of compromise or unauthorized disclosure if our security measures or those of our third-party service providers are unable to prevent cyber-attacks.

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Our Class B common stock has ten votes per share, and our Class A common stock has one vote per share.

Stockholders who hold shares of Class B common stock, including certain of our executive officers, employees, and directors and their affiliates, held approximately 52% of the voting power of our combined outstanding capital stock as of June 30, 2025.

Because of the ten-to-one voting ratio between our Class B and Class A common stock, the holders of our Class B common stock collectively hold more than a majority of the voting power of our outstanding common stock, and therefore such holders are able to control all matters submitted to our stockholders for approval.

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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-Q

Item 1A. Risk Factors