Venmo gaining ground in payments as Cash App struggles

CNBC

02-05-2025

In the increasingly crowded market for peer-to-peer payments, Venmo is showing momentum while Cash App has hit a rough patch.
The parents of both businesses reported quarterly results this week. PayPal, which owns Venmo, reported an earnings beat and kept its forecast for the year. Block, meanwhile, plummeted in extended trading on Thursday after the Cash App parent missed on revenue and issued disappointing guidance.
Venmo and Cash App are simultaneously competing to gobble up more consumers for their peer-to-peer offerings while also adding services like debit, credit and transfer services so they can actually make money from those users.
For PayPal CEO Alex Chriss, who took over the struggling payments company in 2023, monetizing Venmo is a key piece to his turnaround plan.
Venmo revenue jumped 20% in the first quarter from a year earlier, though PayPal didn't provide a dollar figure. PayPal pointed to growing adoption of features like the Venmo debit card, instant transfers, and integration into online checkout. The company said monetization per user is improving and that Venmo continues to play a role in its broader e-commerce push.
Revenue at Venmo increased at twice the rate of total payment volume, which rose 10%, reflecting progress in turning engagement into profit.
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During the quarter, PayPal added nearly two million first-time debit card users across PayPal and Venmo, and said Venmo debit card payment volume rose more than 60%. Monthly actives on the card grew about 40%, while Pay with Venmo volume surged 50%.
"We've leaned into Venmo and the investment is starting to pay off," Chriss said on the company's earnings call.
Block CEO Jack Dorsey struck a different tone on his company's call.
Cash App posted 10% gross profit growth from a year earlier to $1.38 billion in the first quarter. PayPal's gross payment volume, or a measure of money moving through Square and Cash App, came in at $56.8 billion, missing the average analyst estimate of $58 billion, according to StreetAccount.
Dorsey acknowledged Cash App's recent underperformance.
"I just don't think we were focused enough and had enough attention on the network and the network density, and that is our foundation," he said.
Dorsey noted that some users still don't view Cash App as a true banking platform, in part because their experience with the app can feel limited or restrictive when trying to move or access funds. The company is promoting its lending program, Cash App Borrow, which has received approval from the Federal Deposit Insurance Corporation and can now bring origination and servicing in-house.
"We of course want to deepen engagement with our customers through banking services and Borrow, and I have no doubt we will," Dorsey said. "But at the same time, we need to make sure that we continuously grow our network, and that starts with peer to peer."