DANBURY, Conn., Feb. 15, 2024 /PRNewswire/ -- Scott Shamberg, former global CEO of Publicis performance agency Performics, was introduced today as President of PlusMedia, LLC, a full-service performance marketing company dedicated to helping its clients connect, acquire and retain customers across an integrated, omnichannel customer journey in a continuous effort to drive revenue growth.  Working alongside PlusMedia Founder & CEO, Sherry Scapperotti, Scott will lead the executive team while managing the ove ...

OAKLAND, Calif.--(BUSINESS WIRE)--Marqeta (NASDAQ: MQ), the global modern card issuing platform enabling some of the world’s most innovative embedded finance solutions, today announced its new customer, Internet Travel Solutions (ITS), a leading provider of travel management software that will utilize Marqeta’s comprehensive credit card platform to launch a multi-use travel and expense (T&E) commercial credit card for the mid-sized business market. Business travel in the US is rebounding to pre-pandemic ...

Marqeta Inc. shares powered 5.7% higher Monday as the card-issuing name found a new fan on Wall Street. BofA’s Cassie Chan upgraded the stock to buy from neutral earlier in the day, saying that Marqeta MQ, +5.72% boasts the “enviable combination” of near-term visibility into its financials and emerging opportunities that could help spur 20% growth over the medium term. Chan noted that customers representing 75% of Marqeta’s total payment volume renewed deals between the second quarter of 2022 and the third ...

Vectorian Investment Thesis Marqeta, Inc. (NASDAQ:MQ) is not a blemish-free investment. But even considering its pesky detractions, namely its tight reliance on Block, Inc. (SQ), I maintain that there are more positives than negatives to this investment thesis. Essentially, assuming the best-case scenario, this stock is priced at 75x forward EBITDA. That's clearly far from cheaply priced. However, the one thing that is highly bullish about this stock, is that once it gets beyond Q3 2024, there's a path ...

Marqeta, Torpago and Sunwest Bank launched Sunwest’s commercial credit card and expense management solution called Sunwest Visionary Card.The new bank-branded offering is enabled by Torpago’s commercial credit card and spend management solutions, Marqeta’s global card issuing platform and Sunwest’s entrepreneurial business bank, according to a Thursday (Jan. 25) press release.Torpago’s low-code/no-code Powered By platform provides infrastructure that includes loan origination and underwriting, card issuing ...

OAKLAND, Calif.--(BUSINESS WIRE)--Marqeta, Inc. (NASDAQ: MQ), the global modern card issuing platform, today announced that it will host a conference call and webcast to discuss fourth quarter and full year 2023 financial results on Wednesday, February 28, 2024 at 4:30 pm ET. Hosting the call will be Simon Khalaf, Chief Executive Officer, and Mike Milotich, Chief Financial Officer. A press release with the fourth quarter and full year 2023 financial results will be issued after the market closes that same d ...

| --- | --- | --- | |-----------------------------|-------|-------| | | | | | Marqeta Earnings Supplement | | | | November 7, 2023 | | | | | | | | | | | 2 The forward-looking statements in this earnings supplement 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. Quarterly Total Processing Volume (TPV) Marqeta Earnings Supplement Quarterly Net Revenue Net Revenue (in millions) Marqeta Ear ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission File Number: 001-40465 Marqeta, Inc. (Exact name of registrant as specified in its charter) (State or other jurisdicti ...

Note About Forward-Looking Statements [Forward-Looking Statements Overview](index=3&type=section&id=Forward-Looking%20Statements%20Overview) This overview defines forward-looking statements, highlighting their inherent risks and uncertainties regarding future performance, operations, and market conditions - Forward-looking statements relate to future events or the company's future financial or operating performance, identifiable by words like 'may,' 'will,' 'expects,' 'plans,' 'anticipates,' 'believes,' 'estimates,' 'potential,' or 'continue.'[9](index=9&type=chunk) - Uncertainties related to U.S. and global economies and their effect on business, results of operations, financial condition, demand for the platform, sales cycles, and customer retention - Future financial performance, including net revenue, costs of revenue, gross profit, operating expenses, and ability to achieve future profitability - Ability to effectively manage or sustain growth and expand operations, enhance platform and services, and develop capabilities - Ability to attract, retain, diversify, and expand customer base, and maintain relationships with Issuing Banks and Card Networks - Impact of increasing geopolitical uncertainty, instability in financial services, rising inflation, and increased labor market competition - Ability to recognize efficiencies from the restructuring plan executed during Q2 2023 and repurchase shares under the program - Ability to maintain effective disclosure controls and internal controls over financial reporting, including remediating material weakness Part I - Financial Information [Item 1. Condensed Consolidated Financial Statements](index=5&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) This section presents Marqeta's unaudited condensed consolidated financial statements, including balance sheets, statements of operations, equity, and cash flows, with detailed notes on business and accounting policies [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The Condensed Consolidated Balance Sheets provide a snapshot of the company's financial position, showing a decrease in total assets and stockholders' equity, while total liabilities increased from December 31, 2022, to June 30, 2023 Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2023 | December 31, 2022 | Change (2023 vs 2022) | | :-------------------------------- | :------------ | :---------------- | :-------------------- | | Cash and cash equivalents | $950,157 | $1,183,846 | $(233,689) | | Short-term investments | $432,354 | $440,858 | $(8,504) | | Total current assets | $1,513,815 | $1,746,769 | $(232,954) | | Goodwill | $123,446 | — | $123,446 | | Total assets | $1,704,143 | $1,770,346 | $(66,203) | | Total current liabilities | $318,340 | $282,879 | $35,461 | | Total liabilities | $331,528 | $297,390 | $34,138 | | Total stockholders' equity | $1,372,615 | $1,472,956 | $(100,341) | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) The Condensed Consolidated Statements of Operations and Comprehensive Loss show an increase in net revenue and gross profit for both the three and six months ended June 30, 2023, compared to the prior year periods. However, net loss also increased significantly due to higher operating expenses and other income/expense dynamics Condensed Consolidated Statements of Operations and Comprehensive Loss Highlights (in thousands, except per share) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net revenue | $231,115 | $186,678 | $448,456 | $352,780 | | Costs of revenue | $146,506 | $108,629 | $274,685 | $200,005 | | Gross profit | $84,609 | $78,049 | $173,771 | $152,775 | | Total operating expenses | $154,030 | $124,766 | $330,624 | $248,764 | | Loss from operations | $(69,421) | $(46,717) | $(156,853) | $(95,989) | | Other income (expense), net | $10,762 | $1,802 | $22,434 | $(9,875) | | Net loss | $(58,797) | $(44,688) | $(127,598) | $(105,286) | | Net loss per share, basic and diluted | $(0.11) | $(0.08) | $(0.24) | $(0.19) | [Condensed Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) The Condensed Consolidated Statements of Stockholders' Equity detail changes in equity components, primarily driven by net losses, share-based compensation, and share repurchases during the periods presented Key Changes in Stockholders' Equity (in thousands) | Metric | Six Months Ended June 30, 2023 (from Dec 31, 2022) | | :------------------------------------------ | :------------------------------------------------- | | Balance as of December 31, 2022 | $1,472,956 | | Issuance of common stock (options/ESPP) | $1,051 + $1,310 + $1,775 = $4,136 | | Net settlement of restricted stock units | $(3,746) + $(6,324) = $(10,070) | | Share-based compensation | $47,027 + $45,419 = $92,446 | | Repurchase and retirement of common stock | $(20,993) + $(48,497) = $(69,490) | | Net loss | $(68,801) + $(58,797) = $(127,598) | | Balance as of June 30, 2023 | $1,372,615 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The Condensed Consolidated Statements of Cash Flows indicate a significant net decrease in cash, cash equivalents, and restricted cash for the six months ended June 30, 2023, primarily due to increased cash used in investing activities (driven by the Power Finance acquisition) and financing activities (due to share repurchases) Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(36,520) | $(23,943) | | Net cash used in investing activities | $(122,525) | $(967) | | Net cash used in financing activities | $(73,069) | $(2,398) | | Net decrease in cash, cash equivalents, and restricted cash | $(232,114) | $(27,308) | | Cash, cash equivalents, and restricted cash - End of period | $959,532 | $1,228,073 | - The significant increase in cash used in investing activities for H1 2023 was primarily due to the **$131.9 million Power Finance acquisition**[25](index=25&type=chunk) - The increase in cash used in financing activities for H1 2023 was mainly due to **$67.1 million in common stock repurchases**[25](index=25&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed disclosures and explanations for the condensed consolidated financial statements, covering business operations, accounting policies, and specific financial components [1. Business Overview and Basis of Presentation](index=11&type=section&id=1.%20Business%20Overview%20and%20Basis%20of%20Presentation) This note describes Marqeta's core business as a digital payment technology provider, offering a modern card issuing platform and issuer processor services. It also outlines the basis of financial statement preparation, use of estimates, and business risks, including a history of net losses and the company's liquidity position - Marqeta creates digital payment technology, providing a modern card issuing platform and issuer processor services, primarily earning revenue from processing card transactions[30](index=30&type=chunk)[31](index=31&type=chunk) - Incurred net losses of **$58.8 million (Q2 2023)** and **$127.6 million (H1 2023)**, with an accumulated deficit of **$729.8 million** as of June 30, 2023 - Expects to incur net losses for the foreseeable future due to investments in new products, customer acquisition, brand development, and international expansion - Believes current cash and cash equivalents (**$950.2 million**) and short-term investments (**$432.4 million**) are sufficient to fund operations for at least the next twelve months [2. Summary of Significant Accounting Policies](index=12&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) This note summarizes Marqeta's significant accounting policies, noting no major changes except for new policies related to business combinations, goodwill, acquisition-related intangible assets, and restructuring. It also clarifies the company operates as a single segment and details policies for restricted cash and capitalized internal-use software - The company operates as a **single operating segment**, with the CEO reviewing consolidated financial information for decision-making[37](index=37&type=chunk) - Restricted cash includes deposits with Issuing Banks for collateral and cash securing a letter of credit for office lease - Capitalizes certain costs for internal-use software development, amortizing them over their estimated useful life - New policies added for business combinations, goodwill and acquisition-related intangible assets, and restructuring during the period [3. Revenue](index=13&type=section&id=3.%20Revenue) This note disaggregates revenue into platform services and other services, providing details on contract balances and remaining performance obligations. Platform services revenue, net, significantly increased for both the three and six months ended June 30, 2023, compared to the prior year Disaggregated Revenue from Customers (in thousands) | Revenue Type | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Platform services revenue, net | $226,198 | $181,102 | $436,530 | $342,100 | | Other services revenue | $4,917 | $5,576 | $11,926 | $10,680 | | Total net revenue | $231,115 | $186,678 | $448,456 | $352,780 | Contract Balances (in thousands) | Contract Balance | June 30, 2023 | December 31, 2022 | | :----------------------- | :------------ | :---------------- | | Total contract assets | $2,241 | $1,944 | | Total deferred revenue | $17,925 | $21,250 | - Net revenue recognized from deferred revenue balances at the beginning of the period was **$3.2 million (Q2 2023)** and **$7.8 million (H1 2023)**[46](index=46&type=chunk) [4. Short-term Investments](index=14&type=section&id=4.%20Short-term%20Investments) This note details the company's short-term investment portfolio, which was renamed from 'Marketable securities.' The portfolio primarily consists of U.S. treasury securities, U.S. agency securities, and certificates of deposit, with a decrease in total fair value from December 31, 2022, to June 30, 2023 - The financial statement line item 'Marketable securities' was renamed to **'Short-term investments' in Q2 2023** for better alignment with the investment portfolio[48](index=48&type=chunk) Short-term Investments Composition (in thousands) | Investment Type | June 30, 2023 (Estimated Fair Value) | December 31, 2022 (Estimated Fair Value) | | :---------------------- | :----------------------------------- | :--------------------------------------- | | U.S. treasury securities | $250,605 | $378,002 | | U.S. agency securities | $68,342 | $29,059 | | Commercial paper | $28,263 | $28,815 | | Certificate of deposits | $62,493 | — | | Total short-term investments | $432,354 | $440,858 | - As of June 30, 2023, **37 short-term investments were in unrealized loss positions**, but the company does not intend to sell them before anticipated recovery - Maturities: **$308.2 million due within one year**, **$124.2 million due after one year through two years** as of June 30, 2023 [5. Fair Value Measurements](index=16&type=section&id=5.%20Fair%20Value%20Measurements) This note outlines the fair value hierarchy for assets and liabilities, categorizing them into Level 1, Level 2, and Level 3 based on the observability of inputs. Most cash equivalents and short-term investments are Level 1 or Level 2, while contingent consideration liability is a Level 3 measurement Fair Value Hierarchy of Assets and Liabilities (in thousands) as of June 30, 2023 | Category | Level 1 | Level 2 | Level 3 | Total Fair Value | | :-------------------------------- | :------ | :------ | :------ | :--------------- | | Money market funds | $447,636 | — | — | $447,636 | | Commercial paper (cash equivalents) | — | $19,983 | — | $19,983 | | U.S. government securities | $250,605 | — | — | $250,605 | | U.S. agency securities | — | $68,342 | — | $68,342 | | Commercial paper (short-term investments) | — | $28,263 | — | $28,263 | | Asset-backed securities | — | $11,666 | — | $11,666 | | Corporate debt securities | — | $10,985 | — | $10,985 | | Certificate of deposit | — | $62,493 | — | $62,493 | | Total assets | $698,241 | $201,732 | — | $899,973 | | Contingent consideration liability | — | — | $53,067 | $53,067 | - Contingent consideration liability is a **Level 3 measurement**, determined by a probability-weighted discounted cash flow analysis using unobservable inputs[53](index=53&type=chunk) [6. Certain Balance Sheet Components](index=17&type=section&id=6.%20Certain%20Balance%20Sheet%20Components) This note provides a detailed breakdown of specific balance sheet accounts, including prepaid expenses and other current assets, property and equipment, other assets, accrued expenses and other current liabilities, and other liabilities, highlighting changes between December 31, 2022, and June 30, 2023 Prepaid Expenses and Other Current Assets (in thousands) | Item | June 30, 2023 | December 31, 2022 | | :-------------------------------- | :------------ | :---------------- | | Prepaid expenses and other current assets | $29,098 | $38,007 | Property and Equipment, net (in thousands) | Item | June 30, 2023 | December 31, 2022 | | :-------------------------------- | :------------ | :---------------- | | Property and equipment, net | $14,330 | $7,440 | | Internally developed and purchased software | $11,813 | $3,082 | - Depreciation and amortization expense increased to **$2.5 million (Q2 2023)** and **$4.5 million (H1 2023)** from $0.9 million (Q2 2022) and $1.9 million (H1 2022), respectively - Capitalized **$4.6 million (Q2 2023)** and **$8.7 million (H1 2023)** in internal-use software development costs Other Assets (in thousands) | Item | June 30, 2023 | December 31, 2022 | | :-------------------------------- | :------------ | :---------------- | | Other assets | $44,768 | $7,122 | | Acquired developed technology, net | $38,560 | — | - Acquired developed technology, net, with an amortization period of 7 years, contributed **$1.5 million (Q2 2023)** and **$2.4 million (H1 2023)** to amortization expense[59](index=59&type=chunk) Accrued Expenses and Other Current Liabilities (in thousands) | Item | June 30, 2023 | December 31, 2022 | | :-------------------------------- | :------------ | :---------------- | | Accrued expenses and other current liabilities | $189,669 | $136,887 | | Contingent consideration liability | $53,067 | — | | Accrued restructuring | $9,567 | — | [7. Commitments and Contingencies](index=19&type=section&id=7.%20Commitments%20and%20Contingencies) This note details the company's operating lease commitments for its corporate headquarters, non-cancellable purchase obligations with service providers and Issuing Banks, and contributions to defined contribution plans. It also confirms no material legal contingencies - Operating lease for corporate headquarters expires in **February 2026**, with total lease payments of **$11.99 million** as of June 30, 2023 - Weighted average remaining operating lease term is **2.6 years** with a weighted average discount rate of **7.7%** as of June 30, 2023 - Non-cancellable purchase commitments total **$213.0 million** over the next 5 years, including **$197.7 million for cloud-computing services** - Contributed **$1.5 million (Q2 2023)** and **$3.7 million (H1 2023)** to defined contribution plans - No material legal contingency matters as of June 30, 2023 [8. Stock Incentive Plans](index=20&type=section&id=8.%20Stock%20Incentive%20Plans) This note outlines the company's share-based compensation programs, including Restricted Stock Units (RSUs), Stock Options, the Executive Chairman Long-Term Performance Award, and the Employee Stock Purchase Plan (ESPP). It details the expense recognized, activity, and unrecognized compensation costs for each Share-Based Compensation Expense (in thousands) | Award Type | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Restricted stock units | $25,179 | $15,078 | $49,970 | $30,423 | | Stock options | $5,309 | $6,160 | $12,793 | $13,818 | | Executive Chairman Long-Term Performance Award | $13,267 | $13,267 | $26,388 | $26,388 | | Employee Stock Purchase Plan | $410 | $643 | $1,013 | $1,524 | | Total | $44,165 | $35,148 | $90,164 | $72,153 | - Unrecognized compensation costs for unvested RSUs were **$283.4 million** as of June 30, 2023, expected to be recognized over **2.9 years** - Unrecognized compensation costs for unvested stock options (excluding Executive Chairman Award) were **$57.0 million**, expected over **2.5 years** - Executive Chairman Long-Term Performance Award has **$90.6 million** in unrecognized compensation cost, expected over **2.6 years**, vesting upon service and stock price hurdles (e.g., **$67.50 to $173.15**) [9. Stockholders' Equity Transactions](index=23&type=section&id=9.%20Stockholders%27%20Equity%20Transactions) This note details transactions affecting stockholders' equity, including the issuance of warrants to customers and the company's share repurchase programs. It highlights the completion of the 2022 program and the initiation of a new $200 million program in May 2023 - Issued warrants to customers in 2021 and 2020 to purchase up to **1,150,000** and **750,000 shares**, respectively, vesting based on performance conditions - Recorded **$2.4 million (Q2 2023)** and **$4.5 million (H1 2023)** as a reduction of revenue due to warrant vesting - Completed the **$100 million 2022 Share Repurchase Program** by March 31, 2023, repurchasing **3.2 million shares for $21.0 million (H1 2023)** - Authorized a new **$200 million 2023 Share Repurchase Program** on May 8, 2023 - Repurchased **10.2 million shares for $48.5 million** under the 2023 program during Q2 2023, with **$151.7 million remaining available** as of June 30, 2023 [10. Net Loss Per Share Attributable to Common Stockholders](index=24&type=section&id=10.%20Net%20Loss%20Per%20Share%20Attributable%20to%20Common%20Stockholders) This note details the calculation of basic and diluted net loss per share, which are identical due to the company reporting a net loss. It also lists potentially dilutive securities that were excluded from the diluted EPS calculation because their inclusion would have been anti-dilutive Net Loss Per Share (Basic and Diluted) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss per share, basic and diluted | $(0.11) | $(0.08) | $(0.24) | $(0.19) | | Weighted-average shares used (basic & diluted) | 538,267,449 | 544,704,146 | 538,988,940 | 543,524,008 | - Basic and diluted net loss per share are the same due to **net losses in all periods** - Potentially dilutive securities excluded from diluted EPS calculation (anti-dilutive effect) as of June 30, 2023, include **1.9 million warrants**, **38.4 million stock options**, **45.1 million unvested RSUs**, and **0.3 million ESPP shares** [11. Income Tax](index=25&type=section&id=11.%20Income%20Tax) This note details the company's income tax expense or benefit, highlighting a significant benefit in the six months ended June 30, 2023, primarily due to a partial valuation allowance release from the Power Finance acquisition. It also mentions the immaterial impact of the Inflation Reduction Act's excise tax on stock repurchases Income Tax Expense (Benefit) (in thousands) | Period | Income Tax Expense (Benefit) | | :------------------------------- | :--------------------------- | | Three Months Ended June 30, 2023 | $138 | | Three Months Ended June 30, 2022 | $(227) | | Six Months Ended June 30, 2023 | $(6,821) | | Six Months Ended June 30, 2022 | $(578) | - The income tax benefit for H1 2023 was primarily due to a **$7.2 million partial valuation allowance release** related to the Power Finance acquisition, offset by $0.4 million in foreign income tax expenses[96](index=96&type=chunk) - The excise tax on stock repurchases under the Inflation Reduction Act of 2022 was **immaterial** for the three and six months ended June 30, 2023[97](index=97&type=chunk) [12. Concentration Risks and Significant Customers](index=25&type=section&id=12.%20Concentration%20Risks%20and%20Significant%20Customers) This note identifies concentration risks related to financial instruments, Issuing Banks, and customers. It highlights significant reliance on a single Issuing Bank (Sutton Bank) for transaction settlement and a single customer (Block) for a large portion of net revenue - Cash and cash equivalents include **$447.6 million (June 30, 2023)** managed by four financial institutions, primarily in U.S. Government securities - Short-term investments of **$432.4 million (June 30, 2023)** have concentrations in U.S. Treasuries and U.S. agency securities (**74%**), commercial paper (**7%**), and certificates of deposit (**14%**). All debt securities are investment grade - **77% (Q2 2023)** and **78% (H1 2023)** of Total Processing Volume (TPV) was settled through Sutton Bank - Block, Inc. accounted for **78% (Q2 2023)** and **77% (H1 2023)** of the company's net revenue - Another customer accounted for **12% of customers' receivables** as of June 30, 2023 [13. Business Combination](index=26&type=section&id=13.%20Business%20Combination) This note details the acquisition of Power Finance Inc. on February 3, 2023, for a base cash purchase price of $221.9 million, including a $53.1 million contingent consideration. The acquisition aims to enhance credit product capabilities, with the purchase consideration allocated to developed technology, deferred tax liabilities, net assets, and goodwill - Acquired Power Finance Inc. on **February 3, 2023**, for a base cash purchase price of **$221.9 million**, including **$53.1 million in contingent consideration** tied to performance-based goals[103](index=103&type=chunk) - The acquisition is expected to accelerate capabilities in the company's credit product, allowing customers to launch a wider range of credit products - Purchase consideration of **$164.0 million** was allocated to **$41.0 million in developed technology** (7-year useful life), **$7.4 million in deferred tax liabilities**, **$7.0 million in net assets**, and **$123.4 million in goodwill** - Acquisition-related transaction costs were **$0.4 million (Q2 2023)** and **$1.9 million (H1 2023)** - Contingent consideration of **$52.7 million was paid in July 2023** after performance goals were achieved by June 30, 2023 [14. Restructuring](index=27&type=section&id=14.%20Restructuring) This note describes the restructuring plan approved in Q2 2023 to reduce operating expenses and improve profitability through workforce reduction. The plan incurred approximately $8.4 million in net restructuring charges, primarily severance and benefits, and is expected to be substantially complete by the end of Q3 2023 - Approved a restructuring plan in **Q2 2023** to reduce operating expenses and improve profitability by reducing the workforce[109](index=109&type=chunk) - Recorded **$8.4 million in restructuring charges** during Q2 and H1 2023 - Charges included **$14.2 million for severance and benefits**, offset by a **$2.9 million net reduction in stock-based compensation** and a **$2.9 million reduction in accrued bonuses** - Restructuring liability of **$9.6 million** included in Accrued expenses and other current liabilities as of June 30, 2023 [15. Subsequent Event](index=27&type=section&id=15.%20Subsequent%20Event) This note discloses a contract amendment with Block, Inc. (effective July 1, 2023) for the Cash App program. The amendment extends the term to June 30, 2027, includes reduced pricing, and shifts responsibility for managing the primary Card Network relationship to Block, which will impact the company's revenue presentation - Executed a contract amendment with Block, Inc. on **August 4, 2023**, effective **July 1, 2023**, for the Cash App program, extending the term to **June 30, 2027**[112](index=112&type=chunk) - Amendment includes reduced pricing for the Cash App program - Block will now be responsible for defining and managing the Cash App program with respect to the primary Card Network - Beginning July 1, 2023, fees owed to Issuing Banks and Card Networks related to Cash App primary Card Network volume will be netted against amounts earned, impacting Net Revenue presentation [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Marqeta's financial condition and results, covering business overview, key metrics, revenue/expense components, liquidity, and critical accounting policies [Overview](index=28&type=section&id=Overview) Marqeta's overview describes its modern card issuing platform, which enables customized payment cards and frictionless experiences across various industry verticals. It highlights the platform's flexibility, configurability, and rapid product development, distinguishing between 'Managed By Marqeta' (MxM) and 'Powered By Marqeta' (PxM) configurations. The section also acknowledges the unpredictable impact of macroeconomic factors on the business - Marqeta's platform, powered by open APIs, allows customers to create customized payment cards and flexible payment experiences for consumer and commercial use cases[116](index=116&type=chunk) - Managed By Marqeta (MxM): Marqeta provides an Issuing Bank partner, manages the card program, and offers a full range of services including program definition, operation, compliance, dispute management, fraud scoring, and cardholder support - Powered By Marqeta (PxM): Customers access the platform via APIs, Marqeta provides payment processing, but customers are responsible for defining and managing the program with Card Networks and Issuing Banks, and managing compliance - Macroeconomic factors (e.g., geopolitical uncertainty, inflation, interest rates, bank failures) create uncertainty and could adversely impact processing volumes and future results [Recent Developments](index=29&type=section&id=Recent%20Developments) This section highlights the recent contract amendment with Block for the Cash App program, effective July 1, 2023. The amendment includes reduced pricing and shifts responsibility for primary card network management to Block, which is expected to reduce reported net revenue but increase gross margin percentage - On **August 4, 2023**, Marqeta executed a contract amendment with Block for the Cash App program, effective **July 1, 2023**[121](index=121&type=chunk) - The amendment includes reduced pricing for the Cash App program - Block will now be responsible for defining and managing the Cash App program with respect to the primary card network - Expected to reduce reported net revenue and decrease gross profit, but increase gross margin percentage [Key Operating Metric and Non-GAAP Financial Measures](index=30&type=section&id=Key%20Operating%20Metric%20and%20Non-GAAP%20Financial%20Measures) This section defines and presents key operating metrics and non-GAAP financial measures used by management to evaluate business performance. It includes Total Processing Volume (TPV), Net Revenue, Gross Profit, Net Loss, Adjusted EBITDA, and Adjusted EBITDA Margin, along with Non-GAAP operating expenses Key Operating Metric and Non-GAAP Financial Measures (in thousands, except TPV in millions) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total Processing Volume (TPV) | $53,615 | $40,457 | $103,635 | $77,083 | | Net revenue | $231,115 | $186,678 | $448,456 | $352,780 | | Gross profit | $84,609 | $78,049 | $173,771 | $152,775 | | Gross margin | 37 % | 42 % | 39 % | 43 % | | Net loss | $(58,797) | $(44,688) | $(127,598) | $(105,286) | | Net loss margin | (25)% | (24)% | (28)% | (30)% | | Adjusted EBITDA | $824 | $(10,225) | $(3,521) | $(20,678) | | Adjusted EBITDA margin | 0.4 % | (5)% | (1)% | (6)% | | Non-GAAP operating expenses | $83,785 | $88,274 | $177,292 | $173,453 | - TPV increased by **33% for Q2 2023** and **34% for H1 2023**, indicating strong market adoption and customer business growth[125](index=125&type=chunk) - Adjusted EBITDA turned **positive in Q2 2023 ($824 thousand)** from a loss in Q2 2022 ($(10,225) thousand), reflecting improved operating performance[125](index=125&type=chunk) [Components of Results of Operations](index=31&type=section&id=Components%20of%20Results%20of%20Operations) This section breaks down Marqeta's revenue into platform services and other services, and details the components of costs of revenue (Card Network fees, Issuing Bank fees, card fulfillment) and operating expenses (compensation, technology, professional services, etc.). It also explains other income/expense and income tax expense - Net Revenue: Comprises platform services revenue (Interchange Fees, processing and other fees) and other services revenue (primarily card fulfillment) - Costs of Revenue: Includes Card Network fees (net of monetary incentives), Issuing Bank fees, and card fulfillment costs - Operating Expenses: Consist of Compensation and benefits (salaries, share-based compensation), Technology (hosting, software licenses), Professional services (consulting, legal), Occupancy, Depreciation and amortization, Marketing and advertising, and Other operating expenses - Other income (expense), net, primarily includes interest income from short-term investments, gains/losses from foreign currency, and equity method investment impacts[142](index=142&type=chunk) - Income tax expense includes U.S. federal/state and international taxes, with a full valuation allowance against U.S. net deferred tax assets[143](index=143&type=chunk) [Results of Operations](index=33&type=section&id=Results%20of%20Operations) This section presents a consolidated table of Marqeta's results of operations for the three and six months ended June 30, 2023 and 2022, showing net revenue, gross profit, operating expenses, and net loss Consolidated Results of Operations (in thousands) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net revenue | $231,115 | $186,678 | $448,456 | $352,780 | | Gross profit | $84,609 | $78,049 | $173,771 | $152,775 | | Total operating expenses | $154,030 | $124,766 | $330,624 | $248,764 | | Loss from operations | $(69,421) | $(46,717) | $(156,853) | $(95,989) | | Net loss | $(58,797) | $(44,688) | $(127,598) | $(105,286) | [Comparison of the Three Months Ended June 30, 2023 and 2022](index=34&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20June%2030%2C%202023%20and%202022) This section provides a detailed year-over-year comparison of Marqeta's financial performance for the second quarter, highlighting changes in net revenue, costs of revenue, gross margin, operating expenses, and other income/expense, along with customer concentration [Net Revenue](index=34&type=section&id=Net%20Revenue_Q2) Net revenue increased by 24% in Q2 2023, driven by a 33% increase in Total Processing Volume (TPV), particularly from the largest customer, Block, and growth across financial services and PxM customers. This was partially offset by unfavorable changes in card program mix Net Revenue and TPV (Q2 YoY, in thousands, TPV in millions) | Metric | Q2 2023 | Q2 2022 | $ Change | % Change | | :------------------------ | :------ | :------ | :------- | :------- | | Total net revenue | $231,115 | $186,678 | $44,437 | 24 % | | Total Processing Volume (TPV) | $53,615 | $40,457 | $13,158 | 33 % | - Net revenue increase of **$51.5 million** attributable to largest customer, Block - TPV growth driven by financial services and PxM customers; top five customers grew **34%**, other customers grew **25%** [Costs of Revenue and Gross Margin](index=34&type=section&id=Costs%20of%20Revenue%20and%20Gross%20Margin_Q2) Costs of revenue increased by 35% in Q2 2023, primarily due to higher Card Network fees from increased TPV and transaction volume, and unfavorable card program mix. Gross profit increased by 8%, but gross margin decreased by 5 percentage points Costs of Revenue and Gross Margin (Q2 YoY, in thousands) | Metric | Q2 2023 | Q2 2022 | $ Change | % Change | | :------------------------ | :------ | :------ | :------- | :------- | | Total costs of revenue | $146,506 | $108,629 | $37,877 | 35 % | | Gross profit | $84,609 | $78,049 | $6,560 | 8 % | | Gross margin | 37 % | 42 % | | -5 pp | - Card Network fees increased by **$38.6 million (40%)** due to **33% TPV increase**, **42% transaction increase**, and unfavorable program mix - Issuing Bank fees remained relatively flat due to TPV increase offset by lower net fees from volume tiers [Operating Expenses](index=35&type=section&id=Operating%20Expenses_Q2) Total operating expenses increased in Q2 2023, primarily driven by a 30% increase in compensation and benefits due to higher salaries, post-combination compensation, and restructuring costs. Depreciation and amortization also saw a significant increase due to the Power Finance acquisition Operating Expenses (Q2 YoY, in thousands) | Expense Category | Q2 2023 | Q2 2022 | $ Change | % Change | | :-------------------------------- | :------ | :------ | :------- | :------- | | Total compensation and benefits | $126,788 | $97,868 | $28,920 | 30 % | | Salaries, bonus, benefits and payroll taxes | $82,623 | $62,720 | $19,903 | 32 % | | Share-based compensation | $44,165 | $35,148 | $9,017 | 26 % | | Technology | $13,154 | $13,154 | — | — % | | Professional services | $4,873 | $5,794 | $(921) | (16)% | | Depreciation and amortization | $2,494 | $921 | $1,573 | 171 % | | Marketing and advertising | $561 | $886 | $(325) | (37)% | | Total operating expenses | $154,030 | $124,766 | $29,264 | 23 % | - Salaries, bonus, benefits, and payroll taxes increased due to higher average headcount, **$9.8 million in post-combination compensation** from Power Finance, and **$11.3 million in restructuring costs** - Share-based compensation increased mainly due to more RSU awards - Depreciation and amortization increased significantly due to amortization of acquired developed technology from Power Finance acquisition [Other Income (Expense), net](index=36&type=section&id=Other%20Income%20(Expense)%2C%20net_Q2) Other income (expense), net, increased significantly by 497% in Q2 2023, primarily driven by higher interest income earned on the company's short-term investments and cash deposits Other Income (Expense), net (Q2 YoY, in thousands) | Metric | Q2 2023 | Q2 2022 | $ Change | % Change | | :------------------------ | :------ | :------ | :------- | :------- | | Other income (expense), net | $10,762 | $1,802 | $8,960 | 497 % | - Increase primarily due to **higher interest income** from short-term investments and cash deposits[158](index=158&type=chunk) [Customer Concentration](index=36&type=section&id=Customer%20Concentration_Q2) Block, Inc. continued to be Marqeta's largest customer, accounting for 78% of net revenue in Q2 2023, an increase from 69% in Q2 2022 - Block, Inc. accounted for **78% of net revenue in Q2 2023**, up from 69% in Q2 2022[159](index=159&type=chunk) [Comparison of the Six Months Ended June 30, 2023 and 2022](index=37&type=section&id=Comparison%20of%20the%20Six%20Months%20Ended%20June%2030%2C%202023%20and%202022) This section provides a detailed year-over-year comparison of Marqeta's financial performance for the first six months, covering net revenue, costs of revenue, gross margin, operating expenses, and other income/expense, along with customer concentration [Net Revenue](index=37&type=section&id=Net%20Revenue_H1) Total net revenue increased by 27% in H1 2023, primarily driven by a 34% increase in Total Processing Volume (TPV), with Block contributing significantly to this growth. Other services revenue also saw an increase Net Revenue and TPV (H1 YoY, in thousands, TPV in millions) | Metric | H1 2023 | H1 2022 | $ Change | % Change | | :------------------------ | :------ | :------ | :------- | :------- | | Total net revenue | $448,456 | $352,780 | $95,676 | 27 % | | Total Processing Volume (TPV) | $103,635 | $77,083 | $26,552 | 34 % | - Net revenue increase of **$105.9 million** generated by Block - Other services revenue increased by **$1.2 million (12%)** due to higher card fulfillment revenue - TPV growth driven by financial services and PxM customers; top five customers grew **37%**, other customers grew **21%** [Costs of Revenue and Gross Margin](index=37&type=section&id=Costs%20of%20Revenue%20and%20Gross%20Margin_H1) Costs of revenue increased by 37% in H1 2023, mainly due to higher Card Network fees from increased TPV and transaction volume, and unfavorable card program mix. Gross profit increased by 14%, while gross margin remained relatively flat Costs of Revenue and Gross Margin (H1 YoY, in thousands) | Metric | H1 2023 | H1 2022 | $ Change | % Change | | :------------------------ | :------ | :------ | :------- | :------- | | Total costs of revenue | $274,685 | $200,005 | $74,680 | 37 % | | Gross profit | $173,771 | $152,775 | $20,996 | 14 % | | Gross margin | 39 % | 43 % | | -4 pp | - Card Network fees increased by **$75.6 million (43%)** due to **34% TPV increase**, **43% transaction increase**, and unfavorable program mix - Issuing Bank fees remained relatively flat due to TPV increase offset by lower net fees from volume tiers [Operating Expenses](index=38&type=section&id=Operating%20Expenses_H1) Total operating expenses increased in H1 2023, primarily due to a 39% increase in compensation and benefits, driven by higher salaries, post-combination compensation from the Power Finance acquisition, and restructuring costs. Technology expenses also increased due to hosting and software licensing costs Operating Expenses (H1 YoY, in thousands) | Expense Category | H1 2023 | H1 2022 | $ Change | % Change | | :-------------------------------- | :------ | :------ | :------- | :------- | | Total compensation and benefits | $274,547 | $198,216 | $76,331 | 39 % | | Salaries, bonus, benefits and payroll taxes | $184,383 | $126,063 | $58,320 | 46 % | | Share-based compensation | $90,164 | $72,153 | $18,011 | 25 % | | Technology | $27,744 | $24,538 | $3,206 | 13 % | | Professional services | $10,310 | $10,564 | $(254) | (2)% | | Depreciation and amortization | $4,474 | $1,900 | $2,574 | 135 % | | Marketing and advertising | $1,002 | $1,445 | $(443) | (31)% | | Total operating expenses | $330,624 | $248,764 | $81,860 | 33 % | - Salaries, bonus, benefits, and payroll taxes increased due to higher average headcount, **$42.6 million in post-combination compensation** from Power Finance, and **$11.3 million in restructuring costs** - Share-based compensation increased mainly due to more RSU awards - Technology expenses increased due to **$0.9 million in third-party hosting costs** and **$2.3 million in software licensing costs** - Depreciation and amortization increased significantly due to amortization of acquired developed technology from Power Finance acquisition [Other Income (Expense), net](index=39&type=section&id=Other%20Income%20(Expense)%2C%20net_H1) Other income (expense), net, increased substantially by 327% in H1 2023, primarily due to a significant increase in interest income from short-term investments and the absence of an impairment charge on an equity method investee option that occurred in the prior year Other Income (Expense), net (H1 YoY, in thousands) | Metric | H1 2023 | H1 2022 | $ Change | % Change | | :------------------------ | :------ | :------ | :------- | :------- | | Other income (expense), net | $22,434 | $(9,875) | $32,309 | (327)% | - Increase primarily due to a **$19.9 million increase in interest income** and the absence of a prior-year impairment of an option to purchase equity interests in an investee[174](index=174&type=chunk) [Customer Concentration](index=39&type=section&id=Customer%20Concentration_H1) Block, Inc. remained Marqeta's largest customer, contributing 77% of net revenue in H1 2023, an increase from 68% in H1 2022 - Block, Inc. accounted for **77% of net revenue in H1 2023**, up from 68% in H1 2022[175](index=175&type=chunk) [Use of Non-GAAP Financial Measures](index=40&type=section&id=Use%20of%20Non-GAAP%20Financial%20Measures) This section explains the company's use of non-GAAP financial measures, such as Adjusted EBITDA and Non-GAAP operating expenses, to evaluate operating performance. It also highlights the limitations of these measures and provides a reconciliation to their most directly comparable GAAP measures - Non-GAAP measures (Adjusted EBITDA, Non-GAAP operating expenses) are used to evaluate core operating results and efficiencies, and for annual employee bonus plans - Limitations include potential differences in calculation by other companies, exclusion of depreciation/amortization (which may require future asset replacement), and not reflecting income taxes - Investors are encouraged to review GAAP measures and the provided reconciliation Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(58,797) | $(44,688) | $(127,598) | $(105,286) | | Depreciation and amortization expense | $2,494 | $921 | $4,474 | $1,900 | | Share-based compensation expense | $47,056 | $35,148 | $93,055 | $72,153 | | Acquisition-related expenses | $11,684 | — | $46,152 | — | | Restructuring | $8,373 | — | $8,373 | — | | Other expense (income), net | $(10,762) | $(1,802) | $(22,434) | $9,875 | | Income tax expense (benefit) | $138 | $(227) | $(6,821) | $(578) | | Adjusted EBITDA | $824 | $(10,225) | $(3,521) | $(20,678) | [Liquidity and Capital Resources](index=41&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses Marqeta's liquidity, primarily from cash, cash equivalents, and short-term investments, totaling $1.4 billion as of June 30, 2023. It addresses the company's history of operating losses, its ability to fund future operations, and details recent share repurchase programs and payments related to the Power Finance acquisition and restructuring - Principal liquidity sources: **$1.4 billion in cash, cash equivalents, and short-term investments** as of June 30, 2023 - Expects existing liquidity to be sufficient for working capital and capital expenditure needs for more than the next 12 months - Completed the **$100 million 2022 Share Repurchase Program** in Q1 2023 - Authorized a new **$200 million 2023 Share Repurchase Program** on May 8, 2023, with **$151.7 million remaining** as of June 30, 2023 - Paid **$131.9 million for the Power Finance acquisition** and expects to pay an additional **$53.1 million for contingent consideration** (paid in July 2023) - Will pay **$85.6 million in post-combination cash compensation** to acquired employees over two years - Will pay **$14.2 million in restructuring-related severance and benefits** - As of June 30, 2023, **$9.4 million in restricted cash** is held for Issuing Bank collateral and office lease security[189](index=189&type=chunk) [Cash Flows](index=42&type=section&id=Cash%20Flows) This section summarizes Marqeta's cash flow activities for the six months ended June 30, 2023 and 2022, detailing the net cash used in operating, investing, and financing activities, which resulted in a significant net decrease in cash, cash equivalents, and restricted cash in 2023 Summary of Cash Flows (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(36,520) | $(23,943) | | Net cash used in investing activities | $(122,525) | $(967) | | Net cash used in financing activities | $(73,069) | $(2,398) | | Net decrease in cash, cash equivalents, and restricted cash | $(232,114) | $(27,308) | [Operating Activities](index=42&type=section&id=Operating%20Activities) Net cash used in operating activities increased to $36.5 million in H1 2023, primarily due to the timing of payments for services and operating expenses, partially offset by increased net revenue - Net cash used in operating activities was **$(36.5) million in H1 2023**, compared to $(23.9) million in H1 2022[190](index=190&type=chunk)[192](index=192&type=chunk) - Primary uses of cash in operating activities are for Card Network and Issuing Bank fees, and employee-related compensation[191](index=191&type=chunk) [Investing Activities](index=43&type=section&id=Investing%20Activities) Net cash used in investing activities significantly increased to $122.5 million in H1 2023, primarily driven by the Power Finance acquisition and increased purchases of short-term investments - Net cash used in investing activities was **$(122.5) million in H1 2023**, compared to $(1.0) million in H1 2022[190](index=190&type=chunk)[194](index=194&type=chunk) - The increase was primarily due to the **Power Finance acquisition** and increased purchases of short-term investments, partially offset by maturities of short-term investments[194](index=194&type=chunk) [Financing Activities](index=43&type=section&id=Financing%20Activities) Net cash used in financing activities increased to $73.1 million in H1 2023, mainly due to payments for share repurchases under the company's programs - Net cash used in financing activities was **$(73.1) million in H1 2023**, compared to $(2.4) million in H1 2022[190](index=190&type=chunk)[196](index=196&type=chunk) - The increase was primarily due to **payments to repurchase shares** under the share repurchase programs[196](index=196&type=chunk) [Obligations and Other Commitments](index=43&type=section&id=Obligations%20and%20Other%20Commitments) This section states that there were no material changes to obligations and commitments from the prior annual report, but highlights non-cancellable purchase commitments totaling $213.0 million as of June 30, 2023, primarily for cloud-computing services - No material changes in obligations and other commitments from the Annual Report on Form 10-K for fiscal year ended December 31, 2022[198](index=198&type=chunk) - As of June 30, 2023, non-cancellable purchase commitments totaled **$213.0 million** over the next 5 years, including **$197.7 million for a cloud-computing service agreement**[199](index=199&type=chunk) [Critical Accounting Policies and Estimates](index=43&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section discusses Marqeta's critical accounting policies and estimates that require significant management judgment, specifically focusing on revenue recognition and business combinations, and how these estimates can impact reported financial results [Revenue Recognition](index=43&type=section&id=Revenue%20Recognition) Marqeta generates revenue from platform services (Interchange Fees, transaction fees) and other services (card fulfillment). Revenue recognition involves allocating transaction prices to performance obligations, estimating variable consideration, and determining whether the company acts as a principal or agent in providing services - Revenue from platform services (access to payment processing platform) and other services (card fulfillment) - Transaction price allocated based on relative stand-alone selling price, estimated using historical pricing and costs - Platform services revenue recognized over time; variable consideration estimated using the expected value method - Company acts as principal for most services, recording fees to Issuing Banks and Card Networks as costs of revenue [Business Combinations](index=44&type=section&id=Business%20Combinations) Accounting for business combinations involves allocating the purchase price to acquired assets and assumed liabilities at fair value, with any excess recorded as goodwill. This process requires significant management estimates, which are inherently uncertain and subject to refinement during the measurement period - Purchase price in business combinations is allocated to acquired tangible and intangible assets and assumed liabilities at fair value, with the excess recorded as goodwill[209](index=209&type=chunk) - Significant estimates are required for fair value determination, including future cash flows from acquired technology, useful lives, discount rates, and fair value of assumed equity awards - Estimates are inherently uncertain and subject to refinement for up to one year from the acquisition date (measurement period) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=45&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses Marqeta's exposure to market risks, specifically interest rate risk and foreign currency exchange risk, and assesses their potential impact on the company's financial results [Interest Rate Risk](index=45&type=section&id=Interest%20Rate%20Risk) Marqeta's cash, cash equivalents, and short-term investments totaled $1.4 billion as of June 30, 2023. Due to the short-term maturities of most of these instruments, their fair value would not be significantly affected by changes in interest rates. A hypothetical 100 basis point change in interest rates would not materially impact financial results - Cash, cash equivalents, and short-term investments totaled **$1.4 billion** as of June 30, 2023[211](index=211&type=chunk) - The fair value of these instruments would not be significantly affected by interest rate changes due to their short-term maturities[211](index=211&type=chunk) - A hypothetical **100 basis point increase or decrease** in interest rates would not have a material effect on financial results or condition[211](index=211&type=chunk) [Foreign Currency Exchange Risk](index=45&type=section&id=Foreign%20Currency%20Exchange%20Risk) Most of Marqeta's sales and operating expenses are denominated in U.S. dollars, limiting its current exposure to foreign currency risk. A hypothetical 10% change in foreign currency exchange rates would not have a material impact on the condensed consolidated financial statements as of June 30, 2023 - Most sales and operating expenses are denominated in U.S. dollars, resulting in **no significant foreign currency risk** currently[212](index=212&type=chunk) - A hypothetical **10% change in foreign currency exchange rates** would not have a material impact on the financial statements as of June 30, 2023[212](index=212&type=chunk) [Item 4. Controls and Procedures](index=46&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details management's evaluation of disclosure controls and procedures, concluding they were not effective as of June 30, 2023, due to a material weakness related to the accounting for the Power Finance acquisition. Despite this, the financial statements are deemed to fairly present the company's financial position. Remediation efforts are underway [Evaluation of Disclosure Controls and Procedures](index=46&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that disclosure controls and procedures were not effective at a reasonable assurance level as of June 30, 2023, due to a material weakness. However, additional analyses ensured the Condensed Consolidated Financial Statements fairly present the company's financial position - Disclosure controls and procedures were **not effective** at a reasonable assurance level as of June 30, 2023, due to a material weakness[214](index=214&type=chunk) - Despite the material weakness, management performed additional procedures and concluded that the Condensed Consolidated Financial Statements **fairly present the financial position**, results of operations, and cash flows[214](index=214&type=chunk) [Material Weakness](index=46&type=section&id=Material%20Weakness) A material weakness was identified related to the accounting for the Power Finance acquisition, specifically a lack of sufficient precision in purchase price allocation reviews and timely oversight of third-party specialists. This led to an error that was corrected, and remediation efforts are ongoing to enhance business combination controls - A material weakness was identified in internal control over financial reporting related to the **accounting for the Power Finance acquisition**[215](index=215&type=chunk) - Deficiencies included lack of sufficient precision in reviews for purchase price allocation and lack of timely oversight over third-party specialists - The error was corrected in the Q1 2023 financial statements and did not result in material misstatements in previously issued or current financial statements - Remediation efforts include designing and enhancing business combination controls and management review activities for acquisition accounting [Changes in Internal Control over Financial Reporting](index=47&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) No material changes in internal control over financial reporting occurred during Q2 2023, other than the commencement of remediation efforts for the identified business combination control weakness - No material changes in internal control over financial reporting during Q2 2023, except for the start of remediation efforts for the business combination control weakness[219](index=219&type=chunk) [Limitations on Effectiveness of Controls and Procedures](index=47&type=section&id=Limitations%20on%20Effectiveness%20of%20Controls%20and%20Procedures) This section acknowledges the inherent limitations of any internal control system, emphasizing that controls can only provide reasonable assurance and are subject to judgment, changes in conditions, and potential deterioration in compliance - Internal control over financial reporting provides only **reasonable, not absolute, assurance** due to inherent limitations[220](index=220&type=chunk) - Effectiveness is subject to judgment, changes in conditions, and potential deterioration in compliance[220](index=220&type=chunk) Part II - Other Information [Item 1. Legal Proceedings](index=48&type=section&id=Item%201.%20Legal%20Proceedings) Marqeta is not currently a party to any material pending legal proceedings, though it may be subject to various claims in the ordinary course of business - The company is **not currently a party to any material pending legal proceedings**[223](index=223&type=chunk) [Item 1A. Risk Factors](index=48&type=section&id=Item%201A.%20Risk%20Factors) This section outlines the significant risks and uncertainties that could adversely affect Marqeta's business, results of operations, financial condition, and stock price. It covers risks related to business and industry, regulation, intellectual property, and ownership of Class A common stock [Risk Factors Summary](index=48&type=section&id=Risk%20Factors%20Summary) This summary provides a concise overview of key investment risks, including growth management, customer concentration, profitability, operational fluctuations, regulatory compliance, and stock volatility - Rapid net revenue growth may not be indicative of future growth - Failure to manage growth effectively could adversely affect business - Future revenue growth depends on retaining existing customers, increasing TPV, and attracting new customers - Operates in competitive and evolving markets - Significant net revenue from a small number of customers, especially Block, poses concentration risk - History of net losses and anticipated increasing operating expenses; may not achieve or sustain profitability - Results of operations may fluctuate significantly due to various factors - Reliance on relationships with Issuing Banks and Card Networks; changes to rules or fees could adversely affect business - Litigation, regulatory actions, and compliance issues could lead to fines and reputational harm - Class A common stock trading price is volatile - Material weakness in internal control over financial reporting needs remediation - Share repurchase program may not enhance long-term stockholder value - Dual-class stock structure concentrates voting control with Class B stockholders [Risks Relating to Our Business and Industry](index=49&type=section&id=Risks%20Relating%20to%20Our%20Business%20and%20Industry) This section details risks inherent to Marqeta's business and industry, covering growth sustainability, customer retention, competition, concentration, profitability, operational stability, and reliance on partners - Rapid net revenue and TPV growth rates may not be sustainable (Net revenue: **24% Q2 2023, 27% H1 2023**; TPV: **33% Q2 2023, 34% H1 2023**) - Failure to effectively manage rapid growth, including international expansion and maintaining corporate culture, could adversely affect operations - Dependence on retaining existing customers, increasing TPV, and attracting new customers; customer contracts generally lack minimum volume commitments and can be terminated - Operates in a highly competitive and dynamic industry with established and emerging competitors - Significant revenue concentration from Block (**78% Q2 2023, 77% H1 2023**); loss or reduced business from Block or other major customers would be adverse - Difficulty in forecasting net revenue due to recent growth, industry changes, and transaction mix (signature vs. PIN debit, consumer vs. commercial) - History of net losses (**$58.8M Q2 2023, $127.6M H1 2023**) and anticipated increasing operating expenses; profitability not assured - Significant annual/quarterly fluctuations in results due to demand, transaction mix, contract terms, pricing, operating expenses, and macroeconomic conditions - Reliance on Issuing Banks (e.g., Sutton Bank for **77% of TPV in Q2 2023**) and Card Networks; changes to rules or relationships could be adverse - System failures, interruptions, or errors could diminish demand, affect operations, and lead to liabilities and service credits - Exposure to liability and reputational damage from improper or unauthorized use of sensitive data, cyberattacks, and fraud - Dependence on a strong and trusted brand; negative publicity or failure to maintain quality customer support could harm business - Failure to adapt to rapid technological changes and develop platform enhancements could impair competitiveness - International expansion subjects the company to new challenges and risks, including regulatory frameworks, competitive conditions, and foreign currency exchange rates - Risk of losses from settlement of payment transactions and fraudulent use of payment cards - Dependence on executive officers and key employees; loss or high attrition rates could adversely affect business - Restructuring plan may not adequately lower operating expenses, could affect recruitment/retention, and divert attention from operations - May require additional capital, which might not be available on acceptable terms, leading to dilution or restrictive covenants - Acquisitions or strategic investments may fail to achieve objectives, divert management, or result in integration difficulties and liabilities [Risks Relating to Regulation](index=67&type=section&id=Risks%20Relating%20to%20Regulation) This section addresses the extensive regulatory landscape impacting Marqeta, directly and indirectly through its partners. Risks include changing laws (e.g., privacy, AML, sanctions), uncertain interpretations, potential for increased oversight, and the impact of Interchange Fee regulations. Non-compliance could lead to fines, litigation, reputational harm, and operational restrictions. Changes in tax laws and potential tax liabilities are also highlighted - Subject to extensive and evolving laws, regulations, and industry standards in the U.S. and internationally, including privacy, data protection, information security, anti-bribery, AML, and payment services - Indirectly subject to regulations through Issuing Banks and Card Networks, which operate in highly regulated environments - Interchange Fees, a significant portion of net revenue, are subject to intense legal and regulatory scrutiny and competitive pressures (e.g., Durbin Amendment). Changes could adversely affect business - Stringent and changing laws related to privacy, data protection (e.g., CCPA, GDPR), and information security could affect service provision, result in claims or fines, and increase operational costs - Obligation to comply with anti-corruption, anti-bribery, and anti-money laundering laws; non-compliance can lead to criminal penalties or significant fines - Subject to governmental export controls and economic sanctions regulations, which could impair international market competition and lead to liability - Failure to maintain effective disclosure controls and internal control over financial reporting (including remediating existing material weakness) could impair timely and accurate financial reporting and adversely affect stock price - Changes in financial accounting standards or practices may cause unexpected financial reporting fluctuations - Could be required to collect additional sales, value-added, or similar taxes, increasing costs for customers and affecting results - Changes in tax laws (e.g., Tax Cuts and Jobs Act, Inflation Reduction Act) or regulations could materially increase tax liabilities and negatively impact financial condition - Exposure to greater-than-anticipated tax liabilities due to estimation, judgment, and audit risks - Ability to use net operating losses (NOLs) to offset future taxable income may be subject to limitations (e.g., Section 382 of the Code) [Risks Relating to Intellectual Property](index=75&type=section&id=Risks%20Relating%20to%20Intellectual%20Property) This section outlines risks related to Marqeta's intellectual property, including the potential failure to adequately protect proprietary rights, challenges in enforcing patents and trademarks, and the risks associated with using open-source software. It also addresses the possibility of being accused of infringing third-party intellectual property rights, which could lead to costly litigation and reputational harm - Failure to adequ

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission File Number: 001-40465 Marqeta, Inc. (Exact name of registrant as specified in its charter) Delaware 27-4306690 (State or ...