Block’s Revenue Jumps 25% As It Continues Its Upmarket Push

Block Inc., corporate parent of Square and Cash App, posted $5.5 billion in second-quarter revenue, a 25% jump from $4.4 billion in the same quarter a year ago, as the payments provider pushes on with its move to add larger merchants.

The midmarket segment now accounts for 40% of its sellers, Square’s preferred term for its merchants, in the recent quarter. That’s up from 35% in the second quarter of 2021, but only a slight increase from 39% in the same period last year.

Despite the reduction in growth for this segment, Block executives still see a lot of potential. “…For Square, growing up-market has remained strong with gross profit

from mid-market sellers up 20% year-over-year,” Amrita Ahuja, Block chief operating officer and chief financial officer, told analysts during a call late Thursday, according to a SeekingAlpha.com transcript. “We believe the total addressable market for the larger sellers segment remains large and highly fragmented, and our recent shift in go-to-market efforts is intended to drive further growth upmarket.”

Growth among Block’s midmarket merchant base should benefit from its focus on improving its product suite “to better appeal to midmarket sellers and achieve product parity in international markets,” says Robert Napoli, an analyst with William Blair & Co. LLC, in a research note. “Growth with midmarket sellers should benefit from continued product enhancement, including recently vertical-focused webpage capabilities, and continued verticalization of the salesforce. Meanwhile, we expect the older seller sidecar business to continue to decline as a mix of total over time.”

In other news, Block says it now has nearly 1 million Cash App Pay active monthly users as of June. Launched in 2021, Cash App Pay enables Cash App users to pay for purchases at merchants using funds in their Cash App balances.

In its letter to shareholders for the second quarter, Block says nearly $500 million in volume was processed in the quarter through Cash App Pay. “We believe Cash App Pay is highly differentiated, as merchants can access a unique customer base with Cash App: [m]ore than two-thirds of Cash App’s monthly transacting actives were Millennial or Gen-Z customers as of the second quarter,” the letter says.

As for Cash App, the peer-to-peer payments service with other financial services generated $3.6 billion in second-quarter revenue, up 38.5% from $2.6 billion in the year-ago quarter. Square revenue was $1.9 billion, up 11.8% from $1.7 billion in the year-ago quarter.

Block provided no update on the antitrust suit it filed in July against Mastercard Inc. and Visa Inc. over interchange fees.