Marqeta, Inc. (MQ) Q1 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call shows a positive sentiment with strong growth in non-Block verticals, broad-based use case expansion, and successful product innovations. The Q&A highlights strong EBITDA performance, stable competitive intensity, and strategic partnerships, including a significant financial institution collaboration. Despite some uncertainties in macroeconomic conditions, the company maintains optimistic guidance with slight increases in EBITDA and net income. The share repurchase plan further supports a positive outlook. Given the market cap, the stock is likely to see a positive movement (2% to 8%) over the next two weeks.
Key Financial Performance
Gross Profit Grew 19% year-over-year, fueled by 33% TPV growth. This reflects the increasing scale of the platform.
Adjusted EBITDA Grew to $33 million, achieving a 20% margin. This growth is attributed to strong gross profit growth and disciplined execution.
Net Income Achieved $8 million, marking GAAP profitability. This is due to strong growth, operating leverage, and disciplined execution.
TPV (Total Payment Volume) $112 billion, with a 33% year-over-year growth. This is the second consecutive quarter with TPV over $100 billion and the third with growth over 30%.
Net Revenue $166 million, growing 19% year-over-year. Non-Block revenue is growing 2x faster than Block revenue.
Gross Profit Take Rate 10.5 basis points, 0.5 basis point lower than last quarter, largely due to business mix.
Adjusted Operating Expenses $84 million, growing 7% year-over-year. This is better than expected due to phased implementation of key investment initiatives.
Lending Growth (including BNPL) Nearly 60% year-over-year growth, driven by flexible network credential usage and geographic expansion.
Expense Management Growth Over 40% year-over-year growth, driven by customers expanding market share and utilizing configurable capabilities.
On-Demand Delivery Growth Double-digit growth, but below the company's overall growth rate as it is the most mature use case.
Cash and Short-Term Investments $712 million at the end of the quarter.
Share Repurchase Repurchased 9.4 million shares at an average price of $4.16, with $52 million remaining on the buyback authorization.
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Operating Highlights
Stablecoin-backed card programs: Emerging use case leveraging stablecoin settlement through bank and network partners. Allows linking to crypto wallets for spending in local fiat from stablecoin balance.
Credit builder card: Launched by an embedded finance brand to help consumers establish and strengthen credit profiles. Automatically sets aside funds to pay off monthly balances, aiding credit building.
Mastercard One credential: Supports a new customer with a single programmable card spanning debit, credit, installments, and prepaid with real-time spending rules.
Multinational card issuing capabilities: 12 of top 15 customers use Marqeta in more than one country, with 6 in at least 5 countries. Examples include Sezzle's virtual card launch in Canada and Ramp's expansion into Australia, Japan, Singapore, Brazil, and Mexico.
Geographic expansion: Ramp is expanding its corporate expense management solutions into new international markets, leveraging Marqeta's platform for rapid scaling.
Gross profit growth: Increased by 19% year-over-year, driven by 33% TPV growth.
GAAP profitability: Achieved $8 million in net income, marking a significant milestone.
Adjusted EBITDA: Grew to $33 million with a 20% margin, showcasing operational efficiency.
Modernization of card issuing technology: Efforts by long-established issuers to adopt modern platforms like Marqeta to compete effectively with fintech disruptors.
Virtual card expertise: A large U.S. financial institution is leveraging Marqeta's platform to provision a line of credit directly into consumer wallets, enhancing retail and online spending capabilities.
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Risk or Challenges
Macroeconomic Uncertainty: The company acknowledges increasing levels of macroeconomic uncertainty, which could pose risks to consumer spending patterns and overall financial performance.
Business Mix and Renewal Activity: Gross profit growth is expected to slow due to evolving business mix and renewal activity, which could impact financial outcomes.
Dependence on Block Revenue: Block net revenue concentration remains significant at 42%, and while non-Block revenue is growing faster, any adverse changes in Block's performance could materially impact the company.
Competitive Pressures: The company faces competitive pressures from fintech disruptors and established issuers modernizing their platforms, which could challenge Marqeta's market position.
Geographic Expansion Risks: International expansion efforts, such as those by Ramp and Sezzle, involve complexities and risks related to regulatory compliance, operational execution, and market acceptance.
Platform Migration Challenges: Migration of existing portfolios to Marqeta's platform, as seen with new customers, involves operational risks and potential disruptions.
Regulatory and Compliance Risks: Emerging use cases like stablecoin-backed card programs and international operations expose the company to heightened regulatory scrutiny and compliance challenges.
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Guidance & Outlook
Q2 2026 Revenue and Gross Profit Growth: Net revenue and gross profit are expected to grow between 14% to 16%.
Q2 2026 Adjusted EBITDA Growth: Adjusted EBITDA growth is expected to be 10% to 12%.
Q2 2026 GAAP Net Income: The company expects to be at breakeven on a GAAP net income basis.
Full Year 2026 Revenue Growth: Net revenue growth is expected to be 12% to 14%.
Full Year 2026 Gross Profit Growth: Gross profit growth is expected to be 10% to 12%.
Full Year 2026 Adjusted EBITDA Growth: Adjusted EBITDA growth is expected to be in the mid- to high 20s percent.
Full Year 2026 GAAP Net Income: The company expects to generate about $15 million in GAAP net income, up $5 million based on Q1 outperformance.
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Shareholder Return Plan
Share Repurchase Activity: Marqeta repurchased 9.4 million shares at an average price of $4.16 during Q1 2026. As of March 31, there was over $52 million remaining on the latest buyback authorization.
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Key Q&A
Q:What is driving the strong growth in non-Block verticals, and how is market share being gained?
A:The growth is broad-based across use cases, with BNPL maintaining 60% momentum and expense management growing at 40%. Most growth comes from existing programs and customers. BNPL has seen over 4 quarters of growth above 50%, driven by geographic expansion, Pay Anywhere cards, and SMB lending solutions. The company continues to innovate, including launching a Mastercard One credential program. Expense management benefits from unique product configurations and customer success.
Q:What are the incremental learnings regarding Block's impact on performance?
A:The company assumes a gradual decrease in new issuances in the first half and no new issuances in the second half. Q1 showed no discernible changes in new issuances. The growth impact is now closer to 1.5% rather than 2%. The relationship with Block remains strong, with ongoing discussions about new opportunities despite Block's diversification efforts.
Q:What is the demand for secured credit card programs and flexible card products?
A:Demand for secured credit card programs is growing, with interest in serving the entire customer spectrum. A new customer will launch a secured card with embedded BNPL later this year. Competitors have not yet significantly stepped up in flexible card products like Visa Flex Credential and Mastercard One, but competition is expected to increase by year-end.
Q:What is driving EBITDA outperformance and changes in GAAP net income?
A:EBITDA outperformance is due to lower-than-expected adjusted operating expenses, with key investment initiatives slower to ramp. GAAP net income benefited from EBITDA outperformance and lower stock-based compensation. The company reiterates its guidance for net revenue and gross profit, with slight increases in EBITDA and net income guidance for the year.
Q:How should growth rates and take rates be viewed given changes in business mix?
A:Growth rates and take rates are influenced by the mix of customers, with large customers growing over 50% and creating slight pressure on take rates due to better pricing. However, this is seen as a positive outcome, reflecting customer success and disciplined pricing.
Q:What is Marqeta's perspective on Reg II and its impact on merchant routing and unit economics?
A:Merchant routing is stable, with occasional increases in alternative network usage. Marqeta's exposure to interchange is minor due to a shift in pricing models, reducing direct exposure to routing changes.
Q:What are the opportunities and risks for outperformance in 2023?
A:BNPL and expense management are key growth drivers, with expense management likely to outperform due to customer success and scale. Risks are primarily macroeconomic, with no current impacts on spending trajectory but uncertainty in the environment.
Q:Is competitive intensity increasing in the financial institution space?
A:Competitive intensity is stable, but there is increased momentum for modernization among banks. Marqeta is engaging in more substantive conversations with banks, focusing on de novo opportunities and infusing modern capabilities without heavy lifting.
Q:What is Marqeta's role in Agentic and digital assets?
A:Marqeta sees Agentic as an opportunity, particularly issuer-led initiatives using virtual cards for secure transactions. In digital assets, Marqeta supports stablecoin cards for remittance and payout use cases, providing incremental opportunities alongside traditional products.
Q:What is the growth potential for earned wage access and share repurchase plans?
A:Earned wage access is growing, particularly in gig work and embedded finance, but requires partnerships for payroll and tax calculations. Marqeta repurchased $39 million in shares in Q1, with $52 million remaining in the authorization, and plans to continue repurchases based on market valuation.
Q:What are the back-half growth dynamics and expectations for Block and renewals?
A:Block's impact on gross profit growth is closer to 1.5% for the year, with a lower impact in the back half. One renewal was completed in Q4 2022, and another is expected in Q2 2023.
Q:What is the significance of the large financial institution partnership?
A:Marqeta is provisioning a line of credit into an existing wallet for a large financial institution, enabling seamless credit injection without re-platforming. This partnership is live and positions Marqeta for future opportunities with banks exploring modernization.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the competitive landscape for flexible card products, stating only that competition is expected to increase by year-end. Additionally, they did not provide clear timelines or quantitative metrics for the impact of modernization efforts with financial institutions.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Accounting Officer
Australia Japan
BNPL credit
BNPL feature
BNPL flexibility
Barkema Chief
Brazil Mexico
Canada Sezzle
Marqeta card
Marqeta platform
balance
business
card consumer
card issuing
consumer credit
continuum product
country
credit consumer
credit installment
credit need
debit credit
demand card
disruptors
fintechs enterprise
geography continuum
infrastructure
integration
issuer capability
life
need consumer
partnership
platform Marqeta
portfolio
solution market
spend
stablecoin card
MQ Transcript
Marqeta, Inc. (MQ) Presents at J.P. Morgan 54th Annual Global Technology, Media and Communications Conference Transcript
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Marqeta, Inc. (MQ) Q1 2026 Earnings Call Transcript
Positive5-6
The earnings call shows a positive sentiment with strong growth in non-Block verticals, broad-based use case expansion, and successful product innovations. The Q&A highlights strong EBITDA performance, stable competitive intensity, and strategic partnerships, including a significant financial institution collaboration. Despite some uncertainties in macroeconomic conditions, the company maintains optimistic guidance with slight increases in EBITDA and net income. The share repurchase plan further supports a positive outlook. Given the market cap, the stock is likely to see a positive movement (2% to 8%) over the next two weeks.
Marqeta, Inc. (MQ) Presents at Morgan Stanley Technology, Media & Telecom Conference 2026 Transcript
Neutral3-2
Marqeta, Inc. (MQ) Q4 2025 Earnings Call Transcript
Positive2-25
The earnings call summary and Q&A indicate strong financial and product growth, particularly in Europe and BNPL, despite some headwinds from customer renewals and accounting changes. The integration with new bank partners and expansion plans are positive signs. Analysts seem optimistic about Marqeta's competitive positioning and growth trajectory. However, some uncertainty remains regarding specific impacts and timelines for partnerships. Overall, the sentiment is positive, with expected stock price movement between 2% to 8%.
MQ Report
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