MQ - Earnings call transcript Q1 2022

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Operator

Good afternoon. Ladies and gentlemen, thank you for standing by. Welcome to the Marqeta First Quarter 2022 Earnings Conference Call. [Operator Instructions] After the speakers’ remarks, we will open the line for your questions.

As a reminder, this conference call is being recorded. to of call Investor like Finerman, to now President Vice Relations would turn over the Stacey I to begin.

Stacey Finerman

operator. Thanks,

ended and our year may may with begin, and materially risks we statements set except them, the that forward-looking we or XXXX the XX-K of December SEC. Relations from I like are the by does contain the call statements required to These Form and forward-looking filings These including as to for call as uncertainties, today. company in statements including Investor obligation filings intent XX, on Before the SEC, not periodic to subsequent our our subject annual statements. this which our any law. on time forward-looking Actual remind available would forth report today’s update numerous everyone with forward-looking differ results only make those website, of speak any assume are

begin. includes These our on to turn Reconciliations to today’s Mike and the GAAP for earnings call earnings measures. Founder financial addition, press a in Relations measures and GAAP With found I’d like release not Milotich, Officer. most that, a release financial to directly which to be as considered are CEO Marqeta’s Jason call call Gardner, measures supplemental materials, to available the comparable website. today’s and are supplement Hosting In Investor today Marqeta’s Chief today’s be substitute should non-GAAP Jason can or measures. Financial over

Jason Gardner

business. start will a volume, benefited XXXX quarter results of for that afternoon, is earnings a payments. thank and quarter, from overview as This of the Marqeta’s of processing focus our quarter TPV, and few joining with then Good for brief first and year-over-year billion us $XX quarter Stacey. the XXXX XX% the diversify rate notable you, I our Total into or given representing everyone was a Thank in grow our call. of dive increase. key I areas will we for growth first you stimulus

XX% basis Our exceptionally the an quarter represents XX% growth fourth rate on XXXX, also of from an a strong growth quarter. sequential

being Our TPV more the diverse quarter from customers of the with as million of number of by $XXX set customers growth over is doubled XXXX. a driven in first

Our lives net revenue the The the represents year. manage growth increased aspects saw from previous main to by we tax neobanks to of Cash quarter more saw drivers continue $XXX as of XX% evidenced are XXXX in million a more in throughout intact. and their refund financial the we Consumers trust of App. still increase deposited

companies continued innovative seasonally and expenses. witnessed weaker despite buy for continues back also retail travel to sales. show begins later of management their corporate and to a now, being bounce We QX efficient ways Expense pay also as for quarter in momentum more handling strength look operating

in the Xx signed contributed customers growth XXXX. to XX% fast customers more to as than our as signed XXXX growing over quarter. prior Newer customers These are of in

is continued diversifying resiliency, success Cash driving spending pay volume App in closing, due XX% increasing quarter now, XXXX, strong customers; deal from increased timing in from reflects the in fourth scalability. quarter. months our of slightly global first decline The of refund X buy by XXXX. we the the volume the our in on double tax now growth and primarily these total strong growing net quarter in and is our accounted to XX% deposits our newer XXXX. later for focusing fourth business platform’s account customers includes of of for which XX% TPV, quarter comparable As our a about which X quarter reliability Afterpay ways factors: based a of fueling our and broadening of our one, critical customers’ two, the on and first of result, XX% Block This the the revenue, success; up three, support

thrive. we to foremost, customers our and want First

customers’ Our success. success is our

fuel We which enabled diversify Marqeta’s to easily businesses. platform, quickly growth our broaden to are our programs them This the always they and platform tools by allows looking customers multiple on their customers single-stack Marqeta’s code giving once customers is platform can our deploy configure. need best-in-class to markets. by and across

based spoken about many have times abroad. We U.S. our customers expanding

that recently the and shortly card in credit The the the platform we management throughout first Europe. European company, Across their number are in startup have U.S. in of outside Europe Marqeta represents in than enables half years. Payhawk, Payhawk, and launch single of more business launch United provides past XX plan market also to geographies. a value U.S. for an achieve spend provides. use to unicorn our on our Europe, Tap, X of in been used including expense of to their to platform customers they These States live the our UK, quickly Marqeta’s XX platform other the launch in management Bulgaria’s which first two the multiple a countries small business top expand Marqeta over just XXX,XXX our product businesses Our growing Capital small stack Marqeta the customers use platform tremendous status, of one-third quickly, examples and top that has more to than to platform

APIs is that leverage of Card. offering into balances and new our growth Their facilitate to low-cost our installment and launch Card drive Marqeta Upgrade partnership turning and tremendous disruptive has platform customer Another products monthly unique rewards. modern configurations issuer and credit a of plans version rewards. ability offers as leveraged with the to cards multiple Upgrade a card

named only has of by Issuers. fastest-growing XXXX Nielsen’s featured the U.S. looking U.S. and card the XX Credit audience, back. market larger addressable Upgrade the was from rewards in X cover card top Upgrade looking credit Card Card recently Nielsen reward to its As to total fin-tech in programs, a target list Top crypto launched for a broadening result, for cash millennials savers

core This broad management customers. program for our as capabilities competitive advantage providing Managed focus is for by support These our by solution. which evidenced Marqeta. second a Marqeta capabilities, offer as we serve Our area,

payments significantly expertise, bring rely Customers on and leverage running by to the new navigate while burdens deep to the customers reducing of landscape bank engineering regulatory a manage sponsorship network to to Hence, card complexity for of program. free allowing and enables rules, This precious obtain card it their innovation. our programs for entirely the our Managed to customers focus legal and our distinct Our This market. are makes they resources. easier us

short could virtual Now and Marqeta of of at example, in recently and used For this one with Pay new card launch multiple customers amount merchants. purchases capabilities. be able for nuances of to helped that Buy a managed our handle time by our was a different Later program type we expertise of card relatively complexities

Know card We Managed also support fulfillment many the to Customer Customers. or offer by our to value-added KYC broaden ways such management, Your as the services we

Let customers management airing a launched aggressive me derail end-to-end and suite recently Therefore, conservative growth our points. control card can a have risk-aware product or risk effectively, RiskControl This customers program. share an example. to Card way, to significant our new risk too issuers pain in grow gives comprehensive to solve we control. of our balance help

exclusively from lets real-time this it customers the the within was fine-tune up created card transactions products approved. for and We’ve which controls our ground are decisioning suite the issuers. of product One built

customers issuer industry the their we acquiring similar is card By processors point our comprehensive risk most and from rather relevant the enhancing multiple networks offer own change the can on While run can products, the real-time other we point of believe with and using more view rules networks of our the solution the decisioning data and simultaneously scores these issuing data points, view. customer fly. rules than

other for rules, creating typically helpful not there’s process review have Our a new new which a solutions solutions are fraud attack. when –

making based solution Our to management. verticals risk it expense rules implement cardholder’s our a a fit like customers on for history, strong allows spending

this management With different Marqeta’s partners find full the Evolve, Our of have focus, added the Trust, range platform provide future, customers. to and best Bank the recently we the liability increasing for resiliency for which builds Evolve us our platform, will partner redundancy to in program scale that can service, match who support bank third we U.S. bank scalability our another that area for capabilities. and global & of four of allows our the

a example, open In in banking dedicated diverse focus our Evolve’s of portfolio to QX offers with fintechs. great our a for closing, continuation combined for For XXXX. great Evolve performance large, Evolve. and of partner division This, services, solutions results a us innovative makes payments us, a and solid partner financial demonstrate technology banking-as-a-service, on

and very economic a a delivered of business backdrop against strong tough and Our global uncertainty year-over-year comparison. growth

the money additional the by developments customers. of for now and I I customer over Looking out movement Mike. building the pipeline thrilled at remainder in to call XXXX, tools will the turn many our our exciting we’re am

Mike Milotich

revenue a XX%, of Jason. Marqeta you, fueled TPV. in great Thank delivered quarter with growth XX% by increase another

Our top to of triple the our at in our growth top scale, line with customers’ growing reflects least XX support in growth TPV XX our digits their at customers ability QX.

were results geographies was that very and we This we expected, come scale serve. verticals our stronger outcome we newer dozen success for by business a to a customer demonstrates of than where by from outperformance large net services industry fulfillment broad-based, This placing for top growth growth revenue the signal customers, better provide, is a diversifying continued Also terms in the and contributing card the Our of which margin in driven order, gross higher our outperformance achieved due number the many the customers we was of profit customers. of one largely XX. program. outside positive a to our several to the have

$XX services revenue adjusted QX as and grew than of government of slower tough the beneficiaries growth of in payments year-over-year EBITDA driven overall company biggest net last by stimulus the vertical into over translated increase year. billion, XX QX margin. XXXX. better one The gross comparisons points an upside TPV profit financial stimulus despite a the XX% was Our

a card tax in be refund our was which For partially to Block tough the spending. delivery App On-demand stimulus helps specifically, vertical. direct deposits, the continues large increase offset slowest-growing by comp Cash

I many as customers this quarter. January as X a we is growth retail with with We last than have into double over in of growing continues by and However, driver the year-over-year, our digits versus grocery performance had driving the QX, our who our XXXX. This now Canada; due over our from customers U.S. meaningful and mentioned have versus prior customers XXXX volume about option management, million joined X a QX who it to upside. Buy than the one did QX, in tripled more of Xx stores, in and greater XXX%. platform XX% Pay step-up now Now, million QX quarter customers Strong are are the and TPV quarter. two joined factors: X we proliferate, year. TPV, than including as growing customers transactions than drug who to who of Later, twice both than accelerating at our Customers Expense and diversification are more in XXX large last points last as had revenue variant expanding of are the to more now successfully time platform of earlier our payment driving in customers faster doubled increased X since Omicron XXXX. newer to TPV lifted Lending grow in platform X rise

with bps TPV to grew Compared due with revenue Xx shopping. continue XX% of the XX% rate higher-yielding line Net $XXX net million drive of top more and in that our was our our the TPV was contribution in our four remaining of rate. growth X – stable of to consistent customers more rate each Xx to take in last the quarter, revenue X and While the take than top QX of benefited reduced XX%. last verticals. the verticals Therefore, customers that in quarter, was grew revenue TPV grew QX, holiday remained year from majority than and our net our lower

customer, our by Powered we a XXX% with where have purely over Our grown processing for well has many quarters. revenue, Marqeta relationship

by X rate profit gross are is low is Powered the Managed the Although in lower, a single-digit revenue than TPV, customers new QX customers hit many rate Marqeta percentage verticals, the these due of despite of by TPV our X served rate a after stable much of to by Marqeta volume XX%, we our is a rate mix. drive take grew The year year many take share in other a XX% now a tier similar are Marqeta of our share verticals gaining revenue in the take to network in benefit low verticals, variety of business These but than in from slower received changes coming operate which profit versus gains resulting overall those take U.S. business. points being contract. Powered Gross outside incentive ago. we and our more catch-up last

As March. And year given operate contract on volume runs from the hit business, in year, our we incredible this quarter April results. as that of growth contract earlier, a a quarter’s incentives reminder, last our remember through X from you Tier higher likely the

you normalize gross incentive for the quarter. of profit If QX this in our grew million catch-up XX% $X XXXX,

TPV And our demonstrate fees be our revenue with two partners than volumes, but two, our partners profit basis. we growth growing bank normalized line and One, incentives TPV. with gross the factors to as bank driving well we business network relationships as are slower on fees normalized to that as growing have are in are Our network strategic leverage in are can the than there be faster materially little above these a the a Both network scale. operating powerful factors achieved of our growing growth.

was profit was $XX QX On in option EBITDA net a was private company The GAAP non-GAAP million $XX non-cash which year. loss includes gross negative nonrecurring impairment invested a we XX%. million, margin an a adjusted a quarter $XX As negative adjusted as the and investment which due the and of result, some than to million, purchase basis, for margin the of was and a last driven technology efficiencies. to The expected in platform. that of scaling fueling by profit as the better the few X% EBITDA was points business are our growth gross higher we the QX operating resources well

Now, our expectations to let’s rest and QX XXXX. shift for the of

many revenue than of This we the is so QX should our be drivers is trends growth months in to is to of as expect little also a couple XX% gross with be higher consistent continue. to This as between to larger in April. seen outperformance in QX. have This grow growth dollars expected revenue is QX we profit expected over QX in and We a year-over-year net XX% we range. in expected should of XX% The a the be margin XX%. QX ago far QX rate than similar increase lower base. the

incentive volumes margin As lowest lower tiers is of quarter, volume QX as in to contracts March. we in quarter which the April discussed run rise our QX reset growing Therefore, last each profit gross resulting year progresses. cumulative then our as network year, network incentives, with

than our profit However, the year, significant expected Therefore, gross this growth. profit than scale grow the less of points step-down is in to be QX expect was given to it gross business. several revenue increased we last faster net margin in

gross expect our We QX dynamics the to XX%, due to profit margin quarter adjusted just negative the XX% EBITDA be I described. to margin lowest

as QX XX slow our from XXXX. throughout points ramping investment grow Our should adjusted least in QX expense we the growth of operating at over

expected and for XXXX on full of follows: the be growth net are expectations new for later trajectory expectations year. XXs is in high revenue in our the the based to as the business business the Our year-to-date contributing year

as year. more we performance shared I scaling QX last of step grow last quarter, incredible the As in down lap occurred down then that meaningfully should growth QX will business step over growth rapid the QX XXXX. the as in we

is saw our the holiday was challenging year. economic to forecast a but volume. first particularly time more will current impact since from meaningful the as uncertainty, you last the the progress Given year through year with spending the we on of we tough share back project, we to is half QX

running scalability expectations in a gross margin with should Our of hope once remain the quarter basis. to increasing XX We ways step and and be year, each gross digits XX resiliency, fueling EBITDA and be the are the or XX% you many quarter our reliability global customers margins another the progress range unchanged QX. had negative a long-term around our our low high is the should down diversifying quarter to we business guidance the with as the be top to full should great in in wrap year the we share expense of $XXX profit platform. more growth to as consistent had year. annual profit and with of in through QX XX up, QX an EBITDA we margin to mid-XXs, we customer’s and on expected TPV we for But our tighter ways QX in as points next of right to lower Adjusted expectations. midpoint and we success, be roughly to QX the quarter. scale. than continue highlighted continue million To pass customers XX% we the of Marqeta little expect our Each to our margin support line invest now, that single Adjusted

Our our net remain add both bank management due to Gross network great Managed partners as find steady our Marqeta customers the Powered steady operating as remained take and solutions. we value leverage business our continue Marqeta our for businesses. by with of to and margins ways and we revenue rates program scale by to powerful profit

of now the operate once back we questions. incredible will XX% captured in but to resiliency confident we In incremental the as be required the the to plus scales, at in it that capabilities to can business the opportunities and compared new margin the over of EBITDA us. for remain business will run, front becomes turn investment operator continue incremental a We less have long the invest more captured. adjusted revenue I significant

Operator

Chiodo Please Instructions] ahead. you. go [Operator Credit from Suisse. Our is Thank first Timothy with question

Timothy Chiodo

be opportunity bit I misunderstood on that’s to appreciated, less focus want an and your a broader might or we think thank little Great, maybe opportunity. banking-as-a-service everybody. that Good you. afternoon,

So a direction. was services, in or to if to thought tech-type a of that terms this We ledger your or bank customers could tied partnership ancillary that things of talk core nod Plaid little are But about ability software-type transfer of directly. in the support services. not other banking bit interchange sort a ACH you systems sort

think for investors. be that would I helpful

Jason Gardner

Tim. Thanks, Sure.

our care mean we the then And about reliability movement. increasing about So that’s three factors talked I primarily fueling success, prepared you’re money customers my and as support broadening customers’ and our in right. global remarks, platform global it’s scalability. really customers resiliency, I ways

baking-as-a-service we ACH to deposit ATM customers value. our service, direct actually tools currently many mean such a offer I So use capabilities solves they as withdrawals, to specific today, that unlock business need accounts, transfer can where

issuing banking-as-a-service, the of what space So part is in dynamic. do just one processing we

the we needs. We’re monitored to capabilities leaders that a And issue, looking always space. on based in banking this service additional we’re customer as pioneered add

think our one matters So Simplify base certain that, aspect what we’d building the – customer to our does look ACH. money then They not out capabilities money a customers, areas you Plaid, to target build banking-as-a-service. roadmap And with partner mentioned, in year. we this every absolutely are for need of in we’re like number additional on

We also have eight partnerships Temenos companies as and in the banking-as-a-service space, such which Centerra.

we the our very we a and to service want. banking as point focused always customers sense have, seek on. customers the is they our ultimately, on customers. are with want hit puck and We something we absolutely So a makes where think lot space to of much based it to the for to what where We in where But they add leaders companies want our like go. will that offerings partner banking-as-a-service

which always additional think processing, part we needed. we big then In will issuing and handle that, when fact, of and is add we capabilities the

Timothy Chiodo

meaning type a assume more you that banking at Jason. Thank services, that of offerings margin higher Is it for core context the gross ledger to slightly Marqeta? of come software-type for Excellent. those could some fair

Mike Milotich

a true. business. lot per I It’s a rather necessarily different or don’t model. know a type of than you’re on transaction if volume-based charging user a that’s on really basis Usually, like

depends think really I customers the it how So on active are.

that the customers necessarily Tim, of types engagement say either wouldn’t of providing. go case, other on those and level we’re that’s I the depending it but the way So capabilities of couldn’t

Timothy Chiodo

Thank the Alright, Mike. you, Appreciate Excellent. you, thank Jason. answers.

Operator

Thank you.

Faucette question James next ahead. Stanley. is Morgan Our from Please with go

James Faucette

strength the you’re very you’re for Thanks of kind touch color Great. way much. you pretty give the currently to groups rest maybe bit and you’re of year. seeing then just like the for sound rest right the the look that mentioned right the wanted wondering conservative good. you as now both a across be some given formulating you I the the that little on you the contrast of the seeing want and bit more seeing current year, different little if you economic as give at variance particular the that But different compare there volumes more now? you’re that a segments. of quarter of and And It outlook to I’m little you’re kind watching could things where idea from sounds uncertainty. Can can a you just think be to where the what

Mike Milotich

Sure. James. Thanks,

particular strength I – the areas grew later of said, I for the in are the the buy say us than pay as now, more I think XXX% quarter. now two right vertical, would

management So, performance. very XXX%. strong grew over Expense

of It’s two quite those customers. scaling So and very parts business rapidly. across that are multiple quickly the growing are

us have particular lot different those, expand a that, add there of of allows target is us to broad-based, all of value into. And are providing a will that of within who serve that. quickly. or they guess, we where really I those capabilities course, with be verticals. allowing like that relatively niche of our And also – customers capabilities it’s can quite which we’re lot range Within So to large scale a

and kind vertical services is a on given an size the than is the course, is that still customer which, are growing would significantly lowest is now growth the larger the The quickly, – – quite had overall base. but And of delivery, the I little of the So slowest our of pandemic – then slower growing now during still incredible explosion slowing on-demand growth of a are it, those that bit two base. fastest. growing is financial say the

thing So to growth. new areas more kind customers have and remarks, starting those and say this, are seeing just and are a we are my last newer we’re so are in lot of diversify there the growth. about mentioned where as would customers, a The I of explosive is of I verticals really who quickly where more and lot we’re relatively ramping as

And that so it’s those have, faster platform customers I Xx newer who as mentioned, we on customers are prior XXXX. growing that to were than the

– and a those And swath are whole coming across so of use cases.

So that’s how we’re thinking about it.

of the things as just out think we I terms out and behavior the mean, of In look one or into the watching – out watching – level I the years, is of quarters, activity. we’re is the spend at

has – seeing seeing in we for quite We sizes. don’t see, ticket spend for while. big changes in behavior terms card, a in here changes transactions example. are the we’re active like And our for So big of example, per not obviously, also inflation been so

of consumer if trying but continue see we’re for things any monitor business we’re as there right slowdown that that good, support. use either the watch that’s we something to types we now, go And forward. to everything looks the is are or to in those So going to cases

James Faucette

then makes have of That allocation. sense. on just a come lot quickly down capital a lot. Obviously, And Yes. valuations

capitalization relative your right cash You position, guys to market now. have very strong especially a

You’re in not you’re lot really cash. on basis, least a spending at cash or a burn of burning non-GAAP

other capital you’re now? of own about come of that right whether valuations or companies potential it think about thinking down? you acquisitions at Just shares looking be those allocation, your wondering maybe how how for So do

Mike Milotich

James. continue down Thanks, to for our our mover the mean priority that M&A. And is definitely want first is to obviously benefit. first Yes. advantage. are We I fact coming to our valuations maintain

product we’re so our range capabilities of customers that capabilities can a looking customers. and to roadmap broader we market bring leapfrog so expansion at really for sooner current could our And additional

that are our use first basis, and us. coming the helpful as of on adjusted for focused So if for will our an the you That is not us priority operating on area look mentioned, we’re that that the down overall And flow. the definitely for at valuations you is just EBITDA hopefully really even – cash. even be even fact cash

upfront that timing the items one that is bonuses of exclude quarter out an of this large vendor accrued And or paying the remove paying you those were quarter very the cash last to large operating of the or cost, in a of paying reduction to a one year is If partner two, get in the was were two in if upfront positive. flow to a ours – specific P&L. actually terms amount ours you cash for our

for we or to but is now, find do down, are our we much if actually we not focus need buybacks. we – then our might burning If cash, are really for time we goes share So – M&A. as deploy by, primary plan mostly don’t cash valuations consider that purposes. with But M&A over, have that we coming we some left

Jason Gardner

M&A product that. of the the services I’ll opportunity to and help of fill The Yes. us or to advantage gas to technology and we ahead Marqeta will is us is massive add roadmap. our accelerate verticals therefore, plan James, the take And always really investing and look for more for huge to opportunity

James Faucette

Thanks, Mike. that, Appreciate Jason.

Jason Gardner

Yes.

Operator

Thank you.

Research. Our next Wolfe from Darrin with Please go is question ahead. Peller

Darrin Peller

at thanks, ‘XX verticals or Xx Hey, at more when you the the the a and pre was more incremental just guys. Listen, growing that doing little we look then even. are maybe of rate that verticals that than are what on explaining well

that of are us so what vertical And those If on that’s discussion competitors – be. better that’s verticals capabilities are? with then your verticals And sense some key of verticals follow-up been those could just resonating there. give just out and much quick than you parlaying what the how one on a would the into new

those lot at We’re of the markets. crypto end given the the and questions a of some BNPL company we’re in volatility getting seeing maybe over exposure

maybe about thinking BNPL And you your what’s guys? some color just into how for you on again. can outlook? give us so And factored Thanks, been big may be

Jason Gardner

Sure. Thanks, Darrin.

our up and and talked people vanilla their the So them engineers figure business. started to of one want from couldn’t strategies card company. sort always are about, the the the go thought do of match out mean solve product do significant we had and disruptors. would focused of sort was And about basically dream building product on growth it we a our that issue investments delivered and was platform can APIs from it a to Really, DNA our in bank. card the was they shoehorn they I to they so a build to a or that how commerce as with beginning, long-term we the out – thing delivering with that pretty

of zero for will allowed to to So delivery the transaction. or on If goes we The use transaction reduced point point their on sale repackage go to food, that using and up We as with the their which down is significantly restaurant We the have food tenant one that there. repackaged terminal based was pick at ISO to right Marqeta authorize started the that they to the card. sale. driver fraud that the an that’s DoorDash in at to the phone Jason and go them from to for GPS let’s the They tell and example. That the the a Apple parse have yes, message driver the of turns a coordinates up and then scale. DoorDash right way. near we is can message right of DoorDash. the card in They authorize find card, now amount. the deliver a the the the order They delivered being swipe message right to We drivers. state on-demand restaurant, driver picking

into went management and some the and our the of and to for pay sort digital we verticals We later expand of largest and where vertical then bank. went land with We of strategy of the we all start sorts then different throughout expense buy bring and customers, very specialized to on-demand now go capability vertical and part So then we them. into is delivery. e-commerce

institutions. then like and Card, So Block Card, Team App, in U.S., with financial here and is Lydia Cash then a great three moving Europe the product Square companies into example large

new where base, to customers those like is that just new cases, be adding geographies, obviously, payments, the can talking advantage. our you we’re And to But a here, that first we’re will customers use and add world across our think know platform new the of the where surface. headed in be come, And It’s about then always easily within accommodate verticals think four functionality going we is more the more and spectrums. growing this. we products. always for. like mover do four verticals, world go. we looking are scale And about future to customer payment leadership new that the belief And we into scratching will about So

We’re U.S. less carded the volume the than alone. X% needed of in

is to is just us tremendous. – So for opportunity the grow

Mike Milotich

I your for maybe that, then second I’ll thing guess, other to just your answer add with well, And second on one question, guess then just I question. and

a be might a One card virtual valid of single-use the Darrin, is reasons platform just our is card, because so success do customers that a virtual also, card. are flexible, what makes key can for us a having think expand, physical period or very customers allows which leveraged, I is part our All are a of successful. which easily to also things time those of

our than of our a terms BNPL at points but XX% the as TPV two of In it did is decline from percentage last segment, more U.S., BNPL exposure to quarter.

QX was be meaningful so – are that smaller of because very we quarter. but to last than part, seasonality retail-oriented. lot little a tends So a it’s But is it’s of a just it

different a like whether with within mentioned, virtual product physical to We’re our trying card. it’s diversify set as I – BNPL, card,

from issuers card We’re BNPL. getting interest established providing

some help this also these the and have can we why financial we already so provide market payment where the this in institutions them, as a purpose-built we again, Jason this that in say to just solutions, would into who to as described. have we still consumers, of attractive it’s programs looking established fluctuations are new who we’re new think I trying And market can capability payment to is And is get So types entrants offer of these capability. card diversify verticals.

growing mentioned, TPV is percentage So incredibly for fast. example, I also management, our of and expense double-digit

moving – and capabilities. vertical e-commerce We more an of into are with travel-related

We presence in are building credit. our

a things all BNPL, we so that minimal bit down a are our impact performance. hopefully, in So has diversifying business that our to were to little these are slow that ways if

Darrin Peller

alright. will queue of I snuck back I to guys. for really I sets That’s another questions. mean, so helpful, Yes. the into, turn it

you. thank So,

Jason Gardner

Thanks, Alright. Darrin.

Mike Milotich

Darrin. Thanks,

Operator

Thank you.

Our from JPMorgan. next is go with question Huang Please Tien-Tsin ahead.

Tien-Tsin Huang

Mike, you very the feel and now what’s that being of customers the that how lot look of quality that. do of I’m given here on and potential for XXXX vintage pipeline the products, the be curious about strong there you the on like? I’m done. what I another Jason front of use you all to based much. just see, you and cases just a generally pipeline? Is in comments How your looking new curious, Thank vintage? like well it’s about if you’re new at questions

Jason Gardner

we Credit deals on really credit, have rest and on, text for for of is of well-known well number both pipeline in something announcements the a we’ve products, fit and for to focused the exciting customers. the as disruptors. So year, make new geographies products as

about we not coming working with but hear look about a on. talk the don’t deals here, to the new we’re latest be that out – we’re We’re exciting forward want in lot quarters that announcements to things going to to sharing going coming really to

can It market. we’re pipeline the pipeline, addressable new for and Geographies. on grow business current ways. sort based in the around their grows adopting their specifically we’re verticals of scale that grow in, So to current products customers, building products existing different

on at then we you look focus payment of Australia to on So focused the our in of and the and how lot than more our regulatory the experience grew lot has I’ve platform. world. customers for U.S. build of around And a if UK us. or is companies and And that networks technology have about want it to world was where past same. that basis really talked compliance. around a primary as like our types and using user customers the every And the payment and and country we And using – we of us using out more move talked be the a out different much on us that global a we the us our experience customer about

we excited are future. So in the growth the about

lot new here long-term a years the vision We really verticals, been playing looking in that’s out really the have new more to coming products and here well and a announce quarters. to enter the over

Tien-Tsin Huang

Alright. distribution. the That’s the fun. of My quick follow-up revenue and maybe distribution curious translate in for per we tighter if is Mike, just loud to I’m through want say, for just it, I’m XX? pick or I terms client customer, more that clear let’s XX a curve? clients, through just bit curious if You tightness six from a tighter Thanks. hear a but two seeing lot you’re little there

Mike Milotich

Yes.

they of of in very know, say our number would sort are much Yes, to hyper you about that what’s have a outside exciting. six block upfront then different customers that all we’re, the have – I obviously maybe customers guess, I to have you next of say very XX, four which is – And the get the get then would then that X size. don’t I probably then right, of and XX are large group, XX I you’re into top similar So stage, or business of growth quite are contribution you we three And the then verticals kinds represent. and to serving

is from be big, a that question to makes and necessarily but that – like household then that’s quite name and to project of you as similar a then that your and growing small, curve up. the which is growth. a almost Blocks XX. it know those there customers to I they hard right? customers hard there estimate what ramp large about sometimes and are all could and few bit to is it’s because don’t there You XX swath There also of like relatively – are don’t look is small all that earlier, are they but little probably they really how So high now next But And then going are X think relatively it. years fast, is be a very

Tien-Tsin Huang

there Great the sure I’m of several quarter. Thanks that for update. are incubating. – Yes. are

Jason Gardner

Tien-Tsin. Thanks,

Operator

Thank you.

next with Please El-Assal go Our question Ramsey from is Barclays. ahead.

Ramsey El-Assal

international you ask wanted to the thanks attention pay Is becomes call well that more on – what strategy I opportunity evening. Hi, you as broadly need an are taking it present mentioned today, on question. Good there? the you to accelerate comment sort push M&A to? kind driver that close of move opportunistic where you your approach a new for times on thinking into of that to more kind can quite themselves growth and with or my opportunities you international it a we few markets is such of

Jason Gardner

Yes Thanks, and yes. Ramsey.

thing wants phenomenon. modern is cool all world, the So offline, about they have card whether mean, the issuing I network the card. accept online a global is interconnected in the merchants to that the or

as managed markets, with enter stuff. countries build with they pretty we help market, than we and build And So about to addressable our built one-third we And geographies. top to more new multiple XX XX more in Marqeta those a them different by use products, and product top customers regulatory that’s the customers. us. than begin an enormous opportunity of compliance capability card our spread for wings, to more sort half of solve capabilities the And issuing their modern of for talked really heavy-duty our have lot of in

So, we how figure time. they out really them want and to help go get this

lots from seeing base, encouraging not customer our adopting we’re new only signs internationally. but of moving So products

employee them platform servicing to a the markets. time they so constituency code of So a that built and in within once lot and there. building saves and a regards multiple market lot a of It is specific across money

the started is year. absolutely today. U.S. That in with purpose in operating now and multiple countries international, more is or us Europe customers we’re customers in is growing, that the platform in resonating absolutely in countries U.S. very Again, announce – Australia or are operate now the who who we started the have built the globally And this we in. XX U.S. to more in much So

strategically our first, to to us, venture that’s opportunities new roadmap, roadmap, there in our enhance looking there, help look been something the at with we because can of us today, very gain And in companies simply and will countries, investing are lots strong and of opportunistic. but there for a will have grow those of absolutely is the addressing for If we companies lots additional lots So, absolutely where seeing see lots be are that, capital The years build we now. new to specific that be broader a help market a M&A. it space companies. business, up for foothold many we we great others and and that meet really conditions constituency. world out products And this

are opportunistically that our we looking advantage roadmap take internationally and like market customers building yes, up excited to absolutely So, yes products our we use in see of to and speed and want. M&A about But it.

Ramsey El-Assal

Great.

curious? in quick also I vertical. in. like one type everything that or me that’s gone on decisioning of Let with asset any I of prices translates crypto slowdown terms asset It’s either given curious in space, of one prices sneak And into just in crypto pipeline about crypto the your the volatility volumes whether the am new clients, in crypto was in just just volatility

Jason Gardner

make a platform, between we regards for and so our just do, backed, fold, platform seeing a crypto and incoming fiat customers cryptocurrencies the to wallet. coin-based, like what at used lot step to a the we shake the pay, of partners gateway capability. our in point so as back the platform, Marqeta to purchases Well, take their Using sale, of at this the crypto us in interest are in app that innovators enable

for a sale, want us to asked fluctuations a products market, spend I want provided to is capabilities vertical that. a believe and to able go I about see easy and spend in to long there building you one point for was verticals. make sale when to say it experience them of – approach we at your incredibly to and crypto So, This that. customers done assets the can consumers it have been ago our be for in do want and time and question we customers, spend. and we those point really we have good and of They our the create

continuing in So, invest are crypto. we to

of adopt in looking companies our pay sale. are value just use just-in-time pipeline a purpose-built consumers. this space. movement helps of or within obviously, helps their who point a traction. And non-existent. well. create it last And bring merger delivery, seeing was for customers We year, much Revenue is on-demand have in they did again, of this crypto in the around gaining these volatility more now companies technology to And these and solution we like open buy a And to now later, for our whereas to vertical. are almost this million the again, of we the to lot lots technologies funding more APIs attracted at really It’s value to assets as

So, this in is looking to more are opportunities for we more space again, invest and of us. and and there lots lots

Ramsey El-Assal

question. for much so taking Thanks my Okay.

Operator

you. Thank

SMBC Andrew Our Nikko go question is ahead. from with next Securities. Please Bauch

Andrew Bauch

I you results A full team. of Hi the mean year guide, nicely Starting in with beat the here. set quarter. first nice

and quarter consensus. our in model Second comes above

have of how of should quarter? trying kind are the embedding And be these year, on. the the amount given to thinking have momentum programs exiting we gauge coming that that back about offset of So, half you second should conservatism the new by in you the you

Mike Milotich

Yes.

that I conservative. think are I say purposely not we So, – definitely would being

We now are looking assuming what at the see trajectory that of not the right forward a and lot and and business projecting we of disruption.

I – full the did of did that. bit the we than so are a for yes, QX and we little year, because So, and QX high-XXs stronger of expected, expectations I sort to our up raise guess

is The only in So, my meaningful did first on would platform. thing was which holiday of I I we spending conservative. year being – not on really the within would we I flag, prepared that remarks our say customers don’t saw are our XXXX our purposely QX – say we

broader the that spending. of didn’t a in card terms lift have we kind of So, typically seasonality that market in big has retail

really, don’t know is makes it’s QX really us to sort a that little But something QX challenging see – to a number because long right to is our that projections bit more so was base of last trend on. what we really our have we year the project hard it for And now, strong.

we we a have. will But tough are comparison. at looking so otherwise, And that be trajectory

not We have definitely new being customers we purposely and coming conservative. on, are

we we more then will to any of see continue if the As performance, you changes. there is update

Andrew Bauch

Got guys plus IPO, margins. mean the for on up X-year And and I you know expectations coming it. I growth long-term helpful. then your That’s of reiterated XX% anniversary the EBITDA the

X the future a year different. lot However, world in the is here,

little path wages, about it price one rising your in was the guidance, your views to assume housekeeping I be So, correct? And original for increases? impairment, point, with how included be profitability $XX would competition just the talent, should thinking we that million the around

Mike Milotich

first. in me one of So, $XX non-GAAP answer is our so impairment out that it’s our – not let second The adjusted million numbers.

non-recurring it impairment. So, factored the a into non-cash, but wasn’t guide, it’s

So, adjusted guide. and wasn’t it therefore, factored our into impact doesn’t results our

that’s what I answer I would, that So, guess one.

Sorry, was before what? that your question

Andrew Bauch

about wage thinking business X the the this year into and dynamics just It’s from kind how and long-term? cost IPO of fit that

Mike Milotich

thank you me. for I reminding Yes. would say –

So, be kind talent, engineers, some the and path of yes, good war for no we I there a growth we There achieve there you on. can that mean believe need is doubt there. good pressure to people is is product

how increase deploy little we investment prioritize disciplined So, we cost about our we very would bit. But how are investments. and does say those a I that

portfolio is investments balance years to and needle. things to now and X at that years a are have priority important which and versus looking will of little So, further going out, to of move what’s that investments the X the really have for – X things What have you to matter years think year most from balanced the or deciding changing I X it’s more – example. needle move of a really those a that out, what’s list really for revenue,

very just path very our profitability. very we investment economics we that right. so think I and guess kind be of are that to disciplined have successfully balancing about The we that of And ROI-oriented, with so our try is level one, are to that we be attractive, the unit benefit

need of X have to we years revenue. years to going meaningful are our typically investments once And X prior operating level to to made a reach scale. we cost So, be a marginal very low certain

share target about making are balancing finalize we our the But those be think underlying quite where that’s our will plans. – we things, right economics I will as we coming to areas. quarters will and a on profitability, sure we we then the in we more So, path growth are and which strong, multiyear

Andrew Bauch

Helpful. it. you. Thank Got

Operator

Thank you.

Dan Our with Please from go next Dolev question ahead. is Mizuho.

Dan Dolev

for bit a perspective? Thanks quick question, Mike, Thanks. appreciate out And follow-up. – have helpful. take parse a can That guidance macro a what baked maybe line from rate I your letting are volume guys. versus then us in be give Hey I little it. you top kind of estimates would into

Mike Milotich

Yes.

So, there I Dan, right a that right. is disruption in not we today, what would we see that assuming now, say is huge are trajectory the

even for a quite I our and So change I significant is inflation little are ticket big mentioned a within again, business, earlier, even the bit seeing think not as we in sizes, in market. example, though

the next for assuming then over disruption And are commented but guess out, that’s less further we what or months. planning at assuming point. So, we we we eight I are on are this haven’t, anything

Dan Dolev

I that’s I Thank have been organic like you quarter quick in give can update historically mean bad the you know Thank you. an follow-up extremely well. the market established for on Got we competitor guys. it. your are I you update in you. there. you kind there? And growth on first have side. a the big really negative credit us success doing what Like a what can I – And the then mean of quarter, seen having successes probably a of kind – most

Jason Gardner

credit the space? in Specifically

Dan Dolev

Yes.

Jason Gardner

based – is market. well, our early Yes. the our entry It’s success into on

as wanted much better experience. So, we a credit about a when thought we building consumer much, much, product, just

And brand-new have, cards much experience who a I want really with that to is look companies we of the pretty So, partner the the same. credit to build experience.

for that might specific of information and map, on having and it simply a around because other Giving than transactions do and having rate merchants, a the you go a to logos higher transaction, off at transaction pay where be transaction able know specific happens. ability to their that. context interest people being pin is so the lots Something

early absolutely innings. are the we So, in

companies either a rebuild been partnered product with user have new to Our altogether. success the has that experience or want

and services, all ownership. or that tech at across So it’s commerce basically or – institutions, total in look This we on-premises they APIs, the an cost of large ability disruptors, lower and operate built the the financial not do can whether use and can much looking that. lots giants good financial to free tools give is features if time-to-market create consumer experience. we banks verticals they that are that they areas, a and a we really significantly we to leverage technology solution, to better of digital And shorten

So, again, our is view. the we a success brand-new early we gate a with innings. out are really, in are of and new product because And the

to in great to I across appreciate countries functionality and our this But market XX more new base solid year customers. success and really a obviously, your player where We a announce pipeline. customer features, on have is There technology, more but focus with about is And in and the the yes, growing both come. new product.

Dan Dolev

you. Thank Yes.

Mike Milotich

I am sorry.

and me your in one. answer that didn’t I just realize I jump The – Dan, so question. take rate answer Sorry let

think we very so the I take that stable. far is So, rate are seeing

within there As take mix forward of verticals I different rates are is the It’s the mentioned, really our be happens business. what going going top really about stable. were – to to four kind

a it’s we rates. that of the vertical. additional a number to versus And going it and by that just is not are our tend physical but take if then the our there those program, terms uses What equal. to with few in what’s a are or to processing. verticals are more of take complexity all to provide Whether rates factors, customer, are also created certain by consumer are card, commercial is services impact more single-use So, important correlate right, going that we of managed services the of powered that providing – versus only is a customer customers more are

how of you our of quite gross structure how So, can our to profit which much different gross that rate think parts about different. business, line, call when the falls take be we profit rate take we

falls lower are – solutions so profit. take buy have all a like our And rate, – goes that to in but of much there take will gross powered rate almost

mix look at we components really what to so all And it’s guess, think going have important the that an project that we factor forward. those to between will I happen

Dan Dolev

Super helpful. Thanks Mike.

Operator

Thank you.

with next is Please KBW. ahead. Our from go Sanjay question Sakhrani

Sanjay Sakhrani

just answered. on I of know But neobanking exposed slowdown But the follow-up business impacted of we does first When been asked of food spend slowdown, to think my your and Mike, where that? to BNPL comes much maybe incremental the part mind on the I But about I the is discretionary fit we multiyear questions could sort are you do see macro of have a question. Thanks. on foremost. and Many business have cyclical being as how is. extent think and to delivery some that and you working a And know, top on plan how flexibility in? the line, do you expenses?

Mike Milotich

Yes.

– are you say So, the right. I would

say are what it’s neobanking I accounts, and more of as be – to their direct more per more as would one for So, which example, you certainly, square mature, cash. would see deposits, their from BNPL right, discretionary. that people is continued using primary have

I purchases would that of there. of On-demand I is grocery. So, some has a lots in it but other say have say will that food obviously lot and discretionary purchases, types also delivery, of would

BXB to want But say exposed. expense I a more little it’s And So, and less. take generally, maybe about is not get would optimization. people as management spend not out

we don’t have impact. exposure consumer speaking, have we huge but I say, would would spending, in obviously, So, to some changes generally

multiyear? question the, what to was guess view, of sorry, I terms your related In multiyear

Sanjay Sakhrani

trend working you if of the are expense plan. terms – you do like see we in think know run, short I how your I the no. Thanks. about an No, just impact, line on over expenses? should But

Mike Milotich

mean expenses of look, of of I mean I our – that the Yes. people. come think our I most big in the bulk form

And so people. it is bulk but of the there expenses, are technology-related some

we balancing, mentioning our as years. do are earlier, we could ramp like year we I that X-plus something we down was felt needed versus if years from are is what really priorities constantly But it slow our hiring X to that. so And to now X

we to is headcount And so watching growth is the we significantly, could flex something could we ultimately, making. that that in our both. But we that slowdown something are going picture to in investment be were that yes, if change macroeconomic then increase the are

Sanjay Sakhrani

Okay. Thank you.

Operator

you. Thank

question next William Blair. Our is ahead. from Please go Bob Napoli with

Bob Napoli

you good Thank and afternoon.

of lot companies of that U.S. opportunities space. volatility? but is management there about has Solid been feel in radically. management, have not dynamic internationally? for or that has new a just into come And area you are results. The There been the do you expense lot the growing space sustainability what of a the How the expense growth in pretty that in

Jason Gardner

Yes.

So, few which for over has Divvy, been now companies management a past us like vertical Expensify, fast-growing part of is expense Ramp, years, the Bill.com. very

are travel people We partner around work go that has There people new work coming Marqetans the We either of can schedule or expenses other that that. world is back is a at we and can Marqetans. corporate with obviously X,XXX are because the announced for as back, part office key to company to like flexible cities with they corporate offices actually seeing very home. Marqeta, come moving Companies into offices.

believe the this focus Square companies like go there that is So, it’s lot that with to is digital all disruptors, management with we market it’s in time. for Card areas and whether which on, a what in across office vertical whether product still is we Block, been some expense we partnered banks a that’s

You tech Uber. large institutions then and like large financial and Google have giants the the

companies at Looking with. partner like we who Branch

growing focus So, of commercial quickly card we vertical. It’s the the like the side business. are continuing for to very on We us.

looking they headed, want product and our out are we the not something but space. in that where management for we ultimately, have vision we and on and a to them. they sharing customers we more our a But things in that experience for to is in will of some of are we more operating been have do many features obviously us only talk to that space. expense basis build invest And are long-term And that So, of and roadmap years. bringing to we ton regular this

Bob Napoli

a And I or growth on significant a your know any how prevention around payments you. the new thoughts just Thank but value-add key product just fraud pipeline the payments strategy the is then strategy follow-up products? fraud, for broad around product? and – is Marqeta, new is around product your fraud

Jason Gardner

world. of for. customers why that act Yes, it’s ability up and they specific to when act also that fast and three in see people be wanted very areas really, for build the we talk the tell top the Fraud what ask together actually to happen grouping is be interesting. scores one It the and doing, can ground able It’s pretty should of can about them should they Fraud really be furiously our the the we and quickly. RiskControl them they to from and things quickly. decided

is to So, customer most which managed programs way. addresses tools a a by it really how certain that help our customers value. scale significant in common of one things that them risk-aware of RiskControl ask, And the is add example

solution be adding real-time one the it We will that but point everything end-to-end really which signing a with KYC, the decisioning. for the helps solution from cardholders There coming them customer, of end-to-end it’s an more feel it’s it, product of sale or So, now And just afterwards, solutions up years XDS your protecting at lot and our is like it. the we to to market-leading going in launched customers. is become for them. your

Bob Napoli

appreciate I you. it. Thank

Jason Gardner

Alright. Excellent – yes, go ahead.

Operator

the closing And of the question-and-answer the session. remarks. to back to I end would like Gardner call We have Jason for turn reached

Jason Gardner

Europe. out look thank forward months whether come the war it’s and pretty safe. in call. there, new to Stay quarter. or the rough QX earnings in you, updating products. It’s got second joining you, both economic regards the lots our to coming continuing out Thank customers company everyone, after our We new to ‘XX uncertainty and We F here for in

look we after thank you. that as a not forward a forward updating quarter. Take faith everyone of globally, and look to are to that second only our we and to through making and everybody country sure we this, going lot a safe nation, have just but is We get care

Operator

This concludes conference. today’s you. Thank

this your Thank participation. disconnect you lines time. for may your You at

Marqeta (MQ) 12 May 222022 Q1 Earnings call transcript