Cash App is turning into a FinTech beast we've not seen before 😳; Stripe expands its reach with Tap to Pay for Android 🌍; Spotify’s NFT-powered playlists 🎶
FinTech is Eating the World, 24 February
Hey Everyone,
Happy Saturday! Technical issues meant that Friday’s issue is coming out today. But boy it’s worth the wait as it’s the best and juiciest issue this week 🤯 We’re looking at Cash App that is turning into a FinTech beast we've not seen before (deep dive into Block’s latest earnings + 3 more bonus reads), Stripe that just expanded its reach with Tap to Pay for Android (why it's big; Stripe’s biggest mistake ever + 3 more bonus reads), and Spotify’s NFT-powered playlists (why they matter; what are Spotify’s Web3 plans + lessons for FinTechs from Spotify’s quest into audiobooks). Let’s jump straight into the spicy and fascinating stuff 🌶
Cash App is turning into a FinTech beast we've not seen before 😳
Earnings call 📞 Block’s SQ 0.00%↑ stock rose nearly 8% in extended trading after the payments giant reported fourth-quarter earnings that missed Wall Street expectations but posted strong growth in gross profit.
But the real treasure is elsewhere - let’s take a look.
The numbers 👉 Here are the key numbers from the Block, previously known as Square:
In 4Q 2022, Block generated a gross profit of $1.66 billion, up 40% year over year (YoY). Square generated a gross profit of $801 million, up 22% YoY.
The breadth and cohesion of Square’s ecosystem continued to be their biggest differentiator: in 2022, 44% of Square’s gross profit came from sellers that used 4 or more monetized products.
Looking at the full year of 2022, Block generated a gross profit of $5.99 billion, up 36% YoY. Square generated a gross profit of $3.00 billion, up 30% YoY.
The graph below beautifully visualizes Block’s latest quarter and gives a good first glance at how the company makes (or in this case - loses) money.
One more thing… 🥲 One important thing you don’t see very clearly here is AfterPay, which keeps wiping out profits Square makes elsewhere. The BNPL arm of the Square ecosystem recorded $550M in loan losses in 2022, with $155M just in Q4. Wow 😮 The only good thing here is that gross margins on BNPL were 74%…
We can remember that back in 2021, Square announced its intention to acquire Buy Now, Pay Later (BNPL) firm Afterpay for a whopping $29 billion in an all-stock transaction. In hindsight, that might be the company’s biggest mistake ever.
Anyways, when it comes to Block, the real treasure is elsewhere. It’s all about the Cash App which is turning into a FinTech beast we've not seen before. Let’s take a closer look at it.