Block Inc.

Company Overview

Business Model: Block, Inc. is building an ecosystem dedicated to economic empowerment and unlocking access to the financial system globally. The company achieves this by developing products and tools for sellers, consumers, artists, fans, and developers. Its brands, including Square, Cash App, TIDAL, Bitkey, Proto, and Spiral, are designed to be cohesive and mutually reinforcing. The business operates through two primary reportable segments: Square, which provides a commerce ecosystem for businesses, and Cash App, which offers financial products and services to consumers.

Market Position: Block, Inc. differentiates itself through its extensive commerce ecosystems, focus on building cohesive, fast, self-serve, and elegant products, and transparent pricing without long-term contracts. In the Cash App ecosystem, it aims to become one of the top providers of banking services to households in the United States earning up to $150,000 per year, and as of December 2024, Cash App was the number one finance app on Google Play and number two on iOS based on downloads in the United States. The Square ecosystem serves a diverse range of industries and sizes, from sole proprietors to multinational businesses, and has increasingly served mid-market sellers (over $500,000 in annualized Square Gross Payment Volume).

Recent Strategic Developments:

• Organizational Structure & Cost Efficiency: In 2023, Block, Inc. sharpened its focus on organizational structure and expenditures to identify cost efficiencies. This included implementing an absolute cap of 12,000 employees, which was achieved in 2024, with plans to operate below this cap through performance management, centralization of teams, and prioritization of scope.
• Share Repurchase Program Expansion: In October 2023, the board authorized a $1 billion share repurchase program, which was increased by an additional $3 billion on July 25, 2024, for a total authorization of $4 billion. As of December 31, 2024, $1.2 billion of Class A common stock was repurchased under this program.
• Debt Issuance: During the second quarter of 2024, Block, Inc. issued $2.0 billion in aggregate principal amount of 6.50% Senior Notes due 2032.
• TBD Wind Down: In the fourth quarter of 2024, the company announced its decision to wind down TBD, an open developer platform for decentralized finance.
• Tax Asset Realization: In the fourth quarter of 2024, Block, Inc. released a material portion of the valuation allowance for deferred tax assets in the United States, resulting in a one-time non-cash benefit of $1.3 billion to the provision for income taxes. This was due to improved profitability and internal legal entity restructuring efforts.

Geographic Footprint: Block, Inc. has a global presence, with Square sellers spanning the United States, Canada, Japan, Australia, the United Kingdom, Ireland, France, and Spain. Cash App primarily operates in the United States, with monthly transacting actives in all 50 states. For the year ended December 31, 2024, 92.6% of total net revenue was generated from the United States, and 7.4% from international markets.

Financial Performance

Revenue Analysis

Profitability Metrics (2024):

• Gross Margin: 36.85%
• Operating Margin: 3.70%
• Net Margin: 12.01%

Investment in Growth (2024):

• R&D Expenditure: $2.91 billion (12.08% of revenue)
• Capital Expenditures: $0.15 billion
• Strategic Investments: $23.6 million towards impact investments; $31.5 million in bitcoin for investment purposes.

Business Segment Analysis

Square

Financial Performance (2024 vs 2023):

• Revenue: $7.68 billion (+9% YoY)
• Gross Profit: $3.60 billion (+15% YoY)
• Gross Margin: 46.85% (2024)
• Key Growth Drivers: Overall Square Gross Payment Volume (GPV) growth, driven by improvements in both card-present and card-not-present volumes from in-person and online channels, and growth in international markets. Growth in financial services-related products, primarily Square Lending.

Product Portfolio: Square offers over 30 distinct software, hardware, and financial services products.

• Commerce: Square Point of Sale (tailored for restaurants, appointment-based businesses, retail), Square Online, Square Online Checkout, Square Virtual Terminal, Risk Manager, Order Manager, Payment APIs and SDKs, Commerce APIs.
• Software: BNPL (Afterpay), Square Loyalty, Square Marketing, Square Gift Cards, Square Team Management, Square Payroll.
• Financial Services: Square Lending (Square Loans, Square Credit Card), Instant Transfer, Square Checking, Square Savings (FDIC-insured, interest-earning business savings account at Square Financial Services, Inc.).
• Hardware: Square Register, Square Terminal, Square Stand, Square Reader for contactless and chip, Square Reader for magstripe.

Market Dynamics: Square operates in competitive and evolving markets. It differentiates through its extensive commerce ecosystem, focus on cohesive, fast, self-serve, and elegant products, transparent pricing, no long-term contracts, and ability to innovate for unserved/underserved sellers. It competes with business software providers, payment terminal vendors, merchant acquirers, banks, payroll processors, and alternative lenders.

Cash App

Financial Performance (2024 vs 2023):

• Revenue: $16.25 billion (+11% YoY)
• Gross Profit: $5.24 billion (+21% YoY)
• Gross Margin: 32.24% (2024)
• Key Growth Drivers: Growth in inflows per active, execution of the "Bank Our Base" strategy (engaging customers with more products, increasing paycheck direct deposit actives). Growth in financial service-related products including Cash App Card usage, Cash App Borrow, Cash App Instant Deposit volumes, and Cash App Pay, as well as revenue from the BNPL platform. Bitcoin revenue increased due to higher average market price, partially offset by decreased quantity sold.

Product Portfolio: Cash App provides an ecosystem of financial products and services for consumers.

• Banking Services: Cash App Card (debit card, interchange fees, ATM withdrawals, gift cards), Direct Deposit, Savings (FDIC-insured), Cash Offers (rewards program), Cash App Borrow (short-term loans up to $1,000).
• BNPL Platform: Pay in 4 (split purchases into 3-4 installments), Monthly Payment Solution (larger transactions over 6-12 months), Advertising and affiliate programs, Shop directory, Afterpay Card, Afterpay Plus Card.
• Community: Peer-to-peer payments (free for linked debit, fee for credit card or business accounts), Instant Deposit.
• Commerce: Cash App Pay (mobile-friendly payments at merchants).
• Bitcoin: Simple exchange and custody solution (buy/sell bitcoin for as little as $1), auto buys, custom limit orders, direct deposit auto-conversion, instant bitcoin rewards, deposit/withdraw bitcoin across blockchain, send bitcoin across Cash App network, Lightning Network integration.
• Other: Tax Preparation (Cash App Taxes), Stock Brokerage (U.S. listed stocks and ETFs via Cash App Investing LLC), Business Accounts.

Market Dynamics: Cash App competes in peer-to-peer payments, debit/prepaid cards, credit card rewards, stock trading, tax filing, digital wallets, bitcoin exchanges, BNPL providers, and shopping/consumer demand generation. It competes with money transfer apps, prepaid debit card offerings, brokerage firms, tax firms, financial technology apps, banks, and crypto trading services. Differentiation is based on its lifestyle brand, network breadth, product ecosystem, and customer experience simplicity and quality.

Corporate and Other

Financial Performance (2024 vs 2023):

• Revenue: $0.19 billion (-4% YoY)
• Gross Profit: $0.05 billion (-3% YoY)
• Key Components: Includes TIDAL and two bitcoin businesses (Bitkey and Proto), as well as Spiral (bitcoin open source work). In the fourth quarter of 2024, Block, Inc. recognized impairment charges of $73.5 million related to the TIDAL reporting unit due to changes in its strategic focus, including terminations of certain revenue arrangements and investment into new product areas.

Capital Allocation Strategy

Shareholder Returns (2024):

• Share Repurchases: $1.2 billion (16.9 million shares of Class A common stock).
• Dividend Payments: None declared or paid.
• Future Capital Return Commitments: Total authorization of $4 billion for share repurchases, with $2.7 billion remaining as of December 31, 2024.

Balance Sheet Position (as of December 31, 2024):

• Cash and Equivalents: $8.08 billion
• Total Debt: $6.11 billion (net carrying value of Convertible Notes and Senior Notes)
• Net Cash Position: $1.97 billion
• Credit Rating: Non-investment grade ratings from S&P Global Ratings (BB+), Fitch Ratings, Inc. (BB+), and Moody's Corporation (Ba2).
• Debt Maturity Profile:
  • 2025 Convertible Notes: $1.0 billion (mature March 1, 2025)
  • 2026 Convertible Notes: $0.58 billion (mature May 1, 2026)
  • 2026 Senior Notes: $1.0 billion (mature June 1, 2026)
  • 2027 Convertible Notes: $0.58 billion (mature November 1, 2027)
  • 2031 Senior Notes: $1.0 billion (mature June 1, 2031)
  • 2032 Senior Notes: $2.0 billion (mature May 15, 2032)
  • Warehouse Facilities: $1.48 billion drawn (mature through September 2027), with $0.19 billion current portion.

Cash Flow Generation (2024):

• Operating Cash Flow: $1.71 billion
• Free Cash Flow: $1.55 billion (Operating Cash Flow less Capital Expenditures of $0.15 billion)
• Cash Conversion Metrics: Net inflows related to changes in other assets and liabilities, including settlements receivable and customers payable, of $207.3 million.

Operational Excellence

Production & Service Model: Block, Inc. designs its Square and Cash App products and services to be cohesive, fast, self-serve, and elegant. Product development is a cross-functional effort involving product management, engineering, data science, analytics, design, and product marketing. The company frequently updates its software products with a rapid release schedule. Services are built on a scalable technology platform with a strong emphasis on data analytics and machine learning for efficacy, efficiency, and scalability. Square's technology platform automates risk assessment for over 99.95% of transactions.

Supply Chain Architecture: Key Suppliers & Partners:

• Third-party Manufacturers: Contracted for hardware production.
• Component Suppliers: Limited or single sources for key components (e.g., custom parts of magstripe reader).
• Payment Card Networks: Visa, Mastercard, American Express, Discover, JCB, Interac Flash, eftpos.
• Acquiring Processors & Banks: Rely on these for transaction processing and settlement.
• Third-party Data Centers: Used for infrastructure.
• Third-party Custodians: Occasionally engaged to store and safeguard bitcoin.

Facility Network:

• Headquarters: No designated headquarters; adopted a distributed work model in 2021.
• Offices: Leases office space in New York, New York (product development, sales, business operations), Oakland, California (general corporate purposes), and St. Louis, Missouri (business operations). Also has offices in several other locations.
• Data Centers: Utilizes third-party data center facilities.

Operational Metrics:

• Square GPV: $228 billion (2024), from over 4 million sellers and 5.2 billion individual sales transactions.
• Cash App Monthly Transacting Actives: 57 million (as of December 2024).
• Cash App Inflows: $283 billion (2024), with an average of $1,255 per monthly transacting active in Q4 2024.

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels:

• Direct Sales: Direct sales and account management teams for larger sellers, including inbound lead conversion and outbound field sales for in-person outreach.
• Channel Partners: Third-party developers and partners offer solutions to their customers, expanding the addressable market.
• Digital Platforms: Online search engine optimization and marketing, online display advertising, mobile advertising, affiliate and seller referral programs. Square App Marketplace (over 900 managed partners). App marketplaces (Apple App Store, Google Play) for mobile app downloads.

Customer Portfolio: Enterprise Customers:

• Square Sellers: Diverse range of industries (services, food-related, retail) and sizes, from sole proprietors to multinational businesses. None of the customers accounted for greater than 5% of Square GPV in 2024, 2023, or 2022.
• Cash App Customers: Diverse mix across demographics and regions in the United States.
• BNPL Platform: Facilitates commerce between retail merchants and consumers, including relationships with large and well-known merchants.

Geographic Revenue Distribution (2024):

• United States: 92.6% of total net revenue
• International: 7.4% of total net revenue (no individual country contributed more than 10% of total revenue)

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: Block, Inc. operates in markets characterized by vigorous competition, rapidly changing technology, evolving industry standards, and frequent introductions of new products and services. Key trends include omnichannel commerce, proximity payment devices, digital banking, mobile financial apps, cryptocurrencies, tokenization, blockchain, and AI (including machine learning and generative AI). The company expects competition to intensify from existing and new competitors, including those not traditionally associated with the payments industry.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors:

• Business software providers: Point of sale, website building, inventory management, employee management, customer relationship management, invoicing, and appointment booking solutions.
• Payment terminal vendors.
• Merchant acquirers.
• Banks: Providing payment processing, checking, savings, loans, and payroll services.
• Traditional methods: Pen and paper, manual processes, and paper currency.
• Payroll processors.
• Alternative lenders.
• Money transfer apps.
• Prepaid debit card offerings.
• Brokerage firms.
• Tax firms.
• Financial technology apps.
• Crypto trading services.
• BNPL providers: Engaged in aggressive consumer acquisition campaigns, may develop superior technology, or consolidate.

Emerging Competitive Threats: New entrants, disruptive technologies (e.g., generative AI), alternative solutions.

Competitive Response Strategy: Block, Inc. aims to differentiate through its extensive ecosystem, focus on remarkable products, transparent pricing, no long-term contracts, and ability to innovate for unserved/underserved sellers. It invests in brand, design, and technology to keep products fast and simple, while expanding features. The company is also focused on leveraging AI to increase productivity and build features that help sellers grow.

Risk Assessment Framework

Strategic & Market Risks

Market Dynamics: The company's growth rate has slowed and may decline due to factors such as customer retention, competition, economic conditions (inflation, interest rate increases), and reductions in customer spending. Small businesses, a key customer segment, are disproportionately affected by economic downturns. Technology Disruption: Rapid technological changes (e.g., omnichannel commerce, digital banking, cryptocurrencies, AI) may render existing products obsolete. Failure to adapt or successfully integrate new technologies could materially affect the business. Customer Concentration: While no single customer accounts for more than 5% of Square GPV, the business relies on retaining and growing its base of sellers and Cash App customers. Cryptocurrency Market Volatility: Investments in bitcoin, the bitcoin ecosystem, and Cash App's bitcoin transaction feature expose the company to volatile market prices, regulatory developments, and potential disruptions from bankruptcies or enforcement actions in the crypto market.

Operational & Execution Risks

Data Security & Privacy: Handling large amounts of sensitive data (customer, seller, transaction data) creates risks of improper use, disclosure, or unauthorized access, which could harm reputation and lead to liability. Growing use of AI presents additional risks related to flawed algorithms or data practices. System Failures & Errors: Software, hardware, and systems may contain undetected errors or vulnerabilities, leading to service disruptions, data leaks, security breaches, or fraud, which could damage reputation and incur significant costs. Third-Party Dependency: Reliance on payment card networks, acquiring processors, bank partners, and other third-party service providers for critical functions (transaction processing, fund settlement, brokerage services) exposes the company to risks if these parties fail to perform or terminate relationships. Supply Chain Vulnerabilities: Dependence on single or limited suppliers for key hardware components creates risks of shortages, price increases, delays, or discontinuation, impacting product availability and costs. Talent Management: Future success depends on attracting, motivating, and retaining highly skilled employees. The employee cap of 12,000 and organizational restructuring may impact morale and talent acquisition/retention. Internal Controls: Managing growth and new lines of business requires continuous improvement of operational, financial, and internal controls. Failure to do so effectively could impair competitiveness.

Financial & Regulatory Risks

Macroeconomic Conditions: Deterioration of general macroeconomic conditions (inflation, interest rates, credit availability) could adversely affect spending by businesses and individuals, impacting loan products and overall financial results. Financing & Debt Covenants: Inability to secure financing on favorable terms or comply with covenants in existing credit agreements and Senior Notes could limit business operations and growth. Debt Servicing: Servicing Convertible Notes and Senior Notes requires significant cash. Inability to settle conversions in cash, repay at maturity, or repurchase following a fundamental change could lead to default. Counterparty Risk: Exposure to default by option counterparties in convertible note hedge transactions. Tax Liabilities: Exposure to greater-than-anticipated tax liabilities due to changes in tax laws, rates, regulations, or audits (e.g., San Francisco gross receipts tax dispute). Significant valuation allowances on deferred tax assets can impact results. Extensive Regulation: Subject to a wide variety of local, state, federal, and international laws and regulations across payments, banking, lending, cryptocurrency, consumer protection, AML, anti-corruption, sanctions, AI, privacy, data protection, and cybersecurity. Non-compliance can result in fines, penalties, and operational restrictions. Legal Proceedings: Ongoing legal and regulatory matters, including consent orders with the Consumer Financial Protection Bureau ($55 million civil penalty, $75-$120 million restitution) and state money transmission license regulators ($80 million administrative penalties), and inquiries from the SEC and Department of Justice, could result in significant costs, reputational harm, and business restrictions.

Geopolitical & External Risks

Global Operations: Expansion into new global markets subjects the company to challenges such as difficulty attracting customers, competitive conditions, compliance with local customs and regulations, and geopolitical instability. Public Health Issues: Exposure to public health issues like pandemics and related governmental actions.

Innovation & Technology Leadership

Research & Development Focus: Core Technology Areas: Block, Inc. focuses on developing products and services that are cohesive, fast, self-serve, and elegant. Key areas include omnichannel commerce, proximity payment devices (NFC), digital banking, mobile financial apps, cryptocurrencies, tokenization, blockchain, and Artificial Intelligence (AI), including machine learning and generative AI. Innovation Pipeline: The company continuously invests in adding new features, expanding its applications, and enhancing the functionality and ease of use of its offerings. It has a rapid software release schedule.

Intellectual Property Portfolio:

• Patent Strategy: The company has a patent program and strategy to identify, apply for, and secure patents for innovative aspects of its products, services, and technologies. It intends to file additional patent applications and may acquire or license patent rights.
• Licensing Programs: Participates in industry organizations that facilitate patent pools or non-assertion commitments, such as the Cryptocurrency Open Patent Alliance, LOT Network, and Open Invention Network.
• IP Litigation: Subject to assertions by third parties of infringement or other violations of intellectual property rights, which can lead to litigation and significant costs.

Technology Partnerships:

• Strategic Alliances: Collaborates with third-party developers and other partners to offer solutions to customers and expand its addressable market.
• Research Collaborations: Engages in partnerships through industry organizations.

Leadership & Governance

Executive Leadership Team

Leadership Continuity: The company's future success is significantly dependent on its executives and key employees. It invests in identifying, attracting, hiring, developing, motivating, and retaining highly skilled employees.

Board Composition: The board of directors maintains ultimate responsibility for risk management oversight, delegating certain responsibilities to the audit and risk committee. The company has a dual-class common stock structure where Class B common stock holders (including certain executive officers, employees, and directors) hold approximately 52% of the voting power as of December 31, 2024, enabling them to control matters submitted to stockholders.

Human Capital Strategy

Workforce Composition (as of December 31, 2024):

• Total Employees: 11,372 full-time employees worldwide.
• Geographic Distribution: 2,627 full-time employees outside the United States.
• Skill Mix: Not explicitly detailed, but product development involves engineering, data science, analytics, and design personnel.

Talent Management: Acquisition & Retention:

• Hiring Strategy: Focus on attracting, developing, and retaining top talent. The company implemented an absolute cap of 12,000 employees in November 2023, which it achieved in 2024, and plans to operate below this cap.
• Retention Metrics: Not explicitly disclosed, but a purpose-driven culture, employee input, and well-being are emphasized.
• Employee Value Proposition: Offers competitive compensation and benefits, reviewed and updated annually. Equity awards are a key component of compensation.

Diversity & Development:

• Diversity Metrics: Committed to building a diverse workforce that reflects customers and communities.
• Development Programs: Offers learning and development programs for all employees and a robust manager training program.
• Culture & Engagement: Purpose-driven culture with a focus on employee input and well-being. Distributed work model provides flexibility and expands talent acquisition opportunities. Policies and practices ensure hiring, promotion, and compensation decisions are based on merit. Pay equity analyses are conducted annually.

Environmental & Social Impact

Environmental Commitments: Climate Strategy:

• Emissions Targets: Committed to achieving net zero carbon for operations by 2030.
• Renewable Energy: Not explicitly detailed.

Supply Chain Sustainability:

• Supplier Engagement: Not explicitly detailed.
• Responsible Sourcing: Not explicitly detailed.

Social Impact Initiatives:

• Community Investment: Intent to invest $100 million towards impact investments that further economic empowerment. As of December 31, 2024, $67.9 million has been invested, with $23.6 million invested in 2024.
• Product Impact: TIDAL expands economic empowerment to artists. Cash App aims to redefine the world’s relationship with money by making it more relatable, instantly available, and universally accessible.

Business Cyclicality & Seasonality

Demand Patterns:

• Seasonal Trends (Square): Transaction-based revenue is historically strongest in the fourth quarter (holiday season) and weakest in the first quarter. Subscription and services-based revenue, and hardware revenue, generally demonstrate less seasonality, with hardware fluctuations tied to product launches or promotions.
• Seasonal Trends (Cash App): Historically experiences improvements in revenue, gross profit, and inflows related to government fund distributions (e.g., U.S. tax refunds in Q1). The BNPL platform typically generates additional revenue and gross profit during the holiday season (stronger Q4, weaker Q1). Bitcoin revenue is driven by customer demand and market price, which can skew typical seasonality.
• Economic Sensitivity: Performance is subject to economic conditions, with small businesses (Square's primary customers) often disproportionately affected by economic downturns, inflation, and interest rate increases.

Planning & Forecasting: The company's estimates for transaction, loan, and consumer receivable losses are based on historical experience, adjusted for market data relevant to the current economic environment, and regularly updated.

Regulatory Environment & Compliance

Regulatory Framework: Block, Inc. is subject to extensive and evolving local, state, federal, and international laws, regulations, licensing schemes, and industry standards. These include regulations related to banking, lending, deposit-taking, money transmission, foreign exchange, payments services, cryptocurrency, trading in shares, personal income tax filing, fraud detection, consumer protection, anti-money laundering, anti-bribery and anti-corruption, escheatment, sanctions regimes, export controls, AI, privacy, data protection, cybersecurity, and Payment Card Industry Data Security Standard compliance. Industry-Specific Regulations:

• Money Transmission: Holds licenses in various U.S. states and non-U.S. jurisdictions (EU, U.K., Australia) and is registered as a Money Services Business with FinCEN.
• Banking: Square Financial Services, Inc. (an industrial loan company) is subject to direct state and federal regulatory supervision (FDIC, Utah Department of Financial Institutions) and federal banking regulations through bank partnerships.
• Lending: Square Capital, LLC and Afterpay US Services, LLC hold state lending and collections licenses. Square Financial Services, Inc. is subject to Sections 23A and 23B of the Federal Reserve Act and Regulation W.
• Broker-Dealer: Cash App Investing LLC is registered with the SEC as a broker-dealer and is a member of FINRA, subject to their rules and state securities laws.
• Virtual Currency: Holds a New York State BitLicense and a Virtual Currency Business License in Louisiana.
• Privacy & Data Protection: Subject to GDPR (EU), U.K. GDPR, CCPA (California), and other evolving global privacy laws.

Trade & Export Controls: Subject to economic and trade sanctions laws and regulations (e.g., U.S. Department of the Treasury’s Office of Foreign Assets Controls) and export controls.

Legal Proceedings:

• CFPB Consent Order (January 2025): Settled claims related to Cash App's handling of customer complaints and disputes, resulting in a $55 million civil monetary penalty and $75-$120 million in restitution to certain Cash App customers.
• State Money Transmission License Regulators Settlement (January 2025): Settled claims related to Bank Secrecy Act/anti-money laundering program, agreeing to pay $80 million in administrative penalties and costs.
• NYDFS Negotiations: Ongoing negotiations with the New York State Department of Financial Services regarding Bank Secrecy Act/anti-money laundering and bitcoin programs.
• State Attorneys General Inquiries: Received subpoenas and inquiries related to Cash App’s handling of customer complaints and disputes; engaging in conversations for potential settlement.
• SEC and DOJ Inquiries: Received inquiries following a short seller report in March 2023, primarily relating to compliance and risk practices and related disclosures.
• San Francisco Gross Receipts Tax Dispute: The Tax Collector issued an assessment of $71.4 million (including interest and penalties) for fiscal years 2020-2022 related to bitcoin sales. Block, Inc. disputes this, paid the amount in January 2025 to initiate a refund claim, and estimates potential losses from $0 to $97 million for fiscal years 2020-2024.

Tax Strategy & Considerations

Tax Profile (2024):

• Effective Tax Rate: -111.2% (primarily due to one-time benefits from deferred tax assets).
• Geographic Tax Planning: Completed internal restructuring steps in Q4 2024, transferring rest of world intellectual property into the U.S. and integrating international subsidiaries (Clearpay S.A.U., Clearpay Technology SL, Clearpay Finance Limited, Squareup Pte Ltd.) into the Block, Inc. U.S. federal consolidated tax filing group. This generated IRC Section 197 and IRC Section 174 tax amortizable intangibles, resulting in deferred tax assets of $376 million and $226 million, respectively.
• Tax Reform Impact: The Inflation Reduction Act of 2022 introduced a new minimum corporate income tax and a 1% excise tax on share repurchases, which may result in additional taxes. The OECD's Pillar Two initiative (global minimum effective corporate tax rate of 15%) is being adopted by countries where Block, Inc. operates.
• Unrecognized Tax Benefits: $633.6 million as of December 31, 2024.

Insurance & Risk Transfer

Risk Management Framework:

• Insurance Coverage: Maintains cybersecurity insurance, though coverage may be insufficient for all liabilities. Also holds insurance coverage specifically for certain bitcoin incidents.
• Risk Transfer Mechanisms: Utilizes foreign exchange derivative contracts (forward contracts, options, foreign exchange swaps) to hedge exposure to currency exchange rate changes. Self-insures against certain business risks and expenses where deemed cost-effective or where insurance is unavailable. Warehouse funding facilities are secured against consumer receivables, mitigating balance sheet risk. Square Loans are primarily funded through arrangements with institutional third-party investors who purchase loans on a forward-flow basis, mitigating balance sheet and liquidity risk.