CUSTOMER LOANS

6 Months Ended

Jun. 30, 2025

CONSUMER RECEIVABLES, NET

Consumer receivables represent amounts due from consumers for outstanding installment payments on orders processed on the Company's BNPL platform. Consumer receivables are classified as held for investment. These receivables are typically interest free and are generally due within 14 to 56 days.

The Company classifies consumer receivables as held for sale when the Company has the intent to sell all of its rights, title, and interest in these receivables to third-party investors, and there is an available market for such receivables. For the three and six months ended June 30, 2025, $210.0 million and $420.0 million of consumer receivables were reclassified from loans held for investment to loans held for sale and sold to third parties, respectively. For the three and six months ended June 30, 2024, $131.7 million and $171.3 million of consumer receivables were reclassified from loans held for investment to loans held for sale and sold to third parties, respectively. Net losses on sales of consumer receivables were immaterial for both the three and six months ended June 30, 2025 and June 30, 2024.

The Company closely monitors credit quality for consumer receivables to manage and evaluate its related exposure to credit risk. The criteria the Company monitors when assessing the credit quality and risk of its consumer receivables portfolio is primarily based on internal risk assessments, as they provide insight into customer risk profiles and are useful as indicators of potential future credit losses. Consumer receivables are internally rated as "Pass" or "Classified." Pass rated consumer receivables generally consist of consumer receivables that are current or up to 60 days past due. Classified consumer receivables are generally comprised of consumer receivables that are greater than 60 days past due and have a higher risk of default. Internal risk ratings are reviewed and, generally, updated at least once a year. As of June 30, 2025, the amortized cost of Pass rated consumer receivables was $2.3 billion and the amount of Classified consumer receivables was $134.4 million.

The following table presents an aging analysis of the amortized cost of consumer receivables by delinquency status (in thousands):


	June 30, 2025		December 31, 2024
Non-delinquent loans	$	1,898,188	$	2,227,348
1 - 60 days past due	381,970		369,173
61 - 90 days past due	32,316		29,334
90+ days past due	102,099		80,817
Total amortized cost	$	2,414,573	$	2,706,672

The amount listed as 1 - 60 days past due in the above table includes $282.4 million and $266.7 million of cash in transit as of June 30, 2025 and December 31, 2024, respectively, which reflects ongoing repayments from consumers that have been sent from consumers’ bank accounts but have not yet been received at the Company’s bank account as of the date of the financial statements.

Consumer receivables are charged off when they are over 180 days past due as the Company has no reasonable expectation of recovery. When consumer receivables are charged off, the Company recognizes the charge against the allowance for credit losses. While the Company expects collections at that point to be unlikely, the Company may recover amounts from the respective consumers. Any subsequent recoveries following charge-off are credited to transaction, loan, and consumer receivable losses on the condensed consolidated statements of operations in the period they are recovered. The amount of recoveries for the three and six months ended June 30, 2025 and June 30, 2024 were immaterial.

The following table summarizes activity in the allowance for credit losses for consumer receivables (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Allowance for credit losses, beginning of the period	$	193,420	$	181,947	$	201,793	$	185,275
Provision for credit losses	88,100		63,361		143,750		124,340
Charge-offs and other adjustments	(75,340)		(70,675)		(140,976)		(132,814)
Foreign exchange effect	5,801		1,878		7,414		(290)
Allowance for credit losses, end of the period	$	211,981	$	176,511	$	211,981	$	176,511

CUSTOMER LOANS

Customer loans primarily consist of Square Loans and Cash App Borrow products. Square Loans are facilitated by the Company’s wholly-owned subsidiary, Square Financial Services, to qualified Square sellers. The majority of Square Loans are sold to third-party investors with a portion retained on the Company’s balance sheet. Cash App Borrow is a credit product for consumers that allows customers to access short-term loans for a small fee. Historically, Cash App Borrow loans were originated through a partnership with an industrial bank, from whom the Company purchased the loans obtaining all rights, title, and interest, and were classified as held for sale on the Company’s balance sheet. Beginning in the second quarter of 2025, the Company also began originating Cash App Borrow loans through Square Financial Services. The Cash App Borrow loans originated through Square Financial Services are retained on the Company’s balance sheet and classified as held for investment.

The Company classifies customer loans as held for investment when the Company has both the intent and ability to hold them for the foreseeable future, until maturity, or until payoff. Customer loans are classified as held for sale when there is an available market for such loans and it is the Company’s intent to sell all of its rights, title, and interest in these loans to third-party investors. The Company’s intent and ability in the future may change based on changes in the business strategies, the economic environment, and market conditions.

The Company categorizes loans held for investment and loans held for sale by the intended customer of the loan product. Commercial loans primarily include Square Loans; Consumer loans include Cash App Borrow and consumer lending loans; and Other loans include those outside of consumer and commercial loans such as Square credit card.

Loans Held for Investment

Loans held for investment are recorded at amortized cost, less an allowance for potential uncollectible amounts. Amortized cost basis represents principal amounts outstanding, net of unearned income, unamortized deferred fees and costs on originated loans, premiums or discounts on purchased loans and charge-offs. The following table presents the Company's loans held for investment by category (in thousands) as of June 30, 2025. The amount of charge-offs recorded and amount of recoveries for the three and six months ended June 30, 2025 were immaterial.


	June 30, 2025
	Consumer		Commercial		Total
Amortized cost basis	$	696,637	$	387,320	$	1,083,957
Allowance for credit losses	(18,874)		(25,539)		(44,413)
Total loans held for investment, net of allowance	$	677,763	$	361,781	$	1,039,544

As of December 31, 2024, the Company held $365.1 million of Commercial loans held for investment, net of allowance of $23.1 million. The amount of charge-offs recorded and amount of recoveries for the three and six months ended June 30, 2024 were immaterial.

The Company considers Square Loans that are greater than 60 days past due to be delinquent, and Square Loans 90 days or more past due to be nonperforming. Square Loans that are 120 days or more past due are generally considered to be uncollectible and are written off. When a Square Loan is identified as nonperforming, recognition of income is discontinued. Square Loans are restored to performing status after total overdue unpaid amounts are repaid and the Company has reasonable assurance that performance under the terms of the loan will continue. Cash App Borrow loans that are 1 day or greater past due are considered delinquent, and those that are 90 days or more past due are generally considered to be uncollectible and are written off. As of June 30, 2025 and December 31, 2024, the amount of loans that were identified as nonperforming loans was immaterial.

The Company closely monitors economic conditions and loan performance trends to assess and manage its exposure to credit risk. The criteria the Company monitors when assessing the credit quality and risk of its loan portfolio is primarily based on internal risk ratings, as they provide insight into borrower risk profiles and are useful as indicators of potential future credit losses. Loans are internally rated as "Pass" or "Classified." Pass rated Square Loans generally consist of loans that are current or up to 60 days past due. Classified Square Loans generally comprise of loans that are greater than 60 days past due and have a higher risk of default. Pass rated Cash App Borrow loans generally consist of loans that are current. Classified Cash App Borrow loans are comprised of loans that are 1 day or greater past due, due to their short-term nature and repayment period, and have a higher risk of default. Internal risk ratings are reviewed and, generally, updated at least once a year. As of June 30, 2025 and December 31, 2024, the amortized cost of Pass rated loans was $1.1 billion and $385.2 million, respectively, and the amount of Classified loans was immaterial for both periods.

Loans Held for Sale

The following table presents the Company’s loans held for sale by category (in thousands):


	June 30, 2025		December 31, 2024
Consumer	$	692,881	$	652,489
Commercial	631,343		404,844
Other	87,429		53,774
Total	$	1,411,653	$	1,111,107

Loans held for sale are recorded at the lower of amortized cost or fair value. Square Loans that are 120 days or more past due and Cash App Borrow loans that are 90 days or more past due are generally considered to be uncollectible and are written off. Past due status is based on contractual terms of the loans.

For the three and six months ended June 30, 2025, $1.1 billion and $2.2 billion of Square Loans were sold to third-party investors, respectively, and the Company recognized net gains on the sales of loans of $62.3 million and $127.7 million for the same periods. For the three and six months ended June 30, 2024, $1.2 billion and $2.1 billion of Square Loans were sold to third-party investors, respectively, and the Company recognized net gains on sales of loans of $64.8 million and $119.9 million for the same periods. The net gains on sales of loans are recognized in net income through “Subscription and services-based revenue” in the Company’s condensed consolidated statements of operations.

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