The news: Block raised its full-year profit guidance after Cash App use surged in the first quarter in spite of allegations it facilitates fraud.
Cash App rises above allegations: In March, activist short seller Hindenburg Research alleged that Block’s Cash App facilitates fraud and inflates its user numbers. Block later defended itself by publishing details of how it handles fraud and fake accounts.
But none of that held back Cash App:
Block has focused on growing the Cash App ecosystem through products like its debit card and Cash App savings. That push is paying off and overriding customer concerns that may have arisen after Hindenburg’s allegations. But Block could be growing over-reliant on Cash App, especially given the relatively subdued performance of Square. That could create problems going forward if there is more fallout from Hindenburg’s allegations.
What next? On Block’s Q1 earnings call, CEO Jack Dorsey outlined areas the firm is targeting for growth.
But Block stressed that spending would be more conservative in other areas. That includes recruitment, where it is deliberately slowing the pace of hiring, and sales and marketing.
This article originally appeared in Insider Intelligence's Payments Innovation Briefing—a daily recap of top stories reshaping the payments industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.