Good day, ladies and gentlemen, and welcome to Square 4th Quarter 2017 Earnings Conference Call. I would now like to turn the call over to your host, Jason Lee, Head of Investor Relations. Please go ahead.
Hi, everyone. Thanks for joining our Q4 2017 earnings call. We have Jack and Sarah with us today. First, we want to remind everyone of the format of our earnings call. We have published a shareholder letter on our Investor Relations website, which was available shortly after the market closed.
We will begin this call with some short prepared remarks before opening the call directly to your questions. During Q and A, we will take questions asked from our sellers in addition to questions from conference call participants. We would also like to remind everyone that we will be making forward looking statements on this call. Actual results could differ materially from those contemplated by our forward looking statements. Reported results should not be considered as an indication of future performance.
Please take a look at our filings with the SEC for a discussion of the factors that could cause our results to differ. Also, note that the forward looking statements on this call are based on information available to us as of today's date. We disclaim any obligation to update any forward looking statements except as required by law. Also during this call, we will discuss certain non GAAP financial measures. Reconciliations to the most directly comparable GAAP financial measures are provided in the shareholder letter on our Investor Relations website.
These non GAAP measures are not intended to be a substitute for our GAAP results. Finally, this call in its entirety is being audio webcast on our Investor Relations website. An audio replay of this call will be available on our website shortly. With that, I would like to turn it over to Jack.
Thanks, Jason, and thank you all for joining us. Our 2017 results were a strong close to the year and gave us great momentum in the 2018. We accelerated top line growth at significant scale in the Q4 of 2017. Total net revenue was $616,000,000 up 36% year over year and adjusted revenue was 283,000,000 dollars up 40% year over year. This is an increase from the Q3 of 2017 when total net revenue and adjusted revenue grew 33% and 45%, respectively, year over year.
I'd like to take a moment to discuss 3 priorities that will drive our strategy and investment this year. Strengthening our omnichannel commerce offering, expanding the financial services we offer and growing the markets that we're currently in. These areas provide meaningful value to sellers and individuals and significantly increase our market opportunity. First, we want to strengthen our omnichannel commerce offering. We began with a Square Card reader, enabling millions of sellers to easily accept card payments.
Since we started 9 years ago, the ways people buy and sell have changed dramatically. And to many, the shift to omnichannel simply means enabling a retailer to sell both offline and online. But for us, the opportunity is far bigger. Our millions of sellers have needs across industries. A services business like a beauty salon is also a retail business selling hair products.
We already provide sellers with many of the tools they need to create and manage an omnichannel experience from hardware to point of sale software to online appointment booking software and online food ordering via Caviar. There are many more services we want to provide. So this year, we will continue to build out our ecosystem, including 1st and third party products, so we can serve the full spectrum of business needs any seller may have. 2nd, we want to expand the financial services we offer and we will continue to focus on the underserved. Access to financial tools, like the ability to accept card payments and therefore never miss a sale, empowers people to participate and thrive in the economy.
We're really proud of the work we accomplished this past year with the Cash App, which has more than 7,000,000 monthly active customers in December. An individual can set up the app in minutes and send peer to peer payments, store money, receive their paycheck and buy and sell Bitcoin. Cash Card is also a useful spending tool and in December of 2017, customers spent over $90,000,000 with the Cash Card, representing an annual run rate of over $1,000,000,000 In the same way we empowered businesses with fast and cohesive tools, we're building a similar ecosystem of services for individuals through the Cash App. And third, we want to focus on growing the markets we're currently in. There's significant opportunity in Australia, Canada, Japan and the U.
K, and our efforts this year will be focused on gaining share in those markets. We will expand our overall product offerings to ensure our sellers outside the United States have access to more of the Square ecosystem. As you saw with our recent launches of our contactless and ship card reader and interact acceptance in Canada, Square Stand in Australia and JCB acceptance in Japan. We will also improve automated onboarding and strengthen our go to market strategy. We're moving forward in 2018 with strong momentum and a focus on creating more services, more value and more trust with our customers.
Now I'll turn it over to Sarah for some more detailed remarks on our financials.
Thank you, Jack. We're pleased with our Q4 and full year 2017 results. Q4 GPV was $18,000,000,000 up 31% year over year. Q4 adjusted revenue growth of 47% marked the 4th consecutive quarter of accelerating growth at scale, up from 45% in Q3 and 41% in Q2. Additionally, we achieved $139,000,000 in adjusted EBITDA in 2017, representing a 14% margin compared to $45,000,000 in 2016.
These results underscore our ability to drive significant growth while balancing longer term investments. We once again showed strong momentum with larger sellers, the majority of which are new to the Square ecosystem. Large sellers with more than $125,000 in annualized GPV made up 47% of Q4 GPV. We're particularly encouraged by the momentum of mid market sellers, those with more than $500,000 in annualized GPV, which now make up 20% of total GPV compared to 16% in the Q4 of 2016. Adjusted revenue benefited from both transaction based and subscription and services based revenue.
Transaction based profit as a percentage of GPV improved to 1.07% in the Q4 of 2017. We saw strong growth in invoices, virtual terminal and e commerce API payments, all of which have higher margins than our card present transactions, as well as ongoing improvements in our transaction cost profile. Subscription and services based revenue grew 96% year over year. We're driving growth at scale through rapid product innovation and the ability to cross sell into an installed base of Square customers who trust our brand. Of note, products launched since 2014 represented 22% of Q4 total net revenue and 36% of adjusted revenue, up from 14% 25% a year ago.
GAAP net loss was $16,000,000 in the 4th quarter. This equates to a net loss per share of $0.04 flat compared to the Q4 of 2016. Adjusted EBITDA was $41,000,000 this quarter, representing a 15% margin, largely flat from the Q4 of 2016 as we reinvested for future growth. I'll now turn to our full year guidance. For details on our Q1 guide, please refer to our shareholder letter.
In 2018, we plan to continue reinvesting in the business to drive long term growth given our significant market opportunity. For full year 2018, we expect total net revenue to be within a range of $2,820,000,000 to 2,880,000,000 dollars and adjusted revenue to be in the range of $1,301,000,000 to $1,330,000,000 At the midpoint, this represents 29% and 34% year over year growth, respectively. Adjusted EBITDA is expected to be in a range of $240,000,000 to $250,000,000 At the midpoint, this represents a 19% margin. We expect net loss per share to be within a range of negative 0.08 dollars to negative 0.04 dollars and adjusted EPS to be in a range of positive $0.43 to 0 point 4 $7 So with that, let me turn it back to the operator to start the Q and A portion of the call. Thank you.
And our first question comes from the line of Tien Tsin Huang from JPMorgan. Your line is open.
Thanks so much. Good revenue acceleration again. So I'll ask sort of how have your various sources of revenue growth have changed? Is there a way to sort of talk to that? And maybe I'll ask it by a different way.
What surprised you in terms of the growth drivers in 2017? And how do you think it will be different in 2018 in terms of your growth drivers, if that makes sense? Thanks.
Sure. Yes. Thanks, Tien Tsin. So you're right, we're super excited about that 4 straight quarters of accelerating revenue growth rate. It means we're entering 2018 really on our front foot.
In terms of what drove that growth in 2017, I'd start with the core business. It stays really strong and I think the ongoing move up markets, I talked in my prepared remarks about the larger sellers. I mean that just keeps speaking to the product innovation that's resonating from micros now the whole way up to quite large businesses. On top of that, it's been about the ecosystem. So as we've grown, we've continued to iterate and launch new products.
We talked about virtual terminal last year, it really came out of nowhere, right? Launched in late 2016 and was the fastest product to across $1,000,000,000 in GPV. Instant deposit, another good example of playing to our strength of fast. We know that speed of getting your money is important both to sellers and individuals frankly. And so Instant Deposit processed over $2,000,000,000 in Q3 of 2017.
I don't think we saw it really being that strong until we were well into the year. I would also pivot a little to talk about Cash App here. So it's a great example of a business that we invested in for the last several years. We haven't talked about it a lot publicly, but it's clearly starting to have a real impact on our absolute growth or absolute dollars of revenue, but also the growth rate in particular. So when you've built a service that's already seeing 7,000,000 monthly actives that we are monetizing, we've I think the stat we gave on Q4 was over a third of all Cash App transactions are monetized.
And so that can be through Instant Deposit, it can be through Cash For Business, it can be using a credit card. But now in particular through the cash card itself, we're starting to find a new monetization engine as our customers go out and use that card in mainstream America, whether it's online or offline. They are using it the way we'd expect and we're able to monetize that through interchange. So certainly the complexion of the business on the one hand stays the same, right? It's the core continues to have a real engine underneath it.
But I think the power of the ecosystem is the growth that you saw really accelerate through 2017. And I think through 2018, we continue to expect those new products to add to the growth rate.
Your next question comes from the line of Josh Beck from KeyBanc. Your line is open.
Thank you. I wanted to ask about the subscription and services line ex capital. It looks like the Square Capital loans grew about 23%, but the subscription line overall grew 96%, so clearly much faster, excellent lending. So are there any products there that you would call out that particularly surprised to the upside? And then I also wanted to ask maybe Jack about just the longer term ambitions with Square Cash.
Clearly, dollars 7,000,000 is a really impressive number. Just longer term, where do you think that business can go? Thank you.
Great. Thanks, Josh. So let me start with your first question about subscription and services. It's certainly nice to see a line that's growing 96 percent year over year when it's pounding out, the amount of absolute dollars that you also see in the quarter. So we're very excited by what that means for our ecosystem.
Within it, the top revenue contributors are Instant Deposit, Caviar and Capital. Instant Deposit, I already mentioned, is being driven by both seller usage. So we know they want fast access to capital, but also individual usage. And that's one of the ways that we monetize the Cash App. And I'm sure Jack will talk to that as he talks about longer term ambitions there.
Instant Deposit continues to really be strong for us. Caviar has been a highlight in 2017. I think the team really iterated well on how they added more and more utility for buyers. So we started more in delivery, but today we have pickup and delivery. They have also forged exclusive content with some of the best restaurants in a given metro.
And so they're doing that by starting the square way, which is how do we do best for our sellers. And in the case of folks who are starting to use this for payments, we start to see their point of sale. We can actually really start to think through their operations and help them manage where a customer is going to show up. So is it in the app looking for delivery? Is it in the app putting in a pickup that they're going to walk into the store and get?
Or are they going to come into your restaurants and actually eat in? And that goes back to kind of this omnichannel view of buyers are everywhere and we want to make sure that our sellers can meet them everywhere. So Caviar, I think, has been a real highlight for us in 2017. Capital, just before I leave it, capital was also a great business for us. So cumulatively $2,500,000,000 since launch.
You noted the year over year growth rate in Q4, but there's still a lot in capital to come and we're excited about some of the levers that they can pull over time.
And around cash, this is what we're really excited about. 1, because we're seeing the same sort of patterns that we saw in our original business around sellers, but now in a new entirely new audience, which is individuals. So we are serving an underserved and underbanked audience, and we're seeing a real usage in respects of how we actually see Cash Card being used. People are using the Cash Card at places like Walmart, McDonald's, Uber, Lyft, Netflix and Spotify. So using it for everyday activities that you would expect someone to use a card for.
The other thing that we're really pleased with is over the past 6 months, probably even longer, we continually see the Cash App break into the top 20 of the free app store in iOS. And at one point, we broke the top 15 and almost broke the top 10. So we're right up there with some of the largest mainstream apps and the acceleration continues. 1 of the other things we're really excited about, which gets into the longer term ambition is, every Friday, we see a significant bump because of payday. And this to us indicates a strong network effect.
So we see a bump in terms of sign ups and also downloads and usage. As people are getting paid. They're sending money to their friends. They're receiving money from their family and continues to further densify the network. And this is a network driven business and we're seeing all the positive indicators, that it is healthy and also thriving.
As we look at how people are using this, it really points to what we want to do in the future. And a lot of what we're seeing is this being a primary spending device for people, and being a simple way for them to go to the App Store, download one app and have everything they would need and expect from a typical bank. And this is really powerful, certainly for the individuals, but we think it also has a lot of potential around our business. As we talked a lot about integration last year, we have certainly been using these rails for products like Instant Deposit, but we think there's a lot more opportunity to power and provide for more of the seller side and the business side of our business, but also be a more complete solution for individuals around their finances, but also around their financial health. So we're leaning in very heavily to this app and to the really positive patterns that we're seeing.
And we don't consider this a peer to peer app and stop. We consider it much more and really around providing financial access to people.
Very helpful. Thank you both.
Thanks, Josh. Your next question comes from the line of Darrin Peeler from Barclays. Your line is open.
All right.
Thanks guys. A nice job. Let me start off on back to the services and subscription area for a minute. Just what percentage of your merchant base actually utilizes one of these key areas now? And then it almost seems that you're showing signs of the sellers utilizing even more than one of these services at a pretty regular rate now.
Just can you comment on that and if that's true and I mean I think you commented on some examples in the And then maybe what kind of growth in subscription and services is embedded in your expectations for this year?
Okay. Thank you, Darren. So yes, we are continuing to see growing adoption of the full ecosystem and this is a huge part of our strategy because not only does it drive growth, but as sellers start to use more than one product, they obviously become much more sticky on the platform. And so that's one of the many reasons why we see the power of our model,
the
positive dollar based retention rate stays in place. In terms of I think you're kind of effectively trying to ask attach rate. We haven't gone attach rate attach rate by product. But if you look at just product launch since 2014, the fact that that's now up to 36% of adjusted revenue compared to 25% a year ago, so 11 point improvement. That certainly speaks to the attach rate that we're seeing.
In terms of where we see areas of strong adoption, we've talked before about someone like a product like appointments. It's a great example. 60% of appointment sellers use another product on Square. If you look at some of our newer products like loyalty, like retail point of sale, like payroll, they're actually acting as a new door to Square 2. So what we see is net new sellers coming in, perhaps using one of those products first.
And then our goal is how do we ultimately upsell them back into payroll and point of sale. And it has to be because there's utility, because when they are using payments in point of sale, we can make something like payroll easier for them because we're already doing employee management. So absolutely, we see a lot of these virtuous cycles being created. And as the ecosystem continues to grow, I think that that Jack talked about, the network effect that's important in something like Cash App is also very important on the seller side too. In terms of what's baked in, I think we're really comfortable with our overall guidance at the moment.
So that's 34% year over year for the full year and 44% in Q1.
Got it. Thanks guys.
Thank you.
Your next question comes from the line of James Faucette from Morgan Stanley. Your line is open.
Great. Thank you very much. I wanted to ask related to the larger merchants, particularly those above 500,000 clearly have grown nicely. Can you give some color on that, where that growth is coming from? How much is coming from existing merchant partners growing into that segment versus new.
And I guess what just post that clarification, what I'm really interested in is it seems like some of the incumbent merchant acquirers that target that larger merchant group are having more lead generation challenges than in the past. And I'm wondering if you're noticing those challenges open up more white space for you or what you need to do to take advantage of a bit more breathing room that you're being afforded? Thanks.
Great. Thanks, Jim. So just first on larger sellers. So about 2 thirds of our larger seller population is net new. So 1 third is folks doing what we want them to do, which is to grow once they get onto the Square platform.
But the fact that 2 thirds is net new is really edifying and tells us that what we're doing from a product perspective is resonating. In terms of more knowledge of maybe where they've come from, which I think is partially what you're asking in your question, 80% of large sellers sell phone boards. We don't really have a strong mechanism to know what they came from, although most would have been accepting cards, right, given the scale that they're at. I also mentioned that some of our newer products like appointments or Caviar or Payroll are acting as a new front door. So that is another vector where again we don't have a ton of knowledge about where they've come from, but certainly once we get them on the Square, flipping them over into payments point of sale is a core strategy.
In terms of the lead generation on a from a go to market perspective, we continue to see really strong efficiency. So we're still seeing a 3 to 4 quarter payback period and that's even as we have more than doubled sales and marketing expense if you look at from kind of 2014 through 2017 just on core seller. It's more than doubled and yet we haven't hit any kind of signs of channels becoming less efficient. And in fact, I would say this is an area Square has been quite innovative. So go to market strategies like referral programs really work well for us because when you have a net promoter score of 70 plus, it really means that sellers want to tell their friends and their family and other sellers about the product.
And that's a channel no one can follow us into because that's our sellers talking about our product. I think on the lead generation point about incumbents, we've certainly heard chatter out there about difficulties in kind of what I call more old school routes to market. But I think from day 1, we've always held firm that it has to be about scalable go to market to do what we want to do. You can't have high touch, you can't be kind of hand holding your customers through an onboarding process. You've got to have a product that's intuitive, that speaks to them and that unfolds once they onboard, so they see more and more utility, true on the seller side, true on the individual side.
Our next question comes from one of our sellers, Jay Sanders at 392 Cafe in Iowa. Are we able to pay for Square registers through daily and weekly payments?
So we do have financing for Square Register. So all of our hardware orders of $49 and up are eligible for monthly payments. And we have select financing at checkout on the website. So what this allows you to do is apply and instantly find out if you're approved. We ask for just a few pieces of information and we check eligibility.
Checking eligibility for this won't affect your credit score, so it's going to be safe. Apart from that, we have really clear pricing, so you'll see upfront exactly how much your business will pay. And depending on your order total, you can pay over 3, 6, 12 or 24 months. So we don't have daily or weekly, but we do have the next best thing. So financing is an installment plan from Square, which uses our Square Capital infrastructure.
Thanks, Shay.
Your next question comes from the line of Bryan Keane from Deutsche Bank. Your line is open.
Hi, guys. I was just thinking about the Cash App and beyond the Cash Card, is there a plan to go straight to the merchant online even potentially using Bitcoin for that? And then secondly, Sarah, just thinking about the EBITDA margins, I know they're down a little bit year over year in Q4 in the Q1 2018 guide. It sounds like there's some investments there that are causing a decline. Just curious what exactly that is because the old question of balancing investment versus growth in the back half of the year then obviously margins are going to have to expand.
So does that does the growth going to suffer as a result of that? Thanks so much.
So on the first question, we currently benefit a lot from our partnership model with cash and through register. So we'll continue to amplify that. Bitcoin for us is not stopping at buying and selling. We do believe that this is a transformational technology for our industry and we want to learn as quickly as possible. We also believe that it does provide an opportunity to get more people access to the financial system.
And certainly, that's in source of asset, but also ultimately over time through currency. So we're going to have a learning mindset and make sure that we are learning and leading here, and starting with something that gives us the most information the fastest, but also is consistent with how we see people using Cash App. We have seen people buying and selling Bitcoin with the app, and we want to make that step a little bit easier, but also at the same time learn and create some future optionality for us as we think about the future of our industry and especially the relationship between a buyer and a seller.
Great. And then Brian, on the EBITDA margins, as we guide, we always point you back to the full year. It's a much easier way for us to plan than to think through 90 day increments. So at 34% growth rate at the midpoint balanced by 19% margins, we think that's a really healthy trade off between high growth at scale, but doing it in a disciplined way. So that's how we're thinking about the full year.
In terms of Q1, I think I said this right at the beginning, we feel excited by how we're entering the year. When you come off 4 quarters of accelerating growth, you feel really front footed, frankly. At the back half of last year, we were able to go back and invest. And for us, that usually starts with people. It starts with adding great engineering talent, great data science talent, great design talent to build remarkable products.
But from there, it's also about leaning into sales and marketing when appropriate. And I talked about the 3 to 4 quarter payback period. We still have a lot of room from a sales and marketing perspective. As we look to FY 2018, we spend a lot of time figuring out what our focus will be for the year. Jack laid out nicely in his prepared remarks, omni channel, financial services and international, and we want to get going on that.
And usually that starts with again recruiting, squares resonating right now in the market with future squares. And our current squares are quite happy. And so we're seeing kind of really strong hold rates on everyone here too. And so because of that as we enter the year, we continue to add to the bench, but it's to grow the product, the top line, such that we can hit those growth rates and then ultimately those margin targets through the year.
Okay, helpful. Thanks.
Your next question comes from the line of James Snyder from Goldman Sachs. Your line is open.
Good afternoon. Thanks for taking my question. I was wondering if you can maybe talk broadly about your consumer strategy or your buyer strategy. It seems like you've put a lot more emphasis, not just on the servicing sellers, but also consumers now with the Cash App, the ability to buy Bitcoin, as well as the consumer side loans. So can you maybe just look 2 or 3 years out and give us your philosophy on how much of the investments in new products are really being targeted and directed to building consumer involvement interaction?
And then maybe give us a sense of how much of the investments you're making for 2018 are specifically directed towards those initiatives?
Yes. So thank you for the question. Our consumer strategy is pretty broad and it started with the digital receipt and we've sent over $350,000,000 digital receipts and we still think there's a massive opportunity on them that we're just starting to tap into. With Cash App in particular, we don't see this just as a first party consumer application. We're also using it in places like Caviar.
Caviar is paying its couriers through Square Cash, for instance. And we're also exploring opportunities in our products like payroll. So as we have any consumer application, we think there's a bunch of opportunities to integrate with the seller side as well. And this is one of the things we've been really good at is blurring the line between consumer and sellers. So they don't have to think about that at all.
We this all comes back down to that original thesis though of providing access to people. So everything that we do, whether it be on the seller side or the consumer side, we want to make sure that we are providing more increasingly financial access to these various constituencies. With on the consumer side, we have caviar, we have cash, we have Square installments, payroll and touch points to the receipt that we think we can really push more on. And we have similar aspects on the seller side to give more access to the financial systems. In terms of how much we'll focus on consumer versus seller, we're constantly learning in terms of like what needs the right push versus others.
We have an extremely strong core business, which allows us to do a lot more experiments, both on the seller side and the consumer side. And we don't really have to make a distinction between the 2, because we have seen so many beneficial integrations, both from an infrastructure standpoint, but also from a consumer facing standpoint as well. So we're really excited about the purely consumer offerings that we have, but even more thrilled that they actually contribute back to the seller base as well.
Your next question comes from the line of Dan Perlin from RBC Capital Markets. Your line is open.
Thanks. Good evening.
So I had
a question going back to the, I guess, movement towards larger sellers. And I think, Sara, in the past, one of the gating factors you talked about was the ability to manage a certain level of SKUs. Then you had talked about kind of moving towards an advanced inventory kind of system that would allow that. Is that something that is now enabling you to move upstream more quickly? Or are we not quite seeing that yet?
Thanks.
Thanks, Dan. I think it's all of the there's I mean all of those things. So for larger sellers, many of them just self on board, 2 Square 80% come to our website, self on board and they just get going on our core payments and point of sale or kind of more general point of sale. But as we moved up market, we definitely heard more specificity being needed and we've kind of call it across our 3 major merchant categories. So food, retail and then services.
On the retail side, since you mentioned number of SKUs, that was definitely an ask or a help wanted from retail customers. Not just help me manage 100 of 1000 of SKUs, but help me manage the cost of goods sold that goes with that, help me manage the gross margin. And with that help me make just good business choices to ultimately maximize my profit. And so in something like Square for Retail, which was our vertical point of sale that we launched last year, this was a big area of focus in getting that right. And we're continuing to iterate, right?
It's not done, always new inputs that are coming. In food, I think the ask has been much more around the complexity of managing a restaurant. And there we've used 3rd party, so folks like Touch Bistro, for example, to help manage a complex restaurant environment. However, what restaurants get from the Square ecosystem is that caviar piece. So help me do delivery, help me do pickup, help me manage the internal operations of my restaurant.
If you think about services, often that starts with an appointment. And we actually talked about appointments in our shareholder letter as a good example of where buyers are coming out of business hours. In fact, 50% book an appointment when the store is closed. So help me not miss that sale. And then we want to manage the buyer appointment the buyer experience all the way from the appointment through the payment.
And so we integrated that into the Appointments app last in 2017. So there's lots to do in every vertical and we continue to press on more sophisticated hardware with the launch of something like Square Register. And maybe just the final thing I would say is all of them comes back to awareness. So one of the things we talked about on the last couple of earnings call, Square is still predominantly known for Help Me Accept a Payment. So Help Me Get Started versus large businesses don't start there, right?
They're already accepting all the tender types. They want help with all of these other pieces. And so I think a big part of our investment in 2018 is starting to shift that story to make sure that large businesses know that Square is there for them too.
Great. Thank you.
Thank
you. Your next question comes from the line of Jason Kupferberg from Bank of America Merrill Lynch. Your line is open.
Thanks, guys. I wanted to just ask about 2 of your higher growth areas, one being international and one being caviar. And in the case of international, can you talk about how you're thinking about those 4 countries in terms of the relative growth trajectories, at least directionally, for 2018 based on the initiatives you have planned? And then on the Caviar side, I guess, our understanding historically was that there was a lot of focus really on kind of the higher end of the restaurant market, but I wanted to see if there's going to be more of a push into more of the casual restaurant space. I know there's been a lot more competition overall in food delivery.
So as you try and continue to scale Caviar, how do you see that evolving?
Sure. So, Jason, let me start on international and then I'll pass the baton over to Jack on Caviar. So international, good performance in Q4, although clearly we want to see more and more ability to broaden out our offering in each of the countries that we're in and make sure that it's really fully featured. So I would say every country is a little different. If you look at a more recent launch like Australia, Australia had a great FY 2017.
The product sitting with a net promoter score of 80. Its next closest comp has a net promoter score of under 0. So it's primed for success. We put Square Stand into that market at the end of last year. So we brought more hardware now into region.
And Square Stand has kind of a twofold impact of a, it's a better experience to accept the payment if you have a retail store, but it also creates a lot of visibility, on the other side of the counter because buyers can see it too. So Australia, I think we feel very good about what we've seen to date and as we head into 2018. I think in a country where we've been longer in region, Canada would be a good example, where frankly we had half a product until we launched Interac at the end of 2017, because half of all card transactions happen in Interac. Regulation definitely slowed our launch there, but in the end we've gotten there. And I think for 2018, we'd like to see Canada really start to show strong growth now that we have a much more fully featured product.
Early indications in markets like Canada or Japan where we have added to the product show actually that existing sellers are accelerating their growth. So that kind of positive retention rate is kicking into gear. So the net of it is there's the even the countries we've been in longest post the U. S, there's still a lot to be done. And I think that's why you see the focus this year on our current market because there's $6,000,000,000,000 of consumer expenditure to go after online and offline and the whole kind of omni channel remit.
With that, let me get Jack on Caviar.
And so as we think about Caviar and other services in particular, we have shifted our focus away from just food delivery and more towards food ordering. And this gets out the first part of your question as well. So one of the things that has enabled us to move away from just a pure focus on premium sellers and premium restaurants is the addition of pickup. So we don't want to be an app that you go to when you want food to come to you purely and exclusively. We want to make sure that we're providing an app and the service that anytime you're hungry, you have options.
And today, those options are the food can get delivered to you, you can go to the restaurant and pick it up, and you can imagine going further and enabling dine in as well. So anytime you're hungry, we want to show the highest quality restaurants and that's both inclusive of premium high end restaurants, but also some of the fast casual. And we have 100, if not 1000 of fast casuals in every market that we serve that are offering both pickup and also delivery. Pickup is really interesting for us, so because it does really open the aperture of who we can serve and it enables us to see a lot more restaurants, enables us to be a lot more self serve ultimately, so that we can offer more selection to our consumers. Every time they open the app, there will be something for them.
The thing that sets us apart as a service on the food ordering side though, we believe is quality and that's all due to the relationship we have with our sellers. And that really speaks to the lineage of the company. We've always had an appreciation and respect for the seller, and that we've through and how we approach food ordering and delivery and also pickup. That deep relationship wins a lot of exclusives for us. And it also brings a lot more respect to the restaurants order of operations, which makes it a lot easier for them to ensure that they are delivering something high quality to their customers.
And therefore, they view us as a partner and not just a random courier that comes in and picks up the food anonymously.
Good color. Thank you.
Thanks, Jason.
Your next question comes from the line of Paul Conder from Credit Suisse. Your line is open.
Thanks. Good afternoon, everybody. Solid results here. I just wanted to ask some more questions about the Bitcoin product, if you can give us
some more
detail. In terms of Cash App adoption, any way to think about maybe the impact it had in the Q4? And then just some other questions about how you're sourcing the Bitcoin, how you're storing it, like what's the custody risk? Is this sitting on your balance sheet somewhere? And how are you thinking about purchase fees for customers?
Sure. So let me talk a little bit about just the impact of Bitcoin first on our financials in Q4. It was really immaterial. We were just beginning with the product and it was really as we hit January that we fully rolled out the count the ability to buy and sell Bitcoin in Cash App to 100% of all of our customers, which is a really exciting milestone. To be clear on how we ultimately can monetize Bitcoin, today when we offer to the buyer to purchase or to sell their ownership in the Bitcoin, we include a cushion or a margin in the price effectively to allow us to account for the fairly dynamic market that we see for Bitcoin.
It's important that we have not added in additional fixed fees because ultimately we can think about Cash App holistically and think about many different ways that we monetize the utility that we provide for Cash App and it's not just Bitcoin only. Your question on what's sitting on our balance sheet. So first from a Square perspective, we have kept a very small amount of Bitcoin that's held by Square. That allows us to just add a little bit more liquidity as we are growing, but our intent is not to hold a lot of Bitcoin on the balance sheet. Maybe I'll pass to Jack on the question around Bitcoin sourcing and storing.
We're continuing to look for opportunities to be industry leaders here. So a lot of what we're doing is in flux. And as we learn, we have stronger answers. But we're making sure that we are, 1, ensuring health of our customers through Bitcoin and then 2, Health of Square as well. And as you know, this is a rapidly evolving space and we want to make sure that we have the best answers and we have a team that is 100% focused on moving as quickly as possible towards more and more quality.
Okay. Got it. Thanks for the detail.
Thanks, Paul.
Your next question comes from the line of Andrew Jeffrey from SunTrust. Your line is open.
Hi, thank you very much for taking the question. Sarah, I wonder if you could talk a little bit about the sales and marketing initiatives and how you think longer term about going to market, especially among the larger sellers? And at what point maybe you think about standing up a traditional sales force? Or is that something that you think the model can kind of grow around given the strong word-of-mouth momentum and the value proposition?
Sure. So the core strength of Square on go to market has been really thinking scalable from the get go. Because of that, our go to market motion is much more around things like SEO, SEM, retail, which again not many folks have thought of retail as an avenue. To do retail, someone has to be able to pull it off a peg, download an app and get going. And therefore, you must have an incredibly intuitive, easy to use product.
You also need word-of-mouth. People know where to go buy it. We've utilized direct mail, utilized TV. In those channels, it's where you'll see us put a lot of machine learning muscle to work, so that we're optimizing those go to market avenues and really getting strong ROI. And all of that comes together in seeing the fact that 80% of larger sellers onboard themselves and the fact that we see a 3 to 4 quarter payback period even as our mix has shifted to larger sellers, 20% now doing more than $500,000 on Square.
That said, we have utilized a sales force much more of on the phone telesales effort to date. And that's because for some larger sellers, they may have a more complex business, where they need some help getting up and going, where they're multi location, maybe multi employees, have a much more sophisticated ask. Sometimes they want a custom price. And frankly, we're very willing to do that, because ultimately it's more revenue, more adjusted revenue, so the transaction costs removed from it. And it also creates a very fertile ground for upselling and cross selling the full ecosystem of Square.
So we will evolve that as we go. I think what we come back to is always that ROI. So what is the payback period? And as long as we can continue to onboard our cohorts of Square with a reasonable payback, we're somewhat indifferent to the how it's done. That's really the metric that we look to.
Thank you.
Thank you. And our next question comes from the line of Bob Napoli from William Blair. Your line is open.
Thank you. Just on the consumer follow-up on the consumer, the lending business, I know that and congratulations on really strong numbers before I go in again. But are you
Thank you.
Do you have some color on the consumer lending business that you are looking to do? I know you've talked about making that a significant business and I just didn't know do you have something anything material forecasted for that in your outlook for 2018?
So Bob, right now in terms of the consumer lending piece, we call it our installments program. It really comes back to our focus on the seller. So how can we help the seller grow their business? We know that larger business take for granted the ability to offer you a pay over 12 months sort of offering. Small businesses have not had access to that in the past.
And so that's really what we're going after with our installments or consumer lending program. We've started by baking it into our invoices product because it allows us to offer something out to the buyer of the seller at a point in time where maybe they have a little bit more color, context and time to think about accepting that financing. And we've seen good traction with it to date. However, like any lending business, we'll do it very mindfully to make sure that we're testing our risk models that we understand exactly all of the key inputs. Jack talked before about that full ecosystem we're building around the buyers.
We actually have a lot of signals because of the strength and the breadth of the Square network already. So we think that's a core competitive advantage. But it's something that we'll move into mindfully. And for right now, I would continue to forecast the core capital business and the growth rates that we have in our guidance.
Great. Thank you.
Thank you. I'd now like to turn the call back to the company for closing remarks.
Thank you, everyone, for joining our call. I would like to remind everyone that we will be hosting our Q1 2018 earnings call on May 2. Thanks again for participating today.
Ladies and gentlemen, thank you for participating in today's program. This does conclude the program. You may all disconnect.