Ladies and gentlemen, welcome to Marqeta, Inc.’s third quarter 2024 earnings conference call. Currently, all participants are in listen-only mode, and a Q&A session will follow the presentation.

[Operator instructions] Please note that this call is being recorded. It is now my pleasure to introduce your host, Stacey Finerman, Vice President of Investor Relations. Please proceed.

Stacey Finerman — Vice President, Investor Relations

Thank you, operator. Before we start, I want to remind everyone that today’s call may include forward-looking statements. These statements involve risks and uncertainties, as detailed in our SEC filings, which are accessible on our Investor Relations website, including our annual report on Form 10-K for the year ending December 31, 2023, and subsequent filings. Actual results may differ significantly from those predictions.

These statements reflect our views as of today and we have no obligation to update them, unless the law requires us to do so. Also, we will discuss non-GAAP financial measures today; these should not replace GAAP measures but should be viewed as supplementary. Reconciliations between non-GAAP and corresponding GAAP figures are included in our earnings press release available on our website.

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Today’s call features Simon Khalaf, Marqeta’s CEO, and Mike Milotich, Marqeta’s CFO. I will now pass the call to Simon.

Simon Khalaf — Chief Executive Officer

Thank you, Stacey, and thank you all for joining Marqeta’s third quarter 2024 earnings call. I will provide a high-level overview of our Q3 results, discuss our business progress in transforming payments, and address revised growth expectations for Q4. Marqeta is in a strong position, as highlighted by positive year-over-year growth in net revenue, gross profit, and adjusted EBITDA.

Total processing volume (TPV) reached $74 billion in Q3, marking a 30% increase compared to last year. Net revenue stood at $128 million, up 18% year-over-year, while gross profit hit $90 million, a 24% increase compared to Q3 2023. Our non-GAAP adjusted operating expenses were $81 million, a 9% year-over-year rise that remains considerably lower than the growth rate of our gross profit.

This led to adjusted EBITDA of $9 million for the quarter. Now, let’s explore our place in the payment transformation landscape. While we’ve seen significant advancements on the acquiring side over the last decade, real progress on the more complex issuer processing side has gained momentum only in the last five years. Despite our achievements, Marqeta currently captures about 2% of issuer processing volume in our markets.

The shift toward modern financial services is undeniable. Traditional methods will gradually fade as consumers and businesses demand innovative options. Our role in this transition is pivotal, as we offer the scale and experience needed to support innovators. To expedite this shift, we’ve launched Portfolio Migration—a product that simplifies the process of upgrading existing card programs onto our platform, minimizing complexity and disruption for our customers.

This solution, allowing for easy migration from competitor processors to Marqeta’s platform, has already demonstrated success. Recently, we completed the migration of millions of Klarna Cards across Sweden, Germany, and the U.K., enhancing stability and performance for users just ahead of the holiday season. This achievement reinforces our ability to provide similar solutions to future clients.

Additionally, we’re enhancing the speed of launching new card programs with our recently released UX Toolkit. This offering enables customers to create personalized front-end experiences using prefabricated UI components tailored for Marqeta’s APIs, requiring fewer resources for development.

This is particularly significant for the growing sectors of new banking and embedded finance, where simplicity and integration are key. We are already seeing four customers adopt the UX Toolkit, and feedback has been extremely positive. Alongside these advancements, we aim to…

“`

Marqeta Faces Compliance Challenges Amid Growth Restructuring

In a rapidly evolving financial landscape, Marqeta is adapting to increased regulatory scrutiny while striving to enhance its payment solutions, particularly in the Buy Now, Pay Later (BNPL) sector. The company’s new initiative, Marqeta Flex, aims to seamlessly integrate flexible BNPL options within payment applications, marking a significant step forward for consumer financing.

Last week, Marqeta unveiled Marqeta Flex, a groundbreaking service that transforms how BNPL payment methods are accessible within payment apps. This innovation aims to present BNPL options to consumers at crucial moments during the payment process. Marqeta has long expanded the market for BNPL through single-use virtual cards, which simplify provider-merchant connections. With Marqeta Flex, the goal is to further broaden BNPL access, allowing users to choose personalized financing solutions through apps like Klarna, Affirm, and Branch. The company plans to introduce this offering mid-2025 and is seeking additional collaboration from partners and customers to facilitate the transition.

Despite this promising advancement, Marqeta is adjusting its Q4 guidance due to unforeseen regulatory changes affecting smaller banks that support various customer programs. These changes, anticipated by Marqeta, have led to increased investment in program management and compliance services to navigate the shifting landscape.

The operational challenges imposed by heightened scrutiny have proven significant, resulting in a 30% to 40% extension in the timeline to launch new programs compared to 2023. Marqeta expects this trend to persist for at least two more quarters. Consequently, these delays have pushed expected volume and gross profit growth further down the line. Understanding the new dynamics, Marqeta is taking a comprehensive approach to ramp up existing programs while pursuing relationships with more banks to increase capacity.

As we move forward, Marqeta remains optimistic. The company sees these regulatory hurdles as temporary, noting that they are merely slowing progress rather than altering the overall business trajectory or profitability outlook. Marqeta is committed to innovation in the payments industry and continues to build strong relationships with clients seeking compliant, engaging customer experiences.

With that, I will turn it over to Mike.

Mike Milotich — Chief Financial Officer

Thank you, Simon. Good afternoon, everyone. In our Q3 financials, we have begun to see the growth trends of our business shape up after crossing the Cash App renewal. Total Payment Volume (TPV) grew significantly, yet it fell short of our expectations due to fewer new program launches, which I will elaborate on shortly.

Our journey to profitability remains on track, with adjusted EBITDA exceeding expectations by 2 to 3 million thanks to ongoing efficiency initiatives. In Q3, our TPV stood at $74 billion, reflecting a year-over-year growth of 30%. Notably, non-Block TPV grew over 15% faster than Block TPV, highlighting strength across a diverse customer base. Our top 10 non-Block customers experienced growth exceeding 30%, while remaining non-Block customers reported over 50% growth year over year.

The growth in financial services lending, including BNPL and expense management, mirrored the company’s overall expansion rate. As our Block segment thrives, new neobanking and accelerated wage access customers are experiencing rapid growth, with contributions surpassing 10% of total company TPV. Lending solutions, driven by our BNPL customers and Pay Anywhere card options, add to this momentum.

Conversely, growth in on-demand delivery—a more mature service—showed signs of deceleration, slowing to single digits this quarter. Net revenue for Q3 reached $128 million, an 18% increase compared to the previous year. The revenue growth gap, larger than typical, stems from shifts in business mix towards lower-revenue segments among Powered by Marqeta customers.

Furthermore, a renegotiated platform partner agreement in Q1 2024 exerted some downward pressure on year-over-year revenue comparisons, although this does not affect gross profit figures and will stabilize by Q1 2025. Notably, Block’s net revenue concentration remained steady at 47%, while non-Block revenue growth exceeded Block’s by over 10 points.

Our net revenue take rate fell slightly to 17 basis points, primarily due to the increasing contribution from Powered by segment customers. In Q3, gross profit totaled $90 million, translating to a 24% year-over-year growth and maintained a gross profit margin of 70%. Overall, the company expects to overcome these hurdles and position itself for sustainable long-term growth.

Looking ahead, we remain committed to driving progress and effectively managing the challenges that arise in our evolving industry.

Marqeta’s Q3 Results Highlight Challenges but Show Strong Foundation

Despite a backlog of program launches and new financial hurdles, Marqeta remains optimistic about its growth potential.

Marqeta faced several obstacles regarding its program launches this quarter. A growing backlog has raised concerns for both Q4 and 2025, which we’ll address further in this discussion.

Newly launched programs have underperformed, which is concerning. Marqeta caters to innovative clients and has traditionally viewed its launch cohorts as a diverse group of programs. Unfortunately, fewer new programs in 2024—a result of delays—have diminished this diversification. Evaluating their success may be premature. Several factors could explain the poor gross profit performance, including changes in customer investment levels, needed adjustments to value propositions, or a higher cost of revenue than initially predicted.

This quarter, Marqeta’s gross profit take rate stood at 12 basis points, up one basis point from last quarter, largely due to increased incentives in Q3. This incentive adjustment occurs annually in Q2, reflecting contract cycles. Additionally, Q3 operating expenses were lower than expected at $81 million, a 9% increase from the previous year. In leveraging our scale, Marqeta has focused on targeted hiring and utilized multiple locations to tap into the best talent while executing efficiency and cost-cutting strategies effectively.

These efforts contributed to a better-than-expected Q3 adjusted EBITDA of $9 million, yielding a margin of 7%. Interest income for the quarter reached $14 million, with a GAAP net loss of $29 million. Notably, Marqeta repurchased over 9 million shares at an average price of $5.15, amounting to $49 million.

By the end of Q3, Marqeta had $1.1 billion in cash and short-term investments. Moving forward, the outlook for Q4 has been tempered. Expectations for net revenue growth now hover between 10% and 12%, while gross profit growth ranges from 13% to 15%. This is a reduction of six and nine points, respectively, compared to the projections from early August. The main reasons behind these lower expectations are tied to the heightened regulatory climate affecting our bank partners.

Firstly, we predict significantly fewer new programs will launch and ramp up in the latter half of the year, which is likely to lower gross profit growth by roughly six points. We’ve struggled to roll out new solutions and processes quickly, leading our banking partners to prioritize existing programs over new launches. As a result, our customers’ own launch schedules have been pushed back, contributing to a growing backlog that will take time to resolve.

Delays now mean program launches will transition into Q4 and early 2025. This setback could notably affect Q4 performance, particularly gross profit, since newer programs typically start with high margins until we reach contract volume tiers. Why did these changes seem abrupt? We’ve closely monitored regulatory scrutiny and increased compliance measures throughout the year to elevate management standards. However, we’ve recently realized that the adaptation period may take longer than anticipated for all involved parties.

We are implementing solutions to address these issues, collaborating with existing bank partners to expedite program approval and onboarding processes. We also plan to onboard at least two more bank partners to expand our offerings and meet growing demand.

The second issue involves some advanced fintech clients accelerating the assumption of greater control over program components in this regulatory environment, decreasing gross profit growth by two to three points. Several clients are shifting resources towards more in-house program management operations, which affects Marqeta’s take rate and volume. However, we don’t believe this trend will widen since few companies have the capability or inclination to pivot in this direction.

Aside from these challenges, most facets of the business are aligning with earlier expectations. For the full year 2024, Marqeta anticipates negative net revenue growth of approximately 26% and gross profit growth of around 6%. Despite the setbacks in gross profit growth, cost optimization remains a focus to improve adjusted EBITDA. Our expenses for Q4 are expected to rise in the high single digits, with meaningful investments in platforms and resources to ensure we serve our customers effectively and drive future growth.

Consequently, we foresee Q4 adjusted EBITDA margins of 5% to 7%, only a one-point drop from previous expectations, aided by improved operational discipline. For the entirety of 2024, we predict an adjusted EBITDA margin of about 5%. As for 2025, it remains too early for detailed discussion, but we believe that Q4 2024 can act as a valuable gauge. Gross profit growth for 2025 might mirror Q4 2024 since program launch delays are likely to push growth to later in 2025.

Keeping aligned with our previous forecasts, we still expect adjusted EBITDA in 2025 to hit approximately $50 million, aiming to reach GAAP profitability by 2026. The current challenges with program launches are seen as short-term disruptions rather than a fundamental setback for our business growth trajectory beyond 2025.

To summarize, we delivered strong Q3 results with notable gross profit growth and an improving adjusted EBITDA trajectory. As we leverage our scale, we are beginning to see not only profitable growth but also opportunities in embedded finance with clients looking for a reliable global partner for various use cases. Though gross profit growth may fall short of earlier projections in the upcoming quarters, Marqeta remains a market leader, poised for mid-teens growth and an upward trend in adjusted EBITDA. While we’re facing delays in new program launches, we maintain confidence in our long-term vision for modernization in issuer processing.

I will now turn it over to the operator for the question-and-answer segment.

Questions & Answers:

Operator

Thank you, everyone. We will now start the question-and-answer portion. [Operator instructions] Please limit yourselves to one question and one follow-up question per participant. One moment while I gather questions.

The first question comes from Ramsey El-Assal from Barclays. Please proceed.

Regulatory Changes and Program Launches: Insights from Marqeta’s Leadership

Barclays — Analyst

Hi. Thank you for taking my question this evening. Can you comment on your visibility at this point given everything that’s going on in terms of these regulatory-driven changes? Are you confident that you’re seeing a bottoming out of the challenges here? Or could we reach next quarter and find that conditions have worsened? I’m also curious if there’s a risk that some bookings might get canceled if the timeline for implementation extends too long.

Simon Khalaf — Chief Executive Officer

Let me address that, Ramsey, and then I’ll pass it to Mike. We believe we have some visibility and that we have reached a bottoming out. This is due to several factors, including our anticipation of the changes. However, we did not foresee the effects on the onboarding process with our banking partners. For instance, when we alter something in a program, it needs to return to the beginning of the queue instead of being processed simultaneously. These are procedural shifts rather than significant changes. While regulators have a tough assignment, I truly believe we are moving past the most challenging aspects to return to normal operations with our banking partners.

Although we have a backlog to clear, the demand has actually increased rather than decreased. Therefore, we don’t expect our partners to lose patience when waiting in the queue. Both sides are fully committed to the partnership. There’s substantial effort involved from development through onboarding to risk management, and both we and our customers are eager to navigate this environment together. Mike, do you have anything to add?

Mike Milotich — Chief Financial Officer

Sure. To add some detail regarding the delays, in the early months of 2024, regulatory scrutiny heightened with over 10 consent orders impacting banks in our sector. Consequently, we experienced a notable increase in the launch timeline, with onboarding taking over twice as long as in 2023. Generally, onboarding and delivery lasted around 150 days previously, but in Q1 and Q2, it extended to more than 300 days. We anticipated this spike due to all the initial changes. However, we thought things would normalize in Q3.

Unfortunately, new programs launched took about 30-40% longer, leading to an average time exceeding 200 days. This context helps illustrate the situation’s magnitude. Regarding visibility, we had 15 programs that were delayed by an average of 70 days. Among those, five did launch in Q3, albeit later than expected. Nine re-scheduled to Q4, and one has been pushed into Q1 of 2025. Overall, while uncertainties remain, we’re optimistic about our projections moving forward.

Ramsey El-Assal — Barclays — Analyst

Thank you for that information. I have a quick follow-up: You noted that some newly launched programs are underperforming. Can you elaborate on this situation and whether changes might improve their trajectory? For instance, could refining the value proposition or customer investment levels lead to better performance over time, or are these outcomes set to remain as they are?

Mike Milotich — Chief Financial Officer

Indeed, changes can be made to influence performance. As I mentioned earlier, we view new program launches as a portfolio, considering them collectively. Our business often relies on a few successful programs within a cohort, while some might require adjustments to their value propositions to achieve greater success.

We typically encounter such scenarios and work alongside those customers experiencing challenges to refine their offerings and navigate necessary changes through the banks. What sets this instance apart is the reduced sample size due to delays, which affects overall balance compared to a more extensive program launch. We’re committed to supporting them in improving performance, as all stakeholder incentives are aligned towards this goal.

Operator

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

Darrin Peller — Analyst

Hi, everyone. Thanks for taking my question. I have a couple of follow-ups. Firstly, regarding your confidence in existing customers who haven’t been impacted by recent changes, what gives you faith that these customers will remain stable? It’s also positive to hear about visibility concerning the onboarding process for the 15 programs. Could you help clarify what reinforces your assurance that current or future clients won’t change their outlook on your operations? Additionally, could you provide more insights on the verticals within your business, especially in relation to smaller partner banks? Thanks.

Simon Khalaf — Chief Executive Officer

Thank you, Darrin. I’ll address the first part, and then I’ll let Mike provide additional context. Regarding our existing customers, Marqeta took proactive measures well before the recent regulatory scrutiny to evaluate all our programs and the necessary processes, dating back to launches from two years ago. We feel confident that the programs currently in place can withstand the increased regulatory demands.

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Marqeta Executives Address Customer Engagement Amid Increased Launch Timelines

Darrin Peller — Analyst

We’ve reassessed our initial parking lot exercise, evaluating each of our programs rigorously and concluding that they are robust. When confronted with questions, we’ve put our partners to the test, ensuring we feel confident in our decisions. Regarding your second question about customer retention, especially with longer launch times, we’ve maintained close communication with our clients and collaborated with them to implement necessary changes.

We’ve also talked to them about limiting the number of modifications at the beginning, allowing us to prioritize their projects without extending their timelines unnecessarily. Our clients have responded positively to this approach. Additionally, we’ve redirected some of our resources to consult with our customers directly. We aim for an effective launch based on the lessons learned from the 400 programs previously launched, rather than pursuing overly ambitious strategies that could merely gain short-term attention.

Overall, “discipline” captures our approach in these early stages of program rollout. I would be genuinely amazed if we experience any significant drop-off in client engagement, given how invested our customers are in the upcoming solutions.

Mike Milotich — Chief Financial Officer

Adding to Darrin’s point, since we began significantly increasing our bookings over the past 18 months to two years, more than half of these bookings involve existing customers who are exploring new programs. They are well aware of the ongoing changes in our industry.

For instance, a client that partnered with us a year or two ago can observe the transformations occurring now. It’s clear that this situation isn’t unique to Marqeta or any particular banking partner we work with; it’s part of a broader industry evolution that many are experiencing.

This change is not confined to specific sectors; it’s widespread throughout the industry. Our onboarding process is undergoing fundamental changes that affect all use cases. To emphasize what Simon mentioned, we are encouraging customers to follow established procedures to expedite their launches and refine their value propositions in time.

Darrin Peller — Analyst

Mike, you emphasized sticking to established frameworks. Have you had a chance to connect with regulators regarding any upcoming substantial changes?

Simon Khalaf — Chief Executive Officer

We maintain ongoing dialogues with all relevant parties, including regulatory bodies. Their roles are challenging, and I wouldn’t characterize our interactions as merely incremental adjustments. While many reactions stem from past events in the industry, not directly from Marqeta, we recognize that issues affecting one entity can impact the entire ecosystem.

Recently, regulators have intensified scrutiny of banks, leading to increased oversight of third-party partners. However, we don’t anticipate significant alterations in this environment. We are committed to compliance, as demonstrated by our proactive investments this year, primarily focused on compliance and risk management.

Furthermore, we’ve adjusted our process by conducting bank vetting much earlier. We won’t enter contracts until banks have thoroughly vetted our solutions. This change enhances our efficiency and boosts our delivery confidence.

Operator

Thank you. Next, we have Tien-Tsin Huang from JPMorgan. Please go ahead.

Tien-Tsin Huang — JPMorgan Chase and Company — Analyst

Thank you for the insights and for maintaining your 2025 EBITDA outlook. Given your efforts to address current challenges, I assume there will be additional costs involved. Can you clarify how you’re managing these remedies and their effects on the P&L while maintaining confidence in EBITDA protection?

Simon Khalaf — Chief Executive Officer

Thank you for the question, Tien-Tsin. The primary costs have already been accounted for. We’ve been making significant compliance investments since early in the year, which will continue into 2024. This year’s compliance efforts have been our largest undertaking.

We’ve automated several processes and expanded our team internationally, focusing on risk management and compliance support. However, we cannot precisely predict how much additional operational expenditure banks will incur to adapt to these changes. Our compliance team feels reassured by the investments banks are making to meet the current challenges.

Looking ahead, our strategy emphasizes enhancing efficiency with our existing banking partners. This includes adhering to established protocols and focusing on successful use cases while minimizing unnecessary modifications in order to expedite launches. We are also onboarding additional banks to bolster our supply capabilities and deploying experts into the field to collaborate with clients effectively.
This comprehensive approach not only adds to our competitive edge but also enables us to better manage our project backlog.

Mike Milotich — Chief Financial Officer

To add some clarity regarding 2025, despite the unusual circumstances prompting our disclosure, we maintain a consistent perspective on gross profit for programs that launched before 2024. The shifts in our 2025 outlook are primarily related to new initiatives.

“`

Marqeta’s Program Timeline Delays Impact Revenue Expectations

Investors are watching closely as Marqeta addresses new program delays and evolving customer needs.

The company is preparing for growth in 2024, but it has acknowledged a few challenges that could affect its revenue projections. By assessing over 100 launched programs, Marqeta has observed a common growth pattern, notably a slow start that accelerates over time. For example, during the first six months of a new program, about 90% of the total volume typically occurs between the fourth and sixth months, followed by a significant increase of six times that volume in the next six months. This growth pattern continues with an even steeper increase in subsequent months.

Simon Khalaf, the Chief Executive Officer of Marqeta, explained that this growth curve is crucial for their revenue forecasts. If delays push this timeline back even slightly, it could considerably affect the company’s ability to generate revenue and gross profit. Khalaf remains optimistic, stating that by 2026, Marqeta expects to regain momentum, similar to what was outlined during their Investor Day. They are currently focused on addressing existing challenges and backlog issues.

Chief Financial Officer Mike Milotich emphasized their ongoing progress, especially in controlling expenses, which should allow them to meet their EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) target of around $50 million, despite the setbacks.

Milotich further clarified that there are two key factors influencing the delays: first, the extended timeline for launching new programs; and second, the trend of sophisticated fintech customers opting to manage more processes internally. He noted that while the early performance of newly launched programs contributes to this issue, it is not a major factor in itself.

In discussing customer behavior, Milotich pointed out that some clients are shifting to direct bank relationships and bringing more risk management in-house. For instance, two customers are taking over their bank connections while another has created a proprietary risk management system. This shift reduces their reliance on card services, which affects Marqeta’s projected volume, contributing to a 2-3% decrease in growth expectations for Q4.

Market trends also indicate that this is not an isolated scenario; many companies are facing similar challenges. Khalaf mentioned recent discussions at the Money20/20 conference regarding heightened regulatory and compliance demands, which have caused delays across the industry. Interestingly, this has led some firms to partner more closely with Marqeta, recognizing its proactive investment in compliance measures as a competitive advantage.

Then, transitioning to developments with Visa, Khalaf confirmed that Marqeta has been one of the first firms certified to work with Visa Flexible Credential, expecting to launch within days. The initial feedback has been positive, suggesting strong demand for its services across various regions.

In summary, Marqeta’s growth trajectory may face headwinds in the short term due to program delays and changing client dynamics, yet the company remains committed to navigating these challenges effectively.

Marqeta CEO and CFO Discuss Current Challenges and Pipeline of Opportunities

Industry shifts lead to changes, but Marqeta remains focused on long-term goals.

The conversation began with concerns about base-as-a-service (BaaS) players being considered alternatives to Marqeta. However, those solutions are losing traction as they struggle to manage large-scale programs. Marqeta believes its early commitment to compliance gives it a competitive edge in this environment. The company aims to overcome the operational challenges faced alongside its bank partners.

Mike Milotich — Chief Financial Officer

In response to the evolving banking landscape, Marqeta is preparing for increased demand. Several programs are set to help customers who may lose their banking partners, confirming that this issue isn’t unique to Marqeta.

Sanjay Sakhrani — Analyst

Sanjay posed a follow-up question regarding the expected gross profit run rate for Q4 and its implications for 2025. He wondered whether it represented a worst-case scenario or if the projections could potentially be adjusted. Variability in deferral periods, such as the possibility of a 60-day delay, sparked concerns about revenue being deferred until the latter half of the next year.

Mike Milotich — Chief Financial Officer

Mike clarified that they wanted to reset expectations transparently. The speed at which they can clear their backlog will likely determine revenue trajectories for 2025. Positive changes in operations are being implemented, and progress is being made. The backlog includes several planned launches that are currently waiting in line, causing uncertainty in future quarterly trajectories. They expect to have more clarity when they update their outlook in late February.

Operator

The next question came from Andrew Schmidt at Citi, who appreciated the thorough details provided. He asked about the changes required on the Marqeta platform amidst increased scrutiny and longer timelines. He noted that while transparency and detail enhancements were mentioned, he wanted clarity on any significant platform changes.

Simon Khalaf — Chief Executive Officer

Simon responded that the compliance team is addressing existing needs rather than introducing entirely new requirements. The focus remains on enhancing visibility and reporting capabilities. They are developing a real-time dashboard for compliance purposes, allowing the team to stay informed on program launches. Improvements are being made, but the needs have not drastically changed due to Marqeta’s operational maturity.

Andrew Schmidt — Analyst

Andrew then shifted focus to the sales environment, asking whether the current climate was causing hesitation among potential clients. He also inquired if they were reallocating resources from new sales to implementation while tackling their backlog.

Simon Khalaf — Chief Executive Officer

Simon noted that while they have adjusted resources to support customers better, the pipeline remains strong, particularly for embedded finance opportunities. He emphasized that regulatory scrutiny has not deterred new clients but rather has led to increased interest.

Operator

Andrew Bauch from Wells Fargo followed up with a question about the six-point headwind that could affect gross profit growth in Q4. He sought confirmation that previous sales estimates remained unchanged despite macroeconomic factors.

Mike Milotich — Chief Financial Officer

Mike confirmed that only changes related to new programs were noted. Other aspects have remained consistent with previous estimates, despite some programs assuming additional responsibilities.

Andrew Bauch — Analyst

He followed up by asking Simon to clarify where demand was rising amidst onboarding delays.

Simon Khalaf — Chief Executive Officer

Simon explained that demand has consistently increased, although the backlog has also grown due to delays. Of the 15 programs slated for launch, only five were successful, illustrating the challenges. Nevertheless, he identified three areas experiencing heightened demand: neobanking services, flexible payments, and newly introduced products like Visa Flexible Credentials.

Marqeta’s Growing Engagement with Embedded Finance Solutions

Many software companies focused on finance automation—including AP automation, expense management, and payroll management—are eyeing the commercial banking suite and seeking collaboration with us. A significant portion of our business pipeline reflects this trend.

Currently, about two-thirds of our pipeline consists of embedded finance customers, which tend to have a broader audience compared to fintech companies that rely on venture funding to cultivate their user base.

Operator

Thank you. This concludes the question-and-answer session, and the conference call for Marqeta, Inc. is now over. [Operator signoff]

Duration: 0 minutes

Participants on the Call:

Stacey Finerman — Vice President, Investor Relations

Simon Khalaf — Chief Executive Officer

Mike Milotich — Chief Financial Officer

Ramsey El-Assal — Barclays — Analyst

Darrin Peller — Analyst

Tien-Tsin Huang — JPMorgan Chase and Company — Analyst

Timothy Chiodo — Analyst

Sanjay Sakhrani — Analyst

Andrew Schmidt — Analyst

Andrew Bauch — Analyst

For more analysis on MQ, read all earnings call transcripts.

This article is a transcript of a conference call produced for The Motley Fool. Although we aim for accuracy, there may be errors, omissions, or inaccuracies in this transcript. As always, we recommend doing your own research, including listening to the call and consulting the company’s SEC filings. For more information, please review our Terms and Conditions, including our Obligatory Capitalized Disclaimers of Liability.

The Motley Fool recommends Marqeta. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.

Marqeta (MQ) Q3 2024 Financial Results and Insights

Daily Market Recaps (no fluff)

Marqeta’s Q3 2024 Earnings: Growth Amid Payment Innovations

Key Points of Discussion:

Opening Statements:

Is Marqeta Worth Your Investment? A Quick Pre-Assessment

Marqeta Faces Compliance Challenges Amid Growth Restructuring

Marqeta’s Q3 Results Highlight Challenges but Show Strong Foundation

Questions & Answers:

Regulatory Changes and Program Launches: Insights from Marqeta’s Leadership

Marqeta Executives Address Customer Engagement Amid Increased Launch Timelines

Marqeta’s Program Timeline Delays Impact Revenue Expectations

Marqeta CEO and CFO Discuss Current Challenges and Pipeline of Opportunities

Marqeta’s Growing Engagement with Embedded Finance Solutions

Participants on the Call:

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