Block Inc. (SQ), formerly Square, is a financial technology (fintech) company that provides mobile payment solutions. The startup was founded in 2009 by two veteran entrepreneurs, Twitter, Inc. (now X Corp.) co-founder Jack Dorsey and Jim McKelvey.
Key Takeaways
- Block is a mobile payments fintech that operates two ecosystems—Seller and Cash—to help startups grow their business and provide financial products to individuals.
- The company has made five important acquisitions over the last few years, including Stitch Labs and Verse Technologies.
- In 2018, Block purchased Weebly, the online store and website builder, for $365 million.
Block Inc. Background
Dorsey and McKelvey wanted to enable merchants to accept card payments electronically, a capability that had previously been inaccessible for many businesses. Square was an industry leader in creating technology capable of aggregating merchant services andmobile paymentsinto a single, easy-to-use service.
Today, Block operates both the Square ecosystem (formerly called the Seller ecosystem) and the Cash App ecosystem. The Square ecosystem helps sellers start, run, and grow their businesses by offering a range of tools, including point of sale, virtual terminal, invoice, and other types of business management and financial software.
The Cash App ecosystem provides financial products and services aimed at helping individuals manage their money. In fiscal year 2023, Block processed a total of $209.6 billion in gross payment volume generated by over four billion card payments. In the same year, the company posted a loss of $21.12 million in net income but $21.92 billion in net revenue. (In fiscal year 2022, the company posted a net loss of $553 million in net income on $17.53 billion in net revenue.)
While still a relatively young company, Block has expanded its financial ecosystems over the years through a number of strategic acquisitions. Those acquisitions have helped to boost the company's global operations, diversify its product and service offerings, and expand its reach into next-generation technologies. Among the most recent is Block's acquisition of buy now, pay later company Afterpay in 2022.
Below, we look in more detail at five of Block's most important acquisitions. The company does not provide a breakdown of how much profit or revenue each acquisition currently contributes.
1. Stitch Labs Inc.
- Type of Business: Operations Management Software
- Acquisition Price: Financial terms not disclosed
- Acquisition Date: July 10, 2020
Tech startup Stitch Labs was founded in 2011 by Brandon Levey, Jake Gasaway, and Michelle Laham. The company operates a commerce operations management platform, providing businesses with inventory and order management, channel management, and fulfillment solutions.
In May 2014, Stitch Labs and Square began integrating their separate platforms. The partnership enabled businesses using Square's mobile payments platform to begin tracking inventory, invoices, and shipping information via Stitch Labs' platform.
In July 2020, Square acquired the startup for an undisclosed amount. Square continued offering Stitch Labs’ products until the spring of 2021, but did not accept new customers during that time.
2. Weebly Inc.
- Type of Business: Website Building Platform
- Acquisition Price: Approximately $272.5 million
- Acquisition Date: May 31, 2018
Weebly, a San Francisco-based tech startup was founded in 2007. The company offers a global platform that simplifies for users the process of building a unique website, blog, or online store. Weebly currently serves millions of businesses on over 50 million sites globally.
In May 2018, Weebly was acquired by Square in a cash-and-stock deal worth $272.5 million. Square said that by combining Weebly’s web-building tools with its own in-person and online offerings, it will be able to provide merchants with the ability to start or expand an omnichannel business. The acquisition was meant to widen Square’s global customer base and provide a new recurring revenue stream.
3. Verse Technologies Inc.
- Type of Business: Mobile P2P Payments App
- Acquisition Price: Financial terms not disclosed.
- Acquisition Date: June 15, 2020
Verse Technologies, a Spain-based tech startup offering mobile peer-to-peer (P2P) payment solutions, was founded in 2015. The company’s mobile payment app offers users a simple way to send money to their phone contacts for free. It also allows users to request payments from their contacts and to transfer balances from the app to their bank account.
By the time Verse was acquired by Square in June 2020, it already had raised $37.6 million of funding from various investors. Prior to the acquisition, Square’s own P2P payment app, named Cash App, was only available in the U.S. and the U.K.
Square said that its main priority going forward was to enable Verse to continue expanding throughout Europe, allowing it to continue operating as an independent business with no immediate change to current products, customers, or operations.
4. Eloquent Labs
- Type of Business: Conversational AI Software
- Acquisition Price: Financial terms not disclosed
- Acquisition Date: May 7, 2019
Eloquent Labs, a conversational artificial intelligence (AI) services startup, was founded in 2016 by two top researchers in natural language processing. The company’s software utilizes AI in place of live chat customer support agents employed by ecommerce companies.
Eloquent Labs was acquired by Square in May 2019. Square said that Eloquent's AI technology and team will help it to enhance messaging services across its payments ecosystem. Block has since continued to build upon Eloquent Labs' AI capabilities. In February 2020, the firm acquired Dessa, a Canada-based tech company that specializes in the research and development of emerging AI technologies.
5. Third Party Trade LLC
- Type of Business: Online Brokerage
- Acquisition Price: Financial terms not disclosed
- Acquisition Date: 2019
Third Party Trade, an Oregon-based online brokerage, was founded in 2015 by Michael Giles. The company provides an application programming interface (API) platform for building investing-related financial applications. Financial media firm Benzinga reported in 2019 that, according to a source familiar with the matter, Third Party Trade was being acquired by Square.
Following the acquisition, Third Party Trade was subsequently renamed Cash App Investing LLC, which is registered with the Securities and Exchange Commission (SEC).
In October 2019, Square introduced free stock trading on its Cash App, to be administered through the newly formed Cash App Investing LLC.
How Square (Block) Reports Diversity and Inclusiveness Transparency
As part of our effort to improve the awareness of the importance of diversity in companies, we have highlighted the transparency of Block's commitment to diversity, inclusiveness, and social responsibility. The below chart illustrates how Block reports the diversity of its management and workforce. This shows if Block discloses data about the diversity of its board of directors, C-suite, general management, and employees overall, across a variety of markers. We have indicated that transparency with a ✔.
| Square Diversity & Inclusiveness Reporting | |||||
|---|---|---|---|---|---|
| Race | Gender | Ability | Veteran Status | Sexual Orientation | |
| Board of Directors | |||||
| C-Suite | |||||
| General Management | ✔ (U.S. Only) | ✔ | |||
| Employees | ✔(U.S. Only) | ✔ | |||
Does Square Still Exist?
Square the payment processing system still exists. In 2021, Square Inc. changed its corporate name to Block, Inc., though its stock ticker symbol is still SQ. The name change was intended to reflect the company's expanded focus on a variety of fintech offerings.
Who Owns Cash App?
Cash App is owned by Block, Inc. It is a peer-to-peer (P2P) payment system. The company launched Cash App in 2013 to compete with services like Zelle, Venmo, and PayPal.
Who Uses Square?
In 2023, more than four million sellers used Square to process payments, according to SEC filings from Block, Inc. The majority of these are businesses that earn $500K or more. Mid-market sellers accounted for nearly 29% of sales made with Square.
The Bottom Line
Block, Inc., formerly Square, is a fintech company that processes mobile payments. It operates two payment ecosystems. The Square ecosystem helps startups grow their business, while Cash App ecosystem provides financial products to individuals.
Block made several acquisitions from 2018 to 2023 that allowed it to expand its footprint in the fintech world and create more avenues for acquiring customers. These acquisitions include Stitch Labs, Weebly, Verse Technologies, Eloquent Labs, and Third Party Trade. After being acquired by Block, Third Party Trade was renamed Cash App Investing.
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