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Situation

Block (formerly square) is arguably one of the most innovative companies of our generation. What started as a payments dongle for micro merchants has transformed into a modern day, full-suite financial services provider.

The business’ core product offering centred around an integrated Point of Sale software and payments solutions for micro hospitality and retail merchants. Overtime Square has expanded its platform to offer a range of software solutions to help manage day-to-day business operations.

More recently, Block has entered consumer finance – initially with its proprietary Cash App and then through its acquisition of the Australian-based buy-now-pay-later provider, Afterpay. As a standalone business, Cash App is one of the fastest ever businesses to reach $1b in revenue.

Block listed on the NYSE in 2015 (NYSE:SQ) and given it sat so comfortably within TDM’s domain expertise of payments and SMB software, we tracked the business closely, finally becoming shareholders in 2019.

 

Aligned Values

Block is a passionate, mission-driven organisation led by a visionary founder, and supported by a world class management team. We were also attracted to Block’s mission of economic empowerment.

TDM’s structural advantage of an evergreen pool of capital and our long-term investment horizon, allowed us to  invest in an underappreciated and undervalued next-generation winner, by looking through the short-term market noise. We believe we are backing and supporting a great management team to unlock significant long-term shareholder value.

 

Partnership

TDM initially invested in June 2019. At the time of our investment, we believed the market underappreciated the size of opportunity Square had ahead of it, and how well it was placed to grow both sides of its ecosystems. There is no doubt many underestimated the depth of the competitive advantage that was being built, and the power of the network, allowing Block to accelerate its growth.

You can listen to Hamish Corlett’s “Business Breakdown” of Block below.

 

Growth

Block continues to connect its merchant ecosystem (known as Square), with its consumer ecosystem (Cash App), and the opportunity do so only hastened with its acquisition of Afterpay and the powerful associated network effects. This, coupled with the continued independent growth of each ecosystem, both in market share, customer type and geography, has given us high conviction that Block will become a financial services “generational winner” over the next decade.

 

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