How Square (Block) Makes Money

The Square (Block) Cash App is its largest and fastest growing source of revenue

Block Inc. (SQ), formerly Square, is a financial services and online payments company that provides hardware and software tools to help businesses run and grow their operations. Among Block's primary products are—a point-of-sale hardware system, software for payments processing and analytics, Square Card (a free business debit card), and Cash App (a peer-to-peer (P2P) payment service).

Block faces a broad array of small and large competitors such as business software companies, payroll processors, payment terminal vendors, and banks. They include PayPal Holdings Inc. (PYPL), Intuit Inc. (INTU), and venture capital startup ShopKeep.

Key Takeaways

  • Block is a financial services and mobile payments company that sells a broad range of products, including point-of-sale hardware and software.
  • Its Cash App product generated the most revenue in 2020 and is growing fast.
  • The Seller segment generated the majority of gross profit in 2020, but its share of the total is declining.
  • Block announced that it purchased $170 million worth of bitcoin in February 2021.

Square's (Block) Financials

Since its 2015 initial public offering (IPO), Block has grown rapidly into one of the largest and best-known payment services companies in the U.S. But it only recently achieved profitability. Four years after going public, the company posted its first annual profit in fiscal year (FY) 2019.

Its FY 2020, which ended Dec. 31, 2020, has been another profitable year, albeit less so than FY 2019. Net income fell 43.2% to $213.1 million in FY 2020. Total revenue for the year was $9.5 billion, up 101.5% compared to the previous year. Gross profit rose 44.6% to $2.7 billion.

Bitcoin revenue, which grew 785.2% compared to the previous year, generated the majority, or 48%, of the company's total revenue. Block allows users to buy bitcoin through its Cash App, a service for which the company charges a small margin above the price it pays to purchase bitcoin. Bitcoin revenue will fluctuate depending on the volatility of bitcoin prices and customer demand. Transaction-based revenue comprised about 35% of total revenue, while subscription and services-based revenue and hardware revenue comprised 16% and 1% of the total, respectively.

Square's (Block) Business Segments

Effective June 30, 2020, the company changed its operating and reporting segments. Previously, the company reported as a single entity. It now has two reportable segments: Cash App and Seller. Block provides a breakdown of revenue and gross profit for these two segments.

Cash App

The Cash App segment refers to Block's mobile cash application and provides financial tools to users of that app. It includes P2P payments, bitcoin and stock investments, and the Cash Card, which is linked to customer stored balances that can be used to make purchases or withdraw funds from an ATM.

In FY 2020, Cash App generated $1.2 billion in gross profit, up 167.8% from the previous year. The segment's gross profit accounted for about 45% of the company's total gross profit. Cash App revenue grew 439.8% to $6.0 billion in FY 2020, accounting for about 63% of total revenue.


The Seller segment includes the company's managed payment services, software solutions, hardware, and financial services offered to sellers, excluding those services that involve Cash App.

The Seller segment generated $1.5 billion in gross profit in FY 2020, up 8.4% compared to the previous year. The segment accounts for the majority of the company's gross profit, at about 55% of the total. Seller revenue rose 1.9% to $3.5 billion, accounting for about 37% of total revenue.

Square's (Block) Recent Developments

On Feb. 23, 2021, Block added to its bitcoin holdings, purchasing a further $170 million of the cryptocurrency and raising its total holdings to approximately 5% of its cash and equivalents. Block, which also bought $50 million of bitcoin in October, said that cryptocurrency continues to be a growing part of its business. Bitcoin hit an all-time high on Feb. 21 above $58,000 before shedding more than $12,000 over the next several days. It was trading just above $46,000 as of Feb. 26, 2021.

The company announced in January 2021 the launch of Square for Retail, a new full POS system to help retailers run their business. The new service will provide seamless integration with Square Online. It will allow retailers to sell online, in-store and on social, and provides an inventory management tool that will enable them to print barcode labels, track inventory across locations, create reports, and manage purchase orders. It also offers real-time insights into inventory performance, tracks costs, and monitors profits.

How Square (Block) Reports Diversity and Inclusiveness

As part of our effort to improve the awareness of the importance of diversity in companies, we offer investors a glimpse into the transparency of Block and its commitment to diversity, inclusiveness, and social responsibility. We examined the data Block releases to show you how it reports the diversity of its board and workforce to help readers make educated purchasing and investing decisions.

Below is a table of potential diversity measurements. It shows whether Block discloses its data about the diversity of its board of directors, C-Suite, general management, and employees overall, as is marked with a ✔. It also shows whether Block breaks down those reports to reveal the diversity of itself by race, gender, ability, veteran status, and LGBTQ+ identity.

Block Diversity & Inclusiveness Reporting
  Race Gender Ability Veteran Status Sexual Orientation
Board of Directors          
General Management ✔ (U.S. Only)      
Employees ✔ (U.S. Only)    

Article Sources

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