Square, Inc. (NYSE:SQ) Q3 2019 Earnings Conference Call Transcript

Nov 06, 2019 • 05:00 pm ET

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Square, Inc. (NYSE:SQ) Q3 2019 Earnings Conference Call Transcript

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Presentation
Executive
Jason Lee

is being audio webcast on our Investor Relations website. An audio replay of this call will be available on our website shortly. With that, I'd like to turn it over to Jack.

Executive
Jack Dorsey

Good afternoon, everyone, and thanks for joining us. A few comments before I pass it to Amrita, and we answer your questions.

What makes Square unique is our focus on building a robust ecosystem. An ecosystem to us is a set of tools which solve critical problems for folks in remarkable ways, and more importantly, reinforce one another. For instance, a seller might come to Square, because we are the fastest and most elegant way to manage their payments in-store. And through that one move, they find a broader set of tools, such as capital to get a quick loan, a website builder to sell online, the most advanced register to put on their countertop, and payroll to pay their employees instantly via Cash App.

Likewise, an individual comes in the Cash App, because they receive some money from their front or a new employer. Not only do they find the fastest way to send and receive money, but also free Visa Card, they can use everywhere for purchases, and then some rewards program called Boost, a way to invest our money in the stock market or even bitcoin, and a way to quickly pay yoga teacher or dog walker. Having one of these ecosystems of scale is incredible, but having two that can interact with and strengthen each other is profound.

With the sale of Caviar to DoorDash complete, we've taken the opportunity to look deeply at how -- at how to best guide this forward. With the seller ecosystem, we built and shown a long-term profitable business when it has an expected adjusted EBITDA margin of nearly 30% for full year 2019, compare this to a margin of negative 9% in 2015, at the time of our IPO. Given the efficient payback periods and ROI for the tools in this ecosystem, we have decided to significantly grow our sales and marketing efforts this year and into 2020. Our investments will be focused on bringing more awareness to all the software tools we make available to sellers to run their entire business, in addition to managing their payments, and we will continue to prioritize investments to grow our seller network beyond our expectations.

Cash has been another incredible story. Excluding bitcoin, Cash App revenue was $159 million in Q3, up 115% year-over-year. Like seller, Cash App also has a broad portfolio of tools that reinforce each other, and this quarter we successfully redesigned the app to make all the much easier to find and use. Adding to send, store and spend, we introduced a new capability this quarter, investing, and did so in a way we believe is transformational. Today on the Cash App, you can purchase stock simply for free when the market is open or scheduled when its closed. So we wanted to solve a