Bloomberg Audio Studios, Podcasts, radio News. You're listening to Bloomberg BusinessWeek with Carol Masser and tim Stenoveek on Bloomberg Radio Well. Earlier this month, Block, the company formerly known as Square, raised its full year profit guidance this after second quarter earnings came in well ahead of Wall Street expectations. It was fueled by strength and its cash app lending business
and resilient payment volumes. The company now expects to generate ten point one seven billion dollars in gross profit this year. That's up from a prior forecast of nine point nine to six billion. We've got with us am Rita Ahujia, CFO and COO of Block. She joins us from Palo Alto, California, Actually from Hillsborough, California. Excuse me, I'm rida is going to be featured in an upcoming edition of the Bloomberg CFO Briefing newsletter. You can sign up for that at
Bloomberg dot com slash CFO Briefing. Also with us is Nina Trentman, Bloomberg News senior editor. She writes the Bloomberg CFO Briefing newsletter. She joins us here in the Bloomberg in Active Brokers Studio. Welcome, Welcome everybody, and Rita, I want to start with you. I almost said Square at Block you've got a great view of what the consumer's doing because of transactions, because of what's happening with the cash app. How would you describe the US consumer right now?
Yeah?
Well, first of all, thank you so much for having me. It's great to be here. You know, look, we have real time data across our two at scale ecosystems, Square that serves sellers small businesses, and across that we see hundreds of millions of buyer cards Consumer cards, and then cash App, which serves individuals fifty seven million monthly active accounts on cash App across the United States. So between these two businesses we get to see a lot in
terms of consumer spending and consumer health patterns. Overall, what we've seen is resilience. From a Square perspective, we see strong retention. This is the growth or seam store growth for a small business on our platform, remaining steady and strong. And we see strong new customer acquisition, which we think is a sign of strong small business as well as the growth of our platform. And then from a cash
op perspective. We see continued growth in spending and in earned wages on our platform, which again is an indication of the engagement of our platform, our ability to command share of wallet, as well as the resilience of a consumer.
Man Rita, thanks about joining us. Just following up there. In terms of your business, you also have a buy now, pay later component. I'm wondering how delinquency rates have evolved in that business and also how you're thinking about underwriting in this somewhat uncertain macro environment.
Well, we think the product attributes of our three lending products enable us to be pretty nimble and be able to pivot quickly to the extent we do see a turn in repayment rates, which as you heard on our call, we haven't yet heard. We have three primary lending products,
Square loans that serve small businesses. As you note by now pay later, which serves customers at a point of checkout when they're buying something and they can pay in for that transaction, and then cash that borrow which enables you to get a line of credit that often bridges people. We know so many Americans are living to effect a paycheck and this helps smooth their cash flows, and across each of these three lending products, we've seen strong and
healthy repayment behavior. Now we're ready to the extent that that changes. We have the ability to update our underwriting machine learning based underwriting models in real time. But we also want to be there to support customers as their needs arise, and we think that our products can do that effectively.
Just following up in terms of signals that you're looking for specifically on performance of the business and whether any of the micro uncertainty is feeding through. What are the metrics that you're specifically looking for.
Sure, So from a cash that perspective, we look at things like inflows per active. That's the amount of mine that customers bring into cash App, and that held a growth rate on infloce proactive in the second quarter for us with cash up was at eight percent, showing again strong engagement with our platform and resilience of the consumer. We also look at things like commerce volumes. Our commerce volumes over the last twelve months within cash App grew
sixteen percent year over that year over year. That's the amount of money that people are using our platform to conduct commerce, whether it's by now, pay later, cash up card, or cash up pay. We also look from a square perspective at things like growth on our discretionary verticals, so our food and beverage GPV, which you can think of as discretionary. We serve a lot of quick service restaurants. Full service restaurants grew fifteen percent year year in the
second quarter. Retail GPV also oftentimes discretionary vertical for US grew ten percent year every year. Again, these are healthy rates of growth, but we're very watchful. We look at this data on a daily basis, and we want to be there both to protect our business but also more importantly serve our customers to the extent that you know, in this dynamic environment, anything were to change.
I want to pivot a little bit to crypto because block holds roughly eighty six hundred bitcoins worth almost a billion dollars, and crypto treasury companies have been getting a lot of attention. You guys own bitcoin. Are there any plans to add Ether to the company. What's the journey been like on that crypto planet? Yeah, Ether plans at all.
No plans to add anything beyond Bitcoin from a crypto currency perspective to our balance sheet. We believe that if the Internet is to have a currency. Bitcoin is the most likely contender. It's the longest lived, it's resilient, it's an open developer ecosystem. All the rules are understood, and it is effectively an open source platform, an open protocol
for money. We think ultimately, if the Internet does have a currency, and that is bitcoin, that enables us as a company to move at the speed of the Internet as we think about our business more globally. So a world in which bitcoin succeeds as a world in which companies like ours can move more efficiently and more quickly to serve our customers. That's the sort of purpose the strategic alignment that we have with bitcoin. We have all sorts of different ways that we as a company are
learning about how to operate in a bitcoin world. One of those is by holding it on our own balance sheet as a corporate to have book bitcoin in our treasuries, and we've been doing this for five plus years now and it's something where we get to learn the insurance aspects, the buy sell aspects, the custody aspects, the protection around that, and how we think about the accounting and the tax
elements for bitcoin. So we're learning a lot as a company as we do that just as an individual would or another institution might, and I think it's something that a lot of other corporates will begin to consider more and more.
We're speaking with Amrita, who'sia CFO and COO of Block and Rita on the bitcoin question, the buying and selling. Do you have plans to buy more bitcoin to add to the treasury.
We have a program in place where we dollar cost to average our bitcoin purchases. We have a gross profit that we generate from bitcoin in our customer oriented products, so we sell bitcoin through cash App. We've sold over fifty eight billion dollars worth of bitcoin to our cash app customers. We also have a product that we're launching in the back half of this year for bitcoin minors around the infrastructure, the hardware and this integrated software for that.
And we have a self custody product, bitkey. We have said that ten percent of all of the gross profit that we generate across our bitcoin products we will invest back in the bitcoin, and so we're in the market every single day buying that ten percent worth of our gross profit back into bitcoin.
Im Rita, we are running out of time just very quickly. Just wandering from a CFO perspective. You said, if you've held a bitcoin on your balance sheet for five years, you've seen the fluctuations. That's basically what I'm hearing from CFOs as to why they don't want to hold bitcoin. How is the company navigating the ups and downs in the price, even though most recently we've seen more increase than decrease.
You know, there's been fluctuations in a number of different assets, different asset classes. You have to be transparent with your investors as to what's driving various elements. The updated accounting standards for bitcoin treat it like any other asset that you may own, where you write it up at the end of the quarter if the value goes up, and you write it down at the end of a quarter if the value goes down. The prior standards, which to get into some of the accounting wonkiness, were as an
intangible asset. We're very very strict and you can only ever write down the value of bitcoin. So now with these updated accounting standards that look like any other asset you may hold on your balance sheet, we think that that has the opportunity to create clarity for investors and for companies and to bring more people into the bitcoin ecosystem.
I'm Rita, who's a CFO and COO of Block. Please do come back and join us soon on a Bloomberg Business Week Daily. Really appreciate your time. Once again, I'mrita, who's just CFO and COO of Block, joining us from Hillsboro, California. Also with us, Nina Trettonman, Bloomberg News Senior editor. She writes the Bloomberg CFO Briefing newsletter. Sign up for at Bloomberg dot com Slash CFO Dash Briefing