|19. Square/ SQ Buy @ $148 MV: $64bn Employees: 3,835 Next figures: 4 November 2020 Times recommended: 12 Price when first recommended: $39.51″In June, cash app had more than 30m active customers transacting on our service.
And in July, we expect to achieve gross profit growth of more than 200pc year over year. We saw our customers increasingly use their cash card as their primary spending device. seven million people paid with their cash card in June, double compared to last year. We also saw an increase in people using direct deposit for recurring paychecks, strengthened by stimulus and unemployment checks and tax refunds.
As I mentioned earlier, our sellers have had to navigate an immense amount of uncertainty and challenges.
They’ve used our ecosystem to reach their customers in new ways. And in the second quarter, GPV [gross payments volume] from online channels was up more than 50pc year over year. One in three new online sellers on-boarded in the second quarter were entirely new to Square, and many of these sellers adopted other parts of our ecosystem, including in-person commerce.
We’re also seeing an increase in contactless payment as customers don’t want to use paper cash due to COVID risk. In March, one in 12 of our sellers were cashless. By the end of June, that shifted to one in four of our sellers operating cashless.
We launched on-demand delivery functionality, which enables sellers to take control of their fulfilment process by offering delivery to their customers directly from their websites. Our sellers gained the benefit of Square’s scale by retaining more of the economies compared to using a third-party delivery service. During the quarter, we facilitated Paycheck Protection Program loans, providing a financial lifeline to more than 80,000 small businesses around the country for a total of $873m in PPP loans. Through the program, we reached traditionally underserved sellers.
The average PPP loan through Square Capital was less than $11,000 or one-tenth the average small business administration loan.
There are three topics I’d like to cover today: first, a look at our performance in the second quarter, where trends for both cash app and seller improved each month during the quarter; second, an update on our business in July, where seller showed signs of stability and cash growth further improved; third, the compelling opportunity we see to invest in each of our ecosystems. Overall, in the second quarter, gross profit was $597m, up 28pc year over year or 32pc growth, excluding Caviar (a sold food delivery business). Net loss was $11m, and adjusted EBITDA was $98m.
For cash app, we saw strong growth with gross profit of $281m, increasing 167pc year over year as our teams continue to focus on network growth and driving engagement. As Jack mentioned, we saw an uplift in customer acquisition with more than 30m monthly transacting active customers in June. In the second quarter, these customers were transacting more than 15 times per month on average or every other day, which is up nearly 50pc from a year ago.
We saw customers join cash app for our ecosystem of products and features. In the second quarter, new cohorts of cash app customers had higher attach rates to products beyond peer-to-peer payments, such as cash card, Boost, direct deposit and bitcoin investing. This adoption has driven higher lifetime value. Customers who use two or more products generated two to three times the revenue of customers who only use peer to peer for our seller ecosystem.
Seller GPV trends improved sequentially each month from April through June. Three factors to call out here: First, we’ve invested in building out our omnichannel capabilities over the past two years and have seen sellers utilise our broader ecosystem, particularly in these dynamic times. Our online strategy includes a variety of channels that serve sellers of all types and sizes, connecting them with buyers through web and mobile.
In the second quarter, GPV from online channels was up more than 50pc year-over-year and made up more than 25pc of our Seller GPV, up from 14pc of Seller GPV a year ago. Second, while card-present volumes were down 38pc year over year in the quarter, we saw significant improvement in card-present volumes sequentially each month as certain states relaxed shelter-in-place restrictions. Third, our contactless hardware has empowered our sellers to adapt to social distancing measures and has been an important differentiator for our ecosystem. Beginning in mid-May, we offered promotional pricing on our hardware and saw a significant uplift in unit sales per Square Register and Square Terminal through the end of the quarter.
In our international markets, we saw strong GPV growth of 40pc year over year, which improved moderately compared to June.
Finally, we believe now is a compelling opportunity to invest in both of our ecosystems. Compared to the second quarter, we’re investing an incremental $100m in the third quarter across non-GAAP operating expenses for product development, sales and marketing, and general and administrative expenses. The significant majority of this investment will be on sales and marketing. As we have continued to be encouraged by recent acquisition trends and see a compelling opportunity to acquire new customers, we intend to closely track performance to be dynamic with our spend, including increasing spend if we see strong results.
Across both ecosystems, we have historically seen strong returns on our acquisition spend of at least three times within three years of acquiring a cohort. For cash app, we’ll look at new and creative marketing strategies to reach more customers and further engaging existing customers as we continue to rapidly scale the network. For seller, incremental investment will primarily focus on brand and ecosystem awareness marketing campaigns and adding to our sales and account management teams. In the second quarter, we saw strong trends in our acquisition as new seller cohorts generated higher gross profit in their first five 5 weeks post onboarding compared to new seller cohorts in the prior-year period.
We’re making a deliberate decision to invest given the recent momentum we’ve seen. This is a unique moment to reach new customers with our differentiated products, and we believe this approach will drive long-term, sustainable growth for Square. ” 6 August 2020