For a business for a long time as a technological disruptor in financial services, Block Results of the first quarter 2025 Present a paradox. One of growth slowed down in the middle of a burst of innovation.
THE The question looming on the company is as follows: can Its investments in artificial intelligence (AI), digital loans and ecosystem cohesion relaunched?
“Our growth in the first half of this year does not respond to our bar,” said Block CEO Jack Dorsey, to start society THURSDAY (May 1) Profit call.
The cash application carried out $ 1.38 billion in raw profits for the quarter, up 10% from one year to another. Although respectable, this marks a slowdown compared to the 25% growth that it knew a year earlier. Square, the more mature block commercial unit in the merchants, reported $ 898 million in raw profits, also up 9%. The company’s gross payment volume (GPV) also missed analysts’ expectations.
A key challenge came from the monthly cash app assets. “The growth in gross profit by active transaction increases”, the company shareholder letter said: “But we have not significantly widened our user base.”
For A company that depends on the effects of the networkThis flat line could present a risk. Block’s course has dropped by almost 20% after hours trade.
Learn more:: Block doubles on the banking base as a fintech competition To grow
Block bets on AI, borrow it and the brand
Block, Square’s parent company, Cash App and Afterpay, was once a pioneer in the supply of outlet systems for small and medium -sized enterprises (SMEs). THE The company is now faced with increasing competition from fintech companies.
Dorsey and the company’s financial director Amrita Ahuja Presented a detailed business plan mixing long -term technological bets with a short -term market acceleration.
Block has revised its directives on the raw profits of the annual year at $ 9.96 billion, which represents a growth of 12% in annual shift – a more conservative forecast reflecting macro -contrary winds and decelerated growth of the basic metrics of cash app. And The gross profit increasing by 9% from one year to the next, the company now doubles three fronts: intelligent automation, accessibility of credit and brand reinvention.
Perhaps the most daring demand for the first quarter of block update revolves around its internal AI initiative: “Goose”. Described as an “agentic system”, goose aims to be the universal interface of block employees – and possibly its customers. The goal: has Automate workflows and large -scale decision -making.
“Our first objective is to do goose Our only interface for all our functions, ”said Dorsey, noting that goose Already improves engineering productivity by 30%, and adds that the system will ultimately extend to each role in the company.
“At the end of this year, goose will act as a personal financial director for consumers and a roucoutier for sellers, “said Dorsey.
Cash app borrowed – The short -term blocking loan product – is becoming a key key to its monetization strategy. After receiving FDIC approval to issue consumption loans nationally via Square Financial Services, the company accelerates unroll through its user basic of cash apps.
Read:: The growing number of direct deposits in cash application marks progress in expansion Efforts
More than half of all loan loans are used in the ecosystem of the cash application, the company reported, suggesting a solid network locking. In particular, users who deposit their pay check in cash application are 2.5 times more likely to accept a loan offer than card users only, and 13 times more likely than users without cash application or direct deposit.
This integrated financial model – What Block calls for its “Bank our Base” strategy – aims to deepen the commitment by transforming occasional users into multipuridal customers. Borrowing is at the heart of this transformation.
To reduce risks, block real -time automatic learning models that assess user behavior and payment models. The “healthy loss rate” have been maintained in historic cohorts, according to the company, and subscription improvements are underway to offer higher credit limits.
In Square, international GPV growth (15% from one year to the next) continues to exceed the United States (5.6%), suggesting an unexploited border, but scaling in these regions introduces complexity.
The Q1 2025 of Block may not have delivered the fireworks from previous years, but it reflects a company that actively recalibbs. By investing in AI, by refining its financial offers and by reinventing its brand to both Gen Z and businesses on the intermediate market, Block is bet that he can always win the future of finance.
