The global modern card issuer reported $57
billion in total processing volume with net revenue of $109 million
in the third quarter of 2023.
Marqeta, Inc. (NASDAQ: MQ), the global modern card
issuing platform, today reported financial results for the third
quarter ended September 30, 2023.
The Company reported total processing volume (TPV) of $57
billion, representing a year-over-year increase of 33% driven by
volume growth across several use cases.
Marqeta's Q3 earnings are the Company's first full quarter of
financial results reflecting its Cash App contract renewal
announced in August. Marqeta reported net revenue of $109 million,
a decrease of 43% year over year, which included a 60 percentage
point negative growth impact due to the change in revenue
presentation caused by the new Cash App contract. Gross profit was
$73 million for the quarter, resulting in a gross margin of 67%.
Gross profit decreased 9% year over year, primarily as a result of
new Cash App pricing. GAAP operating expenses and net loss for the
quarter were $142 million and $55 million, respectively. Adjusted
operating expenses were $75 million, a year-over-year decrease of
20% driven by cost reduction initiatives, which resulted in an
Adjusted EBITDA loss of $2 million.
“Our Q3 results represent the new baseline for Marqeta, post
Block’s Cash App renewal. We've shown continued sales bookings
momentum against a backdrop of operational discipline, continued
scale, and new innovations through the launch of our credit
platform,” said Simon Khalaf, CEO of Marqeta. “We are in a good
position to return to strong growth by Q3 2024 as we lap the Cash
App contract and expect to accelerate that growth in future years
as the market for embedded finance continues to materialize.”
Recent Business Updates:
Marqeta highlighted several recent business updates that
demonstrate its current business momentum:
- Marqeta announced its new credit platform, adding intuitive
credit card program management tools and creating a one-stop shop
for launching consumer and commercial credit programs. Through
Marqeta, customers won’t have to build credit cards with black box
legacy infrastructure or from a patchwork of different solutions.
Instead, through one single, modern tech stack that has been proven
at scale, they can build out a credit product closely tailored to
the needs of consumer and commercial cardholders.
- Marqeta announced multiple updates to its long-standing
relationship with Block. It extended the term of the Square Debit
Card program through June 30, 2028 and extended the term of the
Cash App program for one additional year, also through June 30,
2028. As part of the agreement Marqeta will be the default provider
of issuing processing and related services in current or future
markets outside of the U.S. where Block intends to operate and the
Company is able to provide issuing and processing services.
- Marqeta announced that with the Block extensions complete, it
has now signed contract renewals in the last 6 quarters with
customers accounting for over 75% of its TPV, securing a solid
customer base to drive growth in the coming years.
- Marqeta announced that consumer cards offered by Buy Now, Pay
Later (BNPL) providers to give their customers the ability to pay
in installments at any merchant that accepts cards, drove almost
10% of all BNPL TPV. This rapid growth is testament to the
innovation and comprehensive nature of the Marqeta platform in both
commercial and consumer programs.
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
2023
2022
2023
2022
Financial metrics:
Net revenue
$
108,891
$
191,621
(43)%
$
557,349
$
544,401
2%
Gross profit
$
72,508
$
80,102
(9)%
$
246,281
$
232,877
6%
Gross margin
67
%
42
%
44
%
43
%
Total operating expenses
$142,334
$139,598
2%
$472,960
$388,362
22%
Net loss
($54,990
)
($53,168
)
(3)%
($182,587
)
($158,454
)
(15)%
Net loss margin
(51
)%
(28
)%
(33
)%
(29
)%
Net loss per share - basic and diluted
($0.10
)
($0.10
)
—%
($0.34
)
($0.29
)
(17)%
Key operating metric and Non-GAAP
financial measures:
Total Processing Volume (TPV) (in
millions) 1
$
56,650
$
42,473
33%
$
160,285
$
119,556
34%
Adjusted EBITDA 2
($2,062
)
($13,630
)
85%
($5,586
)
($34,308
)
84%
Adjusted EBITDA margin 2
(1.9
)%
(7.0
)%
(1.0
)%
(6.0
)%
Non-GAAP operating expenses 2
$
74,570
$
93,733
(20)%
$
251,867
$
267,185
(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 2023 Financial
Results:
Net revenue decreased by $83 million, or 43%
year-over-year, declining to $109 million from $192 million in the
third quarter of 2022, primarily due to a contract renewal with
Cash App and resulting change in revenue presentation. The impact
of fees owed to Issuing Banks and Card Networks related to the Cash
App primary Card Network volume, which are netted against revenue
earned from the Cash App program within Net Revenue, was a
reduction of $114 million, negatively impacting the growth rate by
60 percentage points. In prior periods, these costs were included
within Costs of Revenue.
Gross profit decreased by 9% year-over-year, declining to
$73 million from $80 million in the third quarter of 2022 primarily
due to reduced pricing from the Cash App renewal. Gross margin was
67% in the third quarter of 2023.
Net loss increased by $2 million year-over-year to $55
million in the quarter. Our decrease in gross profit in conjunction
with a slight increase in operating expenses was partially offset
by increases in interest income earned on our short-term
investments and cash deposits. Net loss margin was 51% in the third
quarter of 2023.
Total Processing Volume increased by 33% year-over-year,
rising to $57 billion from $42 billion in the third quarter of
2022.
Adjusted EBITDA loss decreased by $12 million year-over
year, declining to a loss of $2 million, in the third quarter of
2023 from an Adjusted EBITDA loss of $14 million in the comparable
prior year period. Adjusted EBITDA margin was (2)% in the third
quarter of 2023, an increase of 5 percentage points
year-over-year.
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 14, 2023, 8:59
p.m. Pacific time (11:59 p.m. Eastern time). The confirmation code
for the replay is 13740965.
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 expected accounting treatment and
changes to revenue and gross profit; 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 global economies, our business,
results of operations, financial condition, demand for our
platform, sales cycles and customer retention; 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
technology platform, including hosted solutions, do 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
adversely affects the gross interchange or other revenue Marqeta
earns or adversely affects the bank and network costs Marqeta
incurs; 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 ongoing financial services and banking
sector instability and follow on effects to fintech companies,
general economic conditions in either domestic or international
markets, including inflation and recessionary fears, conditions
resulting from geopolitical uncertainty and instability or war,
including the direct and indirect effects on U.S. and global
economies, our business, results of operations, financial
condition, and demand for our platform; and the risk that Marqeta
may be subject to additional risks such as inflation or currency
fluctuations 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 in the “Risk Factors” disclosed
in Marqeta's Annual Report on Form 10-K for the year ended December
31, 2022 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 Twitter 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’s modern card issuing platform empowers its customers to
create customized and innovative payment cards. Marqeta’s modern
architecture gives its customers the ability to build more
configurable and flexible payment experiences, accelerating
time-to-market and democratizing access to card issuing technology.
Marqeta’s open APIs provide instant access to highly scalable,
cloud-based payment infrastructure that enables customers to launch
and manage their own card programs, issue cards and authorize and
settle payment transactions. Marqeta is headquartered in Oakland,
California and is certified to operate in more than 40 countries
globally.
Marqeta® is a registered trademark of Marqeta, Inc.
Marqeta, Inc.
Condensed Consolidated
Statements of Operations
(in thousands, except share
and per share amounts)
(unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Net revenue
$
108,891
$
191,621
$
557,349
$
544,401
Costs of revenue
36,383
111,519
311,068
311,524
Gross profit
72,508
80,102
246,281
232,877
Operating expenses:
Compensation and benefits
115,846
105,887
390,393
304,103
Technology
13,930
13,422
41,674
37,960
Professional services
4,197
6,620
14,507
17,184
Occupancy
1,074
1,125
3,285
3,388
Depreciation and amortization
3,108
934
7,582
2,834
Marketing and advertising
346
688
1,348
2,133
Other operating expenses
3,833
10,922
14,171
20,760
Total operating expenses
142,334
139,598
472,960
388,362
Loss from operations
(69,826
)
(59,496
)
(226,679
)
(155,485
)
Other income (expense), net
15,074
6,333
37,508
(3,542
)
Loss before income tax expense
(54,752
)
(53,163
)
(189,171
)
(159,027
)
Income tax expense (benefit)
238
5
(6,584
)
(573
)
Net loss
$
(54,990
)
$
(53,168
)
$
(182,587
)
$
(158,454
)
Net loss per share attributable to common
stockholders, basic and diluted
$
(0.10
)
$
(0.10
)
$
(0.34
)
$
(0.29
)
Weighted-average shares used in computing
net loss per share attributable to common stockholders, basic and
diluted
529,488,986
548,990,212
535,797,471
545,614,599
Marqeta, Inc.
Condensed Consolidated Balance
Sheets
(in thousands)
September 30,
2023
December 31,
2022
(unaudited)
Assets
Current assets:
Cash and cash equivalents
$
947,749
$
1,183,846
Restricted cash
7,800
7,800
Short-term investments
349,395
440,858
Accounts receivable, net
15,656
15,569
Settlements receivable, net
19,505
18,028
Network incentives receivable
34,575
42,661
Prepaid expenses and other current
assets
32,535
38,007
Total current assets
1,407,215
1,746,769
Property and equipment, net
17,022
7,440
Operating lease right-of-use assets,
net
7,145
9,015
Goodwill
123,000
—
Other assets
48,867
7,122
Total assets
$
1,603,249
$
1,770,346
Liabilities and stockholders'
equity
Current liabilities
Accounts payable
$
1,707
$
3,798
Revenue share payable
146,483
142,194
Accrued expenses and other current
liabilities
148,677
136,887
Total current liabilities
296,867
282,879
Operating lease liabilities, net of
current portion
6,145
9,034
Other liabilities
5,154
5,477
Total liabilities
308,166
297,390
Stockholders' equity :
Preferred stock
—
—
Common stock
53
53
Additional paid-in capital
2,081,689
2,082,373
Accumulated other comprehensive loss
(1,838
)
(7,237
)
Accumulated deficit
(784,821
)
(602,233
)
Total stockholders’ equity
1,295,083
1,472,956
Total liabilities and stockholders'
equity
$
1,603,249
$
1,770,346
Marqeta, Inc.
Condensed Consolidated
Statements of Cash Flows
(in thousands)
(unaudited)
Nine Months Ended September
30,
2023
2022
Cash flows from operating
activities:
Net loss
$
(182,587
)
$
(158,454
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization
7,582
2,834
Share-based compensation expense
135,712
115,662
Non-cash postcombination compensation
expense
32,430
—
Non-cash operating leases expense
1,870
1,689
Amortization of premium (accretion of
discount) on short-term investments
(5,525
)
449
Impairment of other financial
instruments
—
11,616
Other
1,068
445
Changes in operating assets and
liabilities:
Accounts receivable
(1,108
)
271
Settlements receivable
(1,477
)
916
Network incentives receivable
8,086
3,336
Prepaid expenses and other assets
7,760
(11,596
)
Accounts payable
(4,350
)
(891
)
Revenue share payable
4,289
(5,084
)
Accrued expenses and other liabilities
3,331
13,144
Operating lease liabilities
(2,499
)
(2,231
)
Net cash provided by (used in) operating
activities
4,582
(27,894
)
Cash flows from investing
activities:
Purchases of property and equipment
(722
)
(1,700
)
Capitalization of internal-use
software
(9,488
)
—
Business combination, net of cash
acquired
(135,630
)
—
Purchases of patents
—
(600
)
Purchases of short-term investments
(972,430
)
(21,660
)
Sales of marketable securities
637,913
—
Maturities of short-term investments
437,034
24,900
Realized gain/loss on investments
(73
)
—
Net cash (used in) provided by investing
activities
(43,396
)
940
Cash flows from financing
activities:
Proceeds from exercise of stock options,
including early exercised stock options, net of repurchase of early
exercised unvested options
4,081
5,733
Payment on acquisition-related contingent
consideration
(53,067
)
—
Proceeds from shares issued in connection
with employee stock purchase plan
1,775
2,775
Taxes paid related to net share settlement
of restricted stock units
(18,553
)
(11,576
)
Repurchase of common stock
(131,519
)
(12,702
)
Net cash used in financing activities
(197,283
)
(15,770
)
Net decrease in cash, cash equivalents,
and restricted cash
(236,097
)
(42,724
)
Cash, cash equivalents, and restricted
cash- Beginning of period
1,191,646
1,255,381
Cash, cash equivalents, and restricted
cash - End of period
$
955,549
$
1,212,657
Marqeta, Inc.
Financial and Operating
Highlights
(in thousands, except per
share data or as noted)
(unaudited)
2023
2022
Year over
Year Change
Q3'23 vs
Q3'22
Third Quarter
Second Quarter
First Quarter
Fourth Quarter
Third Quarter
Operating performance:
Net revenue
$
108,891
$
231,115
$
217,343
$
203,805
$
191,621
(43
)%
Costs of revenue
36,383
146,506
128,179
116,681
111,519
(67
)%
Gross profit
72,508
84,609
89,164
87,124
80,102
(9
)%
Gross margin
67
%
37
%
41
%
43
%
42
%
25 pps
Operating expenses:
Compensation and benefits
115,846
126,788
147,759
110,991
105,887
9
%
Technology
13,930
13,154
14,590
14,401
13,422
4
%
Professional services
4,197
4,873
5,437
6,295
6,620
(37
)%
Occupancy and equipment
1,074
1,057
1,154
1,126
1,125
(5
)%
Depreciation and amortization
3,108
2,494
1,980
1,019
934
233
%
Marketing and advertising
346
561
441
1,862
688
(50
)%
Other operating expenses
3,833
5,103
5,236
5,753
10,922
(65
)%
Total operating expenses
142,334
154,030
176,597
141,447
139,598
2
%
Loss from operations
(69,826
)
(69,421
)
(87,433
)
(54,323
)
(59,496
)
17
%
Other income (expense), net
15,074
10,762
11,672
28,468
6,333
n/m
Loss before income tax expense
(54,752
)
(58,659
)
(75,761
)
(25,855
)
(53,163
)
3
%
Income tax expense (benefit)
238
138
(6,960
)
471
5
4660
%
Net loss
$
(54,990
)
$
(58,797
)
$
(68,801
)
$
(26,326
)
$
(53,168
)
3
%
Loss per share - basic and diluted
$
(0.10
)
$
(0.11
)
$
(0.13
)
$
(0.05
)
$
(0.10
)
—
%
TPV (in millions)
$
56,650
$
53,615
$
50,020
$
46,704
$
42,473
33
%
Adjusted EBITDA
$
(2,062
)
$
824
$
(4,346
)
$
(7,488
)
$
(13,630
)
(85
)%
Adjusted EBITDA margin
(1.9
)%
0.4
%
(2.0
)%
(4.0
)%
(7.0
)%
5 pps
Financial condition:
Cash and cash equivalents
$
947,749
$
950,157
$
1,050,414
$
1,183,846
$
1,204,857
(21
)%
Restricted cash
$
7,800
$
9,375
$
7,800
$
7,800
$
7,800
—
%
Short-term investments
$
349,395
$
432,354
$
408,675
$
440,858
$
441,132
(21
)%
Total assets
$
1,603,249
$
1,704,143
$
1,774,183
$
1,770,346
$
1,774,455
(10
)%
Total liabilities
$
308,166
$
331,528
$
340,533
$
297,390
$
262,117
18
%
Stockholders' equity
$
1,295,083
$
1,372,615
$
1,433,650
$
1,472,956
$
1,512,338
(14
)%
pps = percentage points
n/m = not meaningful
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 income (loss) adjusted to
exclude depreciation and amortization; share-based compensation
expense; 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.
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; 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,
2023
2022
2023
2022
GAAP net revenue
$
108,891
$
191,621
$
557,349
$
544,401
GAAP net loss
$
(54,990
)
$
(53,168
)
$
(182,587
)
$
(158,454
)
GAAP net loss margin
(51
)%
(28
)%
(33
)%
(29
)%
GAAP total operating expenses
$
142,334
$
139,598
$
472,960
$
388,362
GAAP net loss
$
(54,990
)
$
(53,168
)
$
(182,587
)
$
(158,454
)
Depreciation and amortization expense
3,108
934
7,582
2,834
Share-based compensation expense
45,548
43,509
138,603
115,662
Payroll tax expense related to share-based
compensation
541
509
1,818
1,768
Acquisition-related expenses (1)
18,270
913
64,420
913
Restructuring
297
—
8,670
—
Other (income) expense, net
(15,074
)
(6,333
)
(37,508
)
3,542
Income tax expense (benefit)
238
5
(6,584
)
(573
)
Adjusted EBITDA
$
(2,062
)
$
(13,631
)
$
(5,586
)
$
(34,308
)
Adjusted EBITDA Margin
(1.9
)%
(7.0
)%
(1.0
)%
(6.0
)%
GAAP Total operating expenses
$
142,334
$
139,598
$
472,960
$
388,362
Depreciation and amortization expense
(3,108
)
(934
)
(7,582
)
(2,834
)
Share-based compensation expense
(45,548
)
(43,509
)
(138,603
)
(115,662
)
Payroll tax expense related to share-based
compensation
(541
)
(509
)
(1,818
)
(1,768
)
Restructuring
(297
)
—
(8,670
)
—
Acquisition-related expenses
(18,270
)
(913
)
(64,420
)
(913
)
Non-GAAP operating expenses
$
74,570
$
93,733
$
251,867
$
267,185
_______________
(1) 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231107682613/en/
IR Contact: Marqeta Investor Relations, IR@marqeta.com
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