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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Good day, ladies and gentlemen, and welcome to Square Fourth 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 fourth quarter 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 close. We will begin this call with some short prepared remarks before opening the call directly to your questions. During Q&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. And audio replay of this call will be available on our website shortly.
With that, I would like to turn over to Jack.
Thanks, Jason, and thank you all for joining us. Our 2017 results were a strong close of the year and give us great momentum in the 2018. We accelerated topline growth of significant scale in the fourth quarter of 2017. Total net revenue was $616 million, up 36% year-over-year and adjusted revenue was $283 million, up 40% year-over-year. This was an increase from the third quarter 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 three 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 are currently on. 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 restarted nine years ago, the ways people buy and sell have changed dramatically and the 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 the 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. But there are many more services we want to provide. So this year, we will continue to build out our ecosystem, including first and third-party products though we can serve the full spectrum of business needs any seller may have.
Second, 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 the sale empowers people to participate and thrive in the economy. We are really proud of the work we accomplished this past year with the Cash App, which had more than 7 million 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 useful spending tool, and in December of 2017 customers spent over $90 million with a Cash Card, representing an annual run rate of over $1 billion. In the same way we empower businesses with fast and increase of tools, we're building a similar ecosystem of services for individuals through the Cash App.
And third, we're going to focus on growing the markets we're currently in. There's significant opportunity in Australia, Canada, Japan and the UK 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 Chip card reader and Interac acceptance in Canada, Square Stand in Australia and JCP acceptance in Japan.
We will also improve automated on boarding and strengthen our go-to-market strategy. Moving forward in 2018 were strong momentum and focus on creating more services, more value, and more trust with our customers.
Now turn it over to Sarah for some more detailed remarks on our financials.
Thank you, Jack. We're pleased with our fourth quarter and full-year 2017 results. Q4 GPV was $18 billion up 31% year-over-year. Q4 adjusted revenue growth of 47% mark the fourth consecutive quarter of accelerating growth at scale up from 45% in Q3 and 41% in Q2.
Additionally, we achieved $139 million in adjusted EBITDA in 2017, representing a 14% margin, compared to $45 million in 2016. These results underscore our ability to drive significant growth while balancing longer-term investments. We once again showed strong momentum of 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 to 20% of total GPV compared to 16% in the fourth quarter of 2016.
Adjusted revenue benefit from both transaction-based and subscription and services based revenue. Transaction based profit as a percentage of GPV improved to 1.07% in the fourth quarter of 2017. We saw strong growth in invoices, virtual terminal, and e-commerce API payments, all of which have higher margin than our card present transaction, as well as ongoing improvements in our transaction cost profile.
Subscription and services based revenue grew 96% year-over-year. We're driving growth of scale through rapid product innovation and the ability to cross-sell into an installed base of Square customers who trust our brand. Of note product launch since 2014 represented 22% of Q4 total net revenue and 36% of adjusted revenue, up from 14% and 25% a year-ago.
GAAP net loss was $16 million in the fourth quarter. This equates to a net loss per share of $0.04, flat compared to the fourth quarter of 2016. Adjusted EBITDA was $41 million this quarter, representing a 15% margin, largely flat from the fourth quarter of 2016 as we reinvested for future growth.
I'll now turn to our full-year guidance. For details on our first quarter 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 $2.82 billion to $2.88 billion and adjusted revenue to be in the range of $1.30 billion to $1.33 billion. At the midpoint, this represents 29% and 34% year-over-year growth respectively.
Adjusted EBITDA is expected to be in a range of $240 million to $250 million. At the midpoint, this represents a 19% margin. We expect net loss per share to be within a range of negative $0.08 to negative $0.04 and adjusted EPS to be in a range of positive $0.43 to $0.47.
So with that, let me turn it back to the operator to start the Q&A portion of the call.
Thank you. [Operator Instructions] 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 - your various sources of revenue growth have changed? Is there a way to sort of talked about and maybe I'll ask it by 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, is that sense? Thanks.
Sure. Yes. Thanks Tien-tsin. So you're right, we're super excited about that four 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. Its stays really strong and I think the ongoing move up market; I talked in my prepared remarks about 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 cross a $1 billion 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 process over $2 billion in Q3 of 2017. I don't think we thought really being that strong until we're 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 built a service that's already seeing 7 million monthly active that we are monetizing. 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 App 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 were using at the way we'd expect and we are 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 in services line X capital, it looks like the Square Capital loans grew about 23%, but the subscription line overall grew 96%, so clearly much faster X lending. So are there any products there that you would call out that particularly surprised to the upside? And then also wanted to ask maybe Jack about just the longer-term ambitions with Square Cash, clearly $7 million is a really impressive number, just longer-term where do you think that business can go? Thank you.
Great. Thanks Josh. Let me start with your first question about subscription and services. It's certainly nice to see a line that's growing 96% 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 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, if he talks about longer term ambitions there, so 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 us 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 is also a great business for us. So cumulatively $2.5 billion 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 leverage that they can pull over time.
And around cash this is a service we're really excited about. One 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 in underserved and under banked 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 Wal-Mart, McDonald's, at Uber, Lyft's, 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 six months, probably even longer, we continually see the Cash App break into the top 20 of the free app store in iOS. And one point we brought the top 15 and then almost brought the top 10. So we're right up there with some of the largest mainstream apps and the acceleration continues. One 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 identify 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 Peller from Barclays. Your line is open.
All right. Thanks guys, and nice job. Just 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 release. And then maybe what kind of growth in subscription and services is embedded in your expectations for this year?
Okay. Thank you, Darrin. 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 a seller 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 models. So positive dollar based retention rate stays in place.
In terms of I think you're kind of effect we're 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. They are not 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 Appointments sellers using 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 too. 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 up sell them back into payroll in 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 the fact 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 about 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 are 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 or are having more lead generation challenges than in the past. And I'm wondering if you're noticing those challenges open up more whitespace 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 two-thirds of our largest seller population is net new. So one-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 two-thirds is net new is really edifying and tells us what we're doing from a product perspective is resonating.
In terms of more knowledge of maybe where they have come from, which I think is partially what you're asking in your question, 80% of large sellers self-onboard. They 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, Payroll or 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 in the payment point of sales a core strategy.
In terms of the lead generation from a go-to-market perspective, we continue to see really strong efficiency. So we're still seeing a three to four 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 yes 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 worked 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 certainly heard chatter out there about difficulties and kind of what I call more old school routes to market. But I think from day one. 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 customer through an on boarding 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 through on the seller side, through on the individual side. Thank you.
Our next question comes from one of our sellers Jay Sanders at 392 Caffe in Iowa. Are we able to pay for Square Register through daily and weekly payments?
So we do have financing for Square Register. So all of our hardware orders are 49,000 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 asked for just a few pieces of information and we checkout eligibility - checking out 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 appending on your order total, you can pay over three, six, 12 or 24 months. So we don't have daily or weekly, but we do have the next best thing. So financing isn't so much plan from Square, which uses our Square Capital infrastructure. Thanks Jay.
Your next question comes from the line of Brian King 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 secondly Sarah just thinking about the EBITDA margins, I know they're down a little bit year-over-year in fourth quarter and the first quarter 2018 guide.
It sounds like there's some investments there that are causing to decline, just curious what exactly that is because the 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 - is the growth kind of support 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 will 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're going 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 assets, 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 a 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 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 and think through 90-day increments. So 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, right when you come off four quarters of accelerating growth, you feel really front foot at 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 three to four 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 stated that nicely in his prepared remarks, omnichannel, financial services and international and we want to get going on that. And usually that starts with again recruiting as of course resonating right now in the market with future Square's and our current Square's are quite happy.
And so we're seeing kind of really strong hold rates on everyone here too. And so because of about as we enter the year, we continue to add to the bench, but it's to grow the product, the topline such that we can hit those growth rates and then ultimately those margin targets through the year.
Okay. It's helpful. Thanks.
Your next question comes from the line of James Schneider 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 loan.
So can you maybe just look two or three 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 sent over $350 million to the 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 carriers 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. This all comes back down to that original thesis of providing access to people. So everything that we do whether it would be on the seller side or the consumer side, we want to make sure that we're providing more increasingly financial access to these various constituencies.
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 will focus on consumer versus seller.
We are constantly learning in terms of like what needs the right push versus others. We've 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 two, because we've 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 Sarah in the past, one of the gating factors you talked about was the ability to manage certain level of skews. And then you 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 we not quite seeing that yet? Thanks.
Thanks Dan. I think it's all of the above - there's all of those things. So for larger sellers many of them just self on board to Square 80% come to our website self on board and then just get going on our core payments and point of seller kind of more general point of sale. But as we move to up market, we definitely heard more specificity being needed, and we've kind of call it across our three major merchant categories, so food, retail, and then services.
On the retail side, since you mentioned number of skews that was definitely an ask or help wanted from retail customers, not just help me manage hundreds of thousands of skews, but help me manage that cost of goods sold that goes with that help me manage the gross margin, and what that help me make just good business choices to ultimately maximize my profit. And so and 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 their review is third-party, so folks like TouchBistro 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, helped me to pick up, 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 less in 2017.
So there's a lots to do in every verticals 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 come back to awareness. So one of the things we talked about on the last couple of earnings call, our Square still predominantly known for help makes up the payment to help me get started versus large businesses don't start there –they're ready 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 business has no that's 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 two 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 four countries in terms of the relative growth trajectories that reach 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 a 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 button 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 is 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. It's an exclusive comp, has a net promoter score of under zero. So it's primed for success.
We've put Square Stand into that market at the end of last year, so brought more hardware, now into region, and Square Stand have kind of a twofold impact of 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.
In our country, we have 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 our card transactions happen in Interac. Regulation I think float 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 trillion of consumer expenditure to go after online and offline in the whole kind of omnichannel agreement.
With that let me get Jack on Caviar.
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 at the first part of your question as well. So one of the things that has enabled us to move away from just the pure focus on premium sellers and premium restaurants is the addition of pick up.
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 in a service, any time 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 dyne 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 hundreds if not thousands of fast casuals in every market that we serve that are offering both pick up and also delivery pick up is really interesting for us.
So because it does really open the aperture of who we can serve and enables us to see a lot more restaurants, enable 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, 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 leads through and how we approach food ordering and delivery and also pick up. That deep relationship wins a lot of exclusives for us and also brings a lot more respect to the restaurants order of operations where to 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 around random of the car that comes in and picks up the food anonymously.
Good color. Thank you.
Thanks Jason.
Your next question comes from the line of Paul Condra 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 more detail. In terms of Cash App adoption, anyway to think about maybe the impact it had in the fourth quarter? 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 you think about purchase suits 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 head January that we fully rolled out Bitcoin - 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 that Bitcoin only.
Your question on what's sitting on our balance sheet. So first from a Square perspective, we've 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 overdoing is in flux and as we learn we have stronger answers. But we're making sure that we are, one, ensuring health of our customers through Bitcoin. And then two, help us 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.
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 can 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 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 order momentum in the value proposition?
Sure. So the core of 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 and seeing the fact that 80% of larger sellers on board themselves and the fact that we see a three to four quarter payback period even as our mix has shifted two larger sellers, 20% now doing more than half a million on Square.
That's said, we have utilized the sales force much more on the phone tell us sales 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 their multi-location, maybe multi-employees have a much more sophisticated ask. Sometimes they want to 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 up-selling 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 are somewhat indifferent to that 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 - 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 just to 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 would call it our installment 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 as the ability to offer you 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 installment or consumer lending program. We've started by baking into invoices product because it allows us to offer something out to the buyer of the seller at a point in time or maybe they have a little bit more color context in the time to think about accepting that financing. And we've seen good traction with that to date.
However, like any lending business, we will 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 will move into mindfully and for right now I would continue to forecast the core capital business in 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 first quarter 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.