Marqeta, Inc. Q1 FY2025 earnings call

• Q1 results showed strong execution on growth plan with TPV, net revenue, and gross profit increases. • Highlighted platform breadth efforts, including migrations of programs like Perpay and Bitpanda. Completed migrations for Klarna, started migrating Perpay's credit card accounts, and launched Bitpanda's crypto card in Europe. • Announced the pending acquisition of TransactPay to enhance program management in Europe, on track to close by Q3 2025. • Discussed initiatives like the UX Toolkit and plans for a standalone white-label app to accelerate card program launches, supporting quick market entry for customers.

Total Processing Volume (TPV) in Q1 2025 was $84 billion, a 27% year-over-year increase. Net revenue was $139 million, up 18% year-over-year. Gross profit was $99 million, a 17% increase, resulting in a 71% gross margin. Adjusted EBITDA was $20 million, with a 14% margin. TPV growth was driven by financial services, lending (including Buy Now, Pay Later), and expense management. Non-block TPV grew more than two times faster than block TPV. Financial services use cases, including non-block neobanking, saw TPV almost double year-over-year. Lending and expense management TPV continued to grow over 30%.

• Q2 net revenue growth expected to be between 11% and 13%, lower than previous due to a renegotiated platform partner agreement. • Q2 gross profit growth expected in the range of 23% to 25%, with an eight-point lift from incentive accounting change. • Q2 adjusted operating expenses expected to grow in the low to mid-single digits. • Full-year 2025 net revenue growth forecasted to be between 13% and 15%, gross profit growth between 14% and 16%, and adjusted EBITDA margin expected to be approximately 10% to 11%, revised upward due to lower expenses and accounting impact of the platform partner agreement.

• Macro environment uncertainties could impact spend behavior, although no significant shift was seen in Q1. • Potential delays or pauses in program launches, including those in the pipeline. • Migrations and flips are complex and relatively rare, posing risks due to their intricacies.

Q: Timothy Chiodo asked about Marqeta's role in agentic commerce.

A: Mike Milotich stated Marqeta is well-positioned to enable agentic commerce, focusing on product innovation (e.g., agentic commerce, risk products, dynamic rewards), internal productivity, and operational efficiencies using AI.

Q: Tien-Tsin Huang inquired about conversions and resourcing for migrations.

A: Mike Milotich responded that resourcing is not a barrier, and Marqeta has the capability and track record to handle migrations effectively.

Q: Ramsey El-Assal asked about the pipeline in Europe.

A: Mike Milotich said the European pipeline is strong, with pending acquisition of TransactPay enhancing the solution and strong traction from customers utilizing Marqeta's capabilities.

Q: Darrin Peller questioned EBITDA guidance and macro scenarios.

A: Mike Milotich noted Marqeta is less exposed to high discretionary spending, with growth across various use cases, and the business is positioned well to handle macro risks.

Q: Craig Maurer asked about U.S. neobanking potential as a drag on growth.

A: Mike Milotich replied that U.S. neobanking is competitive, but Marqeta can capture fair share by demonstrating leadership and capabilities.

Q: Casey Chan asked about credit contribution to 2025.

A: Mike Milotich said credit contribution is small now but expected to grow, with unit economics better than debit, and multiple credit programs in the pipeline.

Q: Sanjay Sakhrani asked about the CEO search and block spending.

A: Mike Milotich said the CEO search is ongoing, and Marqeta has a broader customer base with different spending behaviors, less exposed to high discretionary spending.

Q: Andrew Bauch asked about Marqeta's role in stable coins.

A: Mike Milotich stated Marqeta is positioned to support stable coin functionality, having pioneered crypto spend facilitation and being a pioneer in enabling crypto-based card spending.