Block, Inc. Investor update

All right. Hey, everybody. We are live, On The Block number six with Amrita, CFO, COO of Block, Foundational Lead. Very excited to have you on, Amrita. Thanks for doing this. Thanks for having me, Matt.

It feels like I'm a longtime listener, first-time caller.

I love it. It's good to be on.

Yeah. Well, great. We had a bunch of questions that were submitted via Twitter, which we're going to get into. We're going to start with a couple that I think are pretty good summations of some of the questions that I've gotten, that I know you've gotten, and received in some of our investor conversations that we've had over the course of the last week or so since earnings. First one's on OpEx and reinvestment and how we think about the reinvestment opportunities and profitability. Could you just talk maybe broadly about Block's investment philosophy and how we think about reinvesting in the business and balancing that investment versus with long-term growth and near-term profitability, like how all that balances together?

Yeah, absolutely. It's a great question, and it's something that we spend a lot of time thinking about. First, let me say, we don't view growth and profitability to be a trade-off. They have to work together. What that means is when we're making investments into our business, we're making investments to ultimately sustainably grow and profitably grow the business for the long term. We need to be held accountable for driving those returns on every dollar that we invest, which is why we're so ROI focused across the business. We think about paybacks, we think about returns on the investment, we think about the unit economics for each of the products that we're investing in. We only scale those investments when we have conviction in each of those KPIs and in the returns ultimately.

The level of precision based on what we're investing in can vary, obviously, for go-to-market investments. These are often tried and true and highly measurable investments that we make across each of our ecosystems, from Square to Cash App to Afterpay. We can directly assess things like variable profit returns, things like our payback periods, as I said. There are longer term investments that we make though as well. Things like product development, things like investments in our AI infrastructure that ultimately power our product velocity. The things that we're looking at for those investments are a little bit different. They're things like engineering velocity, which we look at every week as a leadership team.

They're things like time to customer value, which is a metric that we're still defining, but ultimately it's a metric that we want to hold ourselves accountable to that measures us getting quality products into the hands of our customers as quickly as possible, minimizing that time from idea generation to real customer impact. We look ultimately at product output. Those are the things that then translate to customer value and translate to our performance. Maybe the final thing I'll say on this is what we've shown over the past six months is that we're seeing enough leverage in our business that you don't need to choose between reinvesting for growth and delivering near term profitability with expanding margins. We've demonstrated that we can fund meaningful investments in our business while improving the efficiency with which we operate.

What we are seeing in terms of our 2026 guide is an 8-point margin expansion relative to last year, 3 points of margin expansion relative to our initial guide for the year. If you look at the profitability guide, if you look at our gross profit guide for 2026 relative to what we shared at Investor Day, our first guide for the year, we are higher by about $530 million in gross profit, and we are higher by $770 million in AOI. So we are taking effectively about half a billion dollars of cost out relative to that initial guide through operating leverage while simultaneously still giving ourselves the room to invest meaningfully in initiatives like go-to-market AI, and the requirements in delivering our products to our customers.

Maybe just double dipping on that or spending a little more time on the actual things that we are investing in. Maybe talk through, you mentioned go-to-market AI, what specific things within those buckets are we investing in and what are you seeing as the most exciting there?

Sure. So, we have talked a lot about go-to-market. I think we have built an entirely new motion for ourselves, particularly on the Square side that we are really excited about. Because this go-to-market motion, which includes the expansion of distribution channels from first party sales to now third party sales to marketing to partners, the expansion of these distribution channels look to be largely incremental on each other. What it means is that we are doing more, and we are reaching more sellers as a result, sellers that we would not have reached through our self-onboard channel. Which, by the way, continues to operate at an incredibly high level, our strongest rate of self-onboard since 2021 in this last quarter.

What I look at as we are measuring all of these things is obviously continuing to drive attractive incremental returns to all the marginal dollars that we put towards go-to-market on both the Square side and Cash App side. We continue to be focused as we look at field sales on that marginal ROI, and what we have seen is that the per rep performance has improved quarter-over-quarter, even as we have ramped that team aggressively this year. We have also seen that our field sales team delivered more than 2 times the NVA in Q2 than they did in Q4, and nearly 3 times the sizable deals, the million-dollar-plus deals, and over 3 times more realized GPV. So they are obviously reaching larger sellers. In addition to, as I noted, the fastest growth on self-onboard in 5 years, and our ISO channel also ramping by about 150% quarter-over-quarter.

Each of these distribution channels, we don't think we've reached the limit because we're seeing strong marginal returns. We want to keep investing in each of them because that's ultimately going to create more sellers, larger sellers who will stay on our platform and continue to grow with us for the years to come. From an AI perspective, and maybe I'll talk about both AI, then I'll come to Neighborhoods as I think about the differential investment paths for us over the next year. For AI, ultimately, as I said, our focus is accelerating time to customer value, increasing the velocity at which we're delivering for our customers. Square shipped 130 features in the first half of this year, 3 times more than the first half of last year.

We have been very deliberate over the past few years, building the underlying AI infrastructure that powered that velocity. Those investments are now enabling us to basically externalize products in ways that weren't previously possible. Buzz is a good example of this. It wouldn't exist without all of the work and infrastructure investment we've made over the past few years. Buzz is, we think, the first platform that we've seen that brings agents and humans together on the same level. Imagine a place where you can truly collaborate with your team and have all of the intelligence tools at your fingertips. It just speeds up all the feedback and iteration, and gives you the power of AI, again, at hand and integrated deeply into your workflow, not off to the side as its own chat experience.

We're excited about continuing our work with AI, both in terms of how it powers our company and in potentially how it could power other people's companies and our sellers. Neighborhoods, we're really excited about. We have high conviction that we have now found product market fit, and so we're focused on scaling it. Ultimately, what that means is, since launching auto-enablement for Neighborhoods, we've scaled the number of sellers by more than 10 times. We've demonstrated that our onboarding model can scale efficiently and that we can retain our sellers as they onboard into Neighborhoods. Now we're focused on scaling and expect that Neighborhoods should be one of the top reasons, one of the top drivers of customer acquisition for Cash App in the near future.