Marqeta Q2 2026 Earnings Call Transcript

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Provided by Quartr
August 4, 2026

Key Takeaways

  • Positive Sentiment: Q2 performance exceeded expectations: TPV rose 32% to $120 billion, gross profit increased 17%, adjusted EBITDA grew 31% with a 21% margin, and Marqeta delivered approximately $8 million in GAAP net income for its second consecutive profitable quarter.
  • Positive Sentiment: Non-Block TPV grew more than twice as fast as Block TPV, while expense-management volume increased over 50% and international volume rose over 40%, reaching 20% of total TPV. Average deal size increased more than 90% year over year, reflecting growing traction with large enterprises and embedded-finance customers.
  • Negative Sentiment: Management expects a significant second-half growth slowdown, guiding for Q3 revenue growth of 6%-8% and gross-profit growth of 5%-7%. The deceleration reflects tougher comparisons, the TransactPay acquisition anniversary, slower BNPL growth, an unfavorable on-demand-delivery mix, and reduced Cash App new issuance.
  • Negative Sentiment: Block began modestly reducing Cash App new card issuance in mid-June, with management estimating an eventual shift to little or no new issuance by year-end. Although the existing relationship remains strong and pricing tiers may cushion gross-profit effects, management said the impact could exceed two percentage points on a 2027 run-rate basis.
  • Positive Sentiment: Marqeta raised its full-year adjusted EBITDA growth outlook to the low 30% range and expects GAAP net income in the high-$20 millions, supported by vendor savings, cost discipline, and operating leverage. Longer-term growth opportunities include credit products, European program management, stablecoin-backed cards, non-card money movement, and value-added fraud services.
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Earnings Conference Call
Marqeta Q2 2026
00:00 / 00:00

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Operator

Ladies and gentlemen, welcome to the Marqeta, Inc. second 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.

Sarah Barkema
Sarah Barkema
Chief Accounting Officer and Head of Investor Relations at Marqeta

Thanks, operator. Good afternoon, everyone, and welcome to Marqeta's second 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.

Sarah Barkema
Sarah Barkema
Chief Accounting Officer and Head of Investor Relations at Marqeta

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. I'd like to turn the call over to Mike.

Mike Milotich
Mike Milotich
CEO at Marqeta

Thank you, Sarah, and thank you for joining us for Marqeta's second quarter 2026 earnings call. I'll begin with a brief summary of our Q2 results, then provide an update on how our customers are leveraging the increasing breadth of our platform capabilities across multiple geographies and a diverse set of use cases, which we believe continues to differentiate us from other issuer processors. I will then turn the call over to Patti, who will cover the details of our Q2 financial results and our expectations for the remainder of 2026. The second quarter results reflect our strong underlying business performance. TPV was $120 billion and grew 32%, which was the fourth consecutive quarter above 30% growth. This fueled gross profit growth of 17%.

Mike Milotich
Mike Milotich
CEO at Marqeta

The increasing scale of our business drove 31% adjusted EBITDA growth, achieving a 21% EBITDA margin and delivered $8 million of GAAP net income, our second consecutive quarter of GAAP profitability. These results are a testament to our durable growth, operating leverage, and execution. Marqeta has been at the forefront of modern issuer processing for over a decade, enabling growth and innovation for customers looking for the flexibility and control to deliver unique offerings to their end users. What we believe makes us unique is the breadth and configurability of our platform, spanning debit and credit, consumer and commercial, certified in over 40 countries, combined with the expertise and experience to execute innovative solutions. Our momentum this quarter highlights three ways this differentiation is translating into growth. First, the demand for multinational card issuing continues to increase as our customers extend their programs across borders on our single stack platform.

Mike Milotich
Mike Milotich
CEO at Marqeta

Second, we are broadening and enhancing our product suite to support the breadth of our customers' needs. This includes offering end-to-end stablecoin-backed card solutions to meet the accelerating demand for digital asset-backed payments, several money movement options beyond card to minimize the need for our customers to have multiple partners, and strengthening our fraud solution with third-party data sources to deliver increased program profitability and customer satisfaction. Third, the continued expansion of our customer base to include more business with large enterprises, in addition to the fintechs we have served all along. Our traction with large enterprises has real momentum, with the latest evidence being the size of the average deal signed in Q2 was up over 90% year-over-year. These signings continue to increase the number of embedded finance programs launching in the market with Marqeta. Let me start with the growing demand for multinational card issuing.

Mike Milotich
Mike Milotich
CEO at Marqeta

Our customers continue to expand their businesses across borders without the friction of multiple platform integrations. In this quarter, we added new capabilities and partners to enhance how we support them. Where this is particularly evident is in Europe, which builds upon our expanding offering in the region following our acquisition of TransactPay last year. Earlier in Q2, we announced our partnership with Banking Circle, which expands our bank partnership account and money movement offering into 30 additional European countries to enable businesses to enrich their card programs with embedded banking services and multi-rail payment capabilities. This new bank partnership, in combination with our TransactPay EMI license, allows our customers to gain access to a single foundation for integrating card issuing, multi-currency account functionality, and European payment rails for domestic and cross-border money movement.

Mike Milotich
Mike Milotich
CEO at Marqeta

In Q2, we also had another existing customer expand from the U.S. into Europe by leveraging TransactPay. Building on our long-standing relationship, Expensify is utilizing our expanded capabilities to bring its expense management card offering to the U.K. and E.U. Expensify's European customers can now access the same spend management capabilities that have driven the rapid growth of its card offering in the U.S. Once again, our platform enabled a customer to scale into new markets through a single integration. Let me shift to the broadening and enhancing of our product suite in three distinct ways: new settlement models with stablecoins, money movement beyond the card, and enhanced fraud detection with additional data elements. I will start with stablecoin-backed cards. Our strategy here is straightforward, to make digital dollars spendable through the same trusted card rails our customers and users already utilize on a daily basis.

Mike Milotich
Mike Milotich
CEO at Marqeta

We are introducing our stablecoin offering across a couple of fronts. The first is new strategic partnerships with both zerohash and BVNK, leading infrastructure platforms for crypto, stablecoins, and tokenized assets, zerohash and BVNK will provide the regulated global infrastructure, including custody, compliance, liquidity, and on-chain money movement. Marqeta will provide the card issuance while also managing the bank and network relationships. Together, we will enable stablecoin-backed card solutions that link directly to existing card rails, making it possible to use stablecoins for purchases anywhere a card is accepted without additional integrations or regulatory burdens. In addition, these partnerships further support Marqeta's leadership at the intersection of crypto and fiat payments, strengthening our ability to deliver flexible solutions to both crypto native and non-crypto companies. In addition, we are also a participant in Open USD, a new open stablecoin standard designed as shared infrastructure for businesses moving money over the internet.

Mike Milotich
Mike Milotich
CEO at Marqeta

Participating alongside others across the payments, banking, and technology ecosystem positions us to give our customers access to additional stablecoin options as this market scales. In addition to stablecoins, we are further extending the payment rails you can access through the Marqeta platform with multiple well-established money movement options in the U.S., U.K., and E.U. Our commercial customers in particular, increasingly want to utilize multiple payment rails through one platform. Today, most B2B payments happen without a card, and businesses have to stitch together multiple providers and banks for capabilities like ACH, real-time payments, push to card, and wires. This is a natural extension of our platform strategy, providing a unified offering that brings card and non-card money movement together through a single Marqeta integration, so our commercial customers can execute more of their payments with us.

Mike Milotich
Mike Milotich
CEO at Marqeta

Beyond new rails, we are also enhancing our fraud offering we call Real-Time Decisioning, which delivered over 80% gross profit growth in the first half of this year. By partnering with leading acquirers and fraud prevention providers, including Adyen, Riskified and Signifyd, we are incorporating rich merchant transaction data into our proprietary risk score and fraud detection capabilities. This additional data, including device, location, order, and account information, helps customers reduce fraudulent transactions and increase authorization rates. This ultimately enhances the profitability of the customer's card program through better fraud detection and a reduction of false positives. Finally, a strong proof point of our differentiation momentum is the caliber of embedded finance businesses we're winning, both expanding inside our marquee relationships and winning sophisticated new customers.

Mike Milotich
Mike Milotich
CEO at Marqeta

One recent example of our land and expand success is with a Fortune 500 customer that we signed initially in Q3 last year. This customer serves millions of users by enabling electronic supplier payments for small and medium-sized businesses. In Q2, we signed a second program with them to power a stored value account with a linked debit card for individuals in payroll programs with SMBs. What is unique about this program is that the account is owned by the individual, not tied to a specific employer, so it stays with them across jobs and can be funded via ACH, real-time payments, and mobile check deposit. We're also winning sophisticated new customers. This quarter, we signed a deal to flip an existing program for a leading payments and expense management platform serving film and television production companies.

Mike Milotich
Mike Milotich
CEO at Marqeta

This customer will be migrating their current volume to Marqeta for the increased flexibility to run a tailored program, as well as our track record for delivering innovative solutions. Before I wrap up, let me say a few things about our business with Block, where our relationship remains strong and continues to grow. Late in the quarter, we began to see a modest decline in Cash App new issuance, which was in line with our expectations and therefore factored into our guidance. I want to reiterate that diversification of providers is a standard risk management practice in the industry and understandable for Block, given we help power Cash App, Square, and Afterpay. The majority of our largest customers have diversified in recent years, yet our growth has remained strong and steady.

Mike Milotich
Mike Milotich
CEO at Marqeta

We continue to onboard new Cash App users, both to the long-standing program as well as the newer flexible credential offering, but we are no longer receiving 100% of the new issuance. It is important to understand that we continue to expand the Block relationship with new programs and services, and Block remains a valued growing partner in addition to our non-Block business expanding at a significantly faster rate. To wrap up, our business continues to have strong momentum across three dimensions: the customers we serve, the geographies where we serve them, and the platform capabilities they can utilize. Our support of multinational card issuing on a single platform with a broader product suite that includes stablecoin-backed card solutions, several money movement options beyond card, and strengthening our fraud solution with third-party data sources only enhances our position to meet the growing demand for modern card issuing.

Mike Milotich
Mike Milotich
CEO at Marqeta

Strong gross profit growth, our second consecutive quarter of GAAP profitability, growing deal sizes across fintech and embedded finance enterprises, and the quality programs we're onboarding all point to the same thing, that the breadth, flexibility, and scale of our platform is enabling customers to expand and thrive. I will now turn the call over to Patti to discuss our Q2 financial results and expectations for 2026.

Patti Kangwankij
Patti Kangwankij
CFO at Marqeta

Thank you, Mike, and good afternoon, everyone. Our second quarter results reflect the continued momentum of our business, consistent execution, and the benefits of the scale of our platform. Net revenue and gross profit grew 17% on a year-over-year basis, primarily driven by TPV growth of 32%. Our operating investments remain targeted and combined with disciplined execution, our cost base continued to become more productive. Fueled by gross profit over performance, adjusted EBITDA grew 31% year-over-year, which was well above our guide. The adjusted EBITDA outperformance in Q2 led to GAAP net income of approximately $8 million, which exceeded our expectations. Q2 net TPV was $120 billion, growing 32% year-over-year on a continuously expanding base as non-Block TPV continued growing more than 2x faster than Block TPV. This marks our third consecutive quarter with TPV above $100 billion and the fourth consecutive quarter with growth over 30%.

Patti Kangwankij
Patti Kangwankij
CFO at Marqeta

Growth within our financial services use case continues to run a little slower than the overall company, but excluding Block, financial services growth is meaningfully faster than the overall company. Late in the quarter, we began to see slight moderation in Cash App new issuance, which was contemplated in the guidance we gave last quarter. Lending, including Buy Now, Pay Later, grew over 40% year-over-year. Still very strong against a tougher comparison than the nearly 60% pace in Q1. This was expected given last year's remarkable BNPL growth ramp that began in the second quarter. Growth in this use case continues to be driven by expanding flexible network credential usage and our customers' ongoing geographic expansion on our platform. Expense management growth continued accelerating with volume up over 50% year-over-year.

Patti Kangwankij
Patti Kangwankij
CFO at Marqeta

This robust growth reflects our fast-growing customers continuing to take share by acquiring new end users, made possible by their utilization of our uniquely configurable capabilities. On-demand delivery growth remained in the double-digit year-over-year, but below the company's overall growth rate, as this is our most mature use case. Turning to the P&L, Q2 net revenue was $176 million, growing 17% year-over-year. Block net revenue concentration was 41% in Q2, which was 1 point lower than last quarter and marks a 5-point decline year-over-year, despite Block programs growing well on our platform. Q2 gross profit was $122 million, growing 17% year-over-year, and was above the high end of our expectations. The guidance we gave last quarter included a 2-point drag from renewals in Q2 that we now expect to be signed in Q3.

Patti Kangwankij
Patti Kangwankij
CFO at Marqeta

Excluding the timing shift of renewals, our gross profit landed in the middle of our guidance range. Our gross profit take rate was approximately 10 basis points, down 1 basis point year-over-year. The change in take rate was driven by rapid growth among some of our largest customers, a deliberate move upmarket into larger deal sizes, and faster international growth. More than half of the top 10 non-Block customers by gross profit grew their TPV more than 50% year-over-year. Internationally, volume outside the U.S. grew over 40% year-over-year and hit a milestone this quarter, now representing 20% of total TPV. This mixed dynamic, larger customers, new and existing, growing strongly with us alongside bigger deals and international expansion, lowers our blended take rate. It's the same dynamic driving the scale and profitability we're seeing in the business. Q2 adjusted operating expenses were $84 million, growing roughly 12% year-over-year.

Patti Kangwankij
Patti Kangwankij
CFO at Marqeta

This was lower than we thought, largely reflecting our active negotiation of third-party vendor contracts, securing the same level of service at a better price, along with continued cost discipline more broadly. We remain focused on efficient execution and continue to realize the benefits of operating leverage on our platform. Q2 adjusted EBITDA was $37 million, growing 31% year-over-year, and well ahead of our guidance. This represented a margin of 21% based on net revenue and 31% based on gross profit. Our Q2 GAAP net income was approximately $8 million. This outperformance was the result of gross profit growth and both operating expenses and stock-based compensation coming in below our expectations. GAAP EPS was $0.07 in Q2, reflecting the reduced share count from the 1-for-4 reverse stock split that became effective on June 30th. Our share repurchase activity remains ongoing.

Patti Kangwankij
Patti Kangwankij
CFO at Marqeta

In Q2, we repurchased 3.2 million shares at an average post-split adjusted price of $15.90, which was considerably more than we purchased last quarter, as we continue to believe the current valuation does not fairly represent the company's value or the market opportunity ahead of us. On August 3rd, the board approved another $150 million share repurchase authorization, as we largely exhausted the previous $100 million authorization. We ended the quarter with $700 million in cash and short-term investments as operating cash flow offset our share repurchases. Now let me turn to our outlook. Consistent with what we shared at the start of the year, our top-line growth steps down in the second half against significantly tougher year-over-year comparisons. For the third quarter of 2026, we expect Q3 net revenue to grow between 6% and 8% and gross profit to grow between 5% and 7%.

Patti Kangwankij
Patti Kangwankij
CFO at Marqeta

We expect a substantial step-down from Q2 to Q3, a deceleration of about 10 points of gross profit growth from Q2, driven by 2 points-3 points related to the last large renewal that we expect to sign in Q3. 4 points from lapping the TransactPay acquisition that closed in July of 2025. 1 points-2 points related to the lending, including Buy Now, Pay Later use case, lapping spectacular growth in 2025. Approximately 2 points from the expected diversification of Cash App new issuance. This outlook is about 2 points lower than what we originally assumed for the second half when we issued guidance in February. There are two factors I would highlight. The first relates to a customer-specific dynamic within our lending, including Buy Now, Pay Later use case.

Patti Kangwankij
Patti Kangwankij
CFO at Marqeta

As a BNPL consumer pay anywhere card proposition with flexible credentials continues to gain adoption, our single-use virtual card volume with one of our BNPL customers is being impacted in a way we didn't expect. This customer uses multiple providers for the single-use virtual card, but only Marqeta for the flexible credential, and the success of the flexible credential is leading them to do some load balancing of single-use virtual card TPV. We still expect our lending, including BNPL TPV growth, to be over 30% in the second half, despite very tough year-over-year comparisons. The second is a shift in our on-demand delivery customer mix, which is driving lower gross profit take rate within that use case. As our on-demand delivery customers continue to expand their business, the business mix underneath our customer is shifting towards segments with less favorable economics, which is weighing on the take rate.

Patti Kangwankij
Patti Kangwankij
CFO at Marqeta

We expect Q3 adjusted operating expense to be nearly flat year-over-year as we continue to efficiently manage our investment initiatives against a Q3 2025 base that stepped up meaningfully last year. Adjusted EBITDA growth is expected to be between 20% and 25%, and we expect low to mid single digit millions of GAAP net income in the third quarter, as we anticipate the run rate of our stock-based compensation to be largely in line with the amount in Q2. In Q4, we expect similar trends across revenue, gross profit, and adjusted operating expense. For the full year, we are narrowing our revenue and gross profit guidance. We now expect full-year net revenue growth in the range of 12%-13% and full-year gross profit growth towards the higher end of our prior range at 11%-12%.

Patti Kangwankij
Patti Kangwankij
CFO at Marqeta

We are not currently seeing a notable shift in spend or consumer behavior and are assuming consistent spending patterns for the remainder of the year. Given the Q2 outperformance on the bottom line and lower than anticipated expenses, we are raising our full-year adjusted EBITDA and net income expectations again and now expect adjusted EBITDA to grow in the low 30s and expect GAAP net income in the high $20 million. The breadth and flexibility of our platform continues to translate directly into customer growth and expansion. The programs we are onboarding and the capabilities being deployed reflect demand across both new and existing customers and demonstrate how the continuum of products we offer across geographies enable customers to build and grow on a single modern platform.

Patti Kangwankij
Patti Kangwankij
CFO at Marqeta

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 building on a solid start to 2026, combining strong gross profit growth with efficient investments, which led to our second consecutive quarter of GAAP profitability. We don't believe the lower growth rate in the second half is representative of our growth trajectory going forward. It reflects several unique items weighing on our second half growth, and the ongoing benefits of our operating leverage give us confidence that we can sustain profitable growth. I will now turn it back over to the operator for questions.

Operator

Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would 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. One moment please while we pull for questions. The first question is from Timothy Chiodo from UBS. Please go ahead.

Timothy Chiodo
Timothy Chiodo
Analyst at UBS

Great. Thank you for taking the question. Really appreciate all the upfront context that you gave around Cash App new issuance. One clarification on the mechanics, I think we have this down, and then another on 2027. Mike, if you don't mind, on the mechanics, it sounds like you're saying you're still getting some new issuance to date, including on the flex credential card, meaning for pre-purchased BNPL.

Timothy Chiodo
Timothy Chiodo
Analyst at UBS

The second question is around, that's more of just a clarifier. The question is more around, how should we think about the potential early estimate of an impact in 2027? I know around this time last year, you mentioned that there would be about a 200 basis point impact initial expectation for 2026. How should we be using kind of a similar construct to think about 2027 impact? Thank you.

Mike Milotich
Mike Milotich
CEO at Marqeta

Yeah. Thanks, Tim. Yes, your understanding is correct that we started to see a decline in the new issuance in about the middle of June. We estimate that to be roughly about 10% decline, of what we would have gotten otherwise. That decline sort of stepped up in July, as they sort of slowly shift the new issuance. We expect that to happen throughout the next couple of months, and by the end of the year, us receiving sort of little to no new issuance at that point. That's how we expect it. The new issuance we are getting, is both the long-time card value proposition that they've had, as well as the embedded Afterpay offering that comes on the flexible credentials. Yes, we are seeing both sets of volume.

Mike Milotich
Mike Milotich
CEO at Marqeta

In terms of how to think about it, what we had originally said, Tim, was that it was about 2 points of growth impact, and that was with it kind of phasing in over the year. On a true run rate basis, if we were to continue to not receive new issuance, it would be a little bit more than that in 2027. Exactly how this is going to play out is still TBD. We don't know what's going to happen. I guess I would just make a few points. One, as I said in my comments, the relationship remains very strong, and we continue to be working on new programs and adding new services with them. We continue to do new things together. As I also mentioned, it's very normal for our customers to seek some diversification, that has not bothered us.

Mike Milotich
Mike Milotich
CEO at Marqeta

Right now, this is specifically about new issuance. We have an extensive existing Cash App card user base that's on our platform, including some of the very highly engaged users using direct deposit. We continue to see that as is. As the new issuance shifts, also just keep in mind that it takes a little time for that to show up in volume. The cards need to go out, people need to activate them, the spend needs to ramp up. There is a little bit of a lag in the impact, that's just another thing to mention. The third thing that I'd also mention is that we structure our pricing with pricing tiers, right? To protect us if volume changes.

Mike Milotich
Mike Milotich
CEO at Marqeta

What we might see going forward in 2027, for example, the impact of new issuance on volume may not be sort of a one-to-one basis with gross profit. Again, we'll have to see how things go. And we continue to work with them on Square and Afterpay and other new things. We'll tell you more when we get to the early part of next year and we talk about 2027. Right now we feel very good about the state of the relationship.

Timothy Chiodo
Timothy Chiodo
Analyst at UBS

Thank you, Mike. I should clarify, I think you have been clear that we shouldn't necessarily think that it's a no new issuance forever. It could be for some period of time until a level of diversification sets in. I just wanted to be clear that I appreciate you've made those comments before. If you don't mind.

Mike Milotich
Mike Milotich
CEO at Marqeta

Yeah, that's what.

Timothy Chiodo
Timothy Chiodo
Analyst at UBS

Sorry. Go ahead.

Mike Milotich
Mike Milotich
CEO at Marqeta

That's what we've seen other customers do. With almost all of them, I can't really think of an instance where we didn't remain their primary partner as they diversified. They get to a certain level and then it stabilizes. Again, we're not sure what will happen in this case, but that's what we've seen with many of our other large customers.

Timothy Chiodo
Timothy Chiodo
Analyst at UBS

Okay. Thanks. We can leave it there. Thank you so much.

Operator

The next question is from Connor Allen from JPMorgan. Please go ahead.

Connor Allen
Connor Allen
Analyst at JPMorgan

Hi. Thanks for taking my question. Mike, I wanted to ask about, I think you said average deal size was up over 90% in the quarter. Did I hear that right? Could you maybe talk a little bit about the composition of that, how broad-based it is, and then I assume these would maybe take a little bit longer to flow through the P&L. Maybe a little bit deeper on that comment would be great.

Mike Milotich
Mike Milotich
CEO at Marqeta

Yes, you did hear correctly. The average deal size in Q2 was up 90% year-over-year. A lot of this, we've been talking to you now for, I don't know, probably one to two years about our shift upmarket, right? As the fintech winners have been crowned, they're becoming big businesses. Then embedded finance players, established enterprises, are looking at what fintechs did in terms of financial services as non-banks. They are starting to look at similar services and injecting them into their existing businesses and their established user bases. What's happening is we are starting to talk to many more Fortune 500 companies, bigger companies who are more established. Inherently the opportunities are more significant. That's the dynamic that we're seeing.

Mike Milotich
Mike Milotich
CEO at Marqeta

I think in terms of P&L, the way we look at it internally is we feel like the probability of success is higher. In the fintech days, we were signing lots of deals with lots of companies and knowing that maybe one or two winners would emerge, right? It's a little bit of a percentages game. I would say now the business has shifted. Now we're talking to very established companies. Who we feel a lot more comfortable in the likelihood that they will execute well. They already have a user base. They don't have to build the business from scratch. The way we feel about it is, it's more that our probability of success from new business is likely to be higher going forward.

Mike Milotich
Mike Milotich
CEO at Marqeta

The deal sizes just reflect that now we are working maybe fewer deals, but with sort of much bigger and better bets.

Connor Allen
Connor Allen
Analyst at JPMorgan

Great. Thank you for that. Maybe one more, if you don't mind. It might be for Patti or you, Mike.

Mike Milotich
Mike Milotich
CEO at Marqeta

Sure.

Connor Allen
Connor Allen
Analyst at JPMorgan

I wanted to ask a little bit on the second half dynamics. You talked about the change in view there, which was kind of the BNPL virtual card load balancing, then ODD. On the virtual card side, could you talk about how idiosyncratic that feels? I'm just wondering if it's possible that we might see more of that. Just a little bit more on that dynamic would be great. Thanks.

Mike Milotich
Mike Milotich
CEO at Marqeta

Yeah. Connor, if you don't mind, I'll take that one as I've been living this over the last couple of years, as we've talked about the virtual card dynamics in the past. The way to think about this is, this is one particular customer. As Patti mentioned, what we see is that they have diversified their single-use virtual card business, as many of our partners have. Again, we talked about that, I think it was maybe two years ago or so that happened. Because of our sort of lead in innovation with the flexible credentials, we have all of that business. A lot of that is where the growth is. As they look at the impacts of how that business evolves, they are starting to load balance a little bit of the virtual card volume, which is just not something we anticipated.

Mike Milotich
Mike Milotich
CEO at Marqeta

As in the end, we feel like we are getting the stickier, faster-growing part of the business. I guess, we of course, would like all the business, but if there's a trade-off to be made, we feel like this is a good one. This is going to slow our growth a little bit. I think what's important is also what Patti said about the growth rate in Buy Now, Pay Later. If you were to go back to 2024 and Q1 of 2025, our lending and Buy Now, Pay Later use case growth was consistently in the 30s before Q2 of last year when the flexible credentials started taking off and our growth really accelerated. Even with this impact and the lapping that's occurring, we still expect our second half lending and Buy Now, Pay Later use case to grow over 30%.

Mike Milotich
Mike Milotich
CEO at Marqeta

We're essentially getting back to the growth rate that we used to have before this sort of big boom in the business over the last year plus. That growth rate is now going on a significantly larger base, almost twice the base. We still feel very good about our position in the market and the value we're adding. This is just something we didn't see at the beginning of the year. We didn't expect this kind of impact, but in the end, it's relatively small, but it's just something that is going to impact us in the second half.

Connor Allen
Connor Allen
Analyst at JPMorgan

Great. Thanks for all the details.

Mike Milotich
Mike Milotich
CEO at Marqeta

Yep.

Operator

The next question is from Craig Maurer from FT Partners. Please go ahead.

Craig Maurer
Analyst at FT Partners

Yeah. Hi. Thanks for taking the question. I wanted to ask, the stablecoin capability that you're building out, is this in response to actual demand you're seeing, or are you being anticipatory of what could be coming? Thanks.

Mike Milotich
Mike Milotich
CEO at Marqeta

Thanks, Craig, for your question. I would say it's a little of both. I would say there's a lot of exploratory discussions, particularly among customers who have maybe payouts, for example, as part of their other business or other money movement capabilities. There are a number of prospects that we talk to who are interested in this capability and rolling it out. We are doing it to address those customers, but we're also doing it because we do believe that there will be growing demand for this type of capability over time, and we want to continue to be a leader and an innovator in this space. We just think we're very well-positioned because of our sort of proven scale and our geographic reach that we already have.

Mike Milotich
Mike Milotich
CEO at Marqeta

You put those together with really the leaders in the space as partners, we feel like we're very well-positioned to be someone that should show up at the top of any prospects list in terms of a very capable package that we're putting together. We're going to do these partnerships in a way that makes it quite easy for our customers. It is a little of both, Craig, but again, we feel good that this positions us well to capture the growth as this use case emerges.

Craig Maurer
Analyst at FT Partners

Thank you.

Operator

The next question is from Darrin Peller from Wolfe Research. Please go ahead.

Darrin Peller
Darrin Peller
Analyst at Wolfe Research

All right. Hey, guys. Thanks. I want to just shift gears a bit to profitability. You're obviously continuing to show some pretty nice beats on both EBITDA and net income side. Maybe just help us understand your vision from a strategic standpoint, from a reinvestment versus letting pass through to the bottom line, given you're clearly outperforming in some of these great trends on some of the subverticals. Going forward from here, I know you gave us, I think it was high $20s million of GAAP net income for the year, but maybe just help us understand where you're thinking for this year, but more importantly, targets going forward. Thanks, guys.

Patti Kangwankij
Patti Kangwankij
CFO at Marqeta

I'll start. We're probably not going to share kind of 2027. Yes, we were pretty pleased with the profitability, and this is really demonstrating what we see with the scale that we're getting in terms of volume right now north of $450 billion of volume. A lot of the incremental business that we're getting is really dropping to the bottom line very nicely. From an OpEx standpoint, it did come in slightly lower than we expected. Our adjusted OpEx came in at 12% growth, which was below the high teens we had guided to. I'll highlight two reasons for that. One of the big drivers was our vendor management. We've been actively renegotiating our third-party contracts, and we were able to get the same level of service at a better price.

Patti Kangwankij
Patti Kangwankij
CFO at Marqeta

We're also continuing to find efficiency in how we manage headcount and being deliberate where and when we add roles. We've seen efficiency with AI and other things. Both of these dynamics didn't change the pace of our planned investments, and we're very much on target with our roadmap. A number of these things we do expect to persist. We're expecting flat-ish OpEx growth, which is coming further down in the second half because we did lap a big increase in spending last year when our investments were very back-loaded following the CEO transition in Q1. We've been also managing headcount and stock-based compensation. A lot of that has been flowing through to the bottom line. We are continuing to invest heavily in the business, and we're evaluating M&A and always figuring out ways to reinvest in the business.

Darrin Peller
Darrin Peller
Analyst at Wolfe Research

Okay.

Mike Milotich
Mike Milotich
CEO at Marqeta

Maybe, Darrin, I would just add, in terms of forward-looking, we're a true platform business with very high fixed costs and low variable costs, as we shared even at our Investor Day a few years ago. We want to continue to invest in the business, obviously, to sustain the growth and innovate. We do feel like we will continue to have a decent spread between our gross profit growth and our expense growth. Our earnings growth will continue to exceed the top-line growth for some time.

Darrin Peller
Darrin Peller
Analyst at Wolfe Research

Yeah. Thanks, Mike. Guys, just quick follow-up. Mike, a little bit higher level. Look, you're obviously still performing extremely well with flex credentials and BNPL and expense management, even off the higher base you referenced. If I asked you, what would be the next one of those opportunities that you're most excited about? Is it stablecoin cards? What is the next new thing that you could see turning into the big flex credentials type product and really drive the next few years the way you've been seeing some of those products drive in the past couple?

Mike Milotich
Mike Milotich
CEO at Marqeta

I would say there are a few different new growth vectors that I am particularly excited about. There are three. I would say first is credit. We have been making sort of slow and steady progress on our credit offering. In the next two or three quarters, we are sort of going to hit a little bit of a turning point for us. We have three credit programs launching in the next couple of quarters that are all a little different. We have a consumer co-brand that is a revolving credit product. We have a consumer secured credit product, essentially a credit building product that is launching together with Buy Now, Pay Later on the Mastercard One Credential. We have a commercial charge card program, all launching in the next couple of quarters. We are starting to get some traction.

Mike Milotich
Mike Milotich
CEO at Marqeta

Again, it is still early days, but that is a part of the market we have not served before traditionally, and we think there is a lot of opportunity. The second area, I would say, even though we have gotten a lot of growth from Europe, we are still very excited about Europe because we only did processing before, and you are already starting to see, I highlighted in my comments about our ability to serve multinationals, but also to add program management in Europe, which should improve our take rate there. We think there is still a lot of opportunity left in the Europe business. The final area is value-added services. Because we have been really focused on trying to scale the business over the last few years, we had not put as much emphasis on that a couple of years ago.

Mike Milotich
Mike Milotich
CEO at Marqeta

In the last year or two, we have really started to raise our game, and I highlighted some of the increased capabilities this quarter that we are doing in our fraud solution. Value-added services remains only about 7% of our gross profit today. It is growing, but it is still relatively small, and we just think.

Darrin Peller
Darrin Peller
Analyst at Wolfe Research

Right

Mike Milotich
Mike Milotich
CEO at Marqeta

Not only as we continue to increase our capabilities, but also as we are moving to serve these enterprise customers, they do not want to piece together multiple partners. They are looking for one platform that can really bring a holistic solution. We feel like our attach rate can be better than fintechs who wanted to sort of piece together something unique. Those are the three areas I would say, Darrin, that we are probably most bullish on being major contributors a couple of years from now.

Darrin Peller
Darrin Peller
Analyst at Wolfe Research

That's really helpful, Mike. Great. Thanks, guys.

Operator

The next question is from Jamie Friedman from Susquehanna International Group. Please go ahead.

Jamie Friedman
Analyst at Susquehanna International Group

Hi. Thank you for taking the question. Mike, in terms of the stablecoin-backed cards, can you just walk us through the business process for those? How complicated are they? What do you see as the use case? More importantly, who is it that's asking for those between the issuer and the merchant?

Mike Milotich
Mike Milotich
CEO at Marqeta

Sure. First I would say, we have already a good amount of experience in this. We do crypto-backed cards for both Coinbase in the U.S. and Bitpanda in Europe. We have some experience in this space. I would say that's the first thing that's important. The second thing in terms of how does it work, we really try to simplify it for our customers. In this case, with the partnerships we've set up with both zerohash and BVNK, we'd be embedding their APIs into our platform. Our customers should be able to just through the connection to our platform, sort of pull through those capabilities. We make it pretty seamless for them to take advantage of having a stablecoin-backed product, but making it much more useful for spending and to get access to the money.

Mike Milotich
Mike Milotich
CEO at Marqeta

That's the way we're pursuing the solution. In terms of who's asking, it's a combination of a few different types. As I mentioned before, anyone who has payouts as part of their business, they're moving money to many geographies, stable coin has a lot of value. The recipient of that stable coin, it might be hard to utilize and get off the chain, which is what makes having that attached to a card a very attractive value proposition. I would say anybody who's thinking about a multinational neobank offering. When I say that, I mean not just like a neobank, but a lot of platform businesses are starting to embed sort of banking-like services into their software. Anyone who is on a multinational basis and doing that has some interest.

Mike Milotich
Mike Milotich
CEO at Marqeta

I would say there are a number of people who, again, are inquiring about this, but it is still early, right? There are only a handful of programs live today, we do feel like there will be growing demand for this as time goes on.

Jamie Friedman
Analyst at Susquehanna International Group

Great. All right. Thank you for the detail. I'll drop back in the queue.

Operator

The next question is from Andrew Schmidt from KeyBanc Capital Markets. Please go ahead.

Andrew Schmidt
Andrew Schmidt
Analyst at KeyBanc Capital Markets

Hi, Mike. Hi, Patti. Thank you so much for taking the questions this evening. I wanted to just dig into the sort of the competitive environment and maybe more directly on credit. Mike, you made some really good comments about the credit opportunity. We get a lot of questions on Visa's push via DPS full service credit. I'm just curious, obviously, look, there's a lot of opportunity here for multiplayers to go after. I'm curious where the overlap is, if there is any, and I know you're familiar with that business, kind of how that stacks up versus where you're going after. Thanks so much.

Mike Milotich
Mike Milotich
CEO at Marqeta

Sure. I think there's a few things that I would say. I think first, the advantages that we think we have in this space is one, that we're a proven innovator who can support programs at scale. We have the credibility even though we're relatively new in credit compared to debit. The second thing is that we'll let people truly embed that offering into their user experience and app. That's something that can be more difficult to do on certain other platforms. The other area that we also have been emphasizing and spending some time is we do believe that cards will become more personalized over time. What we often call dynamic rewards, we think that is something that is going to be coming in credit over time.

Mike Milotich
Mike Milotich
CEO at Marqeta

The last thing that I would say, Andrew, that we think, again, makes us uniquely competitive is that what we're finding is the traditional credit market and particularly the co-brand space, you often hear from people that they have to decline two-thirds, three-quarters of the applicants because the proposition has gotten very premium, right? You have to be a high spender because of the competition in rewards. If you're trying to drive engagement with your user base, declining two-thirds or three-quarters of the people who apply is not obviously a good engagement strategy. A lot of people are talking to us about more of a holistic offering that matches the right customer to the right product.

Mike Milotich
Mike Milotich
CEO at Marqeta

Someone who might come in looking for a value proposition, you could say, "Well, I have a credit builder product that also has some Buy Now, Pay Later functionality built in while we work you towards the revolving credit product that you may want." The fact that we have all these products on a single stack, right? It's all together, whether it's consumer, commercial, debit, or credit, and we can do that on a multinational basis is relatively unique in the marketplace. Almost everyone else is going to have multiple platforms, and that's going to be a little more complicated. I think what one of our credit strategies is also to not just be out there selling to prospects who purely want credit, but talking to them about a much more holistic offering that says, "Don't decline anybody and don't have a turndown product.

Mike Milotich
Mike Milotich
CEO at Marqeta

Really have a suite of products that meets each customer where they are." That's just something because of our background and expertise just makes us uniquely able to deliver that value proposition.

Andrew Schmidt
Andrew Schmidt
Analyst at KeyBanc Capital Markets

That's helpful. Thank you, Mike. Always appreciate your perspective there. Maybe just ask about just renewals. Obviously, we're rolling over a couple of renewals this year, but as we look over the next 12 months-18 months, what does that pipeline look like? I'm just curious if the cadence sort of if it steps up or steps down when we think about just the renewal pipeline over the next 12 months-18 months. Thanks so much.

Patti Kangwankij
Patti Kangwankij
CFO at Marqeta

Yeah. We've talked about the two renewals post of deals that we had signed during the fintech boom. Those are the two that we think the last two, maybe outside of Block that were going to come up over the next couple of years because we're renewing contracts actually all the time, right? Regular way. In there, we have been very disciplined in our pricing and the way it's stepping down. That's going to be part of, again, business as usual. You shouldn't expect to hear very much about any renewals, maybe outside of Block, which comes up in 2028. Really the last two that we were benching only because of the material step down because these were deals negotiated during the fintech boom.

Andrew Schmidt
Andrew Schmidt
Analyst at KeyBanc Capital Markets

Got it. Thank you, Patti. Appreciate the comments.

Patti Kangwankij
Patti Kangwankij
CFO at Marqeta

Yeah.

Operator

This concludes the question-and-answer session as well as today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Executives
    • Sarah Barkema
      Sarah Barkema
      Chief Accounting Officer and Head of Investor Relations
    • Mike Milotich
      Mike Milotich
      CEO
    • Patti Kangwankij
      Patti Kangwankij
      CFO
Analysts
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