Dive Brief:

• Square CEO Alyssa Henry will leave the merchant payments service provider on Oct. 2, parent company Block said in a Monday filing with the Securities and Exchange Commission.
• Henry, who worked for the company for about nine years, according to the filing, is exiting about a week after the company experienced a business outage that spread across two days for which it subsequently apologized.
• Block Head Jack Dorsey, also the company’s co-founder, will lead Square after she departs, the filing said.

Dive Insight:

A Block spokesperson declined to comment on how long Dorsey plans to lead Square. The spokesperson said Henry’s departure was not due to Square’s recent outage.

Dorsey co-founded Square with Jim McKelvey in 2009, offering a white card reader to small merchants so they could accept card payments. Since then, the business has grown to include peer-to-peer unit Cash App and the acquired Australian buy now, pay later business Afterpay. In December 2021, San Francisco-based Square changed its name to Block, although it kept the Square moniker for its merchant unit.

The merchant business apologized to its customers last week after the lengthy outage left its seller clients unable to process consumer payments. The service snafu, which began the afternoon of Sept. 7 and extended until the morning of Sept. 8, left Square merchants unable to access their accounts or process payments.

Square, which caters mainly to small and mid-size businesses, cited a domain name system error as the reason for the extended outage. 

“We apologize for letting you down and for the length of time it took for us to get our systems back up and running,” Square said in a Sept. 11 post on its website. “We know this situation was made more difficult by our communication frequency and the delayed support response some of you experienced.” 

As Square’s growth has decelerated, Henry’s departure “will be another cause for investor concern,” Baird Equity Research Senior Analyst David Koning wrote in a Monday note to investor clients. However, Dorsey running the business is a positive, Koning added.

Dorsey, who has spent more time focused on Square’s strategy in recent months, “will engage directly in the strategy, organizational structure and direction of the Square business,” Koning wrote. “The company will take time to evaluate appropriate leadership to best position Square.” 

Wolfe Research Analyst Darrin Peller wrote in a Monday note to investor clients that Henry’s exit from Square appears to be a combination of Henry wanting a break after nearly a decade at the business, and “that Jack may want more direct input into the operations/direction of the Square business,” Peller wrote. Block management has indicated Dorsey has “been more hands-on/day-to-day involved with the business in recent quarters,” he added.

“While some of Square’s success over the years should be attributed to Alyssa’s execution, the company’s more recent performance remains a concern for investors (and we suspect for management, internally),” Peller wrote in the note.

In the second quarter, Square’s gross payment volume rose 12% year over year, but GPV per existing merchant has slipped since Q3 2022, Block CFO Amrita Ahuja said during the company’s second-quarter earnings call. Earlier this month, Ahuja discussed Square’s revamped sales approach, which involved creating dedicated inbound and outbound sales teams for the restaurant, retail and services verticals Square caters to. 

Although Dorsey has been more receptive to managing costs and similar adjustments, Henry “was more receptive to changes in Square’s business model compared to Jack (particularly around outsourced distribution),” Peller wrote.

Another analyst saw upside in the announcement. “Square’s POS has become the jack of all trades but ace of none,” Mizuho Securities Senior Analyst Dan Dolev wrote in a Tuesday note to investor clients. Block’s Square, Cash App and Afterpay businesses are overly siloed, he argued, and Dorsey’s attention directed at Square could fuel “crosspollination.” 

“Renewed focus on the POS business - and less time on Bitcoin - can be a big long-term positive,” Dolev added.

Prior to joining Square, Henry was vice president of Amazon Web Services Storage Services and product unit manager for Microsoft SQL Server Data Access, according to Block’s website. Block noted in the SEC filing that Henry provided “significant contributions” while she was at the company.

“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,” a Block spokesperson said in a statement. “Square is what it is today in large part because of Alyssa’s leadership and we wish her the best in her future endeavors.”