Ladies and gentlemen, welcome to the Marqeta Fourth 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, Director of Investor Relations. Please go ahead.

Thanks, operator. Good afternoon, everyone, and welcome to Marqeta's Fourth Quarter 2025 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 supplemental materials, which are available on our Investor Relations website. With that, I'd like to turn the call over for Mike to begin.

Thank you, Maria, and thank you for joining us for Marqeta's Fourth Quarter 2025 Earnings Call. I'm excited to be joined on this call by Patti, our new CFO, who started on February 9. Patti is a proven finance executive with extensive experience across technology, financial services and payments, and we're excited about the value she will have at Marqeta. To start our call, I will briefly touch on our Q4 results, followed by a few Q4 highlights of the growth in our business across use cases, geographies and value-added services. I will then turn it over to Patti, who will cover the details of our Q4 financial results and our expectations for 2026. Our fourth quarter results were once again demonstrating our outstanding growth as we reached new levels of scale while continuing to increase our adjusted EBITDA as we trend towards GAAP profitability. Total processing volume, or TPV, was $109 billion in the fourth quarter, crossing the $100 billion threshold in a quarter for the first time in Marqeta's history. With a year-over-year increase of 36%, this was the third straight quarter in which our TPV growth has accelerated by 3 points from the previous quarter, demonstrating our strong business momentum as we exit 2025. Q4 net revenue of $172 million grew 27% year-over-year, driven by strong TPV growth across the use cases we enable. Q4 gross profit growth was $120 million, a 22% year-over-year increase, exceeding our expectations by several points. Our adjusted EBITDA was $31 million in the quarter, which was another all-time high, translating into an 18% margin and more than doubling the dollars on a year-over-year basis. This was fueled by strong gross profit growth and the benefit of our scale platform and efficiency initiatives. This quarter and throughout 2025, we drove significant growth…

Thank you, Mike, and good afternoon, everyone. I look forward to getting to know all of you moving forward. I'm excited to be stepping into this role at a time when Marqeta is building the business for scale and on the cusp of GAAP profitability. Our financial results for Q4 reflect another great quarter and an even stronger-than-expected finish to the year. Both net revenue and gross profit growth were approximately 4 percentage points higher than expected due to the business momentum reflected in our TPV growth. For the third straight quarter, TPV growth accelerated by 3 percentage points on a sequential basis, reaching 36% in Q4. With adjusted operating expenses roughly in line with our expectations, the higher gross profit led to another record quarter for adjusted EBITDA, and we approached GAAP net income breakeven for the third quarter in a row. Let me start by providing some color on our incredibly strong TPV, which was $109 billion in Q4, growing 36% year-over-year, with 3 of our 4 major use cases delivering accelerated growth. Non-Block TPV continues to grow over 2x faster than Block TPV. Growth within our financial services use case accelerated from last quarter, and the growth rate continued to be a little slower than the overall company. Lending, including Buy Now, Pay Later growth slowed from Q3, but remained very robust, growing just shy of 60% on a year-over-year basis, mostly due to the growth in flexible network credential usage and our customers' continued geographic expansion on our platform. The growth slowed versus Q3 because we lapped the Klarna migration in Europe, which was executed in October of 2024. Expense management growth accelerated several points from last quarter, with growth exceeding 40%. This performance is driven by customers continuing to acquire new end users as their…

[Operator Instructions] our first question is from Timothy Chiodo with UBS.

Patti, great to be on the call with you. The Cash App topic, so I apologize for just getting right at this, but I did notice a little bit of a change there. So gradual on the new issuance in first half and then turning off the new issuance in the second half. I was wondering if there was any update you could provide investors around maybe the longer-term messaging around to what extent this diversification might persist? Would it persist into 2027, '28, '29? Will there be some kind of a limit to it where we hit a happy medium across the various providers that Cash App is using? And then related to that, I also noticed that you mentioned the tiering that Block is hitting this year, and you expect them to be at that tier for the entirety of the year, which somewhat implies that the second half lack of new issuance isn't overly material to 2026 numbers as you've previously guided. But the follow-up question that if that lack of new issuance starts to catch up to the Block volumes next year, does Block potentially slip back into a lower tier and therefore, your take rate with Block returns to norms rather than the headwind that it sees this year?

Thanks, Tim. I'll try to cover -- you covered a lot of ground there. So let me kind of dive in. So yes, we have changed our assumptions a little bit on the impact of them diversifying their new issuance. Up until this point, and we're almost at the end of February, we see no discernible impact on the new issuance we're receiving. So at this point, it's minimal to really not being able to see anything. And so -- but we do expect them to be getting started. So what we've assumed now is that through the first half, it will sort of gradually -- we'll be receiving less new issuance. But then by the second half, we will no longer see any new issuance. In terms of the second part of your question in terms of the longer-term impact of diversification. As you know, Tim, in payments, a lot of people have -- well, they see multiple providers, but they tend to have a primary provider, right, where you have 80% to 90% of your volume and then you have a second provider who you really use for diversification purposes. And how that plays out for us with Cash App remains to be seen, but we feel really good about our ability to remain their primary partner. One, we feel that our platform capabilities are quite differentiated in terms of what we can do and what we can provide them. The second thing is that our relationship goes very deep and goes back very many years. And so we have -- we're accustomed to working together and have just a very deep relationship and are quite responsive in terms of how we work with them. And then finally, and maybe most importantly, the -- there's a lot of…

Our next question is from Connor Allen with JPMorgan.

Patti, congrats on your role. Maybe a question for you, if you don't mind. Can you talk a little bit more about your choice to join Marqeta? I'm curious, considering your background across cards and payments, just what stood out for you in your diligence? What makes you the most excited here?

Yes. No. Well, thanks, Connor, and it's nice to meet you. So I've been in and around payments for over a decade now across -- as you mentioned, across acquiring, issuing and banking and across a bigger kind of like within a bank as well as kind of Stripe and then subsequently at Roofstock, which I was trying to implement embedded finance within that. So I've known about Marqeta for years, and I was at Stripe when they launched issuing and really recognized Marqeta as a category creator at that time. So when the call came in, I spent some time with Mike and the Board and the leadership team, and I got very excited about the combination of kind of the team I'd be working with, but also kind of listened to a lot of their track record in 2025 and kind of the growth they've been seeing and kind of all the opportunities ahead. And then also the customers that they worked with DoorDash, Klarna, Uber, Block, having worked with these customers across different organizations, they don't take these decisions lightly and really, it kind of validated what's been built here. And so -- and as you know, payment platforms are kind of complex and hard to build. So -- and they require deep relationships. And so I just felt like my experience was especially relevant at a time and place where there was just a lot of growth and investment ahead. And so I'm excited to be here today to join the team.

Great. Appreciate that and share the same view on our side. Maybe one for you, Mike, if you don't mind. I wanted to ask a little bit about competition. There's been some discussion in the market about newer entrants competing for larger deals. I mean we gather that it's not necessarily happening where Marqeta typically participates. But I'm just curious at a high level, if you've seen any shift in the competitive environment, new faces and RFPs, et cetera?

We are not seeing any significant change in the competitive environment. I would say it's relatively stable. I think what is more changing from our perspective is a few years ago, in the fintech boom times, right, there were a lot more deals, a lot more uncertainty where you were making bets on customers and whether they would succeed. That was a big part of the sort of process. Not only are you bidding for the business, but you're also trying to assess the chances of success. What's now happening is there are fewer deals, but they're much more substantial in size. And there are customers who already have a user base and a brand. And so from our perspective, have a much higher likelihood of success because they're really just looking to insert a card value proposition into an existing user base. And so the fact that then there are more established companies has changed a little bit the dynamics of who we see because usually, they're only going to include players who have more substantial scale, and that's a much bigger part of the decision-making process because they're confident they're going to reach several billions of volume or maybe even to double-digit billions of volume annually and who has the platforms and the experience and track record of delivering on that kind of scale. And so it's mostly stable, but there is a slight change as we move upmarket, so to speak.

Our next question is from Darrin Peller with Wolfe Research.

Patti, nice to connect and congrats also, to connect again. I guess when I just think about the underlying trajectory of the business, Mike, I know we talked about 7 points of impact to your gross profit outlook really associated with the items that you discussed on Block as well as the renewals. And I guess there's another few points on pricing, which I think is a little bit more newer to us just given the scale of Cash App. And so the combination, you're really still growing your Cash App by somewhere over 20% when you look at your guide and those variables. A, is that how you want us to think about the trajectory? And, b, if that's true, maybe remind us of what you're seeing as the top drivers. I mean you're talking about flips in the business, where are you seeing the most strength? Just rank the top few strengths you're seeing driving that 20% plus algorithm.

Sure. Yes. Thanks, Darrin. And you're exactly right. There is the 2 impacts we called out that are 7 points, the renewals and the Cash App tiering, those to us are very timing specific. It's almost like they're almost perfectly lining up to hit our 2026 growth in a way if they were -- the timing was a little different, these impacts would be spread it out and our growth wouldn't be kind of where it is in the lower double digits. So those 2 things, we really think are very specific to timing and therefore, go away. And then we have a little bit of 1.5 to 2 points of the Cash App diversification. And then just in general, the TPV growth is just moderating, right? The second half, our growth has really been particularly impressive given our scale, and we don't -- we still expect it to be strong, but not growing over 30%. And so you put all those things together, and there's sort of 7 points of timing and call it, 4 to 5 points of other factors. I think when we look at what is -- what's exciting to us, I would put it in a few different areas. Like there's 4 things where we really have strong momentum. Like the TPV growth, again, is very impressive, particularly Buy Now, Pay Later, and we just think that's going to be a growing use case that's just going to continue to get wider adoption. Europe is not only fast growing, but we've added capabilities there with TPL just in the last 6 months. Our value-added services, the size of that business doubled in 2025, and that tends to be a stickier, higher-margin business. And then the new cohorts, the new customers we're bringing on, as I…

Yes. Okay. Guys, just one quick follow-up would be to double check that you reviewed the portfolio and don't feel any risk of incremental renewals, large renewals. I just want to see if there's anything else we should just keep an eye out for, for the year that would impact maybe guidance even into the next year. It may be too early to know the end of the year, but anything you see where your transparency is?

Yes. I think it's probably a little too early to be talking about 2027. But I think, yes, we do, on a normal way basis, have renewals all the time. But really, these 2 that we're highlighting here are the 2 remaining from coming out of the fintech boom. But I think you'll always see as we're kind of growing with these users and you would see -- you would naturally see some pricing step down as they grow with us, but that's, again, to incentivize them to grow with us.

Yes, I would say, we have pretty good visibility. And I think we -- as Patti just said, I mean, we've included sort of the BAU things that we would expect to see. So we feel pretty good that we've incorporated everything.

Yes.

Our next question is from Sanjay Sakhrani with KBW.

Welcome, Patti. I'm just curious, I know, Mike, you talked a little bit about the expectations for moderating TPV growth in the second half. Obviously, you're growing over some difficult comparisons. But curious, is that sort of conservative given you have the pipeline and then obviously, BNPL is doing well? Or do you feel like there will be a little bit of a scale back in terms of issuance there?

Yes. It's a great question, Sanjay. I think the performance we're seeing in this past quarter, I would say, is just -- is pretty remarkable. Like when you -- just to step back a minute, our lending and Buy Now, Pay Later use case is growing almost 60%, and that's despite us lapping the conversion with Klarna that started -- that we executed in October of '24. So we're growing almost 60% with like a tougher comp. Expense management is growing over 40%. That's a pretty big use case for us. So that's the first time it's grown over 40% in 3 years. Financial services, which is by far our largest use case, is growing over 30% in Q4, and it hasn't -- that's the first time that's happened in 2025 on, again, a very large base. And even on-demand delivery, which for the last couple of years has been more of a single-digit grower, is now double digits the last couple of quarters and accelerated. So we really are seeing incredible performance. We've tried to be reasonable. As we said, we think in the first half, our growth will remain over 30% as there's just so much momentum. But as we get to the second half, it's just we have really tough comps. And if some of these things can keep rolling at that level, obviously, that would be great for the business, but that's not what we've assumed for now. We think those tougher comps will slow the growth a little bit, but growing in kind of the mid- to high 20s on a base of almost $400 billion of volume, we feel pretty good about the growth of the business.

And then just a follow-up on value-added services and Europe. I guess when we think about the growth there, can you just maybe help us dimensionalize sort of what you're expecting this year versus last year? And what maybe the broader product rollouts are that could actually maybe accelerate the growth there as well?

Sure. So let me start in Europe. Europe is now I don't know, about a little bit -- maybe a little bit more than mid-teens of our TPV. And this is the first quarter in a couple of years that it hasn't grown over 100% just as that base is growing. As I mentioned in my comments, 2025 is 8x the size of 2022 in terms of our business in Europe. So we have a lot of momentum there, and that was all done with a relatively limited value proposition of just our -- we have great processing. And of course, we're quite proud of our processing capabilities, but we didn't really have many other services around that capability. And with the TransactPay acquisition, we now have a much more robust value proposition to sell and market. And so we are expecting Europe to still meaningfully outpace the overall company, both in terms of TPV growth as well as gross profit growth. So we expect that to be a pretty major contributor. In terms of value-added services, we continue to add new capabilities and more and more customers are looking for scaled solutions. I would say the growth, we think, will moderate a little bit in 2026 only because we really had a pretty significant step-up in 2025. We had a few of our largest customers adopt offerings from us, which then meant that the gross profit doubled in 2025 versus 2024. And although we think it will keep growing at a nice clip faster than the company, it's not going to keep up that pace. But we do think it will be a meaningful contributor. And typically, those are higher-margin products and they increase the stickiness with the customer as well. So we're quite excited about kind of our expanding portfolio and the increased penetration that we have with those products into our customer base.

Our next question is from Craig Maurer with FT Partners.

Welcome, Patti. I wanted to put a finer point on Tim's question earlier considering a lot of what I had has already been asked and answered. Visa was pointed on their call to call out the win in cash for Cash App. They've been putting a lot of emphasis on their Issuer Services business. So I was wondering what you're seeing differently from them? Are they increasing their presence in the market in terms of what they're doing for fintechs? How is this changing how you're looking at the market, if at all?

Sure. Obviously, I don't know exactly. I can only see what Visa says publicly. But in my view, what Visa DPS particularly offers is, obviously, they have a lot of credibility to say they can handle your business at scale with great reliability, right? So when you've gotten to that size, then they become an option, and they're used to managing customers of that size. And just because of the size of their platform and how long it's been around, my perception would be they're probably just not quite as flexible. So catching customers earlier in their life cycle is probably not kind of prime hunting ground for them. But talking to or talking to prospects who have already achieved a lot of scale and have a lot of maturity, that's a good match for them and where their strengths, it sort of plays into their strength, so to speak. So I would say I think they have made platform improvements. I have no doubt they have more capabilities than they did a few years ago. But I think there's still a relatively small group of people that kind of have that kind of scale that they would target. I think we would still have big advantages, I think, in terms of nimbleness and thinking of more creative solutions to solve very specific problems for customers as opposed to something that's pretty stable processing and they know what they want. And so we may see them a little bit more a couple of years ago, we didn't really see them much. And I think as we go after bigger and bigger business, then that would be maybe a competitor we'll see a little more frequently. But we still feel very good that our value proposition is that we also can support a lot of scale and have programs that are quite big, but we still have a lot of agility and a lot of unique capability and configurability that allows people to do things that are a little bit different and differentiate themselves in the market, and that's really what sets Marqeta apart.

Our next question is from James Faucette with Morgan Stanley.

This is Michael Infante on for James. Mike, I'd be curious to hear how you're thinking about the mix shift we're seeing in BNPL broadly with respect to a larger percentage of volume originating on Flex Credential cards as well as within digital wallet. So as that mix shift continues, what's the impact on your unit economics, if at all?

Yes. I would say not a big impact on our unit economics. I would say they're relatively similar. I would say, typically, more of a consumer value proposition is going to have a little bit of a premium versus a single-use virtual card. But at least at this point, the people -- the first movers with the flexible credentials are quite large players who have a lot of volume. So I would say the economics are relatively similar. But the big difference is the lack of -- I don't know, maybe I'll just say stickiness that comes when you shift from a virtual credential to a consumer credential. That's going to be a much more sticky relationship, harder to diversify because there isn't a lot of precedent for people trying to run a single program on multiple stacks. And versus in virtual card, every transaction that occurs, you could send it to a different platform if you wanted. And so I think the real benefit to us in addition to just having leadership in this space and being able to handle consumer value propositions, which some of our competitors don't have a lot of experience with. But in that shift to something that's more consumer-oriented, it also becomes a little bit of a stickier business for us and a little bit more challenging for customers to diversify, which should be good for us given our early leadership here.

That's helpful, Mike. And then maybe just secondly, any quick update you can share just on the nature of your conversations with some of the larger financial institutions and in the areas that they're diligent in?

Sure. I would say we -- our conversations with financial institutions, I would say, are more frequent and substantive now than they were a couple of years ago. I think there's a real shift in the market towards people really looking at modernization. I think the -- as we've said before, the fintech winners have been crowned and they're becoming big businesses. And so what I think maybe a few years ago, maybe people saw as growing the pie are now starting to become real competitive threats and real competition for the banks for not only deposits, but also spending, both consumer and commercial. And so I think there's a broader recognition that to successfully compete with some of those value propositions, you're probably going to need a little bit more sophisticated technology and more ability to be flexible and configurable. And so we are having more and more conversations. We still believe, though, that these are inherently cautious organizations, and we're likely to break in still with a specific use case. And I would say the 2 probably at the top of the list from our standpoint would be something in commercial, just given our success and proven track record at supporting many of the disruptors and then also in some sort of lending Buy Now, Pay Later use case where a lot of banks also are interested in providing that kind of capability on their cards. And we clearly, again, have established leadership and track record and ability again to support big scale. So we're working to get our foot in the door. And I would say the conversations, there's a lot more promising than maybe a couple of years ago where it felt like it was still pretty far off.

Our next question is from [ Andrew Schmidt ] with Citi.

Welcome, Patti. So I just wanted to dig in on the implementation time frames and partner bank diversification. Maybe you could just give us an update there. And then for the enterprise customers for embedded use cases, if you could just elaborate on what implementation time frame looks like for that type of customer, that would be helpful.

Sure. So in terms of new bank partnerships, we added a new -- well, a new U.S. bank and then a U.K. bank last year. We're in the process of implementing another U.S. bank and a European bank in the first half of this year. So we are diversifying our bank offering. In Europe, it's purely because now we have the capability to sort of offer a combined value proposition. So those are new. And in the U.S., the diversification more is targeting 2 things. Either it's a use case, not all of the banks are comfortable with all the types of use cases that we can serve. So some of it is about -- as our business diversifies, we might need different partners. And then some of it is also capability, right? Some of these banks have been investing and have some unique capabilities that we think pairs well with ours to meet a customer need. So that's why we're expanding our bank kind of portfolio. In terms of the implementation time, I think we've gotten to a good place there, where we have solidified the processes. We've taken out a lot of the challenges we had with things moving slower. And I think also we've done a good job educating customers about the impact of changes that they make along the way and what that can do to time line. So I think we've stabilized that pretty well. But maybe what you're signaling in the second part of your question is true. As we're moving into more enterprise deals, they do move a little slower, right, than our previous customer base who -- a lot of times, our value proposition or the card they were doing with us was critical to their business and what they're trying to achieve. So they're ready and willing to move very fast, and it's one of the top priorities going on at the entire company. When you're dealing with a much larger organization, there's just more complex decision hierarchy, there -- even just the kind of scrutiny that we get in terms of tech and security and all these things, it just takes a little more time. So I would say, in general, they're moving a little slower. But as I mentioned earlier, we're okay with that trade-off because we feel the probability of success is much higher and their ability to hit the ground running is also much higher given they're going to be bringing this value proposition into an already established very large user base as opposed to a few years ago when it was a new fintech, they were going to be building it mostly from scratch.

Got it. I appreciate those comments. And then maybe we could just chat on value-add services for a moment. It's good to see the uptake on the enhanced risk product. Can you just talk about just expectations for attach there, monetization, that would be helpful. And then obviously, a more important point of all this is just the pipeline for other value-add services. It's important to keep iterating these. Maybe you can talk about kind of what you're sort of targeting, what types of areas in the future.

Sure. I think the biggest change that we're seeing is that, again, with the fintech customer base, they almost prided themselves in piecing together kind of best-in-class solutions, right? They viewed it as their modern tech stack, they're going to take best-in-breed and pull it together to something that's quite unique in the market and best-in-class. And so they were a little bit willing to choose a la carte. I think as we're talking to more and more enterprise customers, if you've got a good solution, they're happy to take it from you. They don't want to connect to 5 different people to push -- pull together their value proposition. So if you have a good offering to make and you're going to be the process and program manager, they are -- I see what we see are more inclined to take that solution from you just to make their life a little bit easier and to be able to move faster. And so that's really the difference that we're seeing in the uptake. And in terms of the areas, I think our strength is clearly in tokenization. We have capabilities there that we think are very differentiated. And then in our risk services. Those are the 2 areas. Everyone in issuing is going to want -- is going to have to do some level of fraud management and fraud monitoring, right? And so those are the 2 areas that I think we're going to continue to invest and make sure we remain strong. But we are moving into new areas related to rewards, our white label app, more kind of data and analytics services as we continue to get bigger and have more scale. And so those are some of the things that are relatively small now, but we think have a lot of potential to be larger in the future.

Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you again for your participation.