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Marqeta Second Quarter Earnings Report Shows 76 Percent Jump in Net Revenue, Driven by Customer Growth

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  • MQ

The global modern card issuing platform issued its first earnings report as a public company, showing net revenue of $122 million, up 76 percent year-over-year, with 76 percent growth in total processing volume and a 70 percent increase in gross profit.

OAKLAND, Calif., August 11, 2021--(BUSINESS WIRE)--Marqeta, Inc. (NASDAQ: MQ), a leading modern card issuing platform, today reported financial results for the second quarter ended June 30, 2021.

Marqeta reported net revenue was $122 million, with total processing volume (TPV) of $26.5 billion, both increases of 76% from the same quarter of 2020. The company saw gross profit of $47 million during the quarter, up 70% from the same quarter of 2020. Marqeta reported a GAAP net loss of $68.6 million and Adjusted EBITDA of $(10.6) million for the quarter ended June 30, 2021.

"Our earnings demonstrate an enormous appetite for modern card issuing, demand across diverse industries and rapid growth with our customers," said Jason Gardner, Founder and CEO of Marqeta.

Marqeta’s second quarter earnings growth was underscored by several key business updates:

  • Marqeta announced that it had been chosen by Google to power the launch of a digital card for Google Pay balance users.

  • Marqeta continues to see strong growth from the Buy Now, Pay Later vertical, where it supports the majority of the leading innovators. During the quarter ended June 30, 2021, net revenue for this vertical increased 350% compared to the same quarter in 2020.

  • In July, Marqeta extended its agreement with Affirm, a Buy Now, Pay Later category leader, through January 2024, showing the long term commitment its customers are making to build and scale on its platform.

  • Marqeta added two key leaders with deep experience to drive the next chapter of Marqeta’s growth: Darren Mowry, formerly leading AWS’s business in EMEA, joined as CRO, while Randy Kern, a technology leader with Salesforce, joined as CTO.

Financial and Operating Highlights

(Dollars in thousands except per share amounts or as noted) (unaudited)

Three Months Ended
June 30,

%

Change

Six Months Ended
June 30,

%

Change

2021

2020

2021

2020

Financial metrics:

Net revenue

$

122,266

$

69,402

76%

$

230,249

$

117,790

95%

Gross profit

$

46,975

$

27,617

70%

$

96,832

$

46,179

110%

Gross profit margin

38

%

40

%

(2) pps

42

%

39

%

3 pps

Net loss

$

(68,554)

$

(7,107)

865%

$

(81,392)

$

(21,637)

276%

Net loss margin

(56)

%

(10)

%

(46) pps

(35)

%

(18)

%

(17) pps

Net loss per share - basic and diluted 1

$

(0.29)

$

(0.06)

383%

$

(0.44)

$

(0.18)

144%

Key operating metric and Non-GAAP financial measures 2:

Total Processing Volume (TPV) (in millions)

$

26,520

$

15,082

76%

$

50,518

$

24,077

110%

Adjusted EBITDA 3

$

(10,637)

$

(3,029)

251%

$

(8,990)

$

(13,440)

(33)%

Adjusted EBITDA margin 3

(9)

%

(4)

%

(5) pps

(4)

%

(11)

%

(7) pps

1 Net loss per share is computed by dividing net loss by the weighted average of common shares and dilutive common shares outstanding during the period.
2 We track a number of operating and financial metrics, including the key metric set forth in this table (Total Processing Volume), to help evaluate our business and growth trends, establish budgets, evaluate the effectiveness of our investments, and assess operational efficiencies. Total Processing Volume (TPV) represents the total dollar amount of payments processed through our platform, net of returns and chargebacks. We believe that TPV is a key indicator of the market adoption of our platform, growth of our brand, growth of our customers' businesses and scale of our business.
3 See "Information Regarding Non-GAAP Measures" for definitions of Adjusted EBITDA and Adjusted EBITDA margin and a reconciliation of the net loss to Adjusted EBITDA.

Net Revenue: Net revenue increased by $52.9 million, or 76% year-over-year, driven by higher TPV from existing large customers and continued growth in processing volume from both our Digital Banking and Buy-Now-Pay-Later customers.

Gross Profit: Gross profit increased by 70% year-over-year to $47.0 million. Gross margin decreased from 40% during the quarter ended June 30, 2020, to 38% during the quarter ended June 30, 2021 due to increased card networks fees.

Net Loss: Net loss increased by $61.4 million, or 865%, year-over-year to $68.6 million as a significant increase in gross profit was offset by increases in employee-related costs.

Total Processing Volume: TPV increased by 76% year-over-year.

Adjusted EBITDA: Adjusted EBITDA in the second quarter of 2021 was $(10.6) million, a decrease of $(7.6) million year-over-year.

Financial Guidance

The following summarizes Marqeta's guidance for the third quarter of 2021:

Third Quarter 2021

Net revenue

$114 - $119 million

Adjusted EBITDA (1)

$(16) - $(13) million

(1) See "Information Regarding Non-GAAP Measures" for the definition of Adjusted EBITDA.

Conference Call

Marqeta will host a live conference call today at 1:30 p.m. Pacific time (4:30 p.m. Eastern time). To join the call, please dial-in 10 minutes in advance: toll-free at 1-877-407-4018 or direct at 1-201-689-8471. The conference call will also be available live via webcast online at http://investors.Marqeta.com.

The telephone replay dial-in numbers are 1-844-512-2921 and 1-412-317-6671 and will be available until November 9, 2021, 5:00 p.m. Pacific time (8:00 p.m. Eastern time). The confirmation code for the replay is 13721145.

Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements expressed or implied in this press release include, but are not limited to, statements relating to Marqeta’s guidance for the quarter ending September 30, 2021; statements regarding Marqeta’s business plans, business strategy and the continued success and growth of our customers; expectations regarding Marqeta’s ability to address significant global opportunities; and statements made by Marqeta’ Founder and CEO. Actual results may differ materially from the expectations contained in these statements due to risks and uncertainties, including, but not limited to, the following: the effect of uncertainties related to the global COVID-19 pandemic on U.S. and global economies, our business, results of operations, financial condition, demand for our platform, sales cycles and customer retention; the risk that Marqeta is unable to further attract, retain, diversify, and expand its customer base; the risk that Marqeta is unable to drive increased TPV on its platform; the risk that consumers and customers will not perceive the benefits of Marqeta’s products as Marqeta expects; the risk that Marqeta's technology platform, including hosted solutions, do not operate as intended resulting in system outages; the risk that Marqeta will not be able to achieve the cost structure that Marqeta currently expects; the risk that Marqeta’s solution will not achieve the expected market acceptance; the risk that competition could reduce expected demand for Marqeta’s services; the risk that changes in the regulatory landscape adversely affects the gross interchange or other revenue Marqeta earns or adversely affects the bank and network costs Marqeta incurs; and the risk that Marqeta may be subject to additional risks such as currency fluctuations due to its international business activities. Detailed information about these risks and other factors that could potentially affect Marqeta’s business, financial condition and results of operations are included in the "Risk Factors" disclosed in Marqeta's prospectus filed with the Securities and Exchange Commission (the "SEC") on June 9, 2021 and in its Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2021, as such risk factors may be updated from time to time in Marqeta’s periodic filings with the SEC, available at www.sec.gov and Marqeta’s website at http://investors.Marqeta.com.

The forward-looking statements in this press release are based on information available to Marqeta as of the date hereof. Marqeta disclaims any obligation to update any forward-looking statements, except as required by law.

Disclosure Information

Investors and others should note that Marqeta announces material financial information to its investors using its investor relations website, SEC filings, press releases, public conference calls and webcasts. Marqeta also uses social media to communicate with its customers and the public about Marqeta, its products and services and other matters relating to its business and market. It is possible that the information Marqeta posts on social media could be deemed to be material information. Therefore, Marqeta encourages investors, the media, and others interested in Marqeta to review the information we post on social media channels including the Marqeta Twitter Feed and the Marqeta LinkedIn Feed. These social media channels may be updated from time to time.

Use of Non-GAAP Financial Measures

Reconciliations of non-GAAP financial measures to the most directly comparable financial results as determined in accordance with GAAP are included at the end of this press release following the accompanying financial data. For a description of these non-GAAP financial measures, including the reasons management uses each measure, please see the section of the tables titled "Information Regarding Non-GAAP Financial Measures".

About Marqeta, Inc.

Marqeta’s modern card issuing platform empowers its customers to create customized and innovative payment cards. Marqeta’s modern architecture gives its customers the ability to build more configurable and flexible payment experiences, accelerating time-to-market and democratizing access to card issuing technology. Marqeta’s open APIs provide instant access to highly scalable, cloud-based payment infrastructure that enables customers to launch and manage their own card programs, issue cards and authorize and settle payment transactions. Marqeta is headquartered in Oakland, California and is certified to operate in 36 countries globally.

Marqeta® is a registered trademark of Marqeta, Inc.

Marqeta, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except share and per share amounts)

(unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

2021

2020

2021

2020

Net revenue

$

122,266

$

69,402

$

230,249

$

117,790

Costs of revenue

75,291

41,785

133,417

71,611

Gross profit

46,975

27,617

96,832

46,179

Operating expenses:

Compensation and benefits

95,204

25,901

140,043

50,883

Professional services

6,382

2,479

12,643

4,825

Technology

7,569

2,660

13,195

5,099

Occupancy

907

1,080

1,993

2,167

Depreciation and amortization

874

850

1,781

1,707

Marketing and advertising

495

343

990

681

Other operating expenses

3,530

1,101

4,825

2,627

Total operating expenses

114,961

34,414

175,470

67,989

Loss from operations

(67,986)

(6,797)

(78,638)

(21,810)

Other income (expense), net

(481)

(295)

(2,648)

200

Loss before income tax expense

(68,467)

(7,092)

(81,286)

(21,610)

Income tax expense

(87)

(15)

(106)

(27)

Net loss

$

(68,554)

$

(7,107)

$

(81,392)

$

(21,637)

Net loss per share attributable to common stockholders, basic and diluted

$

(0.29)

$

(0.06)

$

(0.44)

$

(0.18)

Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted

234,669,664

120,051,635

183,784,697

119,265,816

Marqeta, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

June 30,
2021

December 31,
2020

(unaudited)

Assets

Current assets:

Cash and cash equivalents

$

1,579,287

$

220,433

Restricted cash

7,800

7,800

Marketable securities

105,053

149,903

Accounts receivable, net

5,931

8,420

Settlements receivable, net

9,598

12,867

Network incentives receivable

37,437

20,022

Prepaid expenses and other current assets

11,179

11,461

Total current assets

1,756,285

430,906

Property and equipment, net

10,104

9,477

Operating lease right-of-use assets, net

12,353

13,411

Other assets

1,582

3,886

Total assets

$

1,780,324

$

457,680

Liabilities, redeemable convertible preferred stock and stockholders' equity (deficit)

Current liabilities

Accounts payable

$

2,301

$

2,362

Revenue share payable

82,015

78,191

Accrued expenses and other current liabilities

87,323

60,545

Total current liabilities

171,639

141,098

Redeemable convertible preferred stock warrant liabilities

2,517

Operating lease liabilities, net of current portion

13,984

15,449

Other liabilities

8,715

10,452

Total liabilities

194,338

169,516

Redeemable convertible preferred stock

501,881

Stockholders' equity (deficit):

Preferred stock

Common stock

54

13

Additional paid-in capital

1,920,936

39,769

Accumulated other comprehensive income (loss)

(88)

25

Accumulated deficit

(334,916)

(253,524)

Total stockholders’ equity (deficit)

1,585,986

(213,717)

Total liabilities, redeemable convertible preferred stock and stockholders' equity (deficit)

$

1,780,324

$

457,680

Marqeta, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

Six Months Ended June 30,

2021

2020

Cash flows from operating activities:

Net loss

$

(81,392)

$

(21,637)

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization

1,781

1,707

Share-based compensation expense

66,928

6,663

Non-cash operating leases expense

1,058

1,010

Amortization of premium on marketable securities

716

87

Provision for doubtful accounts

73

23

Other

2,901

601

Changes in operating assets and liabilities:

Accounts receivable

2,416

(1,918)

Settlements receivable

3,269

135

Network incentives receivable

(17,415)

(1,718)

Prepaid expenses and other assets

354

612

Accounts payable

(18)

(534)

Revenue share payable

3,824

22,580

Accrued expenses and other liabilities

22,738

7,947

Operating lease liabilities

(1,420)

(848)

Net cash provided by operating activities

5,813

14,710

Cash flows from investing activities:

Purchases of property and equipment

(1,096)

(1,501)

Purchases of marketable securities

(13,145)

(63,033)

Maturities of marketable securities

57,188

61,720

Net cash provided by (used in) investing activities

42,947

(2,814)

Cash flows from financing activities:

Proceeds from initial public offering, net of underwriters' discounts and commissions

1,319,809

Proceeds from issuance of redeemable convertible preferred stock, net of issuance costs

143,109

Proceeds from exercise of stock options, including early exercised stock options

2,571

561

Payments for net settlement of restricted stock units

(10,273)

Payment of deferred offering costs

(1,981)

(511)

Repurchase of early exercised unvested options

(32)

(65)

Net cash provided by financing activities

1,310,094

143,094

Net increase in cash, cash equivalents, and restricted cash

1,358,854

154,990

Cash, cash equivalents, and restricted cash- Beginning of period

228,233

68,144

Cash, cash equivalents, and restricted cash - End of period

$

1,587,087

$

223,134

Marqeta, Inc.

Financial and Operating Highlights

(in thousands, except per share data or as noted)

2021

2020

Year over

Year Change

- Q2'21 vs Q2'20

Second Quarter

First Quarter

Fourth Quarter

Third Quarter

Second Quarter

Operating performance:

Net revenue

$

122,266

$

107,983

$

88,196

$

84,306

$

69,402

76

%

Costs of revenue

75,291

58,126

51,750

49,024

41,785

80

%

Gross profit

46,975

49,857

36,446

35,282

27,617

70

%

Gross profit margin

38

%

46

%

41

%

42

%

40

%

(2)

pps

Operating expenses:

Compensation and benefits

95,204

44,839

37,747

38,231

25,901

268

%

Professional services

6,382

6,261

3,172

2,132

2,479

157

%

Technology

7,569

5,626

4,708

3,432

2,660

185

%

Occupancy and equipment

907

1,086

1,070

1,100

1,080

(16)

%

Depreciation and amortization

874

907

890

901

850

3

%

Marketing and advertising

495

495

618

371

343

44

%

Other operating expenses

3,530

1,295

1,346

1,287

1,101

221

%

Total operating expenses

114,961

60,509

49,551

47,454

34,414

234

%

Loss from operations

(67,986)

(10,652)

(13,105)

(12,172)

(6,797)

900

%

Other income (expense), net

(481)

(2,167)

(638)

(83)

(295)

63

%

Loss before income tax expense

(68,467)

(12,819)

(13,743)

(12,255)

(7,092)

865

%

income tax expense

(87)

(19)

(17)

(43)

(15)

480

%

Net loss

$

(68,554)

$

(12,838)

$

(13,760)

$

(12,298)

$

(7,107)

865

%

Loss per share - basic and diluted

$

(0.29)

$

(0.10)

$

(0.11)

$

(0.10)

$

(0.06)

383

%

TPV (in millions)

$

26,520

$

23,998

$

18,748

$

17,250

$

15,082

76

%

Adjusted EBITDA

$

(10,637)

$

1,647

$

(2,624)

$

686

$

(3,029)

251

%

Adjusted EBITDA margin

(9)

%

2

%

(3)

%

1

%

(4)

%

(5)

pps

Financial condition:

Cash and cash equivalents

$

1,579,287

$

247,630

$

220,433

$

214,960

$

215,334

633

%

Restricted cash

$

7,800

$

7,800

$

7,800

$

7,800

$

7,800

%

Marketable securities

$

105,053

$

140,145

$

149,903

$

134,328

$

96,730

9

%

Total assets

$

1,780,324

$

481,803

$

457,680

$

424,661

$

382,260

366

%

Total liabilities

$

194,338

$

193,497

$

169,516

$

133,922

$

115,901

68

%

Redeemable preferred stock

$

$

501,881

$

501,881

$

501,881

$

478,857

(100)

%

Stockholders' equity (deficit)

$

1,585,986

$

(213,575)

$

(213,717)

$

(211,142)

$

(212,498)

(846)

%

pps = percentage points

Marqeta, Inc.
Reconciliation of GAAP to NON-GAAP Measures
(in thousands)
(unaudited)

Information Regarding Non-GAAP Measures

In addition to the financial measures prepared in accordance with generally accepted accounting principles in the United States ("GAAP"), this press release contains certain non-GAAP financial measures. Marqeta considers Adjusted EBITDA and Adjusted EBITDA Margin as supplemental measures of the company’s performance that are not required by, nor presented in accordance with GAAP.

We define Adjusted EBITDA as net income (loss) adjusted to exclude share-based compensation expense; payroll tax related to share-based compensation; depreciation and amortization; income tax expense; and other income (expense) net, which consists of changes in the fair value of redeemable convertible preferred stock warrant liabilities (for periods prior to the IPO), realized foreign currency gains and losses, and interest income from our marketable securities. We believe that Adjusted EBITDA is an important measure of operating performance because it allows management and our board of directors to evaluate and compare our core operating results, including our operating efficiencies, from period to period. Additionally, we utilize Adjusted EBITDA as an input into our calculation of certain annual employee bonus plans.

Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by net revenue. This measure is used by management and our board of directors to evaluate our operating efficiency.

Adjusted EBITDA and Adjusted EBITDA Margin should not be considered in isolation, or construed as an alternative to net loss, or any other performance measures derived in accordance with GAAP, or as an alternative to cash flow from operating activities or as a measure of the company's liquidity. In addition, other companies may calculate Adjusted EBITDA differently than Marqeta does, which limits its usefulness in comparing Marqeta’s financial results with those of other companies.

The following table shows Marqeta's GAAP results reconciled to non-GAAP results included in this release:

Three Months Ended June 30,

Six Months Ended June 30,

2021

2020

2021

2020

GAAP net revenue

$

122,266

$

69,402

$

230,249

$

117,790

GAAP net loss

$

(68,554)

$

(7,107)

$

(81,392)

$

(21,637)

GAAP net loss margin

(56)

%

(10)

%

(35)

%

(18)

%

GAAP net loss

$

(68,554)

$

(7,107)

$

(81,392)

$

(21,637)

Depreciation and amortization expense

874

850

1,781

1,707

Share-based compensation expense

55,536

2,918

66,928

6,663

Payroll tax expense related to share-based compensation

939

939

Other income (expense), net

481

295

2,648

(200)

Income tax expense

87

15

106

27

Adjusted EBITDA

$

(10,637)

$

(3,029)

$

(8,990)

$

(13,440)

Adjusted EBITDA Margin

(9)

%

(4)

%

(4)

%

(11)

%

A reconciliation of Adjusted EBITDA to the comparable GAAP measure is not available due to the challenges and impracticability with estimating some of the items as such items cannot be reasonably predicted. Because of those challenges, reconciliations of such forward-looking non-GAAP financial measures are not available without unreasonable effort.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210811005826/en/

Contacts

IR Contact: Marqeta Investor Relations, IR@marqeta.com