Marqeta, Inc. (MQ) Earnings

Management highlights

- Core Growth & Differentiation - Q2 results mark the fourth consecutive quarter of TPV growth above 30%, and the third consecutive quarter of TPV above $100 billion, demonstrating durable growth and operating leverage - Management attributes outperformance to the company's unique, highly configurable platform that supports card issuing across consumer/commercial, debit/credit, and is certified in over 40 countries, differentiating Marketa from competing issuer processors - Average deal size in Q2 was up over 90% year-over-year, driven by the company's deliberate up-market shift toward large enterprise customers, following its historic focus on fintechs - 50%+ of the top 10 non-Block customers by gross profit grew TPV more than 50% year-over-year - International Expansion - Following the 2025 acquisition of Transact Bay, Marketa expanded its European capabilities via a new partnership with Banking Circle, adding access to 30 additional European countries and enabling single-platform access to card issuing, multi-currency accounts, and European payment rails for domestic and cross-border money movement Existing customer Expensify expanded its expense management card offering from the US to the UK and EU using Marketa's TransactPay capabilities, demonstrating the platform's ability to support cross-border scaling via a single integration - Product Innovation & Expansion - Launched new end-to-end stablecoin-backed card solutions via strategic partnerships with ZeroHash and BBNK, which provide regulated crypto/stablecoin infrastructure (custody, compliance, liquidity, on-chain movements), while Marketa manages card issuance and bank/network relationships. Marketa is also a participant in the new OpenUSD open stablecoin standard to expand customer access to stablecoin options as the market scales. - Added non-card money movement options (ACH, real-time payments, push-to-card, wires) across the US, UK, and EU, allowing commercial customers to access all their payment rails via a single Marketa integration, addressing common customer pain points of working with multiple providers - Enhanced its real-time decisioning fraud solution via partnerships with third-party providers (Audion, Riskified, Signified), adding rich merchant transaction data to improve fraud detection, reduce false positives, and increase authorization rates; the fraud solution delivered over 80% gross profit growth in H1 2026 - Customer Updates - Signed a second embedded finance program with an existing Fortune 500 customer focused on small business supplier payments, to launch a portable individual stored value debit card for SMB payroll programs - Won a new client by flipping an existing program from a competitor, for a leading payments/expense platform serving film and television production companies, attracted by Marketa's flexible platform and innovative track record - Relationship with Block (Cash App) remains strong: Block's diversification of card issuance providers has led to a modest decline in new Cash App issuance that was in line with management expectations, but Marketa continues to onboard new Cash App users to existing programs, and expands the overall Block relationship via new programs and services; non-Block business is growing significantly faster than Block-related business - Capital Return - Repurchased 3.2 million shares in Q2 at an average post-split price of $15.90, significantly above prior quarter repurchase volumes. Following exhaustion of the previous $100 million authorization, the board approved an additional $150 million share repurchase authorization, as management believes current share valuations do not reflect the company's value or market opportunity

Guidance

- Q3 2026: Net revenue growth expected to be 6-8% year-over-year, gross profit growth expected to be 5-7% year-over-year. The 10 percentage point deceleration in gross profit growth from Q2 is driven by a delayed customer renewal shifting to Q3, lapping the 2025 Transact Bay acquisition, lapping 2025's strong BNPL growth, and the expected reduction in new Cash App issuance. Adjusted operating expenses are expected to be nearly flat year-over-year. Adjusted EBITDA growth is expected to be 20-25% year-over-year, with low to mid single-digit millions of GAAP net income expected. - Full year 2026: Full year net revenue growth guidance is narrowed to 12-13%, and full year gross profit growth guidance is set to 11-12% (toward the higher end of the prior range). Full year adjusted EBITDA growth guidance is raised to the low 30% range, and full year GAAP net income guidance is raised to the high $20 millions. Q4 2026 is expected to see similar growth trends to Q3. - The lower second half 2026 growth rate is not expected to be representative of Marketa's long-term growth trajectory, as it reflects temporary, one-time factors, not a broader slowdown in core demand. Management continues to expect operating leverage to support sustained profitable growth long-term.

Segment performance

Marketa's total Q2 2026 Total Payment Volume (TPV) was $120 billion, growing 32% year-over-year. Non-Block TPV grew more than twice as fast as Block TPV. Net revenue was $176 million, growing 17% year-over-year, with Block accounting for 41% of net revenue (a 5 percentage point year-over-year decline). Gross profit hit $122 million, growing 17% year-over-year, with a gross profit take rate of 10 basis points (down 1 basis point year-over-year). International TPV grew over 40% year-over-year and now represents 20% of total TPV. Adjusted operating expenses were $84 million, growing 12% year-over-year. Adjusted EBITDA was $37 million, growing 31% year-over-year, with a 21% margin based on net revenue. GAAP net income was $8 million, marking the second consecutive quarter of GAAP profitability. By use case: Lending (including buy now, pay later) grew over 40% year-over-year; expense management grew over 50% year-over-year; on-demand delivery grew double digits year-over-year, below the company's overall growth rate as the most mature segment; financial services growth runs slightly slower than company overall, but non-Block financial services growth is meaningfully faster than overall company growth.

Risks & headwinds

- Block's diversification of new Cash App card issuance is expected to reduce Marketa's new issuance volumes to little to none by the end of 2026, which will create a moderate headwind to growth in 2027, with the full impact still uncertain - One large BNPL customer is shifting single-use virtual card TPV volume to other providers as part of load balancing, creating an unexpected headwind to second half 2026 growth that was not included in original annual guidance - Shifting customer mix within the on-demand delivery use case toward lower-margin segments is putting downward pressure on the segment's gross profit take rate, weighing on overall results - All forward-looking statements are subject to material risks and uncertainties that could cause actual results to differ materially from projections, as detailed in Marketa's SEC filings

Analyst Q&A

• Q: What is the 2027 impact of the reduction in Block's new Cash App issuance to Marketa? /

  A: Management expects the reduction in new issuance to phase in through the end of 2026, reaching little to no new issuance by year-end. On a full run-rate basis, the impact to 2027 growth would be slightly more than the 200 basis point impact expected for 2026. Marketa retains the existing large, highly engaged Cash App user base on its platform, and pricing tiers protect gross profit partially from volume declines. The relationship with Block remains strong, with new programs still being added, and stabilization after diversification is the common industry pattern with other large customers.

• Q: What is driving the 90% year-over-year increase in average deal size, and is the single-use virtual card load balancing dynamic with the BNPL customer idiosyncratic? /

  A: The larger average deal size reflects Marketa's intentional up-market shift to large, established Fortune 500 and enterprise customers, which inherently have larger opportunity sizes than earlier-stage fintechs. Deals with established enterprises also have a higher probability of successful execution than early-stage fintech deals, as these customers already have existing user bases. The virtual card load balancing dynamic is entirely specific to this one customer; Marketa retains the faster-growing, stickier flexible credential business with the customer, and BNPL growth still expected to exceed 30% in the second half 2026 on a much larger base than prior years.

• Q: Is the new stablecoin-backed card offering being built to meet existing demand, or is it anticipatory? /

  A: It is a combination of both. There are already active exploratory discussions and prospect interest from businesses with cross-border payouts and multinational embedded banking offerings, who see value in letting recipients convert stablecoin to spendable funds via existing card rails. Marketa is also investing proactively to position itself as a leader for future expected demand growth, leveraging its existing scale, geographic reach, and partnerships with leading stablecoin infrastructure providers to create a seamless, ready-to-use offering for customers.

• Q: What is Marketa's strategy for reinvestment vs bottom-line profitability going forward, and what new growth opportunities is management most excited about? /

  A: As a high fixed-cost platform business, Marketa expects earnings growth to continue outpacing top-line growth for the foreseeable future. The company will continue to invest heavily in product innovation and expansion, but operational efficiencies from vendor renegotiation, AI, and deliberate headcount management are allowing incremental gross profit to flow to the bottom line. Management is most bullish on three new major growth areas for the next 2-3 years: 1) new credit offerings (revolving, secured credit-builder, commercial charge) launching in the next two quarters, 2) expanded European program management capabilities to improve take rates in the fast-growing region, and 3) scaled value-added services like fraud detection, which have low penetration today (7% of gross profit) and high demand from enterprise customers.