Specialist
Former finance & strategy manager at Square Inc.
Agenda
- Update on Square's (NYSE: SQ) Cash App growth trajectory amid slowing download metrics – up market movement execution and entrance into the teen banking market
- Ability to further monetise current users through greater engagement and ancillary offerings such as its Cash Card
- Implications of August 2021-announced Afterpay acquisition on cross-selling to both users and merchants
- Outlook as Square ties together Cash App and Seller business
Questions
1.
What do you think of the user growth for Cash App dropping off, primarily as a function of government stimulus ending? Should we be more optimistic about Cash App’s growth, given the increase in engagement metrics?
2.
A dynamic exists for neobanks – Cash App included – where there’s difficulty in getting users to consider these as their primary bank account as opposed to having a Chase or Wells Fargo account and then having Cash App as a secondary account. What can Cash App do to encourage users to use it as their primary bank account and what do you think the timeline for significant penetration could be?
3.
You referenced having a robust offering with features would be needed for customers to treat a Cash App account as a primary bank account. What key features are missing from that happening?
4.
the lending side from just the short-term micro loans and buy now pay later to credit cards, to loans, to peer to-peer, to mortgage and all that stuff, as they deepen those feature sets, I think that’s, over time, the opportunity. Also, being more specific about what I was talking about, of things that might tempt me to bring the banking deposit into Cash App.
5.
You mentioned Cash App was becoming undisciplined with paid customer acquisition. What exactly was undisciplined about it, and was that being recognised and optimised while you were there?
6.
What might be the user growth rate over the next 1-2 years?
7.
During a recent earnings call, Cash App discussed its entrance into teen banking, roughly a 20-million-user market. What do you think about its ability to execute here and the broader market, including Cash App’s approach, given factors such as parental approval?
8.
When considering the teen banking market, you referenced players such as Greenlight. What advantage does Cash App have over those players in terms of penetrating this teen banking market? The marketing spend it has and its ability to work with celebrities such as Aaron Rodgers, Megan Thee Stallion and others seem to be efforts to target teen banking.
9.
What might be some of the products Cash App can cross-sell to parents? What does this position the company to do? Could there be savings accounts for college marketed to parents, or trading education?
10.
How does Cash App plan to drive engagement with wealthier users? What’s been the challenge historically and what changes could it make to be more attractive to that demographic?
11.
It seems as if Cash App pushes more into a younger demographic and that might push away older, wealthier potential users. Is the company just more interested in capturing a younger demographic and ramping up its CAC [customer acquisition cost] to tackle wealthier users?
12.
Square announced its acquisition of Afterpay in August 2021. Could you discuss the launch behind that acquisition and how you expect this to drive engagement on both the Cash App and the seller side?
13.
What benefit does Cash App have from the AfterPay acquisition? Having this banking charter and then also the Square capital to fund these loans can be considered an advantage, whereas many other operations have to go external for that. What challenges remain from this acquisition when considering integration or a potential regulatory action related to buy now, pay later? As you mentioned, it seems a slam-dunk.
14.
You mentioned Affirm, and I think that’s an interesting competitor in this regard. What advantage does Cash App have over Affirm when it comes to underwriting, given the broader relationship it has with its customers and the data it has direct access to as opposed to what Affirm might receive through third-party data aggregators?
15.
What might be the impact to ARPU after adding the Afterpay capability into the app? ARPU is an approximate USD 18 for a given Cash App user. What could that increase to with the buy now pay later capability?
16.
What other lending products could Cash App push into beyond buy now pay later? You mentioned hypothetical scenarios such as auto loans, but what personal loans are on the table? What’s been the challenge in rolling out these types of lending products?
17.
Does Cash App have the in-house capabilities to roll out more lending products such as mortgages itself, or might further lending offerings have to be through acquisitions? Personal loans doesn’t seem to be too much of an uplift.
18.
Do you think paying USD 29bn for Afterpay was a good deal for Cash App and Square more broadly?
19.
What’s your assessment of Cash App’s strategy so far to increase inflows for a given customer and what could it do further? It has the free debit card and the cheque scanning and deposit capability.
20.
What could be an estimated figure of the number of users using Cash App’s direct deposit feature? Are those users depositing their full cheques into this account or just a part of it?
21.
How can Cash App further incentivise users to direct-deposit in the first place, and then to deposit their full amounts?
22.
How might Square close the loop between Cash App and the seller business and what could the state of this be in 2 years?
23.
Is the free Cash App debit card counterproductive to Square’s goal of a closed loop? I understand the idea of using that card to drive fund inflows, but at what point does Square heavily incentivise users to use Cash App Pay as opposed to the Cash App card to bypass network fees?
24.
What are the unit economics of using the Cash App Pay feature vs the Cash App card? As you mentioned, it bypasses the network and processing fees.
25.
What’s your sense for the direction of Square’s crypto strategy and how it plays into the broader longer term growth strategy? The company has had a huge benefit in terms of revenue growth from bitcoin. Jack Dorsey is talking about integrating with Bitcoin Lightning Network and even bitcoin mining in a decentralised manner. How do you expect crypto to play in this longer-term product evolution?
26.
Might Jack Dorsey’s split focus – bitcoin on one hand and Twitter on the other – hinder Square’s performance in any way? Do you feel there’s any bad judgement on Jack Dorsey’s part? What do you think of the broader management team and its ability execute?
27.
What do you think of Cash App’s ability to innovate and compete with other major neobanks? Who is its largest competitive threat? Chime has a large number of users, SoFi is in the mix and so is PayPal through Venmo.
28.
How might CAC to lifetime value shake out over the next 1-2 years as the competition heats up from features ramping up across the board?
29.
Is there anything investors should be monitoring around Square, Cash App and the broader industry?
