Block, Inc. (XYZ) Earnings Call Transcript & Summary

All right. Welcome, everyone, to the afternoon keynote session here for what is the second of our 4-day 24th Annual Credit Suisse Technology Conference. This session is certainly one of the highlights of the week. We're very excited to have with us both Brian Grassadonia, who currently serves as the Cash App lead at Square, which is the business that he helped to create, and we'll touch on that shortly. And also Amrita Ahuja, who is the CFO of Square. She joined the company in January of 2019, following a long tenure at Activision Blizzard, including some time that she spent as the CFO of the Blizzard Entertainment division. So just the lay of the land for the presentation today, why really 2 sections? We'll have a Q&A, starting with an overview of the Cash App or where Brian will provide most of the content. And then we'll move to an update on current business trends and investment areas where we'll speak more with Amrita. But first, before we get into that, I just want to briefly read the disclaimer, and then we'll get started with a topic for Brian. So bear with me, please. During this conversation, Amrita and Brian may make forward-looking statements, including about Square's preliminary expectations for its November financial performance that are subject to certain risks and uncertainties. They may also speak as to certain non-GAAP metrics. Please make sure -- please be sure to look at Square's most recent 10-Q and earnings 8-K filings with the SEC for a discussion of the company's risk factors and for reconciliations of non-GAAP metrics to their most directly comparable GAAP financial measure. So with that, and I somewhat alluded to this in the intro, but in terms of Brian's role in helping to create the Cash App, maybe we could start with a little bit of a background and the story around Cash App and how it came to be the original vision. And of course, Brian, thanks a lot for being here today.

Yes, thanks for having me. Yes, happy to share a little bit of background on Cash App and just kind of my background at Square. So a little bit of background on me. I've been at Square for about 10 years. And I was -- I've had 2 chapters at Square. I was the first product manager at the company in 2010, where I've kind of led our -- the product that you all kind of knew Square to be, kind of identified Square with early on, which was the Square card reader. So I had a chapter where I led that product line for about 3 years. And then in 2013, I transitioned to Cash App and Cash App actually came out of kind of what we described as a Hack Week sort of development event at Square, where a few of us, we try to build an experience in a week or 2 to kind of feel something, improve something that gives us more confidence that we want to continue building it. So I want to share a few parallels between how we thought about building Cash App early on compared to how we thought about building the seller business early on because there's a lot of parallels. And we've taken a lot of inspiration from what we did early on with seller. And so there's a few kind of fundamental, like foundational elements that I believe you want to have any time you're going to invest in building a product line or building a business. And one of the first things that you just need to believe you have as part of that foundation is an experience that you would describe as like a breakthrough experience. And the best way I can describe what that would be is, as you use it for the first time, it really just makes you say wow. You're just like you can't believe that this can happen. In the case of seller, our breakthrough experience was really -- it was binary. Before Square came along, many small businesses, as many as 50% of small businesses, they weren't able to accept credit cards. People kind of forget this, we take it for granted today. But the way it used to work was you go to a bank, you fill out an application form. And half of the small businesses would get declined, and they couldn't accept credit cards. Square came along. We innovated on policy, we innovated on risk management, and we made it possible for nearly every small business in this country to accept credit card payments. And that was a breakthrough. In the case of Cash App, in those first couple of weeks of Hack Week, what we were able to develop is we developed a way to move money instantly between bank accounts using just the tools that you already have in your pocket, so your mobile phone and your debit card. It was the first time really ever where we were able to kind of commercialize an ability to do that at any sort of scale. And when we started testing with people, they couldn't believe that it was possible. We could move money instantly. It was -- we were able to make it free. And it was kind of very similar to the original Square card reader. You could accept credit cards using the tools that you already had in your pocket, phone and a credit card reading device. The next parallel I want to draw and this is probably the biggest contribution that I had early on at Square was kind of an obsession around building a development-centric culture -- sorry, a distribution-centric culture. And what that means is putting a major, major emphasis on coming up with proprietary, innovative ways of acquiring customers at massive scale for an incredibly low cost. And that takes an inventive focus and obsession on achieving that. In the case of Square, we had -- there's a lot of parts that went into that formula for us. One of the elements was building a way to pass an analog audio signal up a headphone jack. That allowed us to build a credit card reading machine for free -- sorry, for a very low cost like $1 at the time, we could give them away for free. And there's a lot of other elements that went into making sure that our conversion funnel was as streamlined as possible and really driving that virality around the ecosystem. A lot of people didn't really realize this, but when people would see the credit card reader at a coffee shop or you'd see it at a farmers market, that kind of seeing that experience, it made the consumer say wow, too. And if you ran a small business, you would then go adopt this. So there's a virality in that, in the early experience that we built. In the case of Cash App, it was a hyper obsession around fine-tuning our P2P network for viral growth, making sure that every single person was coming in, was bringing in more than 1 other person. And it wasn't any one thing. It was 65, 70 different little micro decisions that really made sure that we were fine-tuning our system for viral growth. And I'd say that, that culture continues to permeate the way that we think about development on Cash App today. And then the last phase was really taking inspiration from what we did on the seller business, using that card reader and that distribution as a foundation to expand our ecosystem and identifying new adjacent services that we could go into. So whether that was the point-of-sale system, Square capital lending, appointment booking software, invoicing software, payroll software, CRM software. For each new service that we added on top of that foundation, reinforce the value of the other services, ultimately building an ecosystem. And once we kind of achieved scale with Cash App, we took inspiration from that as well, expanding into new adjacent product lines with Cash App, with the cash card, the ability to buy in some stocks, Bitcoin, Boost, et cetera. And so I think there's just a lot of parallels and the ride has been pretty incredible for me. I think you're muted or...

Yes. There we go.

Okay. Cool.

All right. That was a great introduction and background. And you alluded to some of these next topics here in your statements there. But let's talk a little bit about customer acquisition and peer-to-peer's role there. So we fully appreciate that there are many reasons that a consumer would come or and has come over to a digital banking platform or Cash App. But perhaps one of the most attractive of those reasons and the one that is perhaps most difficult to replicate would be the peer-to-peer network. So with that backdrop, we'd love to hear a little bit more about maybe a deeper dive into Cash App's view on customer acquisition and the role that peer-to-peer plays.

Yes. Well, the peer-to-peer network, I definitely view it as the fuel of our ecosystem, right? And as you alluded to, it's probably the most proprietary element, that's the most difficult to recreate. I like to think about our peer-to-peer network, I'd like to draw an analogy kind of to the way you would think about a social network. It's really easy to imagine how social networks form, right? They're viral. They have network effects. When people come in, they share photos. They want to share those with their friends. They want to bring people in. Each person that comes in, wants to bring in their friends because the network is more valuable when they have friends that are using it. So they bring them into the ecosystem. And you can imagine a social network scaling -- because we've seen this in the past many times, scaling from 0 customers to 50 million, 100 million more than that in a matter of just a few years because the virality is so dense, you can use those -- you can use social networks so often. P2P networks have very similar characteristics. Every single person that comes in to the P2P network, they want to bring their friends into it because the network -- they find more value in the ecosystem if their friends are using it. So they invite their friends, they send payments to their friends who aren't using it yet. They might refer their friends. And so the thing that I think is really special about it is not all like systems with network effects are both viral. Sometimes you have 2-sided marketplaces where the more people, maybe the more riders that you have or the more drivers that you have and because of transportation, the network is more valuable, but they're not necessarily viral. In the case of P2P networks and social networks, you have more of a uniform -- it's more of a uniform marketplace where you want to spread the ecosystem with the people that you want to use the network with. So our network is very special in that it has both network effects and that the more people that are on it, the more valuable it becomes, and it's viral, which I think is really incredible. A little bit of background on how we -- how it kind of came to be is, like I said before, that very early breakthrough experience that we created on Cash App, the commercialization of instant money movement between bank accounts using your debit card for free, the network achieved really early traction with the people who found that feature and that utility to be the most valuable. Specifically, in the Southeast, people who are living more paycheck to paycheck, socioeconomically less advantaged groups really found a lot of value in that utility, and they started using it for the utility. They didn't use it necessarily because their friends were using the system. They use it because that was such a powerful utility for them. But as they started to adopt it, they started to bring their friends in and those friends brought their friends in and those friends brought their friends in. And ultimately, now, we've been able to kind of scale through that virality to the point where there's now 80 million people in the United States who have transacted on Cash App ever since our inception in 2013 when we launched. And those people are using it. We have customers that are transacting in almost every county throughout the United States. And we really -- it just kind of speaks to the power of virality and kind of compounding growth. We've been the #1 app in the finance section of both the App Store and Google Play since 2017. And this year, in 2020, we've been a top 10 app in the overall App Store, up there with very mass market and mainstream brands. So peer-to-peer has been incredibly powerful for us. It's continuing to scale. So we're not slowing down. In Q3 of 2020, we had more new people coming to the ecosystem and transact for the very first time in any quarter in our history. So that adoption of the network is continuing to accelerate, and we think it's incredibly powerful, and it's the foundation for everything that we do.

And Tim, you really see those network effects apparent in our numbers as well. The efficiency of acquisition that Cash App has been able to generate from 2017 through 2019, there's a cost of about $5 per net new transacting active customers. And that's across our planned marketing spend, referral fees, performance marketing, brand spend. And it's a fraction of what we see the cost of a bank will spend to acquire a customer and a fraction of what we believe neobanks are spending as well would thrive efficiency, less than a year payback on that acquisition, strong ROI, which then enables us to invest further.

Absolutely. Thank you for that context, both Brian and Amrita. That's very helpful. In terms of the evolution of the Cash App ecosystem. So Brian, you talked earlier about the roots of Cash App. We went into peer-to-peer and the network and viral effects there. Maybe now you could expand a little bit more around the overall -- the evolution of the ecosystem that exists today.

Yes, happy to. So for the first few years of Cash App, from 2013 to 2016, we were really focused on kind of building our P2P network focused on the utility, focused on expanding our network effects. And around 23 -- 2016, there were a few things that we kind of had observed or identified in the market. The first one would be that in the context of the app, what I kind of described as the app ecosystem era. I think for the past decade, we've really been in the app ecosystem era in terms of this platform cycle. In the context of this platform cycle, many major industries and most major industries, for that matter, have kind of been rethought or reinvented within the context of this platform era, whether it be transportation, communication, dating, hotels, et cetera. But around 2016, the fintech kind of wave, like as we would describe it, a lot of people don't realize it's actually fairly recent. In the first half of this platform era, there was not a huge fintech movement. A lot of people had tried to really reinvent experiences in the context of the app ecosystem, but a lot of people had failed and were not really that successful. And the one reason that I had kind of diagnosed is kind of going back to distribution-centric development cultures. I think nobody had really come up with a way of acquiring customers at a massive scale for an incredibly low cost, and that just puts them at a disadvantage relative to a lot of incumbents. And now it's something that we had thought we had really cracked the code on, that high-scale distribution. The next element that we identified was that, again, taking inspiration from the seller ecosystem and seeing how once you achieve that distribution, how you can then start to build those adjacent services. We saw that playbook work. We had really good pattern recognition around that playbook, and we felt like we could replicate it. And in fact, this -- well, replicated basically. And then there was another element, which was -- and we really thought deeply about why was our P2P network working? Why were people adopting Cash App for peer-to-peer payments? There were a few kind of characteristics that we felt like we had really cracked the code on that we could apply to more experiences. The first one is that we built an experience -- we weren't the first business to ever try peer-to-peer payments. It had never really gone truly mass market in the way that it has now. And one of the reasons why we diagnosed that is we built an experience that was incredibly relatable. When you open the Cash App, the way you use -- the way you send money is incredibly intuitive. It's very straightforward, and it kind of humanizes the experience and just make you feel really comfortable. There wasn't anxiety around how do you log into something and I mean, if I send the money is it going to really get there. The whole system just worked in a way that was extremely relatable. The second element was that we had a major focus on making money instantly available. So when you send money, it was there on the other side within 3 seconds, and people could transact. And that was a really breakthrough in terms of financial services. And finally, building something that was super universally accessible that anybody could use it. There is very few barriers to entry, anybody could participate. And so as we looked at those 3 characteristics, and we kind of saw these other things coming together, we took a point of view that we could expand our ecosystem, building new adjacent services on top of peer-to-peer with those same fundamental characteristics. And ultimately, have been able to kind of evolve our mission to one where we're now trying to redefine the world's relationship with money by making it more relatable, instantly available and universally accessible. And we kind of apply those characteristics to every single thing that we build inside of the Cash App ecosystem. And the first experience that we've built kind of as an adjacent experience was instant issuance of a virtual debit card. So now people that had money in Cash App could spend their money anywhere Visa was accepted. It didn't have to be only you could transact with people that were in the ecosystem. And that unbounded us from the size of our network. So now people could use Cash App to spend anywhere. And there is a major, major obsession around building our experiences in a way that was incredibly cohesive. And kind of going back to that distribution-centric culture, it's not just about peer-to-peer. When we talk about distribution-centric development, it's about making sure that every new service that you built is built in a way that is so cohesive with the ecosystem. It's so natural. The entry points are so natural that you're not -- I don't think about them in terms of cross-selling. We think about it as these experiences just kind of unfold. So tapping a button and getting a Visa card that gets issued to you within 3 seconds, it just happens. And because of that focus, we've now been able to scale that service to the point where there's now 7 million people per month that are transact -- as of June 2020, that are transacting using our cash card. So now there's multiple services and then continuing to expand upon that. So with stocks and the ability to buy in some stocks, again, focusing on making it more relatable, making money instantly available. We introduced that service with the ability to buy fractional shares of stocks. You didn't have to buy full shares, where you led with brands, not tickers, again, focusing on the relatability element, focusing on when you sell your stocks, you have your money instantly available, anybody can do it. And we've introduced more services as well. So the ability to buy and sell Bitcoin, the same characteristics, super relatable, making money instantly available. The Boost program, which is an instant rewards program that's attached to the cash card, again, leading with brands, leading with instant discounts, super relatable experiences. And the cash -- and the Boost program now is really an attraction into the cash card because it's so intuitive for folks. So that's been a major driver of customer acquisition for us. So -- and kind of in addition to that, we now have continued to expand with things like direct deposit, the ability to take your money out of an ATM. And that ecosystem just continues to expand from there, with a major focus, again, on relatability, making money instantly available and accessibility.

Excellent. Well, I think you hit a lot on actually this next topic around engagement. But to the extent we could dig in a little bit more how -- more on this topic, let's just shift over to engagement. So the role of that in Cash App's business model, I think a lot of it has to do with many of the services that you just mentioned, but maybe we could elaborate.

Yes. Yes, so we -- there's 30 million people that were transacting on Cash App as of June 2020. And if we think about just kind of peer-to-peer payments, peer-to-peer payment is a utility that people can use a few times a week. And as we've built out the ecosystem, we put a major emphasis on introducing new experiences that provide utility that people can use Cash App every single day. So when I think about those 30 million monthly actives, my goal is to figure out how do I get as many of those 30 million monthly actives engaging daily. The cash card is a great way of doing that. But every single new service that we introduced into the ecosystem, whether it be direct deposit or whether it be stock, whether it be Bitcoin, whether it be Boost, each of those new experiences gives us an opportunity to engage our customers more often. And in doing so, they're bringing more money into the ecosystem. So -- and I think our track record of being able to introduce new services and increasing that engagement has been really strong. So since 2017 of Q3, people on Cash App transacted on average 5 times per month. And that's now increased to 15 times per month on average, just in the last few years. And similarly, there's been a similar correlation with revenue from customers. So revenue from customer has increased from $15 in Q3 of 2017, up to $45 in Q3 of 2020 because of the way that we've continued to expand upon the ecosystem. And I think we're just getting started. We have a major emphasis on looking at all the new -- I kind of think about the ecosystem, like -- it's almost like a recipe. And every single new service that we add is an ingredient. You can kind of taste the recipe and identify, like, does it need more salt? Does it need more -- I don't know, acid or something? And when we look to add new services into the ecosystem, we can identify like, well, what do we need? Do we need more monetization? Do we need more engagement? Do we need something that's going to help us acquire customers better? And as we think about expansion, there's a major emphasis on that. And so expanding the ecosystem, it drives engagement, it drives more money into the ecosystem and ultimately drives our business.

And we do see that strong relationship between product adoption, greater engagement and then ultimately, that more durable retentive relationship with a customer and higher lifetime value and greater monetization for us. As Brian noted, daily usage for our customers has grown. On average, in the third quarter, we had more than 7.5 million customers on a daily basis transacting, using Cash App. It's about 1 in 4 of our monthly active customers, and that ratio has increased over time. And when we see customers take on more products, customers with multiple products transacted 3 to 4x more frequently and generated 3 or 4x more gross profit in the third quarter compared to customers who only use peer-to-peer. So that migration for us is key and is part of what the Cash App team has done such a great job executing on.

Great. Thank you for those numbers and for the added context, Amrita. I want to shift gears to an announcement that came out just before the Thanksgiving holiday around the Credit Karma tax business. So maybe we could talk a little bit about the announcement/acquisition and how that fits into the Cash App strategy and the innovation path forward.

Yes. So the Credit Karma tax acquisition, it was a great opportunistic acquisition for us. Every single year around February, and we've seen this now for the past several years, when tax refunds hit our customers' bank accounts, we see inflows in the system increase, and we ultimately see usage increase. And so that pattern, year after year, if you're seeing that. It's definitely been a behavior that we wanted to lean into. And again, I think any new product line that we bring into the ecosystem, we want to believe kind of -- and to be consistent with our mission, that we believe we can build something that's more relatable, where we can put an emphasis on making money instantly available and, again, making something that's super accessible. And so the opportunity with Credit Karma tax, I think it really -- it just fit all of those characteristics for us. We believe that we can apply our development philosophy to an experience and build something that is super straightforward, super streamlined. It just makes doing taxes really easy. Again, back to our distribution-centric development, building it in a way that is incredibly cohesive with our ecosystem, so adopting it is just very straightforward. And ultimately, cross-selling it into our base of 30 million actives, I think, is a huge opportunity. And then driving as many of those inflows into our ecosystem as possible is a great opportunity. Along with that, we kind of spoke with the team, there's an incredibly talented team that has built Credit Karma tax, it's coming along with the acquisition. There was 2 million people that did their taxes through Credit Karma tax just last year. And we believe there's a good opportunity for us to bring a significant number of those people into the Cash App ecosystem. So all in all, it's very consistent with our strategy of continuing to expand our ecosystem into more and more subsectors of financial services. Today, we're really strong in sending money. We're really strong in spending money. We're now really strong in investing money. And taxes is a new subsector of financial services that we don't -- haven't had kind of a first-party product live in, and we're really excited to bring it into the ecosystem. And I think there's a huge opportunity ahead.

Okay. Excellent. Thank you. Let's move on to business trends. So we're going to shift a little bit both to those trends, but also a little bit on investment areas. So we'll shift over a little bit more towards Amrita, perhaps. And really, you could touch briefly on some of the recent trends you're seeing in the business, both for Cash App and for the seller ecosystem.

Yes, sure. What you hear from Brian so far today is the confidence and the enthusiasm that our leaders have for our business for the long term. We also want to be upfront, though, that in this near-term environment, it remains incredibly dynamic and uncertain. So looking at our preliminary read on November performance, let's start with the seller business. We expect our seller GPV to come in relatively flat year-over-year in November. This compares to 8% growth in October and 4% growth in the third quarter. When you look at the drivers there, the deceleration was primarily due to card-present volumes, which we expect to decline 11% year-over-year in November. We saw rising COVID cases and more restrictive measures in the U.S. and in our international markets. Card-not-present GPV, we expect to grow 24% in November, which is relatively consistent with the October rates that we saw, and we continue to see strong growth through our online channels. But if there are further regional restrictions, along with rising COVID cases, seller GPV trends could decelerate further in December. With Cash App, as we anticipated on our third quarter earnings call, we have seen a deceleration in the growth rate with November gross profit growth expected to be approximately 140% year-over-year growth. And as we discussed on the earnings call, we saw a decrease in spend per active in November as the impact from government funds continues to normalize through our system. We exited November below the 140% growth rate and expect continued normalization in Cash App's growth rate into December. These recent trends don't take away from the strong medium to long-term potential we see in both ecosystems, particularly as we invest to be well positioned for future recovery. And even in this current environment, we've seen the ability of both our seller and Cash App ecosystems to reach new customers, as you've heard, to help our existing customers adapt and to drive adoption of additional products along the way.

Okay. Thank you for that update. Just a quick follow-up on that on the earnings call. We talked a little bit about the retention metric and how there was an implied very large strong new cohort that's come into Square this year. In terms of that 10% to 15%, are we still roughly in that same range? Or would the in-store weakness might have changed that a little bit?

Yes. Look, this is something that obviously has movement in it from month-to-month or even within the month. And that retention rate is going to be impacted by restrictive measures related to COVID cases and also by those sellers' ability to adapt in this environment, which we hope our platform affords them. So we don't necessarily look at that on a short-term basis. We'll look at that over the broader arc, and we'll continue to work to provide our customers with the ability to reach their buyers wherever they are, including through omnichannel means increasingly. And that's a key way that we'll see our sellers continue to adapt and meet their buyers in this environment.

Okay. All right. Great. Well, thank you for that November update. I'm sure many investors appreciate that, Amrita. Let's turn more to the longer-term and also for some of the investment planned ahead. You talked about on the earnings call some of the investment planned for 2021. Let's dig into that a little bit. And also the longer-term vision and strategy behind the investment, behind both sides of the business.

Sure. Brian, why don't you kick off on the Cash App side?

Cool. Will do. Okay. So for Cash App in 2021, I want to identify 3 major themes that we're focused on. And the first one is just continuing to drive and strengthen the network that we have. Like, again, peer-to-peer is the fuel of everything that we're doing and ultimately continuing to strengthen that network and engage that group of people to adopt more services, so with a focus on actives. So like I said before, there's 80 million people who have transacted on Cash App all time ever since the inception of our product, 30 million of which were active in June of 2020. So in those 2 numbers, I see 2 major opportunities. 80 million people, it's 1/4 of the U.S. population. And to me, what that means is that there's 3 parts of the U.S. population that has not transacted on Cash App yet. And so continuing to put a major focus on expanding the reach of our network, continuing to adopt -- acquire more people in adjacent demographics and adjacent geographies and just continue to expand. And we're seeing that acceleration. Like I said before, in Q3 of 2020, there were more new people that transacted on Cash App for the very first time than any other quarter. And with our -- and with the LTVs that have increased on the ecosystem, again, increasing ARPU from $15 to $45 in the past several years, there's now new channels that are available to us that maybe weren't available to us before. So we had never even -- up until this year, we have acquired all those customers through almost no traditional paid marketing, no traditional acquisition marketing. But with higher LTVs, higher ARPU, we can now start to explore channels that we've not explored before in reaching different demographics of people. So a major emphasis on continuing to expand the network and then reengaging the 50 million people that have transacted on Cash App before but didn't transact in June. With those groups of people, they have our app installed, they maybe have a payment card linked. And so reacquiring those customers, reengaging those customers is much more cost-effective than acquiring a new customer. So again, more opportunities for us to build growth programs, to build programs that bring those people back into the ecosystem and get as many of those 80 million people and beyond transacting as cash -- on Cash App as frequently as possible. The next major theme is around engagement and inflows. As Amrita shared, the trends that we're seeing in the business, our actives turns are very stable. The amount of people that are transacting within the Cash App ecosystem month-over-month, we're not seeing the same sort of deceleration that we're seeing with overall like gross profit. And ultimately, that's a function of inflows and how often people are transacting. So making sure that we're able to bring more people in and getting them transacting on as many of our products as possible, making sure that we're making it extremely easy to bring money into the ecosystem, whether that be through adoption of things like direct deposit, through integration with things like Square Payroll, through things like our new tax offering. All of these new offerings are ways of bringing money into the ecosystem. When money comes into the ecosystem, customers transact more. When customers transact more, we make more revenue, and there's a very direct correlation between those 2 things. So just a major emphasis on driving that engagement and driving those inflows. And finally, an investment into AI and machine learning. We believe that AI and machine learning has the potential to be the future of computing. And in the same way that the new experiences that we're all using today were basically built with kind of a certain philosophy around building products with software development at the core. We believe that AI and machine learning has the potential to define the next era of experiences. If you were to rewind 20, 30 years ago, many of the software development divisions and large financial institutions, they sat in the IT department. They may be sat in the financial group. They didn't really think about software development and what the potential that software development had to redefine these industries. And we believe that AI and machine learning has the potential to define the next era of experiences. And we're putting a major emphasis on that into our business. In the near term, the way that it kind of manifests is every single time somebody uses the Cash App we want to make sure that, when they use it, the product works as expected. We're not insulting them. We're not declining their payment in a way -- we've all had the experience of going to the grocery store before and you swipe your card and it gets declined and you don't know why and you're trying to call your bank because they thought you were a fraudulent customer. We need to make sure that our customers are never having experiences like that when they're bringing money into the ecosystem. We are building trust, the service is working. When they reach out to customer support, they get a response within minutes, not hours. And all of these little micro experiences ultimately contribute to us building an ecosystem where we're driving stronger engagement, stronger retention, better trust and ultimately building higher lifetime value in the long run. So those are our 3 major areas of investment in 2021.

And let me just sort of start by backing up a little bit and saying, what is the size of the market that we're going after? What's the opportunity we're going after? And where are we today? Where do we think we could be in the future? We've sized the $60 billion opportunity in Cash App. That's just on the existing products and existing markets that we're in today. $100 billion opportunity on the seller side, again, with just the existing products and markets today. And we've shown -- we've demonstrated over time, the ability to grow that addressable market because of new product launches, new geography entrances. But just with those opportunities today, we're about 3% or less penetrated. And we see so much of the market being driven by legacy infrastructure in both ecosystems. And we think we have a real opportunity to double down now. Given the sort of burning platform that's been set during the pandemic, about the need to have a cohesive integrated tech platform serving for financial services with Cash App or for the ability to conduct commerce with a seller ecosystem. So big long-term opportunities that we're going after that have the potential to grow that are highly fragmented markets that we believe we have the ability to compete in. And then when you look specifically at Cash App and the strong growth they've had this year, growing over 170% year-to-date through the third quarter, we've seen similarly strong margin expansion with Cash App, 10 points of margin growth. We expect Cash App to be profitable on a fully burdened adjusted EBITDA basis in 2020. Frankly, that's probably too fast in terms of margin progression. And we want to really invest behind the strong unit economics that we've explained so far today as well as the strong ROI that we're seeing on the investments that we make in terms of sales and marketing and product development over time. So that's what we want to lean into for 2021. Across both ecosystems, we expect to step up our OpEx investments across sales and marketing, product development and G&A by $800 million, $850 million next year, about 60% of that going to Cash App, 40% going into seller. So Brian shared where we're directing our Cash App spend. For seller, the key areas that we're directing spend are sales and marketing, to drive new seller acquisition, as well as hiring engineers to continue to build up our ecosystem with a global focus. For sales and marketing, we're growing seller sales and marketing investments by 40% to 45% next year. That's brand and awareness campaigns to reach top of funnel demand, where we've seen encouraging early results in the campaigns that we've launched so far this year. And it's building out our sales team and account management teams who address larger seller needs, where we've seen real results for that, for the new cohorts of sellers that we brought in so far this year. We expect to double our sales headcount next year. And as I said, it's a greater global focus. We'll be deploying campaigns across our international markets where paybacks have improved steadily over time behind strong customer acquisition. And from a product development standpoint, engineers, data scientists, design teams, to help us expand the ecosystem with a particular focus on vertical-specific features and developer APIs that help us reach larger sellers across channels, both in person and online and bringing more of our products to these global markets.

Excellent. Okay. Well, I was hoping we'd get to a couple of our topics in the bullpen, but I think we're almost out of time. In the brief 2 minutes or so that we have left, Brian, I want to turn it back to you for sort of a summarizing closure question here around the differentiation of Cash App. And I realize, we've touched on a lot of these points earlier throughout the discussion. But maybe you could just give us the summary take on what you consider to be some of the most differentiated aspects of Cash App? And then as a follow-up to that, what role does brand play for Cash App? And what's the long-term vision for that brand?

Yes. I think in creating any business that's going to be truly sustaining over the long run, that frankly can live and sustain and thrive beyond any of us as individuals, even beyond me as an individual, it ultimately comes down to culture. Are you building a culture that is going to reinforce and continuing to -- continue to follow on the track record that we've seen. And so I think with Cash App, one of the things that has been so powerful for us historically, is -- it sounds simple, but it's really our ambition. And when we think about our ambition, it's the mention of redefining the world's relationship with money by making it more relatable, instantly available and universally accessible, that is a very, very big, big ambition. I think it's caused us as a team to think incredibly big. And when I talk about that, I think there are companies -- there are a select few companies that have been able to kind of redefine the world's relationship with an industry. I think Apple has done this when we think about our relationship with technology, pre and post-Apple. I think Google has done this when we think about our relationship with information, pre and post-Google. And when I talk about redefining the world's relationship with money, I'm talking about redefining the world's relationship with money with a similar breadth and scope that those organizations have redefined the world's relationship with their industries. That is a very, very big -- you kind of can't even imagine what that means, right, when you're kind of sitting in it. You only really kind of identify that once you've already done it. And so I think our ambition has been one of the things that has really pushed us. And every single time, we're kind of, I think, in a place, that we can describe the next spot that we're going to go through. A lot of people can't describe it. I remember when we just had our peer-to-peer product and I was trying to describe it to people, like, look, [ Nik ], nobody's really reinvented financial services in the app ecosystem yet. We're going to introduce a debit card, and we'll have people start to bank on Cash App. That leap, it seems obvious now, but it was not at all obvious back then. The idea that we could get 25-plus percent of our peer-to-peer customers transacting with our payment card was really, really unimaginable at the time. And every single time we take those leaps, we're on a new foundation, and we have an opportunity to imagine what's a similar leap forward, what is -- how do we make sure that our ambition today is as big as our ambition was in 2010, when we thought about the kind of company that we create off of this new foundation, how are we going to go even further? And I think that, that has been something that's been very, very important in our culture. It's allowed us to attract incredible entrepreneurs, incredible people that want to kind of come build within this ecosystem. And then for me, I was given an opportunity in 2013. We were building a cellular business, but I was given a canvas in Cash App. And the way that we organized Cash App within the company, we pushed decision-making very deep into the organization. Most decisions were kind of delegated down to me. And I got an opportunity to reinvent the culture, reinvent the brand, reinvent the business. And I have had that experience, and I want to make sure that every single entrepreneur that we bring into the Cash App team has a similar canvas, has a similar opportunity. And the way that we've organized our teams is we have -- we're organized in subsectors of financial services. We have a person who's thinking about the banking space. And how do I make sure that, that person has a canvas where they can be super creative or pushing decisions down to the organization, where they're able to think really, really big. The same will be true with taxes. The same is true with Boost. The same is true with direct deposit. And so at the end of the day, I think our product velocity has been a major differentiator, and product velocity doesn't just kind of happen, right? Product velocity comes through impeccable organizational design. Pushing decision-making really deep into the organization, identifying where your employees are blocked, how you can help them make decisions faster and how you can ultimately speed up the organization to continue to build and build really amazing things. I think that's been a huge differentiator for us, and we're continuing to push on that. And finally, I do want to talk about brand for a second because I think it's incredible. What we're doing with our brand is incredibly unique. I think it's incredibly special. And the best way I could describe this one would be, if you go back to the 1970s, and you were to think about like technology brands. We thought about them as mechanical, they weren't inspiring. They were like microprocessor, generally. Like people -- people weren't inspired by technology brands. And there was companies that came along, I think I'd give Apple credit for this, that reimagine what it meant to build an aspirational and iconic and edgy at the time lifestyle brand in the context of technology. I do think when we think about financial services today, we think about them with a similar -- like a similar lens with which we would think about technology brands before earlier. We don't have a ton of trust in the brands today. We think about them as being pretty rigid. And I believe that there's nothing more fundamental in life or there's very few things that are more fundamental to life than money. And I don't think there's any reason why we can't create one of the world's most iconic and aspirational and edgy lifestyle brands in the context of money. And that's what we're trying to do. And I think that when we do that, it creates this amazing halo effect across everything that we're doing. When we're trying to spread the new app network and we're trying to build that -- build adoption, if we have a brand that people love, we have a brand that people trust, we have a brand that people feel like is an extension of themselves, that helps everything that we're doing. I think it's a huge differentiator.

Wow, you really brought it home. Thank you for that closure and for that summary around the brand and Cash App. On behalf of everyone at Crédit Suisse, I want to thank you, Brian, and also Amrita. Thank you so much for all the time, for the transparency. We really appreciate you being the keynote here for the second day of the conference. So thanks a lot. Thanks for the time and hope you have a great day at meetings.

Happy to do it. Thank you.

Thanks, Tim. Bye.