MQ - NASDAQ

Ladies and gentlemen, welcome to the Marqeta Inc. first quarter 2026 earnings call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Sarah Barkema, Chief Accounting Officer and Head of Investor Relations. Please go ahead.

Thanks, operator. Good afternoon, everyone, and welcome to Marqeta's first quarter 2026 earnings call. Hosting today's call are Mike Milotich, Marqeta's CEO, and Patti Kangwankij, Marqeta's 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 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 supplement materials, which are available on our Investor Relations website. With that, I'd like to turn the call over to Mike.

Thanks, Sarah, and thank you for joining us for Marqeta's first quarter 2026 earnings call. I'll begin with a brief summary of our Q1 results, then provide an update on how the breadth of our platform capabilities are being leveraged by our customers across multiple geographies and a continuum of products, which differentiates us from other issuer processors. I will then turn the call over to Patti, who will cover the details of our Q1 financial results and our expectations for the remainder of 2026. Our first quarter results demonstrate the continued momentum of our business. Gross profit grew 19%, which was fueled by 33% TPV growth. The increasing scale of our platform was on display as adjusted EBITDA grew to $33 million, achieving a 20% margin, and importantly, we delivered GAAP profitability this quarter.

The $8 million of net income is a testament to our strong growth, operating leverage, and disciplined execution. Marqeta has been at the forefront of modern issuer processing for over a decade, enabling growth and innovation for customers in several diverse use cases and geographies. What makes us unique is how comprehensive and flexible our platform is, spanning debit and credit, consumer and commercial, certified to operate in over 40 countries, combined with the expertise and experience to execute a variety of innovative solutions for our customers. Our continued momentum this quarter highlights three trends that are growing in prominence within card issuing. First, multinational card issuers are becoming more and more common as card growth shifts from local banks to fintechs and enterprises looking to support their customers in many geographies.

Second, there is an integrated continuum of products that span debit and credit that enables our customers to meet the needs of consumers and SMBs across their financial journey. There are many layers to the market, including standalone debit, transaction-based lending integrated with debit in a single card credential, secured credit, charge card, and revolving credit. Our customers are often looking to serve several of those needs with a comprehensive offering. Third, there are early efforts underway to modernize the technology in the card issuing market. Utilizing modern platforms like Marqeta, many fintechs have achieved great success and have become big businesses, which is increasing the need for more established issuers to upgrade their capabilities in order to compete effectively. Let me start with the growing demand for multinational card issuing capabilities on a single platform.

Already, 12 of our top 15 customers utilize Marqeta in more than one country, and six of those 12 are in at least five countries as they continue to expand their businesses without the friction of multiple platform integrations. One of the latest examples of international expansion is Sezzle, who is now launching its virtual card in Canada. This allows Sezzle's Canadian consumers to enjoy the same BNPL flexibility at participating retailers that accept contactless payments while benefiting from the same seamless checkout experience their U.S. consumers already enjoy. Another example of our support for a global offering is Ramp, who is expanding its corporate expense management solutions across new international markets. By leveraging Marqeta's modern card-issuing platform, Ramp is expanding local card issuing into Australia, Japan, Singapore, Brazil, and Mexico, with further geographic expansion planned for later this year.

This will allow Ramp to provide its customers with flexible financial solutions in new markets, including the ability to issue virtual and physical cards with customized spend limits, helping businesses thrive on a truly global stage. Marqeta enables this rapid international scaling through a single integration, once again demonstrating our ability to operate at scale and enabling disruptors as they take share from legacy providers. An emerging use case that will be multinational from the start is stablecoin-backed card programs leveraging stablecoin settlement through our bank and network partners. In addition to extending our support of our crypto native customers, we are currently forming new partnerships with crypto infrastructure providers to manage on and off-ramping for fiat native customers. A stablecoin-backed card issued on the Marqeta platform could be linked to a crypto wallet, enabling spend in local fiat from a stablecoin balance.

We are building the capabilities and establishing the partnerships to support both existing and new customers to meet the growing demand for this multinational use case. Let me shift to the integrated continuum of products. In the past several quarters, we've spoken about the rise of BNPL as a feature of a debit offering. There is also increasing demand for another offering that bridges the gap for consumers who are looking for greater financial flexibility beyond debit, but don't yet qualify for revolving credit. A secured credit card enables the consumer to build credit through their daily spend, eventually advancing to unsecured credit. Our continuum of products seamlessly enables fintechs and enterprises to serve consumers throughout their entire financial life cycle.

A compelling example of this continuum involves one of our existing customers, a large and rapidly growing embedded finance brand with an established debit program on our platform. They have launched a new credit builder card with us to help consumers establish and strengthen their credit profiles. This product is designed to make credit building automatic and accessible. Consumers can use the card for everyday purchases while funds are automatically set aside to pay off the monthly balance, which is then reported to the credit bureaus. Over time, this helps their consumers build credit if they later desire to have an unsecured option, while our customer leverages our platform to grow and retain their user base throughout their evolving needs. Marqeta's strength across this continuum, particularly our experience with Visa Flexible Credentials, is also attracting new customers with established portfolios.

This quarter, we signed a customer that provides consumers with a personal financial assistant to help them better manage their financial lives. They sought a partner that enables innovation and could embed BNPL into a secured credit offering, allowing consumers to toggle between secured credit and installments on a single card for greater flexibility. This customer will migrate their existing portfolio to Marqeta, and we are one of the early adopters of the issuer-managed Mastercard One Credential to support this new customer. The One Credential gives consumers a single programmable card spanning debit, credit, installments, and prepaid with spending rules they control in real time. While the existing program will be migrating, is from the U.S., this consumer is also looking for a partner who can support rapid geographical expansion and eventually enable them to add revolving credit products to their offering.

This win exemplifies the unique value that Marqeta delivers to our customers. Program migration to our modern platform, delivering an innovative, multi-threaded, comprehensive solution that is a market first, utilizing our leadership and Visa Flexible Credentials across multiple geographies. Lastly, I wanna highlight the emerging efforts of long-established issuers seeking new capabilities to meet the evolving needs of consumers and businesses with the modern, agile capabilities embraced by the fintech disruptors. In some cases, it could involve platform migrations, but many issuers are also considering more creative solutions to start their modernization efforts in specific use cases or programs before they take on bigger changes in their infrastructure. Leveraging Marqeta's virtual card expertise, a large U.S. financial institution has begun to provision a line of credit directly into a consumer wallet, eliminating lengthy and costly integrations.

This enhancement will allow the bank's customers to leverage credit to spend seamlessly in physical retail locations, followed soon by online capabilities, driving engagement and unlocking significant value. This innovative lending use case is a powerful demonstration of Marqeta's modern and flexible platform, deploying sophisticated, cutting-edge capabilities at scale, which is an early step forward in Marqeta establishing, expanding, and deepening our relationships with large banks. To wrap up, this quarter reinforces the momentum behind our business and the increasing value of modern card issuing platform delivers for innovators worldwide. Our financial results in Q1, combined with the business being onboarded and the capabilities being deployed, reflect how the comprehensiveness and flexibility of our platform is enabling our customers to expand and thrive.

At the same time, our experience, expertise, and scale position us well to capture the emerging demand for multinational card issuing, an integrated continuum of products, and modern solutions for long-established issuers. As we look ahead, we will continue to help fintechs and enterprises grow the pie, but we are also ready to help modernize existing programs with the capabilities that end users are beginning to expect. The current momentum, combined with our expanding capabilities and the enormous opportunity ahead, makes us confident that we will drive long-term value for our customers and shareholders. I will now turn the call over to Patti to discuss our Q1 financial results and expectations for 2026 in more detail.

Thank you, Mike, and good afternoon, everyone. Our financial results for Q1 reflect a solid quarter. Both net revenue and gross profit grew 19% on a year-over-year basis, driven by TPV growth of 33%, with all three growth rates at the top end of expectations. Adjusted operating expenses were better than expected, which coupled with strong gross profit growth, resulted in adjusted EBITDA growth of 66%. Most notably, we achieved GAAP profitability in the quarter with net income of $8 million. Q1 TPV was $112 billion, with strong growth on a continuously expanding base of 33% year-over-year. This is the second quarter in a row with TPV over $100 billion and the third quarter in a row with growth over 30%. Non-Block TPV continues to grow over 2x faster than Block TPV.

Growth within our financial services use case continues to be a little slower than the overall company. We did not see any discernible changes to Cash App new issuance in the quarter. Excluding Block, financial services continues to grow meaningfully faster than the overall company, driven by neo banking customers. Lending, including Buy Now, Pay Later growth remain on par with Q4 growth at nearly 60% on a year-over-year basis. This continues to be driven by the growth in flexible network credential usage and our customers' continued geographic expansion on our platform. Expense management growth remains over 40%. The robust growth is a result of customers continuing to expand their market share by acquiring new end users, made possible by their utilization of our uniquely configurable capabilities.

On-demand delivery growth continues to be in the double digits, but below the company's overall growth rate, as this is our most mature use case. Q1 net revenue was $166 million, growing 19% year-over-year. Block net revenue concentration was 42% in Q1, 2 percentage points less than last quarter as our non-Block revenue is growing 2x faster than Block revenue. Q1 gross profit was $118 million. The 19% year-over-year growth was at the top end of expectations. Q1 gross profit growth had a headwind of 1.5 percentage points due to the revision of our accounting policy for estimating and recognizing card network incentives, which started in Q2 2025. As a reminder, this is the last quarter in which we will have any impact on the year-over-year comparison related to the accounting change.

Our gross profit take rate was 10.5 basis points, half a basis point lower than last quarter, largely due to business mix. Q1 adjusted operating expenses were $84 million, growing 7% year-over-year. This is several points better than expectations due to the phased implementation of key investment initiatives. We continue to remain focused on operating efficiency and are realizing the benefits from the increased scale of our platform. Q1 adjusted EBITDA was $33 million, a margin of 20% based on net revenue. Adjusted EBITDA margin based on gross profit was 28% and illustrates the expansion of our business's profitability. Our Q1 GAAP net income was $8 million with an EPS of $0.02 as a result of gross profit growth, platform scale, and lower operating expenses, and benefiting from lower stock-based compensation.

This quarter marks a significant milestone as we achieved GAAP net income profitability and remain confident in our ability to generate positive net income on an annual basis going forward. We ended the quarter with $712 million in cash and short-term investments. 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 Q1, we repurchased 9.4 million shares at an average price of $4.16. As of March 31st, we had over $52 million remaining on our latest buyback authorization. Before we transition to our expectations for Q2 and the full year, I wanted to acknowledge that our business continues to grow. EPS will become increasingly important and a better reflection of our business growth.

With that, I'd like to briefly touch on the proposed reverse stock split that was included in our proxy statement filed with the SEC in April. The reverse stock split would reduce Marqeta's common stock at a ratio of 1:4 and will result in higher reported net earnings or loss per share. At approximately 434 million shares, $0.01 of EPS is $4.34 million of net income, while at approximately 108 million shares, $0.01 of EPS is $1.08 million of net income. We believe a lower share count will provide a clearer reflection of changes in our per share performance as our business performance evolves over time. Let's transition to the expectations for Q2, 2026.

Consistent with what we shared last quarter, we expect both Q2 net revenue and gross profit to grow between 14%-16%. As a reminder, gross profit growth in Q2 is expected to be slower than Q1, primarily due to a tougher comp from last year's remarkable BNPL growth, which started in Q2, as well as renewal activity and evolving business mix. We continue to be focused with our investments, which are primarily directed towards platform capabilities and innovation. Q2 adjusted operating expenses are expected to grow in the high teens, consistent with the expectations we shared last quarter. As a reminder, the higher growth rate is due to a tougher comparison versus Q2 2025, when the expenses were uncharacteristically low due to investment delays during the CEO transition last year.

Q2 adjusted EBITDA growth is expected to be 10%-12% in line with our previous expectations. We expect to be at break even on a GAAP net income basis in Q2. For the full year, while we recognize the increasing levels of macroeconomic uncertainty, we are not currently seeing any notable shift in spend or consumer behavior. We are assuming consistent spending patterns for the remainder of the year, but noting the risk. Our expectations for net revenue and gross profit for the year remain consistent with what we shared last quarter. We expect net revenue growth of 12%-14% and gross profit growth of 10%-12%. While the Q1 results did come in at the higher end of expectations, this is not enough for us to revise our outlook upwards for the entire year.

We expect our net revenue and gross profit projections for the remaining three quarters and the full year to be consistent with what we guided to at the time of our fourth quarter call. We do, however, expect 2026 adjusted EBITDA growth to be several points higher than we shared last quarter in the mid-to-high 20% due to the outperformance in Q1. Lastly, we now expect to generate about $15 million in GAAP net income for the year, up $5 million based on our Q1 outperformance. The breadth and flexibility of our platform is translating directly into customer growth and expansion.

The programs being onboarded and the capabilities being deployed this quarter reflect demand across both new and existing customers and demonstrate how the continuum of the products we offer across geographies enables customers to build and scale on a single modern platform. Our expertise and scale position us to capture an evolving set of opportunities that we believe will continue to drive long-term value for customers and shareholders. In conclusion, we are starting 2026 on a solid foundation, showcasing the momentum of the business, combining gross profit growth and disciplined investment. The ongoing benefits of scale give us confidence that we can sustain this trajectory of profitable growth at scale. I will now turn it back over to the operator for questions.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you'd like to ask a question, please press star and one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Ladies and gentlemen, we will wait for a moment while we poll for questions. We take the first question from the line of Darrin Peller from Wolfe Research. Please go ahead.

Hey, guys. Thanks for taking the question. You know, when you call out the non-Block growth being as strong as it is, and you mentioned the verticals, I guess we're getting questions, and I'm curious to know what the underlying strength is coming from, so let's call it same-store sales. Your existing customer base just really outperforming. Talk a little more about your ability to keep gaining market share in those verticals. What's really been driving the differentiation in expense management and BNPL as such core areas for you? Do you see more and more barriers to entry around that for you guys to continue that?

Thanks for the question, Darrin. On our, you know, I think we do see pretty broad-based growth across our use cases right now. You see the highlights of BNPL maintaining its momentum at 60%, and then expense management really growing at the 40% this quarter. We're very pleased with it. You know, a majority of that is driven by kind of the existing programs because these programs do take some time to launch and grow. A lot of it is with the existing customers that we have.

We do, you know, and as we've talked about for several quarters, for especially for Buy Now, Pay Later, you know, we have seen over four quarters of kind of a growth over 40% or over 50% actually, with kind of VFC geographic expansion, Payanywhere cards, and strong user growth among SMB lending solutions. These continue, and we're, and we continue to lead innovation here from a product perspective, including kind of a Mastercard One Credential program launching later this year and what kind of Mike mentioned. While we do see some kind of, some, we're going to be lapping some really tough comps over the next few quarters. We do see some kind of decrease over time.

In expense management, you know, I think it is, you know, our capabilities there continue to, you know, to lead, in terms of the way we can uniquely configure, a lot of the products. We continue to lead. Mike, would you add anything from a product perspective?

Yeah. The only thing I'd add, Darrin, is just that I think some of it is the unique capabilities that our platform, and certainly we're in the lead when it comes to Visa Flexible Credentials, and have been in a leader, you know, for some time in expense management. I think it's also a tribute to our customer base continues to win, and their adoption of their services is growing much faster than market, and they're taking share. We're, you know, we're an enabler of their success. As they continue to significantly outperform the market, that's, you know, that's what's continuing to drive our growth along with, you know, lots of new business and new programs. I think, you know, as Patti, I think, mentioned in our last quarter call, right?

Our top 15 customers did over 30 new programs with us just over the last two years.

Yeah.

you know, what's happening is our customers are successful, and they continue to build on our platform. that's what's, you know, driving our success.

Okay. That's great to hear. One quick follow-up would just be on Block, just any further incremental learnings you guys have had when you know, relative to what you measured it could be in terms of impact on your, on this year's performance, by any chance, between now and let's call it the last few months.

Yeah. Why don't I start with kind of the what we're assuming kind of for the forecast and what we've been seeing, then maybe I'll turn it over to Mike to talk about the broader relationship. On our last call, we talked about new issuance. Our new issuance assumption being that we would slowly, gradually decrease new issuance in the first half then have no new issuances in the second half. Obviously, we can't speak to kind of the Block business, but in Q1, we didn't see any discernible changes to new issuances. It's still, you know, again, too early to tell for the entire year, but we do still expect to see a decline of new issuances in Q2 and more in the second half.

Essentially kind of shifting the curve out to the right a bit.

Yeah

In terms of the new issuance assumption, we had mentioned 1.5% to 2 percentage points.

Yeah

of gross profit kind of growth impact, at our last earnings call. Now, I think we're now at the lower end of that, just given kind of the delays here in moving.

Yeah.

We're probably, you know, we're probably closer to the 1.5% growth impact as of right now.

Maybe, Darrin, just I'll add, you know, consistent with what we've said in the past, you know, our relationship is very strong. We're communicating on a very regular basis. The fact that they wanna diversify, you know, we understand and have accepted. I think what's important is we continue to engage in talking about new ideas and new things that we can do together. The state of the relationship is not such that, you know, they have sort of like moved on and we're just sort of the, you know, the old provider. They are gonna do some diversification, but at the same time, you know, we still talk about new things that we can do together to pursue opportunities. The relationship remains, you know, very healthy and strong.

Thank you. We take the next question from the line of Connor Allen from JPMorgan. Please go ahead.

Hi. Thanks for taking my questions. I was curious maybe about the demand more broadly for the secured credit card program. I caught your comments about the embedded finance brand kind of layering that on. I'm curious how broad that interest is across your, across your customer set.

Thanks, Connor, for your question. We're seeing more and more demand. As I sort of said in my remarks, there's really a continuum of products. I think, you know, if you went back 10 years, it was like you were either debit or you were credit, revolving credit. Those were sort of the. Maybe some charge card, I guess. American Express has done that for some time. You know, it was really one or the other. How the market is evolving now is that there's really this continuum where you could start with someone in debit, and then you could start to give them some transaction-based, you know, lending, which allows you to really control the risk because it's done on a transaction basis. With the Visa Flexible Credential, now you could do that on the same card.

Then the next step would be, let me really help this customer or consumer start to build credit and do that through a credit builder card, which allow 'cause it better positions them to get to the revolving credit balance, you know, down the road. What we're seeing more and more is that, you know, if you're a fintech or you're an embedded finance company, you wanna be able to serve the entire spectrum of your customer base, right? You don't want to leave anyone behind, if you will. They're much more interested in matching the right customer with the right product.

The reality is, on some of the more premium co-brand cards today, if you look at the research, the decline rates, you know, more than half the people, it's quite frequently get declined, and they can get upwards of 75%. If that's someone, particularly if you're an embedded finance and that's already a customer of some other product that you provide, that's not a great experience. They're looking for ways to address that. One of the, you know, the ways that a lot of people like is not only can I give you a product, but I can actually help you start working towards getting maybe that product you originally really wanted. More and more we are seeing an increase in demand.

You know, I talked about we now have a customer for the first time that will launch later this year that's gonna combine a secured card with embedded Buy Now, Pay Later. They're sort of skipping past the debit card and doing a secured credit and a kind of transactional lending product. We do think there's a growing market for this capability.

Thanks, Mike. Maybe a quick follow-up on that, if you don't mind. just on the kind of demand for more flexible card products. You guys were very early to the VFC, Mastercard One Credential. I'm curious whether you've seen competitors kind of step up there. Are you seeing more competition for these, Visa Flexible Credential, Mastercard One Credential programs?

Not yet. Although we know, you know, from our network partners that it's coming. I think, you know, as we've said, I think for a while now, we, you know, we appreciated the lead, but we knew we weren't gonna be the only, you know, the only provider of this capability forever. You know, we fully expected that, you know, people will enable this capability and start to do the offerings. I think there are maybe a couple other people live, but on a very limited basis, at least at this point. Probably by the end of the year, some of that could be a little bit more substantial.

I think it's safe to say, you know, we have a, you know, pretty significant lead, and that will probably continue to be the case for at least the next several quarters.

Thank you very much.

Thank you. We take the next question from the line of Bryan Keane from Citi. Please go ahead.

Yeah. Hey, guys. Thanks for taking the question. Just wanna ask about the outperformance in EBITDA and obviously the change in GAAP net income. Kind of what's happening in the business that's driving that? Does that flow-- I know it flows through to the guide for the full year, but is any of that upside in margin continuing to the second, third and fourth quarters?

Yeah. Thanks, Bryan, for the question. Yeah, Q1, you know, we were very pleased with kind of our results there. From a top line and momentum perspective, again, TPV net revenue and gross profit were all on the high end of the range. EBITDA, you know, and net income really beat our expectations. Again, first time true operating GAAP profitability quarter. From an EBITDA perspective, the reason for the outperformance is really around kind of lower than expected adjusted operating expenses. We had a couple key in-investment initiatives that were a little bit slower to ramp. We ended the quarter where we wanted to be in terms of trajectory, but we're just a little bit slower on the uptick.

That really was the result of, that really resulted in the beat on EBITDA. From a net income perspective, obviously we got the beat from EBITDA and were slightly less than expected on stock-based compensation. For the full year, you know, again, it's very early to tell in the year. We're still early in the year. We're monitoring a number of key initiatives and, you know, watching closely the macro environment. At this point in time, you know, there's not a lot of new information that changes our outlook for the next few quarters.

At this point in time, just we're reiterating kind of our guide for net revenue and gross profit and then kind of flowing down what we saw in Q1 for EBITDA and net income. You see a slight kind of increase in our guidance for the year.

Okay, that's helpful. Just as a follow-up, when we think about business mix, I know there was a call-out for a little bit lower take rate due to business mix and then in the gross profit. Maybe how, looking at the pipeline, how should we think about growth rates and take rate going forward as a result of maybe a little change of mix in what we're used to?

Yeah. I mean, I'll start. You know, I think, again, I think on an overall kind of portfolio basis, we're pretty good at estimating, and so we are reiterating guidance around kind of gross profit and growth rate. Sometimes the mix of our customers, obviously last year with the outperformance of kind of lending Buy Now, Pay Later and some program mixes of between kind of some that we program manage and others that we just process. You know, sometimes the mix kind of changes. Again, I think that it had some modest headwind, but overall, we were still pretty close and obviously on the top end of this quarter and still reiterating kind of our guide for the full year.

Yeah. I think historically, Bryan, I mean, this has been pretty consistent. What causes some of that, and when we're talking about business mix, is that some of our largest customers still continue to grow very, very fast, right?

Yeah.

I think it's five of our top 10 or approximately that grow over 50% still. We have very large customers who are still growing quite rapidly. As they take a little bit more share within our, you know, within our overall TPV base, that creates a little pressure because obviously they have slightly better pricing. But we think that's a great outcome. That's exactly what we want. We're happy to have our largest customers have that kind of success. And we think, you know, we structure our pricing in a, you know, in a kind of disciplined way that it creates win-win outcomes for them and for us when they grow like that.

It puts a little, you know, it puts a little pressure on the take rate, but we think that's a good outcome.

Okay. Thanks so much.

Thank you. We take the next question from the line of Tim Chiodo from UBS. Please go ahead. Tim, please unmute your line and proceed.

I'm here, yes. Thank you. Appreciate that. Thank you. I wanted to see if we could ask a little bit more of a Marqeta specific question, also an industry related question. We're now about a few years deep into the clarification of Regulation II to make sure that that has been extended to e-commerce transactions or card-not-present transactions. I was hoping you could do two things. Number one. Talk a little bit about what Marqeta sees in terms of merchants deciding to route to the alternative network that is on the back of cards that you issue. Number two, what, if anything, that means for Marqeta's unit economics.

Thanks, Tim. I appreciate the question. I would say that your first question, which is about what we're seeing in terms of merchant routing, I would say for the most part, it's pretty stable, right? A lot of the people have made the moves, right? If there's certain merchants, and we do see this from time to time, where clearly there was some sort of effort on their side or maybe they had to do some work first, and you start seeing them route a lot more. Because now it's like fewer and far between, it doesn't really change the mix, you know, a lot from month-to-month or quarter-to-quarter. I'd say things are relatively stable.

Occasionally you do see, you know, people using alternative networks a little bit more, but it's not super significant. From a unit economics perspective, I would say for the most part, our exposure is pretty minor. You know, we have shifted our pricing model quite a bit over the last few years to really get paid for the service that we provide, and sort of disassociate our economics from interchange. I would say for the most part, that's how our contracts are structured, and so the nature of the mix does not directly impact us. That doesn't necessarily mean it doesn't come up in the negotiation, of course, but we don't have direct exposure. There are some customers, though, where we still do, where we might have that difference.

I would say for the most part, we have moved away from that contract structure, every year that goes by, we have, you know, the exposure continues to shrink.

Perfect. Thank you. Appreciate that, Mike.

Thank you. We take the next question from the line of Sanjay Sakhrani from KBW. Please go ahead.

Thank you. Good morning. Oh, sorry, good afternoon. Mike, last year, obviously BNPL, expense management, Europe were all, like, good drivers of outperformance. I'm curious as we look this year, where the opportunities might be to sort of outperform and then obviously to the extent that there's any risks, especially with some of these events, geopolitical events that are weighing in on consumers with higher fuel prices and such. When you're thinking about the book today and sort of where outperformance could happen versus underperformance, where are they?

Yeah. I think, well, first starting with BNPL, 'cause obviously that was the real star last year. I mean, the business continues to grow really fast. As Patti said, it's still growing nearly 60%. The comps will get tougher as we go, the growth rate will slow. You know, oftentimes when I look at lapping events, I really focus on the dollar growth as opposed to the growth rate. I would say that growth is still really healthy. Although the growth rate will come down just because the base obviously got a lot bigger as we went through the year last year, the overall growth of the business is still strong. I would say expense management is sort of very steady. It's just been growing really quickly.

It accelerated the last couple of quarters. Each quarter it's gotten a little stronger. A lot of that just has to do with, again, our customers continuing to win share. The more experience we get with the use case and the more scale that we demonstrate, the better it positions us to win additional pieces of business, right? It just sort of cements our status as a leader in that space. That also means we can attract new programs, new customers. I would say if I was gonna pick an outperformer, I guess, for the year, I'd probably maybe choose expense management. Generally speaking, you know, we're pretty good at predicting how the business is gonna go.

You know, we have a lot of conversations with our customers, so we're pretty plugged in. I think what happened last year in Buy Now, Pay Later was just, I think, surprised maybe everybody. And in terms of risks you mentioned, I would say, you know, the biggest risk that's out there is more, macro related. You know, at this time, the I think as you've heard every, you know, all our, I guess, payment, companies talk about, I mean, the consumer, and SMB seems quite stable and strong. We're not seeing any impacts to spending trajectory. You know, we're gonna continue to watch it.

You know, I would say the risk that if I was gonna pick one, I would put that at the top of the list, just given the amount of uncertainty that's out there right now.

Thank you. Just like a follow-up. I know you mentioned you're working with a large FI. I'm just curious if you feel like the competitive intensity is picking up there a little bit more versus the past. I mean, obviously Visa announced a big win with Wells Fargo and Pismo. I'm just curious if you feel like anything's changed in the competitive dynamics there, or do you still see a lot of appetite and engagement with you guys? Thanks.

I think what I would say, it's not as much competitive intensity that I would say is different. I would say it's the momentum behind modernizing, which I think, you know, Visa also mentioned on their call. We're just seeing the conversations become more frequent and substantive with banks. I would put it into kind of three buckets, right? That approaches that a bank might take. One is a, you know, really a conversion, modernizing like a whole book of business, you know, with through migration. I think that's probably the least likely to be where people start. The 2nd is more of a de novo opportunity.

As they look to do new things and look to roll out new products that may be more competitive with some of the, you know, the modern players, who are fintechs and embedded finance companies, you know, they would look for more of a modern platform to help them. The third bucket is the one that I called out, which is, you know, can we infuse some capabilities from a modern platform, you know, without too much heavy lifting? In, you know, in this case, like what we're doing that is exciting is similar to the way some of our BNPL customers would use a virtual card when you wanna do a purchase in store.

If I'm not, someone who has the consumer card, you know, the kind of the Visa Flexible Credential card offering, a Payanywhere card, but I'm in a store and I see something and I would like financing, you know, We have a lot of experience injecting a virtual card in that experience. Essentially, that's what we're doing, a version of that. It's a little bit different in their case, with this financial institution, but that's essentially what's happening, where without them disrupting their current program that they have, they're able to inject a line of credit offering into the experience where for the consumer it will seem very seamless, but they are saving a lot of kind of effort and complexity by taking on a lot more technology.

Our view of that is that's exactly what we want. We wanna get our foot in the door, have them start working with our platform and seeing the capabilities and the flexibility. It's our belief that once that happens, then that will get them more and more interested in using us for broader parts of their business. The more we can do that, you know, the better off we are. The competitive set, I would say intensity-wise is fairly similar. What's maybe different, because we support so many other use cases, like, who we see most frequently might be a little different now than it was a couple of years ago.

You know, at a total competitive intensity level, I would say it's been constant at least in the four years that I've been here.

Thank you.

Thank you. We take the next question from the line of Andrew Schmidt from KeyBanc Capital Markets. Please go ahead.

Hi, Mike. Hey, Patti. Thanks for taking the question. Good to see the GAAP profitability here. I wanted to ask about agentic payment for a moment and maybe you could talk about Marqeta's role. Obviously, there are some use cases where a virtual card, you know, can be used and applied successfully. You're still pretty early in protocols, but maybe talk a little bit about how Marqeta can play. Obviously, you know, when we think about players like Ramp, they have been pretty vocal in terms of agentic payment being involved in the procurement process. I'm curious, maybe not specifically to Ramp, but just in general, if that's an opportunity for you. Thanks so much.

Thanks for your question, Andrew. Yes, we do think agentic payment is a good opportunity because again, doing things in real time and doing them in a flexible way is something that is sort of native to our platform, so it positions us well. I think one of the things that our view on agentic payment is maybe a little different than, I would say, a lot of the announcements you hear in the market that are a little more mission or merchant-oriented. Sorry. Our view is that for agentic payment to really be successful, it's gonna have to be more issuer-led.

The reason for that is some of the early people who have tried agentic payment and have been working on that the last several quarters to do something like an autonomous checkout, I think they're finding that in some cases, you know, there's a lot of fraud, there's things to work out. We think that's what better positions the issuers to be successful at this. They already know you. They have KYC'd you. They know your behavior. They, you know, have cookies on your devices, all those fun things. Their ability to authenticate that you are actually you before they sent out, you know, someone to or, you know, an agent to do a purchase on your behalf, they're really well-positioned to do that.

We also believe that a lot of times virtual cards are going to be used in order to, again, minimize the risk. You won't send an agent out with your actual card credential. You will essentially provision a virtual card with all the specifications, all the limitations and instructions you're giving that agent. You will essentially create a virtual card to do that to sort of remove the exposure to your underlying credential that you use on a day-to-day basis. All those capabilities, we feel like, position us well, but it is, you know, relatively early days. I think we're having conversations with customers. You know, at this point, there isn't there's a lot of maybe engagement, but not, you know, huge things that are out there in market demonstrating this.

You know, as usual, maybe Ramp's a little bit ahead of the curve, but I would say, we're not seeing it on a broad basis yet.

That makes sense. That's helpful, Mike. I appreciate that. Then maybe everyone's other favorite topic, digital assets. It was good to see the stablecoin-linked card development. If you could just talk a little about the opportunity there. Is that in response to the pipeline? Obviously, you know, there is a lot of opportunity. It does seem like those are proliferating. Just curious, you know, about what you're seeing in terms of demand in the market today specific to Marqeta. Thanks.

Sure. What we're seeing is that, you know, because of the use cases we serve and we're in mostly mature markets, we don't see stablecoin cards as something that's disruptive to our business. We see it as additive. It's incremental. It's customers who are looking to get new or target new opportunities. The kind of the way we see that happening is really where customers are looking for more effective ways to support wallets that would have broad functionality to support a customer in multiple ways. A lot of times that's around remittance or a payout. The, you know, the blockchain and the stablecoin is very effective at moving the money.

To actually then, you know, make purchases, we feel like a card as the, you know, the fronting essentially credential is gonna be the most effective way to do that. This what a lot of people are interested in is I could distribute money quicker, cheaper, to others in multiple countries, but still give them a very kind of well-understood, user-friendly, credential that can be used to actually put that stablecoin to use. That's the conversations and the demand that we see, which is, you know, has us moving towards making sure that we have multiple solutions to best support our customers as they look to, again, expand in that way.

It's not something where people are saying, "Well, instead of doing my debit or secure credit or revolving credit card, I'm gonna do this instead." It's more like this product would live alongside other cards they have to support, you know, sort of different use cases that might be harder to do or today are more expensive to do with the, you know, the more traditional rails.

Makes sense. Thank you very much, Mike.

Thank you. We take the next question from the line of Craig Maurer from FT Partners. Please go ahead.

Yes. Hi. Thanks for taking the questions. I was curious about the opportunity with Earned Wage Access. It's been about a year since we heard about the product and we've seen some substantial growth from some issuers in the market, some players in the market in that space. Curious if you could talk about growth in that industry. Also if you could talk about continued plans for share repurchases. I believe you purchased about $39 million worth of stock in the first quarter and should have about $60 million left on the authorization. Thanks.

Sure. I'll maybe answer the Earned Wage Access, then hand it over to Patti on share repurchases. Thanks for your question, Craig. On Earned Wage Access, yeah, there's continues to be, you know, good discussions with customers. I think as we, particularly as we move more and more into embedded finance opportunities, there are companies who are looking to find ways to better sort of distribute, you know, earnings or funds to their employees faster, usually for the purposes of retention. Whether that's more of a gig worker, I guess, or an actual, you know, employee, that's a very effective and attractive value proposition. We are talking to more and more companies.

We're still working on the best ways to establish the right partnerships because some of the complexity, again, still comes from all the payroll and tax calculations. Certainly in the more gig environment, because their business model is almost geared towards every transaction is sort of priced independently. It's a little more seamless, and they're a little more set up for that. I would say when you get into, you know, more of a typical employee, it's a little more complicated.

I would say we continue to try to optimize the solution as best we can, but the customers that we found who are having the most success are, you know, are taking on a lot of that work to make sure they're getting the tax and payroll piece correct.

From a share repurchase standpoint, you're right. As of the end of Q1, we had about $52 million remaining of the $100 million authorized by the board. We repurchased about 9.4 million shares at $4.16. We've been active in the market, and that's kind of decreased the total shares by 2%. We still, you know, as long as the market value, you know, we believe that the current valuation doesn't properly reflect the market opportunity and the differentiation. As long as our market valuation lags, we do believe that, you know, we will intend to continue doing this market repurchase.

I don't think we're ready to yet commit to systematically doing these repurchasing of shares. We're gonna continue to evaluate as we get closer to depleting the current buyback authorization.

Since there is no response, we move to the next question, which is from the line of Nate Svensson from Deutsche Bank. Please go ahead.

Hey, guys. Thanks for the question. I just wanted to walk through some of the back half growth dynamics. I know last quarter we had called out, I think, four discrete items. There was lapping of TransactPay, lapping of some of the strong growth in things like Buy Now, Pay Later. The two other factors were the renewals and then the Block issuance comment. I know we talked about Block issuance before, can you just reconfirm the expectation for the impact to the back half of the year? I know for the full year you're saying it's closer to the 1.5 points rather than the 2 points. Does that mean that the back half is a little bit lower on an absolute basis, some of it got shifted to 1Q?

Should we assume the same headwind in the back half? On the renewal assumptions, I think one was supposed to start impacting 2Q gross profit. Just wanted to confirm the timing on that and the magnitude are still what we were talking about last quarter?

Yeah. For the Cash App impact, yeah, I mentioned that, you know, for the full year, we had stated 1.5-2 percentage points of gross profit growth impact. You know, based on kind of the delays and we haven't seen any discernible changes as of Q1, we are shifting kind of that curve kinda to the right, so closer to the 1.5 percentage points. I think it's a fair assumption to say that for the back half, when we say the Cash App new issuances is 2-3 percentage points, that it is on the lower end of that range as well. You know, eventually we'll get there.

In terms of the renewals, We did mention the impact of the two renewals, one of which was completed in the fourth quarter of last year. The second one we still expect to land this quarter.

Helpful. Thank you. The other thing I was hoping for more color on was the large financial institution you called out with the provisioning of the line of credit directly into the consumer wallet. Just hoping you could talk a little bit more about what you're doing specifically with that product, that client, how that relationship came about. I guess, is that a wallet being issued by the financial institution itself or with a separate third-party fintech or something like that? I guess, thoughts on timeline to get the product Ramp and how you think this relationship might help you go out and win with more large financial institutions going forward.

Sure. Thank you for your question. First, this opportunity came to us from some references in the market. Clearly, this bank had talked with, you know, networks and other people in the industry and they said, "You know, if that's what you're trying to do, you should speak to Marqeta about it." That's how essentially the conversation started. The wallet actually already exists. They already provide this functionality, and they were looking to inject credit into that product they were already providing, but without, you know, recarding, replatforming, all the other things that would require a lot of investment.

We, we, you know, had experience with a solve that, again, not the exact use case, but something pretty similar that we do for our Buy Now, Pay Later customers. That's how the conversation started, and that has started to roll out. It's starting to be, it's live in, in the market right now. In terms of what that means for future business, again, we feel like the-- any experience we can get doing processing, like, as you know, we do tokenization, for example, for a few of the large banks, and that's helpful. We wanna really be doing processing for them to really see the difference of what a platform like ours can do versus maybe what they use today.

Any opportunity to do programs, even if they're relatively small, we see as a big opportunity because that will help them more directly compare functionality on a like-for-like basis. The more we do that, the more maybe others will say, "Well, I'm interested and I might like to do that also." You know, as I mentioned, the conversations are definitely getting more frequent because the companies that we have typically served in fintechs and embedded finance continue to just get bigger and bigger. You know, that's, you know, forcing maybe more and more banks to take a look at their technology capabilities and start to at least explore options.

You know, what decisions they make and how quickly is still to be determined, but there definitely is more and more interest in understanding, you know, paths to modernizing the technology they have related to card issuing.