Square CEO to leave; Jack Dorsey to take over

Jack Dorsey with long beard
Jack Dorsey will assume the role of CEO at Square and its parent company Block.

Eva Marie Uzcategui/Bloomberg

Alyssa Henry, longtime CEO of Square, the merchant-services unit of Block, will leave the company at the end of next month and Square founder Jack Dorsey will assume leadership, the San Francisco startup announced Monday in a regulatory filing.

Block did not say why Henry, Square’s chief executive for nine years, is leaving. She served in various capacities at Square and previously worked at Amazon and Microsoft. Block’s stock fell about 5% in after-hours trading. 

“While Henry’s departure will naturally raise questions, this seems consistent with the recent trend of fintech industry executives moving on post-pandemic,” said Tien-tsin Huang, a senior analyst at J.P. Morgan, in a Monday afternoon note to analysts. 

Huang said there is no indication Henry has a similar job lined up in the tech sector, and J.P. Morgan’s equity analysis team feels confident about the immediate plan. “We like that Dorsey is stepping in to lead Square strategy directly,” the note said. 

“After nearly 10 years with Square, Alyssa Henry will be leaving the company,” Square said in an emailed statement. “As CEO of Square, Alyssa Henry helped transform the business into a software-led technology company, guided the team during the uncertainty of global pandemic lockdowns, and expanded our breadth of services for small businesses around the world. Square is what it is today in large part because of Alyssa’s leadership and we wish her the best in her future endeavors.”

Early this month Square suffered a system outage that affected many businesses that use its services for more than a day, beginning Sept. 7. The event generated hundreds of queries on social media, and four days later Square apologized for the crash and the length of time it took to bring systems back online. 

According to Huang, impact from Square’s recent outage should be “manageable,” based on conversations J.P. Morgan analysts had with Square earlier on Monday before the CEO transition was announced. 

The payments industry is experiencing changes. After five years of steady revenue growth averaging about 8%, while fintech equity funding has seen a sharp decline over the last 18 months, shrinking from a range of $5 billion to $8 billion per quarter during 2021 to $1.4 billion through the first half of this year, according to a new report from Boston Consulting Group.

More leadership churn may be ahead. Stock market observers were recently surprised by the sudden exit of longtime Discover Financial Services CEO Roger Hochschild, whose departure was announced late on Monday, Aug. 14, after the disclosure of a wave of corporate compliance issues.

Dwolla, another startup that has been through many pivots with the fast-growing payments industry, last week announced a new CEO.

Square recently added new features to its increasingly robust set of banking services that include a debit card the firm rolled out five years ago. 

In collaboration with American Express, Square debuted a credit card in June targeting business owners seeking access to credit lines based on their sales volume if they use Square’s merchant-processing services.

In J.P. Morgan’s note to investors, Huang said Square is seeing success in targeting sales in specific industry niches, which he expects will reap growth next year. 

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