Block, Inc.

Block, Inc. (formerly Square, Inc. ) is a U.S. listed company founded by Jack Dorsey and Jim McKelvey in 2009. It is a financial technology conglomerate. The company reportedly serves 56 million users and 4 million businesses, and processes payments worth US$228 billion annually as of 2023.

Block's inaugural product Square, launched in 2009, is a financial services platform for small and medium-sized businesses. Square enables the use of smartphones or tablets as point-of-sale registers for processing credit card payments. It also facilitates operations such as customer appointments, e-Commerce, inventory, payroll, shift schedules, banking, and borrowing business loans. Additionally, Block's portfolio includes Cash App, a consumer-focused service introduced in 2013. This app offers peer-to-peer transactions, direct deposits, a savings account, a debit card, investing in stocks and Bitcoin,  a tax filing service, and personal loans. Block also owns Afterpay, a buy now, pay later service; TBD, a decentralized platform targeting Bitcoin and decentralized finance; Bitkey, a self-custody Bitcoin wallet service;  and Tidal, a subscription-based music streaming service.

2009: conception
The original inspiration for Block's first product "Square" occurred to Jack Dorsey in 2009 when his friend Jim McKelvey was unable to complete a $2,000 sale of his glass faucets and fittings because he could not accept credit cards. Co-founders Dorsey—who also co-founded Twitter—and McKelvey began developing the company out of a small office in St. Louis. The name "Square" derives from the company's square-shaped card reader product.

2010–2014: early years
According to Forbes, Block, named Square, Inc. then, tested its payment method on 50,000 merchants in the summer of 2010, and was reporting a chargeback rate of less than 0.05 percent. In February 2011, Square was reportedly valued at approximately US$240 million, signing up 100,000 new merchants every month. In April 2011, Square announced that it has secured an investment from Visa. In October 2011, the company stated that it was processing about US$2 billion per year in payments through its "Square" card readers, charging 2.75 percent per swipe.

In 2012, Starbucks and Square announced a partnership that would allow Starbucks use the Square payment technology to accept payments for coffee. In the same year, Starbucks also reportedly invested in Square at a valuation of US$3.25 billion. Square was handling an annual payment volume of around US$6 billion around that time.

In 2013, Square launched Cash App, a peer to peer payment service. In October 2014, the company launched the integration of a payroll feature into its Square payment processing system, following the integrations of a merchant cash advance offering, a customer feedback product and an invoicing service into the system.

2015–2020: initial public offering, growth
In 2015, Square stated that it processed about US$23.8 billion worth of payment volume in 2014. In the same year, the company sold shares in its initial public offering for US$9 per share, giving itself a market capitalization of $2.9 billion.

In 2018, Vox reported Square as stating that over 7 million people used the Cash App in December 2018. Vox also stated that Cash App was the "No. 1 free finance app in Apple's U.S. iPhone App Store" and was "ahead" of PayPal and Venmo.

In October 2020, Square put approximately 1% of their total assets ($50 million) in Bitcoin (4,709 bitcoins), citing Bitcoin's "potential to be a more ubiquitous currency in the future" as their main reasoning. The company purchased approximately 3,318 bitcoins in February 2021 for a cost of around $170 million, bringing Square's total holdings to around 8,027 bitcoins (equivalent to around US$500 million in 2021, around US$481 million as of July 2024).

2021–present: name change, acquisitions
On March 2, 2021, Square reached an agreement to acquire majority ownership in Tidal. Square paid $297 million in cash and stock for Tidal, with Jay-Z joining the company's board of directors. Jay-Z, as well as other artists who currently own stock in Tidal, will remain stakeholders.

On December 1, 2021, Square announced that it would change its company name to Block, Inc. on December 10. The change was announced shortly after Dorsey resigned as CEO of Twitter. On December 10, 2021, the name change took effect, and Square, Inc. became Block, Inc. On December 16, less than a week into the rebrand, H&R Block, sued the company for trademark infringement, claiming that the name seeks to confuse customers by misappropriating the Block brand name, which H&R owns. The lawsuit was resolved in April 2023 when the two companies jointly agreed to dismiss the suit.

On January 31, 2022, Block completed its acquisition of Afterpay.

In February 2024, Block reported an annual "Gross Payment Volume" of US$228 billion for the year 2023.

Square
Square is a payments platform aimed at small and medium businesses that allows them to accept credit card payments and use smartphones or tablets or computers as payment registers for a point-of-sale system (POS). The platform was founded in 2009 by Dorsey and McKelvey. Square also offers additional features to manage various operations including staff payroll and shift schedules, customer bookings, inventory, e-Commerce, banking and business loans.

In 2022, a Protocol survey showed that 35% of U.S. small business owners used Square, a higher percentage than its competitors in the survey, while also highlighting the POS market's continued fragmentation. In April 2023, Square was reported to have 4 million merchants as its customers.

Cash App
Launched in October 2013, Cash App (formerly Square Cash) allows person-to-person money transfer via the app or website for debit card users. In March 2015, the firm introduced Square Cash for businesses, which includes the ability for individuals, organizations, and business owners to use a unique username, known as a $cashtag, to send and receive money. As of 2023, Cash App also offers a savings account and a debit card, and services such as direct deposit and investing in stocks and Bitcoin. In March 2023, USA Today reported that Cash App offered a free tax-filing service while cautioning that it didn't accommodate "every tax situation" and didn't offer "live tax support". In October 2023, it was reported that Cash App also allowed users to borrow up to $200 from the app, and that "not everyone is an eligible user for this feature".

In February 2024, Block reported 56 million "monthly active users" for Cash App.

Afterpay
Afterpay is an Australian digital payment platform in which a bought product can be paid off in four installments. This idea made in 2008 by a then eighteen-year-old Nick Molnar was geared towards millennials and inspired by the aftermath of the 2008 Global Financial Crisis. Molnar and Partner/ Co-founder Anthony Eisen launched their platform in 2014 and in four years their product reached a market capitalization of around $3.3 billion. In February 2020, Afterpay was reported to have 3.6 million active customers in the US, 3.1 million in Australia and New Zealand, and 600,000 in the UK. In August 2021, Afterpay and Square announced that Afterpay would be acquired by Square. Block paid US$29 billion in stock for the acquisition and the process was finalized in January 2022. Although Afterpay is now owned by Block inc., Molnar and Eisen still spearhead Afterpay's merchant and consumer businesses.

Tidal
Tidal is a digital music streaming service that gives users access to over 80 million songs from genres and artists across the world. Tidal was founded on the basis of artists getting paid rightfully for their work, meaningfully and directly instead of through traditional means. Tidal was first launched in 2014 by a Norwegian company called Aspiro. Aspiro was purchased by Jay-Z in 2015 for $56 million. In early 2017, the Sprint Corporation purchased 33% of the company for $200 million and then in 2021 Square Inc. paid $297 million for a majority ownership of the company. Tidal now operates in 61 countries worldwide. In June 2022, through the disclosure of the Annual Stockholder Meeting 2022, Block reported that the stake acquired in the Tidal music service was 86.8%.

TBD
TBD is a Bitcoin-focussed subsidiary of Block. TBD serves as a decentralized platform which allows developers to build decentralized finance (DeFi) applications to run on programmable blockchains.

Bitkey
In December 2023, Block launched Bitkey, a self-custody Bitcoin hardware wallet, in 95 countries. The wallet allows investors to own, manage and store their Bitcoin off exchanges. Bitkey includes a mobile app, hardware device, and a set of recovery tools in case the customer loses the phone, their hardware or both. The wallet cannot access or move a customer's Bitcoin without them.

Weebly
Weebly is a web hosting service. Weebly was founded in 2006 by David Rusenko, Dan Veltri, and Chris Fanini after they all met as students at Pennsylvania State University. In 2007, Weebly raised $650,000 in initial capital from a group of angel investors. In 2018, Square Inc. (Now Block Inc.) bought Weebly in exchange for $365 million in cash and stock. The company slowly grew and updated its capabilities over the course of a decade and now Weebly is a free online website creator that operates out of the web browser. The site offers users access to drag and drop features to build their websites, with unlimited storage options and custom URLs.

Financials
Square received angel investments from Marissa Mayer, Kevin Rose, Biz Stone, Dennis Crowley, Shawn Fanning, MC Hammer, and Esther Dyson. Since then, it has raised several additional rounds of funding:
 * Series A funding from Khosla Ventures
 * Series B funding from Sequoia Capital
 * Series C funding from Kleiner Perkins
 * Series D funding from Citi Ventures, Rizvi Traverse Management, and Starbucks
 * Series E funding from Goldman Sachs, Rizvi Traverse Management, and GIC Private Limited

The company's valuation in October 2014 was $6 billion. On November 19, 2015, Square had its IPO on the New York Stock Exchange with an initial valuation of $2.9 billion, down by more than half from its last valuation in October 2014 at $6 billion. The series E funding shares had different rights than the common shares sold at the IPO, therefore the $6 billion 'valuation' from October 2014 is wrong. Although the firm was yet to make a profit as of 2015 and had lost $420 million since 2012, it had decreased its losses from 44% of revenues to 16% in the six months leading up to its IPO. For the fiscal year 2018, Square reported losses of US$38 million, with an annual revenue of US$3.299 billion, an increase of 49.0% over the previous fiscal cycle.

Operations
Block was co-founded by Twitter creator Jack Dorsey under the name Square. Dorsey also serves as chief executive officer and Amrita Ahuja serves as chief financial officer. Block's office is in San Francisco. The firm has more than 5,000 employees.

Block's payment platform, Square, has been available in the United States since 2010 and the company launched in Canada at the end of 2012. In March 2020, Square implemented remote work due to the COVID-19 pandemic. In May 2020, Square announced that some of its workers would be allowed to be permanent remote workers. As of 2021, although Block's real estate footprint remains intact, they no longer have a designated headquarters location.

Financing and acquisitions
In August 2014, Victory Park Capital, an asset management firm, invested in Square Capital. In May 2015, Square Capital raised additional funding, with Victory Park Capital tripling its initial investment. As of 2016, Square had loaned $1 billion to companies through Square Capital since the program's inception. On November 19, 2015, Square Inc. became a public company via an initial public offering. On April 19, 2018, Square announced that it had acquired Zesty, a food delivery service that caters to corporate offices. On April 26, 2018, Square announced that it would acquire Weebly, a website-building service, for $365 million. In May 2019, Square announced that it had acquired Eloquent Labs, an artificial intelligence startup helping improve the customer service experience.

In February 2020, Square announced that it had acquired Dessa, a Toronto-based deep learning company. In November 2020, Square announced it was acquiring Credit Karma Tax, a free do-it-yourself tax-filing service, from Credit Karma for $50 million and would make it a part of its Cash App unit. In March 2021, Square announced it was acquiring a significant majority in music streaming platform Tidal for $293 million in a deal of stock and cash. In the same month, Square's Q1 sales surged 266% as transactions jumped amid economic recovery. In August 2021, Square announced its acquisition of Afterpay, a company offering a "buy now, pay later" service. Square finalized the $29 billion stock deal on January 31, 2022.

Allegations of illegal activity
On March 23, 2023, investment research firm Hindenburg Research disclosed a short position in Block, leading to a 15% drop in the company's shares that day. Hindenburg's accusations of Block included exaggerating user counts, failing to curb fraud and illegal activity on Cash App, and permitting impersonation of high-profile individuals. It also wrote in its report that Block "embraced predatory offerings and compliance worst practices in order to fuel growth and profit from facilitation of fraud against consumers and the government."

Block responded to the allegations in a press release saying, "We intend to work with the SEC and explore legal action against Hindenburg Research for the factually inaccurate and misleading report they shared about our Cash App business today".

NBC News reported in May 2024 that prosecutors at the Southern District of New York were examining financial transactions and internal practices at Block, stemming from alleged compliance lapses at its Square and Cash App units. According to the report, the company allegedly failed to collect adequate information from customers, processed transactions involving countries subject to economic sanctions, and processed cryptocurrency transactions for terrorist groups.