Q1 2025 Marqeta Inc Earnings Call
Ladies and gentlemen, welcome to Marqeta Inc. 1st quarter 2025 on Inx Conference Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded.
Speaker Change: It is now my pleasure to introduce your host, Stacey Finerman, Vice President of Investor Relations. Please go ahead.
Speaker Change: Thanks operator. Before we begin, I would like to remind everyone that today's call may contain forward looking statement.
These four looking statements are subject to numerous risks and uncertainties [inaudible]
Speaker Change: including those that forth in our filing with the SEC, which are available on our Investor Relations website, including our annual report on form 10K for the period ended December 31, 2024 and our subsequent periodic filing with the SEC.
Speaker Change: Actual results may differ materially from any forward-looking statements we make here today.
Speaker Change: These four-looking statements speak only as of the time that it's called, and the company does not assume any obligation or intent to update them, except it's required by law.
Speaker Change: These measures should be considered as a supplement too and not a substitute for.
GAAP financial Measures [inaudible]
Speaker Change: Reconciliation to the most directly comparable GAAP measures can be found in today's earnings press release or earnings release supplemental material which are available on our Investor Relations website.
Speaker Change: hosting today's call as Mike Milotich, Marqeta's interim CEO and CFO . With that, I'd like to turn the call over to Mike to begin.
Speaker Change: Thank you, Stacey, and thank you for joining us for Marqeta's first quarter, 2025 Remix Call.
Speaker Change: To start, I'll briefly highlight our Q1 results, followed by an update on the progress you're making on deepening our platform breadth and expanding the solutions we offer. I'll conclude with more details about our Q1 financial results and our expectations for Q2 and 4-year 2025.
Speaker Change: Our first quarter results demonstrate our ability to execute on our growth plans while simultaneously increasing our level of profitability.
Speaker Change: Total processing volume, or TPD, was 84 billion in the first quarter. This is a 27% increase compared to the same quarter of 2024 with the lasting of leave here reducing growth by one point.
Speaker Change: C-1 net revenue of 139 million grew 18% year-over-year driven by the wide variety of use cases we enable for our customers.
Speaker Change: Group's profit was 99,000, the 17% increase versus Q1 2024, resulting in a gross margin of 71%.
Speaker Change: Adjusted EVISOP was 20 million in the quarter, translating into a 14% margin, fueled by both first profit growth and operating expense discipline, efficiency, and scale.
Speaker Change: has made a forefront of modern initial processing, which started many years ago with the Novel programs, predominantly for FinTech, with innovative and disruptive initiatives that leverage cars in new ways.
Speaker Change: We completed a migration of millions of carts requiring a last year. In this quarter we began migrating a US consumer credit program and an innovative debit program in Europe .
Speaker Change: While migrations and flips are still relatively rare given those complexities, we are building a headshot piece in our track record with regard to this capability.
Speaker Change: The combination of our advanced capability, scale, expertise, and experience smoothly executing migration. Make sure our status platform is strong candidate for more established brands and programs that are looking for modern provider.
Speaker Change: In Q1, we started migrating our first consumer credit program with Perpet, showcasing our ability to convert credit in addition together.
Speaker Change: Burmae has an excellent credit finance offering, as the unique credit-dollar card enables customers to earn rewards based on
Speaker Change: Pervade had already found product market fit in a significant client base. However, they were looking to switch from their processing provider to one that had more sophisticated, scalable and responsive capabilities.
Speaker Change: The program shows, or the company shows Marqeta as due to our flexibility and ability to support their unique underwriting and retaining structure. As it separates, Marqeta has been supporting all new issuance for perfect and has started to migrate its active credit card accounts.
Speaker Change: Platform brass also means having product and solution peri when our customers operate in multiple geographies.
Speaker Change: We continue to see it's same growth in Europe , which GDB grows for nearly over 100% in Q1.
Speaker Change: Adding program management is a key lever for enhancing our offerings to provide a more of a holistic solution for customers operating in Europe .
Speaker Change: We started by partnering with Trends Act A before moving to acquire the company late last year. The acquisition of Trends Act A is currently on track to close by the end of 23 and we expected to be a significant step in delivering our program management offering that is comparable to other geographies like the U.S. and Canada.
Speaker Change: The transaction is driving significantly customer interest and it means more control of the entire cloud offering and seamless geographic expansion.
Speaker Change: Our second migration was quarter with Dutlanda, a European crypto platform.
Speaker Change: of the three recently signed European customers that we will support with program management. This program is the first to launch.
Speaker Change: We have been powering cards that allow consumers to spend their cryptocurrency via card for several years.
Speaker Change: Our early invasions with just-and-time funding allow Fiat currency to be spent at the point of sale using a crypto wallet.
Speaker Change: This split had a tight turnaround due to the previous partner wanting an accelerated timeline to fully migrate the program. Our commitment and willingness to work quickly was also key reason for BitPanda to choose Marqeta.
Speaker Change: Not only did we sign and launch the full program in the same quarter, but the launch was executed simultaneously in 26 countries and 10 currencies.
Speaker Change: and Q1. We also continue to expand our solutions to accelerate card program launches while minimizing customer development needs.
Speaker Change: A few quarters ago, we introduced our UX Toolkit, a comprehensive library of pre-built UI components fully optimized for Marqeta VTIs and vetted for regulatory compliance.
Speaker Change: These SDKs make it easier for customers to embed payments into their existing mobile app or web experiences by offering product-ready flows for onboarding, card management, transaction history and more.
Speaker Change: While the U.S. Toolkit serves customers ready to deeply embed financial products, so the customers want to launch a card program quickly without relying on internal app engineering resources or taking on the day-to-day management of the card holder experience.
Speaker Change: For these customers, we expect to have a standalone white label app available later this year, giving customers a fully branded out-of-the-box solution managed by Marqeta.
Speaker Change: This mobile app will incorporate the same SDK components from our US Toolkit, enhanced with expanded banking and rewards functionality, along with pre-configured flows for onboarding, account setup, transaction monitoring, and support.
Speaker Change: Customers will be able to tailor the raft to reflect their brand identity and launch it alongside the primary application with the option to embed it later using the same SD-2.
Speaker Change: The intended benefit for our customers will be the ability to establish a mark of presence quickly with our Marqeta-managed app experience, then transition to a fully embedded solution over time without reviewing compliance work or re-engineering core user flows.
Speaker Change: This dual-price approach, so not only accelerated speed and market, but also maintain continuity and consistency across views or experiences.
Speaker Change: to wrap up before moving to the details of our financial results.
Speaker Change: The business had nice momentum, XNQ1, and puts us in a good trajectory for the remainder of 2025 and beyond. Specifically, both per day and this time to showcase our ability to migrate programs in a timely and efficient manner. The core capability we added in late 2024.
Speaker Change: These program wins also demonstrate that our customer base and prospects in the market are looking for a technology partner that is flexible, responsive, and has experience with innovative solutions.
Speaker Change: as a wave of card issuing modernization accelerates in the coming years.
Speaker Change: The Experience of Migrating Platforms and Programs while solving specific pain points with flexible solutions will serve as well in the future.
Speaker Change: These capabilities give us confidence that as more established brands with both the no-go and existing card programs look to offer their customers new modern experiences, Marqeta will be the partner of choice.
Speaker Change: Now let me transition to discussing our Q1 financial results which reflect a strong start to the year outperforming our expectations across all metrics.
Speaker Change: Q-N-T-B-D group of 27% remained strong and steady, coupled with outperformance across net revenue, gross profit, and operating expense, delivering higher density to the top of 20 million in the quarter.
Speaker Change: Nets, revenue, and goes profit growth outperform the midfines of our guidance by three and five points respectively, primarily due to favorable business mix.
Speaker Change: This business self-performance combined with moderating expense growth delivered and improved to just a deep-a-daw margin of 14%.
Speaker Change: She won TPD with $84 billion, an increase of 27% year-over-year, despite a one-point growth headwind due to the lapping of lead year. This growth on an ever-standing base continues to show our ability to grow the business of scale.
Speaker Change: Non-block TDD, three more than two times faster than Block TDD, fueled by a wide range of customers across several U-states.
Speaker Change: Consisting with the last several quarters, financial services, lending including by now pay later, and expense management drove the bulk of RTPD growth.
Speaker Change: Grosswood & Financial Services use cases with Inline with the overall company and continues to be fueled by the rapid expansion of our non-blocked meal-banging customers where our
Speaker Change: Both lending and expense management TPD continues to grow over 30% and both accelerated a bit from last quarter.
Speaker Change: Lending, including by now-payment later, growth is driven by the combination of Clark as migration to our platform in Europe .
and a strong use of middle among SMB running solutions.
Speaker Change: Excess management has been grown to mainstream by our customers, sustaining strong and user acquisition, as AP automation and modern corporate card platforms continue to gain share.
Speaker Change: On demand delivery growth remained in a single digit due to the maturity of the use case.
Speaker Change: Despite the changing macro environment, we did not see a shift in the mix of spend on our platforming Q1.
Speaker Change: Breaking down a spend by little, medium, and high discretionary TPP based on merchant category reveals no meaningful shift in the mix of spending 81 versus the past several quarters.
Speaker Change: Q1 net revenue was $139 million and rate 18% year over year. Although this growth was approximately 3 points higher than the expected, the alpha performance would have been 6 points, which is more in line with the gross profit fee, had it not been for one unplanned change in terms
Speaker Change: Very similar last year, we recently renegotiated a platform partner agreement with reduced
Speaker Change: Based on the trends of the cash-up contract and the associated revenue presentation, we passed through the proportional savings to cash-up, which reduces our revenue, but has no impact on gross profit. As a result, our net revenue growth was reduced by 3.1% versus our expectations.
Speaker Change: Again, this is very similar situation the last year and another reminder why we focus more on our gross profit when discussing our business performance.
Speaker Change: Glottian Revenue Concentration was 45% in T1, decreasing 1.224, 2024, and down 4 points from T1, 2020, 2024.
Speaker Change: Non-blocking at revenue growth was on par with last quarter and remains over 10 points higher than blocking at revenue growth. Driven mostly by strong performance among our larger non-block customers and the ramping of new programs launched since the start of 2024.
Speaker Change: Our net revenue take rate of 16 basis points was one bit lower than last quarter, which is the typical seasonality following the holidays.
Speaker Change: G1 Gross Profit, was $99 million, resulting in a year-over-year growth of 17% and a gross margin of 71%.
Speaker Change: This growth was approximately five points higher than we expected at the end of the last quarter, primarily driven by two factors. First, more than half of the outperformance was due to a favorable business mix.
Speaker Change: Our Q1 TDD growth was slightly above our expectations despite the fact that a few of our largest customers under performed. As a result, our growth factor was higher than expected since our pricing is generally to administer it with the amount of volume on our platform.
Speaker Change: Second, as I mentioned earlier, we are pleased with our ability to migrate significant programs on our platform efficiently and expediently enabling these new customers to benefit from the capabilities flexibility and scale of our modern platform.
Speaker Change: Unfortunately, one of our planned migrations later this year will no longer take place, as you reach an agreement with VARO to terminate the deal we announced in 2024. Instead, VARO has chosen to focus on its existing products.
Speaker Change: The early termination lifted to one gross profit growth by approximately one point.
Speaker Change: Non-block gross profit growth continues to grow many points faster than the overall company and is in line with non-block revenue growth.
Speaker Change: Argo's project bakery was 12 basis points consistent with last quarter. [inaudible]
Speaker Change: Q1-adjusted operating expenses were 79 million, and on 5% year-over-year, a little better than expected.
Speaker Change: We continue to be focused in our hiring and utilizing multiple geographic locations to find the best town.
Speaker Change: In addition, the combination of our five-and-growth continues to afford us better economies of scale.
Speaker Change: Q1 Adjusted EBITDA was 20 million, a margin of over 14%, a new all-time high for both metrics as we progress on our path of profitability.
Speaker Change: We feel the adjusted EBITDA margin on the basis of gross profit, which was 20%.
Better reflects the nature of our distance and profitability.
Speaker Change: The Q1 gap net loss was $8 million, including $10 million of interest income.
Speaker Change: We ended the quarter with approximately 1 billion of cash and short-term investments.
Speaker Change: Subsequent to reporting our Q4 2024 results, we restarted our share with purchase activity as we continue to believe the current valuation does not fairly represent the company's value or the market opportunity ahead of us.
Speaker Change: In Q1, we repurchased 26.2 million shares at an average price of $4.22. [inaudible]
Speaker Change: As of the quarter end, we had 270 million remaining on our buyback authorization.
Now let's transition to our expectations for Q2 2025.
Speaker Change: We expect Q2 net revenue growth to be between 11 and 13 percent.
Speaker Change: This is approximately 4 points lower than we anticipated at the time of our last call due to the impacts of the renegotiated platform partner agreement, a reference earlier that has no impact on those profits.
Speaker Change: As expected, even if you put the incentives accounting chains aside, we expect you two will be our highest first proper growth quarter as new programs ramp and new services are adopted.
Speaker Change: As a result, we expect that there will be much less variation in the quarterly incentives for the recorded number of the NL.
Speaker Change: Even though this is not impact, we'll be burned in any given incentive contract here.
Speaker Change: This change will create noise in our gross profit growth rates as we grow over the previous incentive methodology.
Speaker Change: We continue to be focused with our investment which are primarily directed toward platform capabilities and innovation.
Speaker Change: We are also focused on hiring additional resources and key areas like go-to-market to meet growing demand and compliance to further enhance our expertise and service levels.
Speaker Change: Q2 with just an operating expense as expected to grow in the low-to-mid single digits due to easier year-to-year comparison.
Speaker Change: Q2 Adjusted to Deep Adon margin is expected to be 10 to 11 percent, one point higher than we had shared last quarter, due to lower adjusted operating expenses.
Speaker Change: We continue to improve the efficiency and effectiveness of our resources and technology investment.
Speaker Change: For the full year, while we recognize the increasing levels of macroeconomic uncertainty, we are not currently seeing any notable shifts in the area.
Speaker Change: As such, we are sending consistent macroeconomic conditions for the remainder of the year, but noting the risk.
Speaker Change: We expect 20-25 net revenue growth to be between 13 and 15 percent, 3 points lower than what we shared last quarter, due to the renegotiated platform partner agreement.
Speaker Change: I want you to reiterate that this impact is accounting related based on our cash-out agreement and is not lower gross profit.
Speaker Change: The impact of this new agreement should be relatively consistent in each quarter. Therefore, we expect net revenue growth to be 13 to 15% into 3 and 14 to 16% into 4.
Speaker Change: Since the impact of this new platform partner agreement is due to our revenue presentation with no impact on gross profits, our expectations for the underlying business trajectory for 2025 remains unchanged from last quarter.
Speaker Change: We still expect 2025 gross profit growth to be between 14 and 16 percent.
Speaker Change: While P1 did come in higher than expectations, the beat was not large enough for us to revive our gross profit artwork but works for the entire year giving the new levels of macroeconomic uncertainty.
Speaker Change: We want to be clear that our gross process projections for the remaining nine months of the year are essentially consistent with what we guided to at the time of our fourth quarter call.
Speaker Change: Therefore, we expect to be on the higher end of the original 2025 growth-crafting growth range based on our Q1 outperformance.
Speaker Change: We do, however, expect 2020-25 adjusted EVA thumb margin to be approximately 1 point higher than what we shared last quarter at 10 to 11%.
Speaker Change: This upward revision of our expectations is due to lower senses as we grow more efficiently as well as a smaller revenue denominator due to the accounting for the renegotiated platform
Speaker Change: The Q-3, and Q-4 Adjusted Operate, Peter Dom Arjun, is expected to be in line with the full year.
Speaker Change: In conclusion, we are starting 2025 on Solid Foundation as our few other results outperform across all our primary metrics.
Speaker Change: Even as our TBB continues to rise, we are sustaining a relatively stable TBB growth rate with increasing levels of profitability which keeps us on our desired path to profitability.
Speaker Change: are confident to continue this trajectory is primarily driven by four factors.
Speaker Change: First, our portfolio migrations, abilities, and growing track record, executing flips makes us a strong candidate for established programs and brands that are looking for the increased control and advanced capabilities of a modern provider with proven scale.
Speaker Change: The combination of the notable program wins and a shift toward monetization among 15 programs should result in Marqeta capturing an increasing share of the market.
Speaker Change: Second, our customer base and large prospect in the market are looking for a true technology partner that is flexible, responsive and innovative to solve the card issuing and money movement
Speaker Change: We believe Marqeta is relatively unique in our ability to meet those names.
Speaker Change: Third, our European business continues to expand rapidly, and our recent launch of program management in Europe is a promising and valuable expansion of Marqeta's platform breath
Speaker Change: Finally, our platform continues to reach new levels of economies of scale. The rapid adjusted e to done margin expansion is evidence of our ability to reach our profitability potential and fuel long-term value creation as the business grows.
Speaker Change: I will now turn it back over to the authorator for questions.
Speaker Change: Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you would like to ask a question, please press star and one on your telephone keypad. A confirmation tone will indicate your line is in the question queue.
Speaker Change: You may press star and 2 if you'd like to remove your question from the queue.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the stock keys.
Speaker Change: Ladies and gentlemen, we request you to limit to one person and one follow-up question per participant.
Speaker Change: We take the first question from the line of Timothy Chiodo from UBS. Please go ahead.
Timothy Chiodo: Great, thank you for taking the question. I want to touch on something that
Timothy Chiodo: was announced by both the Card Networks recently around their efforts in agenteic commerce. And this is more of an industry question, Mike, if you could talk about it specific to Marqeta or broadly speaking within issuer of processing, it would just seem that someone like Marqeta would be able to play a big role there, given the importance of controls and potentially single use virtual cards and how that could all play a role in a future world where agenteic commerce is a larger portion of...
and our purchases being made, thank you.
Yeah, thank you for your question, Tim.
Timothy Chiodo: We agree with your near-quick assessment. This is exactly the kind of invasion that we have a track record of the enabling.
Timothy Chiodo: and giving people dynamic capabilities where they can make decisions in real time, you know, in taking data and making very quick responses from one perspective, so this is exactly the kind of innovation that we think will well-position to enable for people.
Timothy Chiodo: and even just, I would say stepping back, if you look at where we're focused in AI as a business in general.
Timothy Chiodo: There really are three areas that we'll focus on from a strategy perspective. One is park innovation, a gentle commerce obviously being one of them, where we're looking to add AI capabilities to new or existing products.
Timothy Chiodo: that create more value for our customers, and that includes areas like you mentioning, but also areas like risk products that we have.
Timothy Chiodo: You know, program management offerings around disputes and fraud, as well as, you know, this ability to do dynamical awards and very personalized offers and personalized experience for each individual cardholder.
Timothy Chiodo: The other areas that were focused from an AI perspective are internal productivity, so, you know, making our employees improve efficiency in reducing annual work.
Timothy Chiodo: and then also operational efficiencies in terms of the support we offer card holders by leveraging AI and AI on the nation. Those are things we're focused on, but we are excited about the potential for a gentle commerce.
Thank you, Mike.
Thank you.
Speaker Change: The next question comes from the line of TM Singh Wang from JP Morgan, please go ahead.
Speaker Change: Thank you so much. Mike, nice job. I'm 23 minutes of talking, so if you guys got a little bit of a breath here. I want to ask Tim, ask about agenda commerce.
Speaker Change: I want to ask just about conversions, and you're talking about this shift towards modernization of programs. Do you have the staff and the tools to do these conversions quickly, especially if these things start to...
Speaker Change: You know, level up or size up because there could be quite a bit of labor I think to drive that decision and I'm curious was that part of the vero decision to terminate I know you said I got to focus more on products but I didn't know if resourcing was also an issue in this uncertain time.
Speaker Change: Yes, so resourcing is not a concern for us in June , so yes, it is. These conversions can be a lot of work and require a lot of support, which we're very prepared to provide as the opportunities come our way.
Speaker Change: So what we're really focused on is that...
Speaker Change: you know, migration tended to be, you know, fairly, you know, rare in the past because a lot of times people were moving necessarily for a big difference in capability, it said more had to do it, you know, relationship-sowering or maybe a better price.
Speaker Change: But what we're really focused on is, you know, with our modern platform.
Speaker Change: and all the capabilities we have, you know, across multiple of these cases, but we'll try to end of it.
Speaker Change: Across many geographies, but there's a significant enough capability difference that we can make people interested and if we show that we have the capability and the track record of executing well and providing them the kind of support that they need as you mentioned.
Speaker Change: that, you know, we can get them kind of cast back a little and get them thinking about migrating to a modern platform like ourselves.
Speaker Change: So, you know, this is something that we think is possible but the resourcing required is not a barrier from our perspective.
Michael Milotich, Simon Khalaf
Speaker Change: The backlog and the pipelines are changes in conversation. There's or any lengthening of cycles borrow side.
Speaker Change: So, no changes to cycles or level investments right now. I mean, I think the...
Speaker Change: So far, and I think you've heard from many other, you know, the payment companies. Everything looks pretty good, stable right now, and even if you look at our numbers in April , in our TV growth was a few points higher than what we saw in T1. And so, you know, things look...
Speaker Change: Stable from that perspective. I think if there were risks that come about, they could take place in two forms. One that you mentioned, which is programs that have either signed and not launched or even people who are on a pipeline.
Speaker Change: The whole thing back, they're taking a pause to see how the macro alignment shapes out. We haven't seen that yet.
But that is something we're certainly watching out for.
Speaker Change: and the second area where it could impact us would be, you know, just if there were, we get to more of a recession situation obviously spending to be impacted which would impact any of our existing programs but today we're not seeing that and if anything we have several people on our pipeline now who are actually looking to move more quickly.
Speaker Change: As we talk to larger brands who maybe have spent a lot of time sort of planning and thinking about how to execute
Speaker Change: We, you know, we're having many conversations with people who are, you know, we're still talking them now, but they are, you know, very motivated to launch within the year. So that's, that's a little bit of a change. What we'll see what happens, but that's the kind of infants we're getting from the market.
Speaker Change: Thank you. The next question comes from the line of Ramsey El, S.L. from Buckley's. Please go ahead.
Hi, good results here and thanks for taking my question.
Speaker Change: So I wanted to follow up on Tensions question, but with a little bit of a different overlay, which is regulation or rather D-D regulation.
Speaker Change: Have you seen any impact in terms of the behavior of your bank partners in the context of a lot of the deregulation that we're seeing on the financial services side? Are they boy, are you sensing they can move a bit faster with things like due diligence or onboarding or are we still back in any environment that you guys called out a couple of quarters ago?
Thanks for your question Ramsey.
Speaker Change: Some of the changes that have been announced, or there have been others that have been signaled, but right now I would say the execution still getting pushed down through the ecosystem, I would say it's still relatively slow and moves at a slow pace, so at this point we're not seeing any change.
Speaker Change: in how our banks are operating and how to say together, both of us are, you know, can you just be focused on optimizing the onboarding?
Timothy, sort of that.
Speaker Change: You know, the raised bar that happened over, you know, in the last year or two.
So, that's what we are seeing.
Speaker Change: We continue to believe that the possible lighter touch from regulators, if you will, would be beneficial to us, but more in the form of innovation, people looking to do more innovative programs because they feel like they have a little bit more freedom to operate and just
Speaker Change: The, you know, our track record and the time of the platform we have, that really caters to disruptive innovative companies that would be a benefit to us.
Speaker Change: Okay, a quick follow-up for me. Good to hear about the BitPanda card. I was wondering if...
Michael Milotich, Simon Khalaf
Speaker Change: You could comment a little bit further on the pipeline in Europe . Is that the type of thing where you've got a lot of pressure building up in this sort of sales pipe such that you get one of these implementations under your belt and we could see quite a few on the heels of it. Maybe a little more color there would be helpful. Thanks.
Speaker Change: Sure. Our European pipeline is strong. We definitely are getting, you know, we have a lot of good traction that we can demonstrate and a lot of customers who are
um
The point you all respect is who are performing well in our platform and...
Speaker Change: and, you know, utilizing the capabilities for the fullest. So I think that's creating momentum. And then, you know, our announcement last order of the pending acquisition of Transacte also helps because it makes our solution even more complete, a little more holistic offering we can offer customers. So we do have a
Speaker Change: Bradley, Strong Pipeline. I think the thing that's encouraging about BitPanda is that...
Speaker Change: You know, we are obviously building capabilities, and I'm talking a lot about our ability to migrate platforms and want that availability to be there for potential customers, but it's still relatively rare. I think what's very promising about this panda is that it does demonstrate that it's…
Speaker Change: If everyone is very aligned and focused and doesn't make changes, you can actually move it very quickly. So this way is sort of a...
Speaker Change: A deal done in record time where we literally signed and launched the program in Q1.
Speaker Change: I was probably the first one to get out. I can't remember that ever happening. Thank you very much.
Speaker Change: In the moves very quickly and part of that is not as mean, but it also shows that…
Speaker Change: You know, whenever one is being motivated and focused, it can happen quickly. That's probably the exception rather than the rule at this point, but it is encouraging to see that it can be done. And there once was not easy, as I mentioned, you know, many geographies, many, many currencies at the same time. So, we've talked great about executing that well, and it's good for the band that I think their business is doing great.
[inaudible]
Speaker Change: Thank you. The next question comes from the line of Darren Peller, from Wolf Research. Please go ahead.
[inaudible]
Speaker Change: And then, just thinking about what's incorporated into that now, I mean, you're, correct me if I'm wrong, but you're taking the current trends...
Speaker Change: So, can we just revisit, you know, in terms of the opportunities and the range of outcomes and that range of guidance based on different macro scenarios and remind us again of what you perceive as the opportunities that are idiosyncratic. Thank you very much.
Speaker Change: versus the macro categories of your business that could potentially be the most notable swing
Sure.
Speaker Change: So first, you didn't hear correctly, so we have raised our Yamidah projections for the years. We just continued to...
Speaker Change: Really execute well in terms of the very much more just efficient and effective scenario we've been improving a lot.
Speaker Change: and the last couple of years and we continue to do so and on a gross process basis.
Speaker Change: We essentially kept Q2 and Q4 the same as what we told you last quarter and so with the Q1B we essentially are higher into the range of what we said for four years but although we did keep the range the same.
Speaker Change: in terms of where we can see things going well for the risk. I think the things that are...
Speaker Change: I'm promising about the business from my perspective is a few of the things we highlighted. So first
Speaker Change: This is migration expertise. This is now a migration we completed last quarter. We had two with 181 so we're definitely showing that we have that capability and customers are taking advantage of it.
Speaker Change: You know, in Europe , the fact that our TV continues to grow over a hundred percent.
Speaker Change: and you know, we have sort of more capabilities on the way, you know, as we still assume the Transact A acquisition will close by the end of Q3, and we are, we've signed three programs already in program management, one of them being the panda as the first to launch.
Speaker Change: We're also, you know, just all this efficiency and in either dog we feel like positioned us well to grow and probably have some upside. So that's the one that you mentioned, you know.
It's something...
Speaker Change: Again, you haven't seen anything yet, and even in the month of April , you know, the mix of spending between, you know, how we bucket things between sort of high medium low discretionary, we're not seeing big changes if anything in April , the higher discretionary actually increased a little bit.
Speaker Change: which could be the timing from Easter or any of the other changes, but that's really what drove the acceleration and growth. So we're not really seeing anything. I think from our perspective, what could be idiosyncratic to us, is that when we look at our distance.
Speaker Change: We, because of the base of business that we have, we're less exposed to direct discretionary spending than most, you know, a lot of our...
Speaker Change: Ustasis, sort of target a little bit of the underserved who spend, generally, as less discretionary in nature.
Speaker Change: and so when we look at our spending less than a quarter of the spending on our platform, we view to be in high discretionary categories. So I think
Speaker Change: You know that everyday spending tends to hold up well even in economic slowdown so I think that could be a benefit to us relative to other people in the ecosystem.
Speaker Change: but we're still a spend-based economic model, so we would feel some pain, but we might have a little less than now that we've exposed our might be more to the higher end consumer where there's more discretionary spending.
Speaker Change: All right, my thanks and just my quick follow up on the banks just where are you on adding incremental partners? I know that was something you guys were hoping to get down to the next couple of quarters going back from fourth, third quarter, I think it was. [inaudible]
That's right, so we plan to add two new things.
Speaker Change: and for the finer point, so we're very far along.
Speaker Change: Capacity that that adds to our business, but also some of the capabilities that some of those banks, those banks bring, that we can pass on to our customers and offer even more
Speaker Change: Thank you. The next question comes from the line of James Fawzett from Morgan Stanley . Please go ahead.
James Fawcett: Thank you so much. I just wanted to follow up on your comments around kind of increasing.
James Fawcett: You're essentially decreasing your reliance on block and that kind of thing. Can you give us a little more color on...
Speaker Change: What types of customers or implementations are showing faster growth? And I guess I'm wondering how much of a contributor things like earnway access are and how we should think about that and other programs out of traditional Devon or even credit as long term drivers.
Yeah, I think that's your question, James.
Speaker Change: You know, what we kind of always share with you is...
Speaker Change: You know, we still think there's a lot of growth still to come to block and we think we can absolutely...
Michael Milotich, Simon Khalaf
Speaker Change: But our non-block business, we want to be growing at a good clip which is what we've been doing up to this point.
Speaker Change: I would say the growth is really coming across all the different use cases, so even within financial services, which is a lot of new banking and waste access to these cases, like you mentioned.
Speaker Change: You know, that is growing on the volume almost doubled in 2-1 versus 2-1 a year ago, so that continues to grow really well.
Speaker Change: You know, by now, pay later, and expense management, both those businesses, the TV's growing over 30 percent, and just to give you a sense for I talked about the sample performance in our gross profit, really coming from favorable business mix.
Speaker Change: When we look at the TBB for customers who are outside of our top five customers, that TBB grew at more than twice the rate of the company in the whole.
Speaker Change: So it really is a fairly broad base and it's a combination of both customers who have been our customers for a while, who are expanding with us and to either their business is just thriving or they're also wanting to use products for new geographies with us.
Speaker Change: As well as getting a little bit more contribution from new programs as this begins to ramp up. So it really is broad base, which is what's the most encouraging. [inaudible]
Yep.
Speaker Change: No, I'm sure it is. And then separately, you mentioned in terms of some of the changes in renegotiational with customers, et cetera, that you've improved your economics. And you can see that in the way that you're in guidance and outlook for the rest of the years come together. Can you chuckle a little bit about?
Speaker Change: How we should think about what the moving parts are that allow you to improve the economics and what you're doing either from a cost perspective or something like that. Just try to make sure that we're sensitive to make focusing on the profitability and the bottom line if you will.
Sure.
Speaker Change: So just to be clear, I guess the renegotiations we talked about is for a platform partner of ours, so not a customer.
Speaker Change: and so the including economics are good for us in terms of…
Speaker Change: You know, that's what's causing the impact to our revenue that does not impact gross profit because there's a corresponding offset.
Speaker Change: with our cost of revenue. I would say generally when it comes to the customer renegotiations, we mentioned last one, we have a couple of big ones this year, but generally, what we tend to focus on is...
and then looking to some cases.
Speaker Change: You know, our sort of core price where the, you know, the fish on volume.
Speaker Change: that they have. One might come down, we might add a T or two if they're going a lot.
that they can move in to?
Speaker Change: But we're working pretty effectively to offset some of that with additional services that we're selling. So as we add a lot more capabilities, either...
Speaker Change: More program management services that can be purchased from an all-et-heart basis, or value-added services like our rich services tokenization, even some of the things I mentioned with this white label app that will be building to help customers. These are all things that...
Speaker Change: Ad additional value that we can charge for that also is an effort to offset some of the just reduced core economics that just generally happen as the as the blind grows more and more typically people are going to continue to get a little bit of a favorable price change from you.
Speaker Change: Thank you. The next question comes from the line of Craig Maurer from F.P. Partners, please go ahead.
Yes, I, thanks for taking the question.
I wanted to ask about the U.S. neo-banking environment. You know, we've seen...
Speaker Change: some significant underperformance from several players. You talked about Varro choosing not to move forward with the program with you.
Speaker Change: The U.S. neo-banking has the potential to become a drag on growth if things don't accelerate. Thanks.
Thank you for your question, Craig. I think that there's...
I think.
Speaker Change: I guess from our perspective, what we're seeing is that just um...
a lot more people.
Speaker Change: Looking to launch a neo-banking-like offering, right? It might not be a standalone neo-bank, but it might be a large brand that has another business where they are looking to offer banking services to their customers and or their employees. So I would say it is becoming more competitive.
Speaker Change: for the, you know, to drive the growth because consumers do have more options than they had a few years back.
Speaker Change: So I think from our perspective, as long as we can...
Speaker Change: Capture our fair share of that and enable a lot of these newer people who may be watching that I think we don't see that as something that could be a drag on our growth and again my card.
Speaker Change: Arneal Banky, these cases outside of block are continuing to grow very quickly.
Speaker Change: So, I think it is getting more competitive, but we are trying to demonstrate our leadership in our capabilities in this area so that we can power as many of those as possible and therefore that increased competition that should minimize the impact on how successful we are doing that.
Thanks.
Thank you.
Speaker Change: The next question comes from the line of Casey Chan from Bank of America, please go ahead.
Casey Chan: Hey, thanks for taking my question. I just wanted to follow up just again to make sure, you know, I'm understanding the growth profit outlaw for 2025.
Speaker Change: So, you guys kinda said that. [inaudible]
It will...
Speaker Change: You captured that fortune in 16, but obviously if there's macro deterioration from here, it seems like you can accommodate that. So third to say at the midpoint it can accommodate some of the further macro deterioration.
Speaker Change: and how much is the borough termination having an impact on 2025? And can you also just talk a little bit about?
Speaker Change: If there were any updated expectations for block performance, you know, within your guidance expectations, just given obviously they've revised their forecasts and well and they're still a significant portion of your revenue. Thank you.
Sure, so just bye.
Speaker Change: Declare fire that goes profit, so yes, we maintained our four-year gross profit growth.
to close the time.
Speaker Change: just based on our Q1L performance and essentially holding Q2 and Q4 consistent with where we were last quarter.
Michael Milotich, Simon Khalaf
Speaker Change: The viral determination impact, so the early termination we reached it raised our most profit growth in Q1 by approximately one point and there will be some [inaudible]
Speaker Change: I guess lower growth in Q3, Q4, we had expected that's the launch in the second half of the year, and so we will be losing some revenue and those profit associated with that. Bye.
Speaker Change: We did not change the trajectory of our projections in total because...
Speaker Change: We're seeing other parts of our business perform better than we had expected so we were essentially absorbing that impact in the second half and we still believe that we can deliver the growth expectations that we discussed last quarter you know there are a lot of [inaudible]
Speaker Change: in addition to, I guess, what we feel good about those even as in reference to earlier new opportunities that have surfaced recently where there are prospects for looking to move quickly and therefore could contribute in 2025 so you know we feel like.
Speaker Change: I'm based on the visibility we have that you feel good about the range we've set, being on the high end of our 14 to 16%
Speaker Change: and we'll continue to monitor it in absorbing the viral termination.
Speaker Change: The last question you asked was about blog expectations. Obviously we're very close partners and so we're in very regular context. Anything that they have shared publicly has been factored into our projections. We're in contact with them on a, if not daily, then certainly weekly basis. We're in pretty close sync in terms of how we...
Speaker Change: think about the trajectory of their business and how that impacts on performance.
Speaker Change: Okay, that's helpful. And just a follow-up on credit. Obviously, per pay was a really nice win. It's nice to see that go live.
Speaker Change: Can you just talk a little bit about what you're expecting credit to contribute to 2025 now with this? And in general how do those volumes transactions look like relative to obviously your traditional debit business in terms of what that looks like on the impact of the PNL and what we, you know, maybe it changes the shape of that a little bit going forward as it becomes a more meaningful part of the business. Thank you.
Speaker Change: Yeah, so we'll be a little excited about Jose coming onto the platform and again we've been doing the new insurance for them since late February and we're starting to migrate those existing card holders.
Speaker Change: Just kind of stepping back where we are from a credit standpoint is with Per pay, doing new issuance, and we already had a commercial customer-wise, so we now have a...
Speaker Change: Commercial and a Consumer Program Live on the platform, and then we already have signed.
Speaker Change: Another consumer co-brand that we talked about last quarter as well as there's another commercial program as well.
Speaker Change: We know there are at least two additional programs that we expect to launch later in 2025. So, you know, we're getting some traction, we're getting the experience driving some volume so we can, you know, show what, you know, our capabilities can deliver and have more proof points for prospective customers.
Speaker Change: You know, it's in fact in 2025, it's still small and how it takes even in 2026 to be relatively small. I think per pay is a migration, so that's nice. You get those volume immediately. But the other three programs are all new programs. I will take some time to ramp. So, you know, I would expect that. [inaudible]
Speaker Change: The contribution from credit to our revenue and goes profit won't really be meaningful until probably, you know, late 26 or even into 2027 when these programs have, you know, ramped up more fully and made when we bond boarded a few additional ones in addition to just those four.
Speaker Change: In terms of union economics, typically in credit, it's going to be a little bit better than debit, it's just there's a lot more complexity and a lot more opportunity to add value.
Speaker Change: You know, in terms of what you're doing from a measuring perspective, you know, the statementing, the rewards support, you know, these are all areas that are just a little more complicated and involved than they are indebted and typically the unit economics reflect that.
Sanjay Sakrani: Thank you. The next question comes from the line of Sanjay Sakhrani from KBW, please go ahead.
Sanjay Sakrani: Thank you. Hey Mike, can you just talk about where you are with the CEO , sir?
Thank you for joining us. Have a great day.
Mike Milotich: Happy to you, Sanjay. Thank you for the question. So the board is committed to taking the time it needs to find the right CEO for Marqeta, so the search process is ongoing.
Moabee when there is news, I think the...
Mike Milotich: with the board, you know, feels comfortable with it. With Leah the interim and the rest of the executive team if you're in place that...
Mike Milotich: The business can continue to perform well and not miss a beat in this interim period and so they're going to take the time that they feel they need to hire the right candidate.
Speaker Change: Okay, great. You're doing a great job, by the way. Um, but just um...
Speaker Change: specific to that question, the line of question A on block and sort of how it ties into your performance that you maybe just talk a little bit about.
Speaker Change: You know, just a difference in spending behavior there, seeing versus your thing, because it seems like that consumer that they're exposed to kind of looks a lot like your consumer, but the spending behavior is different. Any analysis there that you guys have done?
Speaker Change: Yeah, obviously I can't speak to their business specifically, I'll leave that to them, but I'll say what we see on a broad basis is
that, you know,
Speaker Change: We're seeing the whole leavating market based on many customers who use our platform, for example, so it's a bigger population.
Speaker Change: There's also, you know, for us, for an example, for some detail, it's like, let me look at all the, the buy now pay later use cases as an example.
Speaker Change: and we look at the breakdown and spending between high discretionary and medium discretionary and low discretionary.
Speaker Change: You know, one of the areas we see growing a little faster and taking share within buy-out pay later is actually the low discretionary, you know, that use case is being applied in, you know, this...
The footprint of it is expanding.
Speaker Change: And particularly as we, you know, enable these customers with these pay-any-work cards, we're essentially the buy-out indicator functionality that is added in a card.
Speaker Change: Rather than the merchant accepting that biennale pay right here that gives consumers a little more flexibility.
Speaker Change: in terms of where they apply it. So, you know, that's just an example where just based on our much broader view, you know, the behaviors may be a little different for us.
Speaker Change: So I mean, there's still obviously a whole very large customer for us in direct 45% of our revenue, but that means, you know, that's more than half of our business, that it's coming from other customers that might have a fun and different mix or target audience.
Thank you.
Speaker Change: Ladies and gentlemen, we take the last question from the line of Andrew Bauch from Wells Fargo. Please go ahead.
Speaker Change: Hey guys, I'll just book into here with a somatic question.
Michael Milotich, Simon Khalaf
Speaker Change: Yes, thanks for your question, Andrew, and so obviously things have really heated up again in the last.
Speaker Change: a few months from a crypto and stablecoin perspective. I think the way we look at it is because of the way our platform works and the flexibility we provide as well as the way we use our just in time funding. We've always been up.
A pioneer in crypto that allows... [inaudible]
Speaker Change: Cards to be spending in a fiat currency, but have the, you know, the stored balance essentially be in something else, a crypto or any could be a stable coin. So I think where, you know, we could see an opportunity for us is,
Speaker Change: If you assume that acceptance is going to be like how people turn that with stablecoins if they're going to use it for, you know, kind of everyday spending either consumers or small medium-sized businesses where it might be a card like use case.
Speaker Change: You know, if the acceptance isn't there and how it works for both the merchant and the issuer, then the transacting and seawater is obviously a much easier way to do it and just have the balance.
Speaker Change: from a stable coin. And that's something given our track record in crypto and the types of customers that we have and we support for that offering. We think that's very applicable. Obviously, and we certainly demonstrated leadership, and that was a part of why Bipand in Europe selected us. And that was a part of why Bipand was a part of why Bipand in Europe .
Sir Dad, you know that? [inaudible]
Speaker Change: It's still early, but obviously there's a lot of activity and assuming people want to go down that path even if it's...
Speaker Change: In their more short to medium turn until needed there is broader adoption of acceptance or issuance of products that would use stablecoin directly. We could be a bridge to that later state.
Craig, congrats on the quarter.
Thank you.
Thank you.
Speaker Change: Ladies and gentlemen, with that, the conference of Marqeta Inc has now concluded. Thank you for your participation. You may now disconnect your lines.
[inaudible]
Speaker Change: [music].
Speaker Change: [music].