Marqeta Reports Third Quarter 2024 Financial Results

The global modern card issuer reported Total Processing Volume growth of 30% and Gross Profit growth of 24% in the third quarter of 2024

Marqeta Reports Third Quarter 2024 Financial Results

IR Contact: Marqeta Investor Relations, IR@marqeta.com

Marqeta, Inc. (NASDAQ: MQ), the global modern card issuing platform, today reported financial results for the third quarter ended September 30, 2024.

The Company reported Total Processing Volume (TPV) of $74 billion, representing a year-over-year increase of 30%. The Company reported Net Revenue of $128 million and Gross Profit of $90 million, representing increases of 18% and 24%, respectively, year-over-year. GAAP Net Loss for the quarter was $29 million and Adjusted EBITDA was $9 million.

"In the third quarter our true growth trajectory was back on display as we lapped the Block contract renewal, while continuing to demonstrate operational discipline to fuel strong Adjusted EBITDA. We combined this with several new product announcements that further enhance the Marqeta platform to provide transformative payment solutions at scale for our expanding customer base,” said Simon Khalaf, CEO at Marqeta.

Marqeta highlighted several recent business updates that demonstrate its current business momentum:

Marqeta introduced a Portfolio Migration service that reduces complexity for customers upgrading existing card programs onto the Marqeta platform, without impacting their existing cardholder experience. This ability allows for the seamless migration of customers from competitor platforms to Marqeta. Completed at the end of October, Marqeta successfully migrated millions of Klarna cards in Europe onto its platform from Klarna’s incumbent processor.

Marqeta unveiled Marqeta Flex, an industry-leading solution that revolutionizes how BNPL loans can be delivered inside payment apps and wallets. Marqeta Flex is intended to increase BNPL’s acceptance and provide consumers with access to personalized BNPL options inside of the payment apps they use most often. Marqeta also announced Affirm and Klarna as the first BNPL providers to be integrated into Marqeta Flex and Branch, which is used by a large number of Uber drivers, as the first application to support Marqeta Flex.

UX Toolkit, also introduced this quarter, is an addition to Marqeta's portfolio of card program management tools. The UX Toolkit includes user interface components that can be customized and enhanced to improve cardholder touchpoints. The UX Toolkit will allow Marqeta’s customers to create front-end modern payment experiences from scratch with fewer development resources required. This will further enhance Marqeta’s leadership in program management and enable its customers to deliver better user experiences for their cardholders.

Operating Highlights

*In thousands, except percentages and per share data. % change is calculated over the comparable prior-year period (unaudited)*	Three Months Ended September 30,				% Change		Nine Months Ended September 30,				% Change
	2024		2023		% Change		2024		2023		% Change
Financial metrics:
Net revenue	$127,967		$108,891		18	%	$371,205		$557,349		(33	%)
Gross profit	$90,132		$72,508		24	%	$253,646		$246,281		3	%
Gross margin	70	%	67	%	3 ppts		68	%	44	%	24 ppts
Total operating expenses	$132,363		$142,334		(7	%)	$240,687		$472,960		(49	%)
Net (loss) income	($28,643	)	($54,990	)	48	%	$54,405		($182,587	)	130	%
Net (loss) income margin	(22	%)	(51	%)	29 ppts		15	%	(33	%)	48 ppts
Net (loss) income per share - basic	($0.06	)	($0.10	)	40	%	$0.11		($0.34	)	132	%
Net (loss) income per share - diluted	($0.06	)	($0.10	)	40	%	$0.10		($0.34	)	129	%
Key operating metric and Non-GAAP financial measures:
Total Processing Volume (TPV) (in millions) ¹	$73,899		$56,650		30	%	$211,192		$160,285		32	%
Adjusted EBITDA ²	$9,019		($2,062	)	537	%	$16,429		($5,586	)	394	%
Adjusted EBITDA margin ²	7	%	(2	%)	9 ppts		4	%	(1	%)	5 ppts
Non-GAAP operating expenses ²	$81,113		$74,570		9	%	$237,217		$251,867		(6	%)
¹ TPV represents the total dollar amount of payments processed through our platform, net of returns and chargebacks. We believe that TPV is a key indicator of the market adoption of our platform, growth of our brand, growth of our customers' businesses and scale of our business.
²See "Information Regarding Non-GAAP Measures" for definitions of Adjusted EBITDA, Adjusted EBITDA margin, and Non-GAAP operating expenses and the reconciliations of the net loss to Adjusted EBITDA, and of the total operating expenses to Non-GAAP operating expenses.

Third Quarter 2024 Financial Results:

Total Processing Volume increased by 30% year-over-year, rising to $74 billion from $57 billion in the third quarter of 2023.

Net Revenue of $128 million increased by $19 million, or 18% year-over-year, primarily driven by increased volumes, partially offset by unfavorable mix due to faster growth of Powered by Marqeta volume and a renegotiated platform partnership in the first quarter of 2024.

Gross Profit increased by 24% year-over-year to $90 million from $73 million in the third quarter of 2023 primarily due to our TPV growth. Gross Margin was 70% in the third quarter of 2024.

Net Loss of $29 million in the quarter improved by $26 million year-over-year due to gross profit growth and lower operating expenses. Net Loss margin was 22% in the third quarter of 2024, an improvement of 29 percentage points versus last year.

Adjusted EBITDA was $9 million in the third quarter of 2024, increasing by $11 million year-over year. Adjusted EBITDA margin was 7% in the third quarter of 2024, an increase of 9 percentage points versus last year.

Financial Guidance

Our fourth quarter guidance reflects several changes that became apparent over the last few months with regards to the heightened scrutiny of the banking environment and specific customer program changes.

The following summarizes Marqeta's guidance for the fourth quarter of 2024:

	Fourth Quarter 2024
Net Revenue Growth	10 - 12%

Gross Profit Growth	13 - 15%

Adjusted EBITDA Margin ⁽¹⁾	5 - 7%
⁽¹⁾See "Information Regarding Non-GAAP Measures" for the definition of Adjusted EBITDA Margin and for information regarding non-availability of a forward reconciliation.

Conference Call

Marqeta will host a live conference call today at 1:30 p.m. Pacific time (4:30 p.m. Eastern time). To join the call, please dial-in 10 minutes in advance: toll-free at 1-877-407-4018 or direct at 1-201-689-8471. The conference call will also be available live via webcast online at http://investors.marqeta.com.

The telephone replay dial-in numbers are 1-844-512-2921 and 1-412-317-6671 and will be available until November 11, 2024, 8:59 p.m. Pacific time (11:59 p.m. Eastern time). The confirmation code for the replay is 13748904.

Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements expressed or implied in this press release include, but are not limited to, statements relating to Marqeta’s quarterly guidance; statements regarding Marqeta’s business plans, business strategy and the continued success and growth of our customers; statements and expectations regarding Marqeta's partnerships, new product introductions, and product capabilities, including credit card issuing; and statements made by Marqeta’s CEO and CFO. Actual results may differ materially from the expectations contained in these statements due to risks and uncertainties, including, but not limited to, the following: the effect of uncertainties related to our business, results of operations, financial condition, and demand for our platform; the risk that Marqeta’s anticipated accounting treatment may be subject to further changes or developments; the risk that Marqeta is unable to further attract, retain, diversify, and expand its customer base; the risk that Marqeta is unable to drive increased profitable transactions on its platform; the risk that consumers and customers will not perceive the benefits of Marqeta’s products, including credit card issuing, as Marqeta expects; the risk that Marqeta's platform does not operate as intended resulting in system outages; the risk that Marqeta will not be able to achieve the cost structure that Marqeta currently expects; the risk that Marqeta’s solution will not achieve the expected market acceptance; the risk that competition could reduce expected demand for Marqeta’s services, including credit card issuing; the risk that changes in the regulatory landscape could adversely affect Marqeta's operations and revenues, including heightened scrutiny of the banking environment and specific customer program changes; the risk that Marqeta may be unable to maintain relationships with issuing banks and card networks; the risk that Marqeta is not able to identify and recognize the anticipated benefits of any acquisition; the risk that Marqeta is unable to successfully integrate any acquisition to businesses and related operations; the risk of financial services and banking sector instability and follow on effects to fintech companies; the impact of macroeconomic factors, including various geopolitical conflicts, uncertainty related to global elections, changes in inflation and interest rates, and uncertainty in global economic conditions; and the risk that Marqeta may be subject to additional risks due to its international business activities. Detailed information about these risks and other factors that could potentially affect Marqeta’s business, financial condition and results of operations are included or incorporated by reference in the “Risk Factors” disclosed in Marqeta's Annual Report on Form 10-K for the year ended December 31, 2023 and subsequent Quarterly Reports on Form 10-Q, as such risk factors may be updated from time to time in Marqeta’s periodic filings with the SEC, available at www.sec.gov and Marqeta’s website at http://investors.marqeta.com.

The forward-looking statements in this press release are based on information available to Marqeta as of the date hereof. Marqeta disclaims any obligation to update any forward-looking statements, except as required by law.

Disclosure Information

Investors and others should note that Marqeta announces material financial information to its investors using its investor relations website, SEC filings, press releases, public conference calls and webcasts. Marqeta also uses social media to communicate with its customers and the public about Marqeta, its products and services and other matters relating to its business and market. It is possible that the information Marqeta posts on social media could be deemed to be material information. Therefore, Marqeta encourages investors, the media, and others interested in Marqeta to review the information we post on social media channels including the Marqeta X feed (@Marqeta), the Marqeta Instagram page (@lifeatmarqeta), the Marqeta Facebook page, and the Marqeta LinkedIn page. These social media channels may be updated from time to time.

Use of Non-GAAP Financial Measures

Reconciliations of non-GAAP financial measures to the most directly comparable financial results as determined in accordance with GAAP are included at the end of this press release following the accompanying financial data. For a description of these non-GAAP financial measures, including the reasons management uses each measure, please see the section of the tables titled "Information Regarding Non-GAAP Financial Measures".

About Marqeta, Inc.

Marqeta makes it possible for companies to build and embed financial services into their branded experience—and unlock new ways to grow their business and delight users. The Marqeta platform puts businesses in control of building financial solutions, enabling them to turn real-time data into personalized, optimized solutions for everything from consumer loyalty to capital efficiency. With compliance and security built-in, Marqeta’s platform has been proven at scale, processing more than $200 billion in annual payments volume in 2023. Marqeta is certified to operate in more than 40 countries worldwide and counting. Visit www.marqeta.com to learn more.

Marqeta® is a registered trademark of Marqeta, Inc.

Marqeta, Inc. Condensed Consolidated Statements of Operations (in thousands, except per share amounts) (unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
		2024			2023			2024			2023
Net revenue	$	127,967		$	108,891		$	371,205		$	557,349
Costs of revenue		37,835			36,383			117,559			311,068
Gross profit		90,132			72,508			253,646			246,281
Operating expenses (benefit):
Compensation and benefits		100,964			102,433			299,120			350,592
Technology		16,317			13,930			44,204			41,674
Professional services		4,759			4,197			13,437			14,507
Occupancy		1,178			1,074			3,476			3,285
Depreciation and amortization		4,448			3,108			11,941			7,582
Marketing and advertising		582			346			1,688			1,348
Other operating expenses		4,115			3,833			11,438			14,171
Executive chairman long-term performance award		—			13,413			(144,617	)		39,801
Total operating expenses		132,363			142,334			240,687			472,960
(Loss) income from operations		(42,231	)		(69,826	)		12,959			(226,679	)
Other income, net		13,703			15,074			41,845			37,508
(Loss) income before income tax expense		(28,528	)		(54,752	)		54,804			(189,171	)
Income tax expense (benefit)		115			238			399			(6,584	)
Net (loss) income	$	(28,643	)	$	(54,990	)	$	54,405		$	(182,587	)

Net (loss) income per share attributable to Class A and Class B common stockholders
Basic	$	(0.06	)	$	(0.10	)	$	0.11		$	(0.34	)
Diluted	$	(0.06	)	$	(0.10	)	$	0.10		$	(0.34	)
Weighted-average shares used in computing net (loss) income per share attributable to Class A and Class B common stockholders
Basic		507,160			529,489			513,678			535,797
Diluted		507,160			529,489			522,394			535,797

Marqeta, Inc. Condensed Consolidated Balance Sheets (in thousands)

	September 30, 2024			December 31, 2023
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	886,417		$	980,972
Restricted cash		8,500			8,500
Short-term investments		217,569			268,724
Accounts receivable, net		26,373			19,540
Settlements receivable, net		11,817			29,922
Network incentives receivable		46,667			53,807
Prepaid expenses and other current assets		23,821			27,233
Total current assets		1,221,164			1,388,698
Operating lease right-of-use assets, net		4,894			6,488
Property and equipment, net		35,791			18,764
Intangible assets, net		31,238			35,631
Goodwill		123,523			123,523
Other assets		19,226			16,587
Total assets	$	1,435,836		$	1,589,691
Liabilities and stockholders' equity
Current liabilities
Accounts payable	$	1,026		$	1,420
Revenue share payable		167,081			173,645
Accrued expenses and other current liabilities		165,466			161,514
Total current liabilities		333,573			336,579
Operating lease liabilities, net of current portion		2,082			5,126
Other liabilities		4,523			4,591
Total liabilities		340,178			346,296
Stockholders' equity :
Preferred stock		—			—
Common stock		50			52
Additional paid-in capital		1,865,565			2,067,776
Accumulated other comprehensive income		833			762
Accumulated deficit		(770,790	)		(825,195	)
Total stockholders’ equity		1,095,658			1,243,395
Total liabilities and stockholders' equity	$	1,435,836		$	1,589,691

Marqeta, Inc. Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited)

	Nine Months Ended September 30,
		2024			2023
Cash flows from operating activities:
Net income (loss)	$	54,405		$	(182,587	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		11,941			7,582
Share-based compensation expense		103,258			95,911
Executive chairman long-term performance award		(144,617	)		39,801
Non-cash postcombination compensation expense		—			32,430
Non-cash operating leases expense		1,017			1,870
Amortization of premium (accretion of discount) on short-term investments		(2,650	)		(5,525	)
Other		328			1,068
Changes in operating assets and liabilities:
Accounts receivable		(7,285	)		(1,108	)
Settlements receivable		18,105			(1,477	)
Network incentives receivable		7,140			8,086
Prepaid expenses and other assets		3,195			7,760
Accounts payable		(3,274	)		(4,350	)
Revenue share payable		(6,564	)		4,289
Accrued expenses and other liabilities		545			3,331
Operating lease liabilities		(2,129	)		(2,499	)
Net cash provided by operating activities		33,415			4,582
Cash flows from investing activities:
Purchases of property and equipment		(2,382	)		(722	)
Capitalization of internal-use software		(14,577	)		(9,488	)
Business combination, net of cash acquired		—			(135,630	)
Purchases of short-term investments		—			(972,430	)
Sales of marketable securities		—			637,913
Maturities of short-term investments		54,000			437,034
Realized gain (loss) on investments		—			(73	)
Net cash provided by (used in) investing activities		37,041			(43,396	)
Cash flows from financing activities:
Proceeds from exercise of stock options, including early exercised stock options, net of repurchase of early exercised unvested options		121			4,081
Payment on acquisition-related contingent consideration		—			(53,067	)
Proceeds from shares issued in connection with employee stock purchase plan		1,629			1,775
Taxes paid related to net share settlement of restricted stock units		(29,043	)		(18,553	)
Repurchase of common stock		(137,718	)		(131,519	)
Net cash used in financing activities		(165,011	)		(197,283	)
Net decrease in cash, cash equivalents, and restricted cash		(94,555	)		(236,097	)
Cash, cash equivalents, and restricted cash- Beginning of period		989,472			1,191,646
Cash, cash equivalents, and restricted cash - End of period	$	894,917		$	955,549

Marqeta, Inc. Financial and Operating Highlights (in thousands, except per share data or as noted) (unaudited)

	2024									2023						Year over Year Change Q3'24 vs Q3'23
	Third Quarter			Second Quarter			First Quarter			Fourth Quarter			Third Quarter			Year over Year Change Q3'24 vs Q3'23
Operating performance:
Net revenue	$	127,967		$	125,270		$	117,968		$	118,822		$	108,891		18	%
Costs of revenue		37,835			45,917			33,807			35,589			36,383		4	%
Gross profit		90,132			79,353			84,161			83,233			72,508		24	%
Gross margin		70	%		63	%		71	%		70	%		67	%	3 ppts
Operating expenses (benefit):
Compensation and benefits		100,964			103,166			94,990			95,790			102,433		(1	%)
Technology		16,317			14,769			13,118			13,938			13,930		17	%
Professional services		4,759			4,808			3,870			7,172			4,197		13	%
Occupancy and equipment		1,178			1,204			1,094			1,076			1,074		10	%
Depreciation and amortization		4,448			3,956			3,537			3,159			3,108		43	%
Marketing and advertising		582			728			378			1,219			346		68	%
Other operating expenses		4,115			3,418			3,905			3,804			3,833		7	%
Executive chairman long-term performance award		—			(157,738	)		13,121			13,413			13,413		(100	%)
Total operating expenses (benefit)		132,363			(25,689	)		134,013			139,571			142,334		(7	%)
(Loss) income from operations		(42,231	)		105,042			(49,852	)		(56,338	)		(69,826	)	40	%
Other income, net		13,703			14,216			13,926			14,932			15,074		(9	%)
(Loss) income before income tax expense		(28,528	)		119,258			(35,926	)		(41,406	)		(54,752	)	48	%
Income tax expense (benefit)		115			150			134			(1,030	)		238		(52	%)
Net (loss) income	$	(28,643	)	$	119,108		$	(36,060	)	$	(40,376	)	$	(54,990	)	48	%
(Loss) income per share - basic	$	(0.06	)	$	0.23		$	(0.07	)	$	(0.08	)	$	(0.10	)	40	%
(Loss) income per share - diluted	$	(0.06	)	$	0.23		$	(0.07	)	$	(0.08	)	$	(0.10	)	309	%
TPV (in millions)	$	73,899		$	70,627		$	66,666		$	61,979		$	56,650		30	%
Adjusted EBITDA	$	9,019		$	(1,817	)	$	9,228		$	3,292		$	(2,062	)	537	%
Adjusted EBITDA margin		7	%		(1	%)		8	%		3	%		(2	%)	9 ppts
Financial condition:
Cash and cash equivalents	$	886,417		$	924,730		$	970,357		$	980,972		$	947,749		(6	%)
Restricted cash	$	8,500		$	8,500		$	8,500		$	8,500		$	7,800		9	%
Short-term investments	$	217,569		$	228,833		$	228,324		$	268,724		$	349,395		(38	%)
Total assets	$	1,435,836		$	1,488,283		$	1,558,361		$	1,589,691		$	1,603,249		(10	%)
Total liabilities	$	340,178		$	345,908		$	347,696		$	346,296		$	308,166		10	%
Stockholders' equity	$	1,095,658		$	1,142,375		$	1,210,665		$	1,243,395		$	1,295,083		(15	%)
ppts = percentage points

Marqeta, Inc.
Reconciliation of GAAP to NON-GAAP Measures
(in thousands)
(unaudited)

Information Regarding Non-GAAP Measures

In addition to the financial measures prepared in accordance with generally accepted accounting principles in the United States (“GAAP”), this press release contains certain non-GAAP financial measures. Marqeta considers Adjusted EBITDA, Adjusted EBITDA Margin, and Non-GAAP operating expenses as supplemental measures of the company’s performance that are not required by, nor presented in accordance with GAAP.

We define Adjusted EBITDA as net (loss) income adjusted to exclude depreciation and amortization; share-based compensation expense; executive chairman long-term performance award; payroll tax related to share-based compensation; restructuring charges; acquisition-related expenses which consist of due diligence costs, transaction costs and integration costs related to potential or successful acquisitions, and cash and non-cash postcombination compensation expenses; income tax expense (benefit); and other income (expense), net, which consists of interest income from our short-term investments, realized foreign currency gains and losses, our share of equity method investments’ profit or loss, impairment of equity method investments or other financial instruments, and gain from sale of equity method investments. We believe that Adjusted EBITDA is an important measure of operating performance because it allows management and our board of directors to evaluate and compare our core operating results, including our operating efficiencies, from period to period. Additionally, we utilize Adjusted EBITDA as an input into our calculation of our annual employee bonus plans and performance-based restricted stock units.

Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by net revenue. This measure is used by management and our board of directors to evaluate our operating efficiency.

We define Non-GAAP operating expenses as total operating expenses adjusted to exclude depreciation and amortization; share-based compensation expense; executive chairman long-term performance award; payroll tax related to share-based compensation; restructuring charges; and acquisition-related expenses which consists of due diligence costs, transaction costs and integration costs related to potential or successful acquisitions, and cash and non-cash postcombination compensation expenses. We believe that Non-GAAP operating expenses is an important measure of operating performance because it allows management and our board of directors to evaluate and compare our core operating results, including our operating efficiencies, from period to period.

Adjusted EBITDA, Adjusted EBITDA Margin, and Non-GAAP operating expenses should not be considered in isolation, or construed as an alternative to net loss, or any other performance measures derived in accordance with GAAP, or as an alternative to cash flow from operating activities or as a measure of the company's liquidity. In addition, other companies may calculate Adjusted EBITDA differently than Marqeta does, which limits its usefulness in comparing Marqeta’s financial results with those of other companies.

The following table shows Marqeta's GAAP results reconciled to non-GAAP results included in this release:

	Three Months Ended September 30,						Nine Months Ended September 30,
		2024			2023			2024			2023
Net revenue	$	127,967		$	108,891		$	371,205		$	557,349
Net (loss) income	$	(28,643	)	$	(54,990	)	$	54,405		$	(182,587	)
Net (loss) income margin		(22	%)		(51	%)		15	%		(33	%)
Total operating expenses	$	132,363		$	142,334		$	240,687		$	472,960

Net (loss) income	$	(28,643	)	$	(54,990	)	$	54,405		$	(182,587	)
Depreciation and amortization expense		4,448			3,108			11,941			7,582
Share-based compensation expense⁽¹⁾		35,654			32,135			103,258			98,802
Executive chairman long-term performance award⁽¹⁾		—			13,413			(144,617	)		39,801
Payroll tax expense related to share-based compensation		440			541			2,307			1,818
Acquisition-related expenses ⁽²⁾		10,708			18,270			30,581			64,420
Restructuring		—			297			—			8,670
Other income, net		(13,703	)		(15,074	)		(41,845	)		(37,508	)
Income tax expense (benefit)		115			238			399			(6,584	)
Adjusted EBITDA	$	9,019		$	(2,062	)	$	16,429		$	(5,586	)
*Adjusted EBITDA Margin*		7	%		(2	%)		4	%		(1	%)

Total operating expenses	$	132,363		$	142,334		$	240,687		$	472,960
Depreciation and amortization expense		(4,448	)		(3,108	)		(11,941	)		(7,582	)
Share-based compensation expense⁽¹⁾		(35,654	)		(32,135	)		(103,258	)		(98,802	)
Executive chairman long-term performance award⁽¹⁾		—			(13,413	)		144,617			(39,801	)
Payroll tax expense related to share-based compensation		(440	)		(541	)		(2,307	)		(1,818	)
Restructuring		—			(297	)		—			(8,670	)
Acquisition-related expenses ⁽²⁾		(10,708	)		(18,270	)		(30,581	)		(64,420	)
Non-GAAP operating expenses	$	81,113		$	74,570		$	237,217		$	251,867
(1) Prior period amounts related to the Executive Chairman Long-Term Performance Award have been reclassified to conform to the current period presentation.
(2) Acquisition-related expenses, which include transaction costs, integration costs and cash and non-cash postcombination compensation expense, have been excluded from Adjusted EBITDA as such expenses are not reflective of our ongoing core operations and are not representative of the ongoing costs necessary to operate our business; instead, these are costs specifically associated with a discrete transaction.

A reconciliation of Adjusted EBITDA margin to the comparable GAAP measure for the fourth quarter of 2024 is not available due to the challenges and impracticability with estimating some of the items as such items cannot be reasonably predicted and could be significant. Because of those challenges, reconciliations of such forward-looking non-GAAP financial measures are not available without unreasonable effort.