- Digital payments company Block is shuttering some European business operations, including peer-to-peer business Cash App’s Verse brand in the European Union and buy now, pay later platform Clearpay in Spain, France and Italy, Block Head Jack Dorsey said Thursday.
- “These required significant investment, and the markets have not seen the growth and profitability we had expected over the past several years,” Dorsey told analysts during the San Francisco-based company’s second-quarter earnings call. “We see an opportunity to shift these resources toward strategic areas that have a higher potential return on investment.”
- Clearpay is Afterpay’s moniker in the European Union; Block acquired Australian Afterpay in 2021. Block – formerly called Square, which remains the merchant business unit of the company – acquired European peer-to-peer payment app Verse in 2020.
The moves are part of Block’s pledge earlier this year to ensure its investments are focused on customer retention as it pursues profitable growth over the long term, Dorsey noted during the call.
With those goals in mind, Dorsey said executives may identify other areas where Block isn’t seeing necessary returns. Additionally, the company has slowed its pace of hiring and has sought to pull back on sales and marketing spending. Block’s operating expenses in the second quarter rose 19%, to $2 billion, according to the company’s quarterly shareholder letter.
In March, Spanish-founded Verse was admonished and fined $250,000 by its banking license provider, the Bank of Lithuania, related to anti-money laundering deficiencies, Forbes reported.
Shuttering Verse operations “will have an impact on monthly actives going forward, although we do not expect an impact to inflows or gross profit,” said Block CFO Amrita Ahuja. Cash App had 54 million monthly active users in June, up 15% year over year.
Competitive dynamics among BNPL providers have intensified in recent months, and macroeconomic headwinds have put pressure on their operations and customers. BNPL rival Affirm pulled the plug on operations in Australia earlier this year. Smaller player Zip has also shuttered operations in some markets, including Mexico and Singapore.
Still, Afterpay’s gross merchandise volume in the second quarter jumped 22% year-over-year, to $6.4 billion, Ahuja said. Losses on consumer receivables were 1.01% of GMV, “relatively consistent with the prior year,” she said.
Block reported its seventh consecutive quarterly loss, of $123 million, according to the shareholder letter. Total net revenue rose 26%, to $5.53 billion. Excluding bitcoin revenue, quarterly revenue was $3.14 billion.