Marqeta (NasdaqGS:MQ) Q4 2025 Earnings call February 24, 2026 04:30 PM ET Company ParticipantsConnor Allen - VPCraig Maurer - Managing DirectorDarrin Peller - Managing DirectorMaria Graizer - Director of Investor RelationsMichael Infante - VP of Equity ResearchMike Milotich - CEOPatti Kangwankij - CFOTimothy Chiodo - Managing DirectorConference Call ParticipantsAndrew Schmidt - Fintech, Software, and Payments Equity Research AnalystSanjay Sakhrani - Managing Director and Senior AnalystOperatorLadies and gen ...

PayPal Holdings, Inc. (PYPL) shares gained 7.55 percent to $44.79, up $3.14 on Monday, as a new industry report highlighted strong growth projections for the global buy now, pay later or BNPL services market, a key segment for the payments giant. The stock is currently trading at $44.24, compared with a previous close of $41.65. It opened at $41.06 and has traded between $40.53 and $45.68 during the session on the Nasdaq. Trading volume has climbed to 43.97 million shares, more than double its average volu ...

Debt Overview - The average person in their 20s owes $19,962, with nearly two-thirds carrying debt [2][10] - About 42% of adults aged 18-29 who attended college have student loan debt, while Gen Z holds an average of $3,493 in credit card balances [2][4] Student Loans - Student loans are the primary debt for college attendees in their 20s, with federal borrowers owing an average of $39,075, and a median of $20,000 to $25,000 [4][5] - For those under 25, the average student loan balance is approximately $14,162, while individuals in their late 20s owe around $33,150 [4] Credit Card Debt - Gen Z has an average credit card balance of $3,493, which nearly doubles to $6,961 for millennials in their early 30s [6] - 72% of Gen Z with credit history carry a balance month to month, and credit cards charge around 22% interest, leading to significant costs if only minimum payments are made [6][7] Auto Loans and BNPL - Approximately 41% of Gen Z has an auto loan with an average balance of $20,893, which can lead to owing more than the car's worth due to depreciation [8] - Around 44% of Gen Z utilized Buy Now, Pay Later (BNPL) services in 2024, averaging 6.3 loans and spending $848 across lenders [9]

Core Insights - Buy Now, Pay Later (BNPL) services like Affirm and Klarna are increasingly popular among consumers, particularly younger demographics, allowing them to make purchases in smaller, often interest-free payments [3][10] - Analysts are divided on the investment potential of Affirm versus Klarna, with some viewing Affirm as a stronger buy due to its lower fees and established profitability [14][18] Industry Overview - The BNPL market is growing as consumers seek flexible payment options, with services allowing payments to be split into smaller amounts without interest, appealing to a wide range of consumers [6][9] - The Federal Reserve indicates that credit card debt in the U.S. has reached $1.28 trillion, highlighting a shift towards alternative payment methods like BNPL [5] Consumer Behavior - Approximately 19% of individuals aged 18 to 29 and 30 to 44 have utilized BNPL services, with late payment rates being notably higher among younger users [10][11] - The financial stability of consumers using BNPL is questioned, as a significant percentage of users report making late payments, indicating potential budgeting risks [11][13] Company Performance - Affirm's CEO reported that a majority of their users are financially stable, with 72% of stable users and 89% of fragile users making multiple BNPL purchases in a year [13] - Affirm is currently priced at $54.26, down 27% year-to-date, while Klarna is trading at $18.34, having experienced a 36% decline year-to-date [17][20] Investment Analysis - Analysts have mixed views on Affirm and Klarna, with some recommending Affirm as a buy due to its profitability and lower fees, while others express caution regarding Klarna's lack of profitability and potential risks [14][19] - Merc Research has a contrarian view on Affirm, suggesting a strong sell position due to anticipated challenges in the UK market and competition in the checkout space [16] Market Dynamics - Both Affirm and Klarna have established relationships with retailers, with Klarna offering cash back for certain merchants, while Affirm has discontinued its cash back rewards program [21]

Group 1 - Block is expanding the reach of its internal Cash App credit scores, aiming to attract lenders interested in data on non-traditional payments and installment loans [8] - The company has developed an internal scoring system that incorporates data from Cash App Borrow and Afterpay to assess borrower creditworthiness, with the goal of improving access to the financial system [5][6] - Block is in discussions with several potential lending partners and plans to officially start collaborations within the year, while also inviting partners to join a waitlist for access to Cash App Score [8][4] Group 2 - The integration of non-traditional payment data, such as buy now, pay later transactions, into credit scores is evolving, with credit bureaus beginning to adopt these practices [6] - Affirm Holdings has started reporting BNPL transactions to Experian, and FICO announced plans to track BNPL transactions for credit bureaus [6] - Block's spokesperson indicated that third-party lending partners will be able to incorporate Cash App scores into their underwriting processes, although specific details on requirements were not disclosed [4][7]

Core Insights - The rise of rent now, pay later services indicates the increasing unmanageability of housing costs for many Americans [4][9] - Affirm has launched a pilot program allowing renters to split their payments into two installments, partnering with Esusu for credit score reporting [2][5] - Monthly service fees and potential finance charges can make these services more expensive than traditional payment methods [6][9] Company-Specific Insights - Affirm's new service does not charge interest but involves monthly fees, accessible only through Esusu's Plus and Premium services [3][5] - Other companies like Zip and Livble offer similar services, with Zip advertising an annual interest rate of 31.11% and Livble charging monthly finance charges of $30 to $40 [6][7] - Flex provides a rent-splitting option that may require landlord participation, with a monthly fee of $14.99 and additional charges [7] Industry Trends - The growth of rent now, pay later services reflects broader economic challenges, as turning rent into installment debt can increase household debt and reduce overall consumer spending [4] - Many of these services are reported to be more costly than using credit cards for rent payments, highlighting the financial strain on renters [6][9]

Core Insights - Affirm's fiscal second quarter demonstrates the integration of buy now, pay later (BNPL) into everyday commerce, moving beyond occasional large purchases [1] Financial Performance - Gross merchandise volume (GMV) increased by 36% year over year to $13.8 billion, while revenue rose by 30% to $1.1 billion [3] - Active consumers grew by 23% to 25.8 million, with transactions per active consumer increasing by 20% to 6.4, and active merchants expanding by 42% to approximately 478,000 [3] Business Growth Drivers - Growth was fueled by point-of-sale integrations, wallet partnerships, and the direct-to-consumer business, particularly the Affirm Card, which saw direct-to-consumer GMV rise by 52% to $4.3 billion [4] - The Affirm Card's volume surged by 159% to $2.2 billion, with active cardholders more than doubling to 3.7 million, leading to card attach rates of about 14% [4] Zero-Interest Financing - GMV associated with 0% APR products grew by 60%, with over 60% of new customers opting for a 0% option for their first transaction [5] - Nearly 39% of all purchases during the quarter were interest-free, with around 60,000 merchants offering 0% APR deals, nearly quadrupling from the previous year [5] Consumer Credit Health - Thirty-plus-day delinquencies on monthly installment loans were at 2.7%, showing a year-over-year increase but a sequential decrease, while recent cohorts tracked toward approximately 3.5% net charge-offs [9] - Pay-in-4 losses remained below 1% of GMV, and the allowance for credit losses was consistent at 5.4% of loans held for investment [9] Technological Advancements - Affirm's AdaptAI and BoostAI systems are increasingly shaping financing offers and merchant performance, with BoostAI now operational across numerous enterprise merchants and small businesses [11] - BoostAI allows merchants to allocate additional funds for Affirm-specific promotions, optimizing conversion rates through automated A/B testing [12] Strategic Initiatives - Affirm expanded partnerships with major retailers and embedded pay-over-time options into QuickBooks Payments, while also testing rent-related use cases [12] - The company applied for an industrial bank charter to gain regulatory clarity, which is viewed as a long-term investment rather than an immediate growth driver [13] Future Projections - Affirm projected GMV for the current fiscal year to be between $48.3 billion and $48.85 billion, with revenue expected between $4.09 billion and $4.15 billion, indicating a deceleration from recent growth rates [14] - Operating margins are anticipated to improve in the second half of the year, despite a 6% drop in shares during after-hours trading [14] Overall Strategy - The quarter reflects Affirm's deeper penetration into everyday commerce, expanding distribution through the Affirm Card and partnerships, while enhancing automated decision-making processes [15]

Core Insights - Klarna's "Pay in 4" option allows users to split purchases into four equal, interest-free payments, appealing to consumers who prefer to manage cash flow while keeping funds in high-yield savings accounts [1][2] - The convenience of Buy Now, Pay Later (BNPL) services can obscure potential risks, particularly for users who may miss payments despite having the financial means to pay [2][3] Group 1: User Behavior and Motivations - A survey indicated that 34% of BNPL users chose services like Klarna primarily for the ability to pay over time without interest, even if they could afford the purchase outright [2] - Convenience and ease of approval are significant factors driving the adoption of BNPL services [2] Group 2: Payment Risks and Structural Issues - BNPL services are designed to be frictionless, which can lead to missed payments; 42% of BNPL users reported at least one late payment in the past year due to various reasons [3] - Unlike traditional credit card bills, BNPL payments are distributed across multiple retailers, increasing the risk of delinquency from issues like failed debits or expired cards [4] - Klarna warns that missed payments may lead to late fees and collections, and these services may report delinquent accounts to credit bureaus [4][5]

Core Insights - Fiserv has partnered with Affirm to integrate buy now, pay later (BNPL) capabilities into its debit card programs, responding to consumer demand for flexible payment options [2][4] - The collaboration aims to enhance customer engagement and transaction growth by allowing issuers to embed BNPL into existing debit products [5] Group 1: Partnership Details - The partnership is designed to provide community and regional banks and credit unions with the ability to meet evolving consumer expectations for payment flexibility [3] - Affirm and Fiserv will handle all technical aspects of the integration, combining Affirm's real-time underwriting and loan origination capabilities with Fiserv's digital solutions [4] Group 2: Market Context - The announcement follows Affirm's plans to establish a bank subsidiary, Affirm Bank, which aims to diversify its platform and offer more financial products [6] - Consumers who are likely to use BNPL have average credit card balances that are $1,128 higher than those who are unlikely to use it, indicating a significant financial behavior trend [7] Group 3: Consumer Behavior Insights - Habitual BNPL users hold average credit card balances of $5,181, which is approximately 60% higher than non-users, reflecting a shift in how households manage short-term credit [7][8] - The trend of using BNPL is seen as a strategy for managing timing mismatches between income and expenses rather than reckless spending [8]

Core Viewpoint - A class action lawsuit has been filed against Klarna Group plc, alleging that the company materially understated risks related to its loss reserves in its IPO registration statement, impacting investors who purchased securities during the specified class period [1][3]. Group 1: Lawsuit Details - The lawsuit is on behalf of investors who acquired Klarna securities from September 7, 2025, to December 22, 2025, including shares from the September 2025 IPO [1][2]. - Investors have until February 20, 2026, to seek appointment as lead plaintiff representatives of the class [2]. Group 2: Company Performance - Klarna's share price has declined from the IPO price of $40 per share to approximately $31.31 per share at the time of the lawsuit filing [3]. Group 3: Company Background - Klarna is a leading global fintech company based in Stockholm, Sweden, specializing in Buy Now, Pay Later (BNPL) solutions [2].