BLOCK(SQ) - 2024 Q2 - Quarterly Report

Financial Performance - In Q2 2024, the company reported a gross profit of $2.2 billion, representing a 20% year-over-year increase [170]. - Cash App generated a gross profit of$ 1.3 billion in Q2 2024, up 23% year-over-year, driven by strong performance in financial services products [170]. - Square's gross profit reached $922.6 million in Q2 2024, a 15% increase year-over-year, attributed to growth in banking products and integrated payments [170]. - Total net revenue for the three months ended June 30, 2024, increased by$ 620.6 million, or 11%, compared to the same period in 2023 [176]. - Subscription and services-based revenue rose by $326.4 million, or 22%, in Q2 2024, primarily due to growth in Cash App's financial service-related products [178]. - Bitcoin revenue increased by$ 220.9 million, or 9%, in Q2 2024, contributing 42% of total revenue for the quarter [179]. - Square segment net revenue increased by $167.8 million, or 9%, for the three months ended June 30, 2024, and by$ 342.4 million, or 10%, for the six months ended June 30, 2024, driven by growth in Square GPV and banking products [197]. - Cash App segment net revenue increased by $455.7 million, or 12%, for the three months ended June 30, 2024, and by$ 1.2 billion, or 18%, for the six months ended June 30, 2024, with bitcoin revenue contributing significantly [201]. Expenses and Costs - Total cost of revenue for Q2 2024 increased by $253.2 million, or 7%, compared to Q2 2023, driven primarily by an increase in bitcoin costs [181]. - The company recorded$ 125.5 million in severance and related expenses as part of its cost efficiency initiatives [172]. - Product development expenses increased by $18.5 million, or 3%, for the three months ended June 30, 2024, and by$ 112.1 million, or 8%, for the six months ended June 30, 2024, primarily due to increased software and cloud computing infrastructure fees [187]. - Sales and marketing expenses decreased by $30.0 million, or 6%, for the three months ended June 30, 2024, and by$ 82.2 million, or 8%, for the six months ended June 30, 2024, mainly due to reduced marketing costs [188]. - General and administrative expenses decreased by $75.7 million, or 14%, for the three months ended June 30, 2024, and by$ 37.3 million, or 4%, for the six months ended June 30, 2024, primarily due to headcount reductions [189]. - Transaction, loan, and consumer receivable losses increased by $12.0 million, or 7%, for the three months ended June 30, 2024, and by$ 49.9 million, or 16%, for the six months ended June 30, 2024, mainly due to increased loan volumes [191]. Profitability and Income - Adjusted Operating Income for the three months ended June 30, 2024, was $399.1 million, compared to$ 25.5 million for the same period in 2023, reflecting improved operational efficiency [204]. - Adjusted EBITDA for the six months ended June 30, 2024, was $1.46 billion, up from$ 752.8 million for the same period in 2023, indicating strong earnings growth [204]. - Net income attributable to common stockholders for the three months ended June 30, 2024, was $195,268 thousand, compared to a net loss of$ 102,042 thousand for the same period in 2023 [220]. - Adjusted Net Income for the three months ended June 30, 2024, was $588,721 thousand, compared to$ 250,437 thousand for the same period in 2023 [220]. - Basic Adjusted Net Income Per Share for the three months ended June 30, 2024, was $0.95, compared to$ 0.41 for the same period in 2023 [220]. Liquidity and Cash Flow - The company ended Q2 2024 with $10.3 billion in available liquidity, including$ 9.5 billion in cash and cash equivalents [173]. - Cash provided by operating activities for the six months ended June 30, 2024, was $1.0 billion, compared to$ 407.7 million for the same period in 2023 [239][240]. - The total liquidity as of June 30, 2024, increased to $10.3 billion from$ 7.7 billion as of December 31, 2023 [224]. - Cash provided by investing activities for the six months ended June 30, 2024, was $867.4 million, up from$ 578.9 million in the same period of 2023, representing a 50% increase [241]. - Cash provided by financing activities for the six months ended June 30, 2024, was $1.2 billion, compared to cash used of$ 721.0 million in the same period of 2023, indicating a significant turnaround [242]. - The company held over $6.2 billion in aggregate principal amount of debt as of June 30, 2024, including$ 2.0 billion in senior unsecured notes maturing in May 2032 [228]. Shareholder Returns and Capital Management - The board authorized a share repurchase program of up to an additional $3 billion to return capital to shareholders [174]. - The company invested$ 149.2 million of restricted cash into a money market fund as of June 30, 2024 [224]. - The company issued $2.0 billion of 2032 Senior Notes in Q2 2024, contributing significantly to cash provided by financing activities [242]. Other Financial Metrics - The adjusted provision for income taxes for the six months ended June 30, 2024, was$ 298.4 million, with a non-GAAP effective tax rate of 22% [221]. - The company recognized a loss of $70.1 million and a gain of$ 163.3 million from the remeasurement of its bitcoin investment during the six months ended June 30, 2024 [225]. - The fair value of the company's bitcoin investment as of June 30, 2024, was $514.6 million, with a recognized loss of$ 70.1 million and a gain of $163.3 million for the three and six months ended June 30, 2024, respectively [245]. - The company aims to exclude certain non-cash charges from non-GAAP financial measures to better reflect ongoing business operations [209]. - The company has not identified any additional material changes in market risk since the last annual report [246].