Business
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 OAKLAND--(BUSINESS
About this update from Marqeta, Inc.
The global modern card issuer reported Total Processing Volume growth of 30% and Gross Profit growth of 24% in the third quarter of 2024 OAKLAND--(BUSINESS WIRE)-- 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 2024 2023 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. 2 See "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 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. View source version on businesswire.com : https://www.businesswire.com/news/home/20241104895415/en/ IR Contact: Marqeta Investor Relations, [email protected] Source: Marqeta, Inc.