MQ - NASDAQ

Ladies and gentlemen, welcome to the Marqeta Third Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Maria Greiser, Investor Relations. Please go ahead.

Thanks, operator. Good afternoon, everyone, and welcome to Marqeta's Third Quarter 2025 Earnings Call. Hosting today's call is Mike Milotich, Marqeta's CEO and CFO. Before we begin, I would like to remind everyone that today's call may contain forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including those set forth in our filings with the SEC, which are available on our Investor Relations website, including our annual report on Form 10-K for the period ended December 31, 2024, and our subsequent periodic filings with the SEC. Actual results may differ materially from any forward-looking statements we make today. These forward-looking statements speak only as of the time of this call, and the company does not assume any obligation or intent to update them, except as required by law. In addition, today's call includes non-GAAP financial measures. These measures should be considered as a supplement to and not a substitute for GAAP financial measures. Reconciliations to the most directly comparable GAAP measures can be found in today's earnings press release or earnings release supplemental materials, which are available on our Investor Relations website. With that, I'd like to turn the call over to Mike to begin.

Thank you, Maria, and thank you for joining us for Marqeta's Third Quarter 2025 Earnings Call. To start, I'll briefly highlight our Q3 results, followed by an update on our progress growing the business across the full spectrum of debit and credit products, consumer and commercial offerings in a wide variety of use cases and geographies with both new and existing customers. I'll conclude with details about our Q3 financial results and our expectations for the remainder of the year. Our great third-quarter financial performance continues to demonstrate tremendous growth, resulting in our ability to deliver higher adjusted EBITDA through both efficiency and scale. Total processing volume, or TPV, was $98 billion in the third quarter, a 33% increase compared to the same quarter of 2024 and an acceleration of over 3 points from last quarter. Since this is the second consecutive quarter with accelerating TPV growth despite our increasingly larger base to grow over. To put this performance in perspective, this is our highest TPV growth rate since Q1 2024, despite the base we are growing over this quarter being almost 50% larger than the base we grew over in Q1 2024. Q3 net revenue of $163 million grew 28% year-over-year due to robust growth across a broad spectrum of use cases we enable. Gross profit was $115 million, a 27% increase year-over-year, largely in line with the net revenue growth. Adjusted EBITDA was $30 million in the quarter, a 19% margin, fueled by both exceptional gross profit growth and continued expense discipline while we make strategic investments in new capabilities and scale to fuel future business growth. This is another all-time high for adjusted EBITDA dollars as we progress on our path to profitability. This year, we remain focused on expanding and deepening our customer relationships by enabling innovative programs and seamless geographic expansion while also increasing our bank supply. One factor driving our performance is a remarkable growth in our lending use cases, including Buy Now, Pay Later. The growth is a testament to our ability to support customers in many markets, including North America, Europe, and Australia, but also to the innovation at scale that we enable. Once again, we are adding unique value to our customers in support of this use case. While BNPL started with Marqeta enabling virtual cards for seamless payment experiences without costly back-end integrations, the category continues to evolve. We have been at the forefront of enabling the new wave of growth in the space with what we call pay anywhere cards that allow end users to pay anywhere that cards are accepted, with the flexibility to split a purchase over time. We were also the first to support the Visa flexible credential in the U.S., which gave us a significant lead, as it has been rapidly adopted over the past year and now includes Klarna's recent expansion into Europe. The newer solutions enable our customers to deliver a better value proposition to their consumers with more flexibility to expand the availability of credit. Our unique combination of capabilities, geographic reach, and scale has helped broaden the category significantly, with TPV and lending, including Buy Now, Pay Later use cases, growing much faster than the overall company TPV growth. Another area where we have continued to see increased growth and demand is in commercial programs, particularly platforms that enable SMBs to reach bigger markets with money movement and access to working capital. In Q3, we signed a Fortune 500 customer to enable electronic supplier payments for the small- and medium-sized businesses they serve. Our customers' global platform has a comprehensive suite of financial and business management applications, serving millions of users. They were looking for a partner who would allow them to stay at the forefront of the needs of their end users with easier and more modern payment options. They saw Marqeta as a leader and enabler of innovation and expense management use cases and selected Marqeta for both our flexibility and ability to execute at scale. In Q4, this program will be the first to launch with one of our new U.S. bank partners. At the start of the year, we talked about our desire to expand our bank supply with partners who prioritize new capabilities and technology, maintain a strong focus on regulatory compliance, and can support our full range of offerings across debit and credit. In the U.S., Cross River Bank is now live, and we are in the process of technically integrating Coastal Community Bank to support programs starting in 2026. We are excited to grow with both banks going forward. With the addition of TransAPay, enabling us to provide program management in the U.K. and the EU, we are also adding bank partners in Europe. Griffin Bank in the U.K. is now live in support of a new program currently in testing, which will launch broadly in Q1 2026. We also plan to add a new bank partner for the EU in the first half of 2026. In order to seamlessly interface with multiple banks, this year, we built our business integration platform with the flexibility to rapidly onboard additional partners around the world. It serves as the orchestration layer that connects our internal money movement systems with external banking and payment partners through secure APIs and web hooks, ensuring every transaction remains synchronized end-to-end. This approach makes our platform bank-agnostic and reduces the time for bank integration by more than 50%, enabling us to scale new products and geographies without heavy engineering work or custom integrations. Centralizing business logic and routing across banks also reduces operational complexity, improves resiliency, and creates leverage in our cost structure as we expand with more banks and payment partners globally. Europe continues to deliver strong results with momentum across a diverse set of use cases, driving TPV growth to remain over 100% year-over-year. This quarter, we completed the acquisition of TransActPay on July 31. This transaction has driven significant customer interest and increased referrals from the payment ecosystem, including our network partners, as well as increasing our TAM to pursue more enterprise customers looking for a single provider for processing, program management, and EMI license in both the U.K. and the EU. This enables us to deliver a complete offering comparable to what we offer in North America, so customers don't have to navigate the complexity of working with multiple partners. In Q3, we signed one of our top 5 expense management customers that we have supported in North America for many years to expand into Europe. The acquisition of TransactPay was the catalyst, as they can now deliver their offering in Europe at parity with North America through the Marqeta platform without a lot of incremental work. We also continue to gain steady traction as we seek out the right partners for our innovative credit solutions. We are having productive conversations with prospects who are looking to differentiate their offering and work with a single modern provider who can support multiple use cases. This quarter, we were selected to power a credit solution for our company's loyalty programs, which enable small and mid-sized companies. This customer has millions of monthly active users and the underlying data to help companies capitalize on trends through analytics and a credit product to drive incremental loyalty benefits, both in stores and through their app. They chose Marqeta because they were looking for a modern partner who could grow and scale with them, given their significant embedded customer base. This customer plans to utilize several services in addition to processing, including tokenization, disputes, and our real-time decisioning risk product. To wrap up before moving to the details of our financial results, the business continues to have strong momentum as we head into the last quarter of the year, both in terms of our actual performance and the level of engagement from prospects on future opportunities. What continues to become clear for current and prospective customers is that Marqeta has a unique combination of modern capabilities, scale, geographic reach, expertise, and flexibility to enable its innovations without the need to make trade-offs. We provide our customers with a level of agility and control in issuing payment credentials that maximizes their ability to deliver value to their users, whether it's through creating new revenue streams, deepening engagement, or improving access to capital. This will continue to serve us well as we further diversify the business outside of debit and beyond the U.S. to deliver future growth. Now, let me transition to our Q3 financial results. Q3 was a very strong quarter with performance significantly outpacing our expectations. Q3 TPV growth of 33% accelerated by over 3 points from Q2 after increasing by 3 points in Q2 versus Q1. This accelerating volume growth, combined with slightly higher net revenue and gross profit take rates versus Q2, drove the P&L outperformance. Additionally, our adjusted operating expense growth was on the lower end of our expectations, which resulted in adjusted EBITDA of $30 million. For the second quarter in a row, the business outperformance and disciplined investment brought us close to GAAP net income, showcasing how the business can scale and demonstrating the tangible progress we are making on our path to profitability. Q3 TPV was $98 million, an increase of 33% year-over-year. The Q3 TPV growth acceleration versus Q2 was broad-based, including both block and non-Block growth as well as each of our 4 major use cases. Non-Block TPV is now growing 2.5x faster than block TPV, helped by Europe TPV continuing to grow over 100%. Growth within financial services continued to be a little slower than the overall company. Our non-block customers are growing over 3x faster than block within these use cases. Consistent with prior quarters, expense management growth continues to be a little faster than the overall company, driven by our customers continuing to acquire new end users as their modern platforms gain share. On-demand delivery growth accelerated into the double digits in Q3, growing about twice as fast as last quarter, primarily fueled by both the merchant category and geographic expansion of our customers. Lending, including Buy Now, Pay Later TPV growth, accelerated 10 points versus Q2, with a year-over-year growth rate that is about double the rate of the overall company. Six of our top 10 customers within this use case had their growth rate accelerate from Q2 to Q3, with 3 customers growing over 100%, while 2 customers were growing slower than 20%. This remarkable growth is driven by a combination of trends that accelerated from last quarter, with the 2 most significant being increased adoption of Pay Anywhere card solutions, including growth in flexible network credential usage and geographic expansion, and growth on our platform. The TPV growth acceleration in Q3 is another demonstration of our ability to grow at scale, processing over $1 billion in volume on about 2/3 of the days in the quarter. Q3 net revenue growth was $163 million, growing 28% year-over-year. Our Q3 net revenue growth acceleration of 8 points versus Q2 and the outperformance versus expectations was driven by strong TPV growth in all of our major use cases, and our net revenue take rate of 17 basis points was slightly higher than last quarter. The addition of the TransActPay acquisition for 2 months after closing on July 31 contributed 2 points to growth. Block's net revenue concentration of 44% in Q3 decreased by about 2 points from Q2. While both block and non-Block net revenue growth accelerated from last quarter, non-Block growth was over 10 points higher than block growth, driven by the strong TPV and the inclusion of TransAPay. Q3 gross profit was $115 million, growing 27% year-over-year, fueled by strong TPV growth and a gross profit take rate of nearly 12 basis points, slightly higher than last quarter. The addition of TransActPay added 2.5 points to growth. Gross profit growth was 10 points higher than the top of the expected range we shared with you last quarter. So obviously, there were a few positive surprises in the quarter. I would classify the outperformance into 4 categories. By far, the most significant factor driving our outperformance is the underlying business growth. Accelerating TPV growth, combined with a favorable business mix supporting our gross profit take rate, accounted for approximately 6 points of the outperformance. On our earnings call in August, you might remember we spoke about our Q2 TPV growth accelerating 3 points versus Q1, which was a little unexpected. So we wanted to see an elevated growth trajectory endure for longer than a couple of months before adjusting our forecast for the remainder of the year, especially considering the macroeconomic uncertainty. As I just walked through, Q3 TPV further accelerated by more than 3 points versus Q2, driven by a broad cross-section of our customers and use cases. About 2/3 of this underlying business outperformance was driven by lending, including Buy Now, Pay Later and on-demand delivery. The growth in these 2 use cases meaningfully accelerated in Q3 versus Q2 as we continue to support our customers' business expansion. Second, approximately 2.5 points of the outperformance were driven by unusual items that were unexpected. The large majority of this impact was driven by recovering fees from smaller customers who previously terminated their card programs. We have worked diligently to recover contractually obligated fees, and it just so happens that several of the larger efforts were resolved during Q3. Third, approximately 1 point of the outperformance resulted from earning a network rebate from one of our network partners that we did not anticipate. Based on the Q3 results, we expect this will continue to be a benefit going forward. The final component of our outperformance was the strength of the TransactPay business, which contributed approximately 1 point more to our gross profit growth than expected. The TransactPay business is on a better trajectory in 2025 than we had expected, and our visibility was limited until we started to consolidate results following the July 31 closing. As a reminder, we revised our accounting policy for estimating and recognizing card network incentives starting in Q2 of this year. We are now accruing incentives each quarter based on the forecasted annual contract tier we expect to achieve, as opposed to booking the incentives each quarter as they are earned and moving through the progressive tiers. As a result, Q3 gross profit growth had a headwind of 1.4 points due to the difference in methodologies for the year-over-year comparison. Q3 adjusted operating expenses were $84 million, growing 4% year-over-year, which was on the lower end of our expectations. This was a timing shift of marketing initiatives from Q3 to Q4, which lowered Q3 growth by approximately 2 points. The addition of Transact Bay contributed approximately 3 points to our year-over-year growth. Q3 adjusted EBITDA was $30 million, reaching another all-time high in dollars for the second quarter in a row. This resulted in a margin of 19% as we continue to make significant progress on our path to profitability. Adjusted EBITDA margin based on gross profit, which was 26%, is the metric we look at internally to illustrate the profitability potential of our business. The Q3 GAAP net loss was $3.6 million, which included $8 million of interest income and a nonrecurring litigation-related expense of $4.3 million. We ended the quarter with a little over $830 million of cash and short-term investments, driven by strong operating cash flows. With the addition of TransactPay this quarter, one thing to note on our balance sheet is the $235 million of restricted cash and the offsetting liability. TransactPay must comply with the regulatory safeguarding requirements associated with the EMI licenses, so we account for the customer funds they hold differently than our approach in other geographies, such as the U.S., where our program funding arrangements are structured more optimally. Our share repurchase activity remains ongoing as we continue to believe the current valuation does not fairly represent the company's value or the market opportunity ahead of us. In Q3, we repurchased 3.2 million shares at an average price of $6.12. For the year-to-date period ending September 30, 2025, we have repurchased 64.6 million shares at an average price of $4.53, which is a reduction of nearly 13% of the total issued and outstanding shares as of the 2024 year-end. As of September 30, we had $88 million remaining on our buyback authorization. Now, let's transition to our expectations for the fourth quarter of 2025. Based on our Q3 results, we are raising our expectations for Q4 and the full year. We now expect Q4 2025 net revenue and gross profit growth to be at least 5 points higher than what we had shared last quarter, and adjusted EBITDA margin to be 2 points higher. Therefore, we now expect net revenue to grow between 22% and 24% in Q4 and approximately 22% for the full year 2025. Gross profit growth is expected to be between 17% and 19% in Q4 and approximately 23% for the full year 2025. The expected slowdown in gross profit growth from Q3 to Q4 of approximately 9 points is primarily driven by 3 factors: First, Q3 growth benefited by approximately 2.5 points from unusual items, mostly the recovery of contractually obligated fees. Second, the impact of our revised accounting policy for network incentives on the year-over-year comparison will be the most significant in Q4. We expect a drag of about 5.5 points on gross profit growth in Q4, which is approximately 4 points more drag than Q3. Third, as we have discussed all year, we are actively engaged in renewal discussions with 2 large customers. We expect one of those renewals to be in effect in Q4, resulting in a headwind of approximately 2 points. We expect Q4 adjusted operating expenses to grow in the mid-single digits, in line with what we shared last quarter, despite the timing shift of some marketing expenses from Q3 to Q4. Adjusted EBITDA margin is expected to be between 15% and 16% in Q4 and approximately 17% for the full year 2025. This equates to a little over $100 million in adjusted EBITDA in 2025, which is more than 3x higher than last year and nearly double what we anticipated at the start of 2025. In conclusion, our incredible Q3 financial results not only led us to raise our full-year 2025 expectations for net revenue, gross profit, and adjusted EBITDA, but they also reflect the deepening of our customer relationships and expansion of our platform capabilities. The combination of strong gross profit growth, efficiency increases, and scale benefits is rapidly improving our profitability and foreshadowing the future earnings potential of the business. We expect to finish the year strong as we position the business for sustainable long-term success through multiple growth vectors and increasing scale. I will now turn it over to the operator for questions.

[Operator Instructions] And our first question comes from Bryan Keane with Citi.

Mike, congrats on the very solid results. I guess my question is just trying to figure out new business, new ramping of contracts, and what that pipeline looks like. It looks like a lot of the outperformance is just by the existing business. And then my follow-up is just kind of thinking about going forward, does it make it tough to figure out how to guide and what the normalized growth rate of the company should be, given that you have areas like BNPL with such outsized growth? It's just hard to predict.

Yes. Thank you, Bryan, for your question. So I would say, first, when we are looking at the growth, we look at it, I guess, slightly differently than the way you characterized it. We look at new business in terms of new programs and, within those new programs, how many of them are driven by existing customers versus new customers. So you are right that many of the exciting growth areas of the business are coming from our existing customers, but most of that is being driven by new programs that they are launching with us, either new products or expanding into new geographies. And whenever they make those decisions, of course, we would like to have deeper relationships with them. But of course, they have other options. And so we still consider that great new business that drives growth. This year, we've talked a lot about what we call our new cohort business, which includes all programs that have launched since the start of 2024. And those are very much on track with what we believed at the start of the year, excluding the impact of Varo deciding to terminate. So our programs this year, again, programs that have launched since the start of 2024, are expected to contribute over $40 million in revenue in 2025. So that business is ramping well, and we're excited to continue to see it ramp into next year. In terms of guiding, I think we do have a complex business. But I feel like, generally speaking, we do forecast the business pretty well. I would say going into the holiday season in Q4, where Buy Now, Pay Later, the volume significantly ramps up. It is a little bit more difficult in Q4 and particularly with sort of the uncertainty in the macroeconomic environment, it's a little bit tougher to tell, but we feel pretty good about our ability to project the business forward, and we'll see as the quarter unfolds.

And then just as a follow-up, it sounds like TransactPay has been key to kind of develop the European market. Is it just expansion from existing customers that they didn't kind of feel comfortable expanding until you had that solution? I'm just trying to figure out exactly how big that could be for you guys now that you have that asset under your belt.

Yes. So there are 2 primary sources of value for us with TransactPay. So one thing you mentioned is that it does make it much easier for our customers to move to either side of the Atlantic, so either North American customers going to Europe or European customers coming to North America. And the reason for that is prior to TransactPay, we couldn't offer the same level of solution that we could in North America, with the biggest difference being program management. So when a U.S. customer, for example, wanted to go to Europe, we'd be able to tell them, well, from a processing perspective, this will be pretty seamless on our platform, but there's a lot of things that you're going to have to find someone else to do for you in Europe that we take care of for you in the U.S. So that was not ideal for our customers. And so the TransactPay acquisition removes that barrier, where actually our offering now will be very similar and very seamless to expand going either direction across the Atlantic. The other source of growth for TransactPay is incremental business. What we repeatedly have heard in the market and even what other ecosystem players tell us is the very large opportunities, the real enterprise customers want one partner, one platform to serve as both processing program manager and bring the EMI license. So there was a part of the market, which is really the bigger part of the market, the high end of the market, that we really couldn't play in before. And now with the TransactPay acquisition, we can play in that market, and our pipeline reflects that. So those are the 2 things that are quite exciting about the addition. And we're only 3 months in now, but we've hit the ground running since the close.

And our next question comes from Timothy Chiodo with UBS.

I was hoping we could dig in a little bit more into the Kara Card relationship. So clearly, it's expanding into 15 new markets, I believe, is the number that was put out there. This is the in-store relationship with the card, but I also understand that the Apple Pay portion would be applicable as well. I was hoping you could help us, one, just put a little bit more detail around the relationship. But also to the extent, even directionally, you could give us a sense of some of the numbers that we could start to put around this, meaning we certainly have estimates around the number of cards that this could be, given there's a wait list in the U.S., and we could put some kind of an assumption around the markets in Europe. But volumes per card, what's a reasonable expectation relative to the, call it, 2,000 or so per card that we see with the Affirm Card? And then directionally, if the yield on this business were lower, higher, or about the same, that would be appreciated.

All right. Thanks, Tim. I'll let you throw a lot in there. So let me see how much I can cover. So yes, Klarna is a great partner of ours. They've been a customer for a very long time, certainly going back probably 7 or 8 years. And we continue to have a great relationship where we can enable innovation together. What's exciting about the expansion of the Visa flexible credential into 15 new markets is that last October, we did a pretty significant migration for Klarna in Europe. It was in 3 countries, and we converted or migrated over 5 million cards. And so we've been operating with them in 3 markets, and now they're going to add 15 additional markets to that relationship. So we have, I guess, a good amount of information based on the 3 markets that we see today, but those were businesses that already existed before they got onto our platform. So it's a little bit different than in these new markets where they're starting with the first time of having a card solution. What I can tell you is that what we see in those 3 markets is that the growth has been really strong. So when you're doing a migration, you move a lot of the historical information from one platform to your own. And so we had a good sense of the trajectory of the business prior to it coming onto the Marqeta platform. What we're seeing in the quarter since that happened is a significant acceleration in that business. And so part of that, of course, is that Klarna gets all the credit. They're executing really well and driving a lot of growth. But we'd like to hope that we at least have some hand in the capabilities of our platform and really making it easy and reliable for them to drive that kind of growth. And so we'll see how the new 15 markets go because we don't really have as good a benchmark because as you said, in the U.S., they had waitlists and other things. So I can't share those numbers. Maybe they would share them with you. But the yield was your last question. I would say, in general, Europe, the yields tend to be a little bit lower because just the economics in Europe are a little different, but there are still healthy yields for us to drive growth and also allow Klarna to be very competitive and offer a very effective value proposition for their end users.

Moving on to Darrin Peller with Wolfe Research.

There was a lot on the call, but I want to just take a step back. And if we look at the puts and takes of what you look at for 2025 and think about the trajectory of the business that you're on right now relative to what you'd expect and hope for going forward, anything anomalous that we're seeing now in this trajectory that we should think is unsustainable because the growth obviously has done very well this quarter. And I guess we're getting questions on how that can look at the end of the year and into next year already. So any early indication of what you're seeing in terms of just trends and anything that may not be? You mentioned 2 contracts that might be renegotiated, or anything else you can call out?

Sure. Yes. No, thanks, Darren. I mean, there's no doubt that the trajectory of the business is stronger than we expected. Just the TPV growth is accelerating again for the second straight quarter. And as I mentioned, this is our fastest TPV growth in about 6 quarters. So clearly, things are on a good trajectory. I would say, first, from, I guess, the positive aspects that are driving this is certainly the Buy Now, Pay Later use case. And again, this combination of some geographic expansion as well as these, what we call Pay Anywhere cards, but the Buy Now, Pay Later companies offering a card that can be used anywhere a card is accepted to deliver the Buy Now, Pay Later use case. We are getting really strong adoption. And our lead and leadership, I guess, with the flexible credential from Visa has been something that we're quite proud of as the first to enable that, and that's leading to a lot of growth. Also, in SMB lending, that part of the market is also doing quite well. I didn't highlight that much, but that's another area. So everything in lending, I would say, is definitely performing better than we expected and driving better growth. And then the on-demand delivery acceleration this quarter was a little bit of a surprise. Our customers continue to expand into new merchant categories, I guess, as well as geographies, and that's driving strong growth. And then just in general, I would say the business is doing a little better. The things that can change there are a few. So one is, we talked about the renewals at the start of the year. And as I just mentioned, one of them we expect to be in effect in Q4, and lower our growth by about 2 points in our gross profit growth by 2 points in Q4. That other renewal, we do expect to get done in the early part of 2026. So what we said at the beginning of the year was we expected those 2 to be a combined 4 points of drag on growth. The first one is coming out to what we expect it to be, about 2 points; we'll see. So we'll update you on those 2, but that's one thing that's changing. I think the second thing I would highlight is that we do now expect that Cash App is going to diversify some of their new issuance with Bancorp and use another processor. So it's the new issuance for now, is our understanding. Even if they do all their new issuance starting January 1, which would be aggressive. But if we just use that as an assumption, we think that would be about 2 points of drag on our growth in 2026. So that's something that we also expect to change. And then the last thing I would just point out is that in this quarter, we did have 2.5 points of just unusual items that we think are very unique to the quarter, and those wouldn't continue. So those are a few of the factors that are, I would say, we expect to change in '26, but we'll tell you more about that when we talk again in February.

Our next question comes from Tien-Tsin Huang with JPMorgan.

This is Connor on for Tien-Tsin. Mike, I wanted to ask about Europe a little bit. You talked about it still growing 100% plus or doubling. I was curious if you could just talk about how sustainable you feel like that is? I think it's across a couple of use cases, and it seems like you've got a couple of clients doing particularly well, but maybe just thoughts on the sustainability of that and mix shifts you're seeing within the use cases, maybe?

Sure. Thanks, Connor. So yes, the international business is doing really well, and a lot of that is being fueled by Europe. Just so you have a sense, our non-U.S. business represents sort of a high teens percentage of our TPV, and that's up 5 percentage points from Q3 of last year. So that very high growth rate means it's grabbing a bigger share of our business over time. And the European growth remains over 100%. That's probably not sustainable, obviously, as the base gets larger, but we've now done that for several consecutive quarters. The use cases in Europe, what's great is that it's very similar to our U.S. business. We have very large customers who are growing quickly in neo banking, lending, and Buy Now, Pay Later, as well as in expense management. So all 3 of those areas are all growing over 100% and are all of substantial size. I would say the only difference in Europe compared to the U.S. is just the on-demand delivery business is much smaller. It is there, but it's not nearly as significant as it is in the U.S. So that's really the biggest difference. In terms of sustainability, I mean, again, 100% growth is probably a little bit much to expect, as the base just keeps getting bigger and bigger. But we do think that the TPV growth in Europe can continue to grow at a materially faster rate than the overall company. And that's because we've got TransactPay coming into the fold, which again just makes our offering that much more compelling and allows us to seamlessly support customers who maybe want to move to Europe or European customers who want to move to North America. And it just allows us to compete in the premium market where the large enterprises play. So the big volumes that can be had are now available to us, and we can be competitive, which really wasn't the case. So what I would say is in the coming quarters, our growth rate might slow a little, like dip below 100%, but still be very fast, much faster than the overall company. And then the plan would be in a year or so, as some of these programs with the combination of Marqeta and TransactPay together start to come on board that, that TPV growth could reaccelerate. So we think it's going to grow much faster than the overall business for at least the foreseeable future.

Perfect. And maybe a follow-up on just like Flexential more broadly. I'm curious, I mean, you talked at some length about within BNPL kind of the use case for Visa Flex Credential. Curious, like outside of BNPL, are you seeing demand for it from any of your customers? What can you say about adoption curves if we exclude BNPL?

Yes, we are seeing a lot of interest because of the flexible credential beyond just Buy Now, Pay Later, because really, the first use case was this combination of a debit credential with the ability to do essentially transaction-based lending or Buy Now, Pay Later lending. But what is coming from the networks that, again, you could ask them for more details. I don't want to steal their thunder, but we are going to move to a world where the flexible credential could be debit and more of a revolving credit instrument. And so then that now has a lot of applicability for people versus today, we probably all have a credit card and a debit card in our wallets. In the future, you might be able to just have one card that allows you to pay now and pay later, or revolve all in one credential. So the discussions about that type of offering we have a lot of those conversations given that we have the most experience with these flexible credentials. And so we have a lot of conversations about that. The second area that I'd also say is right now, it's the Buy Now, Pay Later companies who are at the forefront of using this flexible credential, but we also talk to other companies who want to have a debit offering where you might embed Buy Now, Pay Later that comes from one of these major Buy Now, Pay Later customers of ours. So we do think even the current use case can expand beyond just Buy Now, Pay Later companies, but other issuers as well. And that would be both good for that issuer's value proposition as well as drive distribution for the Buy Now, Pay Later customers of ours.

Moving on to Craig Maurer with FT Partners.

I wanted to ask, when we think about 2026, how does Cross River help with the backlog? Does it open you up to new potential in terms of growing that? And second, the renewal cadence, you obviously talked about renewing 2 customers in the fourth quarter and the first quarter. How should we think about that going forward? And just lastly, how are the opportunities with American Express starting to shape up?

Sure. Thanks, Craig. So yes, and just in terms of Cross River Bank, I mean, we're excited to start working with Cross River Bank. Again, we have a program that is going to go live in Q4 and launch, which we're excited about. And then early next year, we expect to also have Coastal Community Bank up and running. The key thing is that when we are looking for new potential bank partners, we look for the combination of both with banks that have a lot of capabilities and technology. So they had made a lot of investments themselves because those are the things that we can utilize seamlessly to deliver value for our customers. We wanted them to have, obviously, a strong regulatory compliance footing. And then we also wanted banks that could support a broad range of offerings. What makes Marqeta unique is that we do all use cases across debit and credit, consumer and commercial. And so we really want partners who also have that kind of breadth of offering. And Cross River Bank, we feel like is a great partner, and we're excited to work with them as we go forward. So it will be more and more part of the new business that we bring on board to our platform, starting in Q4. In terms of the renewal cadence, so yes, originally, we thought these 2 renewals would get done kind of in the middle of 2025. And they've just taken longer. They're both going to get done before the contract or the current contract expires. So it's not like we're bringing it down to the wire here, but they are just taking a little bit longer. They're bigger customers, larger relationships. And so there's just more to discuss. And we expect one in Q4 and then the other one in the early part of 2026. And once they're done, we'll give you updates. And then your last question on American Express. So there are several opportunities that we're talking to customers about with American Express. And we are also talking to American Express about unique things we could do together. So I would say we had a few things in mind when we started the integration, which is almost complete. And we do continue to partner together to capture some people who are trying to do unique things in the market, where we both bring something unique to the table.

We'll go next to James Faucette with Morgan Stanley.

I wanted to ask, you talked about your ability and opportunity you've had to ramp incremental markets with Klarna, et cetera. Can you talk about how that impacts your ability to add new markets for other partners and things that you can do to accelerate that process operationally for them? It seems like that would be a good opportunity, especially as people look at different countries around the world where they may want to have a presence.

Totally agree, James. And we're doing this for a broad number of customers. Our view is that a lot of the fintech winners have been crowned, if you will, and many of them are becoming big businesses, and they're expanding in terms of both products and geographic reach. And we're really helping them do that. If we look at our top 10 customers, 8 of them operate in more than one geography with us, which we would define as sort of the U.S., Canada, Europe, Australia as sort of the primary geographies that, I guess, in 1 or 2 countries in Latin America. So we already have the majority of our largest customers operating in more than one of those on our platform. And I think it's around in the mid-teens of our top 20 customers are also in more than one market. So this is something we already do and have been doing for a while, but we think there's even more potential because in a lot of cases, these were maybe smaller efforts, but I think now many of our customers are seeing traction and looking to invest in those markets as there just aren't nearly as many people chasing all the same opportunities as there was 3, 4 years ago. And so that's creating opportunity, which is part of the reason, as we talked about earlier, for the TransactPay acquisition is just to make our platform and our capabilities on a geographic basis much more consistent. And when we look at the pipeline of who we talk to now in terms of new customers and new opportunities, this is one of the key criteria when we're looking at who we should target is who are the companies that are already multinational and have the scale that could take advantage of that unique capability that we have. So the fact that we are 100% modern and operate at scale and can do all kinds of use cases across debit, credit, consumer, and commercial, but that also means that we were one stack. And so we make it very easy for you to move from market to market, versus many other competitor platforms that might be a whole different platform that requires a different integration. So this is an area that we're leaning in both with our existing customers, as well as if you were to see our pipeline, it includes a lot of companies that very quickly want to be in more than one market.

[Operator Instructions] And we'll go next to Jamie Friedman with Susquehanna.

So I was wondering if you could share any perspective on the kind of respective revenue yields, as there's relative growth in some. For example, you called out that revenue yield in Europe might typically be lower. How should we compare commercial, say, the expense management initiatives relative to consumer? Any perspective that you might have on revenue yield would be helpful.

Sure. Yes. Thanks for your question, Jamie. And I would say I'll talk about our gross profit take rate since we tend to focus on gross profit take rate. So I would say the yields from use case to use case are not as different as you would think. I would say, generally, they're relatively consistent. What changes the actual yield in each kind of use case has more to do with the size of the customers that we have. So, how big are the very largest customers in that space? So when we compare our offerings or our gross profit take rate in the various segments, the differences more come from the weighting or the mix of the size of the customers in each, as opposed to us fundamentally charging different amounts for different use cases. For example, in our financial services and the neo banking, obviously, our largest customer, predominantly their business is there, but we have a couple of other quite significant customers. And so that one tends to be a little bit lower. And I would say the same thing in expense management. We have 2 or 3 very large customers in that space. And so the gross profit take rate tends to be a little bit lower than in on-demand delivery and lending, and Buy Now, Pay Later, it's a little bit more diversified customer base. There are a lot more customers who are contributing. And so the gross profit take rates are a little bit higher. The only other thing that I would just mention about this is one of the other things that I haven't mentioned when we talk about TransactPay is that traditionally in Europe, our gross profit take rate was much lower because we were only providing processing, and we really didn't have much else to offer versus now we'll have processing and program management, including the license, all of which you can monetize. And then also, we're bringing a lot more of our value-added services to Europe. So we do expect that our gross profit take rates in Europe are going to improve over time, which will maybe also make the difference between, say, North America and Europe, not as significant as it is today.

And that's a good follow-up to my second one, Mike, which is about value-added services. I might have missed it this quarter. I felt like you had more about it in the script earlier in the year. So what is the narrative on value-added services? And I apologize if I missed it earlier.

No, no, you didn't. Yes, we didn't cover it much this quarter, but we spent a lot of time on it last quarter. We continue to expand our value-added services. If you really think back to 2, 3 years ago, a lot of our engineering energy was going into scaling the business. A payment platform that has to work every time. There's a lot of effort that goes into it when your volume is growing at the rates ours has over the last several years. That was a big part of our efforts. But I would say in the last 12 to 18 months, we've really broken through that next level of scale. And it's allowed us to then divert some of our resources to adding more value-added services and making the offerings more robust. So some of the big areas, I would say, right now are related to things related to tokenization, as well as our risk products are both growing quite quickly. So those are 2 areas that we're excited about. And then the new area that we just started launching this year is our ability to support people with the user experience, so a white label app. A lot of the customers or a lot of prospects on our platform do want that full end-to-end solution because, as we move into embedded finance, just remember that the way we at least define embedded finance is that it's companies whose core business is outside of financial services. So our traditional customer base in fintech, they wanted to own a lot of these things and build a lot of these things themselves, versus an embedded finance, these customers have another core business, and they're really looking for a full end-to-end solution. which is why we've really been investing in this area because we think more and more of our business going forward will be full solution sets, including lots of different offerings from our platform to make it easier for them. So it's relatively small right now, but growing quickly and will become a bigger part of the story in the coming years.