Block nets $1.18B Q4 gross profit marking a 47% YoY increase

February 25, 2022 Coin Telegraph

Block nets .18B Q4 gross profit marking a 47% YoY increase

Afterpay

In total, Block generated $4.42 billion worth of gross profit in 2021 marking a total YoY growth of 62%, however, net profit totaled just $77 million.

Crypto-friendly digital payments tech firm Block, Inc. (formerly known as Square) posted $1.18 billion worth of gross profit in Q4, representing a growth of 47% over the same period in 2020.

The firm led by Bitcoin maxi Jack Dorsey has multiple business arms including Cash App, Square, and the freshly acquired buy now pay later (BNPL) firm Afterpay after the $29 billion deal officially closed at the end of last month.

Block’s 2021 Q4 report was posted on Feb. 24, and the firm revealed significant gross profit increases across Cash App and Square, with each firm generating $518 million and $657 million apiece to mark YoY gains of 37% and 54% respectively.

In total, the company generated $4.42 billion worth of gross profit for the entirety of 2021, marking a YoY growth of 62% compared to 2020. The impressive figures do require a pinch of salt, however, as Block’s net profit after expenses for Q4 tallied just $77 million ($166 million for all of 2021) suggesting hefty operating costs for the firm.

The company pointed to Cash App’s Cash Card and Square’s seller ecosystem as key metrics behind the Q4 growth, noting that the Cash Card saw more than 13 million active users in December with 38% of sellers using four or more Square business products.

Moving forward in 2022, Block also highlighted the significance of the Afterpay deal as it will enable the firm to significantly scale up its offerings and products this year. The firm stated:

“On January 31, we completed our acquisition of Afterpay, a global “buy now, pay later” (BNPL) platform. We believe this acquisition will further Block’s strategic priorities for Square and Cash App by strengthening the connections between our ecosystems as we deliver compelling financial products and services for consumers and merchants.”

Block has been ramping up its presence in the crypto space of late, with Cointelegraph reporting in mid-January that Cash App had integrated the Lightning Network to speed up BTC transfers, while Dorsey confirmed that Block was rolling out open-source Bitcoin mining systems.

After stepping down from Twitter in November, Dorsey is reportedly said to be mainly focused on scaling the Block’s crypto initiatives.

Afterpay ‘absolutely’ keen to explore crypto services after regulations clarified

September 9, 2021 Coin Telegraph

Afterpay

Afterpay spoke as part of the Senate inquiry into “Australia as a Technology and Financial Center” and Lee Hatton said there would be enough consumer demand to offer crypto services.

Australian buy now pay later (BNPL) giant Afterpay — now part of Jack Dorsey's Square — has said that it is likely to pursue cryptocurrency services once the regulatory framework is clear.

Following on from Afterpay’s submission to the Senate inquiry into “Australia as a Technology and Financial Center” which posited that merchants could slash payment costs by utilizing cryptocurrencies, representatives spoke to the inquiry on Sept. 8.

Afterpay’s vice president for public policy and communications Damian Kassabgi said that “this idea of being able to exchange currencies from person to person or to a merchant without going through the traditional rails could create a lot of efficiencies.”

Crypto-friendly Liberal senator Andrew Bragg asked if Afterpay had plans to offer crypto services in the future. Lee Hatton, the executive vice president at Afterpay responded that once the regulatory path was clear, the firm would be likely to meet the demand of crypto from its customers:

“Once we're able to understand the regulatory framework in this space, we can absolutely see where our customers are going. And it would seem to us that they are going to want to participate in this way.”

“We will absolutely see a part of our customers starting to leverage [Bitcoin] and we would absolutely be looking for a way to support them to do that,” she added.

The regulatory landscape of crypto in Australia remains unclear as the government is yet to put a detailed framework in place. Bragg urged the government back in May to “stay ahead of the game” by introducing regulations to protect consumers and foster innovation.

Relat Blockchain Australia says gov’t still dismissing industry as a ‘wild west’

The discussion moved on to stablecoins, with Kassabgi emphasizing the significance of using an Australian dollar (AUD) backed stablecoin for payments between consumers and merchants.

“It is not hard to imagine a world where a privately issued stablecoin that is pegged to the Australian dollar, one that passes from consumer-to-consumer or consumer-to-merchant with very little friction where the traditional payment rails are not used, where interchange fees are close to non-existent, and where there is no commercial bank as an intermediary,” he said.

“There are many benefits to this future outlook. However, there is work to be done to create a safe and efficient regulatory environment,” he added.

Afterpay tells Senate inquiry crypto could slash merchant payment costs

September 8, 2021 Coin Telegraph

Afterpay

Afterpay told the Australian Senate that using crypto could cut payments costs for merchants, and that the government should work to create a framework for an AUD-backed stablecoin.

Australian buy now pay later (BNPL) firm Afterpay believes that local merchants can slash payment costs by utilizing cryptocurrencies.

In a submission to the Senate inquiry into “Australia as a Technology and Financial Center”, Afterpay stated that the use of blockchain-based transactions would cut the fees associated with traditional payment methods including card issuer, network operator and banking fees:

“Merchants stand to benefit considerably from the cryptocurrency model, as card network fees are entirely removed from the equation and the customer/payer bears the transaction costs.”

Under the crypto model, the customer would front the cost of validating the payment on the blockchain. This could either be relatively cheap or costly depending on which cryptocurrency and blockchain the transaction is conducted with, or how congested a network is at any given time.

If such a scenario were to play out, Afterpay stated that transaction fees would be transparent and customers would be granted the choice to “wait for more favorable network conditions and a lower cost,” before making transactions.

The inquiry is investigating a broad range of factors related to financial tech, such as the economic and employment opportunities posed by crypto and blockchain tech, barriers to the uptake of new technologies, and the impact of corporate law “restraining new investment” in Australia. Afterpay will be speaking before the Senate committee later today (Sept. 8).

While BNPL competitors Zip have outlined plans to offer crypto trading services for its Australian and U.S.-based customers, Afterpay is yet to reveal any plans to work with digital assets. However, crypto-friendly payments firm Square acquired Afterpay in a $29 billion stock deal announced on Aug. 1, which could see the firm enter the space in the future.

In its submission to the senate, Afterpay noted that it "does not currently offer crypto-related products” but is actively “considering” how innovative fintech features could function as a part of the alternative financial platform.

Stablecoins down under

On the topic of stablecoins, Afterpay emphasized that the Australian government should work with the crypto sector to consider what “framework an optimal environment for an AUD-backed stablecoin should look like."

According to Afterpay, the objective should be to provide stablecoin users with protections concerning the asset but regulate it in a way that doesn’t stifle fintech innovation in Australia.

“This includes considering if regulatory instruments are required for stablecoin issuers to have transparent and adequate prudential reserve holdings, consumer-focused data protections and fair and appealable processes in place regarding account blacklisting,” it said.

Square’s value could 5X thanks to Afterpay deal: Pomp

August 4, 2021 Coin Telegraph

Afterpay

“Maybe you don't simply get a 20X the value of the business, but could you two, three, four or five X the business? Absolutely,” said Anthony Pompliano.

Morgan Creek Digital co-founder and Bitcoin proponent Anthony Pompliano thinks Square’s value could increase to $1 trillion following the firm’s acquisition of Afterpay.

Square, headed up by CEO Jack Dorsey, this week announced its acquisition of the Australian buy now pay later (BNPL) business for $29 billion on the same day it reported $2.7B in Q2 revenue from Bitcoin sales on its Cash App.

Pomp analysed the move on his “Best Business” show on Aug. 4, which was posted on YouTube under the rather clickbaity heading “Square is going to be worth $1 trillion dollars.”

In the video itself he was much more conservative in his estimates. In Pomp’s view, he thinks that a two-to-five times increase in value is a real possibility for Square due to the combined potential of both firms. According to Yahoo Finance, Square currently has a market cap of $122.72 billion.

“If the integration goes well and if the combination of these two businesses works out the way that Square and Afterpay believe it will, it will create a very, very interesting business for Square to continue to expand globally and into other demographics,” he said.

Pomp highlighted that Afterpay’s $29 billion valuation was on the back of 100,000 partnered merchants, and he emphasized that opening up Afterpay’s BNPL services to the 70 million users of Square’s Cash App, as well as the 2 million Square merchants, could see Square’s value skyrocket:

“You could effectively say 100K got you to a 29 billion dollar valuation. If you roll it out to two million, maybe you don't simply get a 20X the value of the business, but could you two, three, four or five X the business? Absolutely.”

Jack Dorsey’s crypto friendly payments firm Square announced on Aug. 1 that it was acquiring Afterpay with Square common shares. The deal is expected to be paid out in the first quarter of 2022.

Following the announcement, Square stock (SQ) has increased by 8%, going from $248 on July 30 to around $269 today, while Afterpay stock (APT) has increased by 34%, moving from $95 AUD to $128 AUD within that same time frame, according to data from TradingView.

Related: Bitcoin is key to the future of Twitter, Jack Dorsey says

Square also published a second quarter report on Aug 1 that posted a 200% increase in Bitcoin revenue year-on-year (YoY) for Q2, with BTC services driving $2.72 billion worth of revenue for the firm. In Q2 , Square’s total gross profit grew 91% YoY to $1.14 billion, and Cash App also generated a gross profit of $546 million overall, up 94% YoY.

It is unclear if Afterpay will attempt to incorporate crypto services into its business model following Square’s acquisition, however BNPL competitor ZIP revealed in July that it is looking to offer crypto trading in Australia and the U.S. within 12 months.

‘Buy now pay later’ firm Zip plans to offer crypto trading in Australia and the US

July 23, 2021 Coin Telegraph

Afterpay

“We know our younger generation of customers seek additional products and services that are relevant to them,” said Zip co-founder Peter Gray.

Australian 'buy now pay later' (BNPL) firm Zip is looking to enter the crypto market by offering trading services to users within the next 12 months.

Zip co-founder Peter Gray told Reuters on July 22 that expanding support for crypto trading services and providing a digital wallet was one of top requests from its clients. The co-founder kept his cards close to his chest however and didn’t outlay a specific roadmap or timetable to get there.

“We know our younger generation of customers seek additional products and services that are relevant to them,” Gray said.

The Afterpay competitor serves customers in Australia, New Zealand and the U.S. under its American Quadpay unit. The firm recently announced that Quadpay will be rebranded to Zip to increase brand awareness as a multinational company.

If the BNPL firm goes ahead with its crypto plans, Zip has said that it will likely offer this service to Australian and U.S. customers.

According to Yahoo Finance, Zip has a market cap of $4.1 billion. The firm competes in a highly competitive industry amongst giants such as Afterpay, which pioneered the concept and has a significantly greater market cap of $31.4 billion.

Apple announced plans to enter the BNPL sector earlier this month with a service that will allow users of Apple Pay to pay for purchases in four interest free installments. Afterpay this week revealed its first product launch with Westpac bank to offer savings accounts with a flat 1% interest rate.

Back in April, the Zip co-founder stated that the firm’s short term plans didn’t include offering traditional banking products. He also dropped the first hints about its broader plans noting they are “probably more related to crypto or the ability to buy and sell shares from the app rather than the ability to have a no-coupon savings account.”

According to data from TradingView, Zip stock (Z1P) has a rolling 10 day average volume of $13.98 million, and currently sits at a price of $7.14.

Afterpay

Stablecoins down under

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