Marqeta, Inc. Q4 FY2024 earnings call

• Leadership Transition: Simon Khalaf stepped down as CEO, and Mike Milotich was appointed interim CEO while the board conducts a search for the next CEO. • Q4 Results: Demonstrated growth at scale with improved adjusted EBITDA margin. • Operational Improvements: Streamlined program launch timelines by enhancing bank partnerships and customer experience; 3 previously delayed programs remain pending launch due to customer decisions, not capacity constraints. • Q4 Wins: Secured a consumer co-brand credit partnership with an international airline; European business saw TPV growth over 100% in Q4, including wins with a European tech company and a first multinational solution sale. • 2025 Strategic Pillars: - Deepen platform breadth: Add American Express network for credit/debit cards, and acquire TransactPay to enhance program management in Europe. - Expand solutions: Focus on risk, compliance, and business insights, with real-time decisioning risk product revenue doubling from 2023 to 2024. - Strengthen payments innovation: Continue as a first mover in areas like BNPL and Visa/Mastercard flexible credentials.

In the fourth quarter of 2024, Total Process Volume (TPV) reached $80 billion, representing a 29% year-over-year increase. Net revenue for the quarter was $136 million, marking an 14% year-over-year growth. Gross profit stood at $98 million, an 18% increase from Q4 2023, resulting in a gross margin of 72%. Adjusted EBITDA was $13 million, equivalent to a 9% margin. TPV growth has been consistent, with non-Block TPV growing approximately twice as fast as Block. Financial services, lending (including Buy Now, Pay Later), and expense management segments experienced growth, while on-demand delivery growth remained in the single digits.

• Full-year 2025 net revenue growth is expected to be between 16% and 18%, driven by TPV growth in the mid-to-high 20s, offset by a lower net revenue take rate. • Gross profit is projected to grow 14%-16%, with a gross profit margin in the high 60s. • Adjusted operating expenses are expected to grow in the mid-to-high single digits. • Adjusted EBITDA margin is anticipated to be in the range of 9%-10%. • Acquisition of TransactPay is assumed to close in Q3 2025, contributing to growth; starting Q2 2025, incentives will be accrued quarterly, impacting quarterly gross profit growth comparisons.

• Macroeconomic dependence, as the business is heavily influenced by spending patterns. • Delay in program launches due to customer decisions, as revenue realization hinges on customer execution of marketing, onboarding, and engagement. • 5 points of revenue growth from new programs are reliant on customer launch and ramp speed, which is outside Marqeta's complete control.

Q: Tien-Tsin Huang inquired about the TransactPay acquisition, specifically what Marqeta is acquiring and why it couldn't build the capability in-house.

A: TransactPay is a bin sponsorship provider licensed with an e-money institution, allowing Marqeta to become the bin sponsor (member of card networks) instead of relying on multiple parties. Building the capability internally would take several years, require significant compliance efforts, and lack the specialized skills TransactPay already possesses.

Q: Timothy Chiodo asked about the embedded finance pipeline and whether Marqeta has all the necessary components to win large RFPs.

A: Marqeta has APIs for easy integration, offers a full solution including credit, debit, BNPL, program management, and supports global operations, making it well-positioned for embedded finance deals.

Q: An unidentified analyst asked about guidance timing regarding the TransactPay acquisition.

A: The acquisition of TransactPay is expected to close in Q3 2025, with financial planning assuming a Q3 close, subject to regulatory approvals.

Q: Darrin Peller questioned the outlook and launch delays.

A: The outlook includes growth from existing customers and new programs, but delays in program launches are due to customer execution; renewals also impact growth, with certain large customers renewing in 2025.

Q: Andrew Bauch asked about international momentum.

A: International growth is driven by enhanced capabilities outside the U.S. and expansion of fintech/embedded finance, with non-U.S. TPV growing over 100% in Q4.

Q: Sanjay Sakhrani asked about risks.

A: Risks include delay in program launches due to customer decisions and macroeconomic factors affecting spending.

Q: Chris Kennedy asked about accelerated wage access and the regulatory environment.

A: Accelerated wage access continues to grow, with efforts to enhance its value proposition; the solution avoids regulatory scrutiny as it is not a loan but distributes earned wages sooner.