Third Quarter 2026 Earnings Call - MARQETA INC

Explicit Guidance:

• Q4 2026 Net Revenue: Expected growth of 3% to 5% year-over-year (reduced from prior guidance).
• Q4 2026 Gross Profit: Expected growth of 5% to 7% year-over-year.
• Q4 2026 Adjusted Operating Expenses: Expected to increase sequentially but remain nearly flat year-over-year.
• Q4 2026 Adjusted EBITDA: Expected growth in the "mid-20s" percentage range.
• Q4 2026 GAAP Net Income: Expected in the "mid- to high-single-digit millions."
• Full Year 2026 Net Revenue: Maintaining growth expectations of 11% to 12% (reduced by 1 point from prior guidance).
• Full Year 2026 Gross Profit: Maintaining growth expectations of 11% to 12%.
• Full Year 2026 Adjusted EBITDA Growth: Raised expectations from "low 30s" to "low to mid 30s."
• Full Year 2026 GAAP Net Income: Expected in the $135 million to $140 million range (includes $107 million non-cash tax benefit).
• Full Year 2026 GAAP EPS: Implied by net income guidance; $1.09 reported for Q3 with a $1.01 per-share tax benefit.
• Share Count: Diluted weighted average share count was 106 million in Q3; share repurchase authorization has $140 million remaining of the $150 million total (as of Sept 30, 2026).
• Cash Position: Ended Q3 2026 with $698 million in cash and short-term investments.

Business-Segment Outlook:

• Block (Cash App): Expects "little to no new issuance" by end of December 2026; anticipates this diversification dynamic will be a "bigger drag" on growth in 2027 compared to 2026.
• Financial Services Use Case: Growth expected to remain "meaningfully faster than the overall company" when excluding Block; current growth runs slower than company average due to Block's weight.
• Lending/BNPL: Projected to continue strong growth; driven by expanding flexible network credential usage and geographic expansion.
• Expense Management: Growth is accelerating; volume growth rate in the "high 50s" year-over-year.
• On-Demand Delivery: Growth expected to remain in the "highest single digits" year-over-year, below company average as this is the most mature use case.
• Geographies: Continued customer launches in Europe (e.g., Satispay) and expansion of existing partners; global bank and network diversification remains a key competitive advantage.
• Customer Migration: "More [migrations] signed that are underway" as legacy platforms face pressure from fintechs; migration volume includes 4 completed migrations in the last 24 months (2 credit, 2 debit).

Market and Competitive Outlook:

• Modernization Wave: Describes the current state as "very early stages" of a wave where >90% of card volume still runs on legacy platforms, driving demand for Marketo's migration capabilities.
• Competitive Position: Platform flexibility (17 banks, 11 networks for top 10 customers) and "white-glove" migration approach are primary differentiators; new logos include Google (Google Wallet for Kids) and Satispay.
• Stablecoin/Crypto: Interest in digital asset-backed payments is "building"; Coinbase partnership enables stablecoin-backed card solutions; expanding commercial payment capabilities (virtual cards, push-to-card, real-time transfers) to reduce customer complexity.
• Agent Commerce (GenTech): Believes issuers must play a "larger role" in agentic payments to maintain fraud controls and consumer trust; views commercial payments (procurement, bill pay) as immediate opportunities for agent-based commerce due to predictable flows.
• Pricing Structure: Customers increasingly contract directly with banks/networks, which reduces "Net Revenue" and "Cost of Revenue" equally without impacting "Gross Profit"; this dynamic is expected to cause "noise" in the top line but is consistent with value-add economics.

Macro / Industry Outlook:

• Consumer Behavior: Management assumes "consistent spending patterns" for the remainder of 2026; no "notable shift in spend or consumer behavior" currently observed.
• Legacy Infrastructure: Anticipates incumbents will continue to be "pushed to evaluate whether their current capabilities enable them to compete effectively," driving migration demand.
• 2027 Context: Management notes that 2026 headwinds (renewal one-time effects, Block scaling effects) will not repeat, but 2027 will face a "bigger drag" from Cash App's new issuance diversification.

Strategic Initiatives:

• Product Enhancements:
  • Straight-Through Processing (STP): Integrating network-level STP to automate supplier payments (no manual entry), expected to broaden customer reach.
  • Account Linking/Verification: Integrating open banking partners (MasterCard Open Finance, Plaid) for seamless onboarding and identity verification.
  • Stablecoin Integration: Linking stablecoins to existing card rails via Coinbase partnership.
  • Google Wallet for Kids: Launch of spend control and tokenization functionality for family allowances.
  • Commercial Payments: Enhancing virtual card and push-to-card capabilities for B2B supplier networks.
• Capacity & M&A: No specific M&A announced; focus remains on "pursuing additional, attractive investment opportunities to drive profitable growth."
• Efficiency: Operating leverage expected to drive further EBITDA margin expansion as volume growth outpaces Opex (scale of $500B+ annualized TPV reached).

Risks and Headwinds to Outlook:

• Cash App Issuance: Continued "diversification of new issuance" will suppress new volume growth in Q4 2026 and create headwinds for 2027.
• Contract Structure Shifts: Customers contracting directly with banks/networks will mechanically depress Net Revenue and Cost of Revenue (no impact on Gross Profit), creating potential P&L noise.
• Legacy Replacement Pace: While demand exists, the migration of >90% of legacy volume remains a gradual process; success depends on "white-glove" execution and data mapping capabilities.
  0 - External Guidance Risks: Forward-looking statements subject to SEC filings, macro conditions, and operational execution risks.

Management Tone on the Future:

• Confidence: "Very confident about the underlying business"; described as "strong momentum" with "strong competitive position."
• Scale Efficiency: Highlighted as operating at a $500 billion annualized TPV threshold where capital efficiency improves (EBITDA margins expanding to 32% of gross profit).
• Strategic Outlook: Describes the market as "still only scratching the surface" of the addressable market; views current trends as the "early stages" of a "wave of modernization."
• Caution: Explicitly noted that Q4 net revenue guidance is lower due to structural contract changes rather than volume decline; noted that 2027 growth trajectory will be affected by non-recurring 2026 factors (Block price step-downs, renewals) and the Cash App diversification drag.

Miscellaneous:

• Tax Benefit: Q3 GAAP net income included a $107 million non-cash tax benefit from the release of deferred tax assets valuation allowance; full-year guidance includes this same benefit ($135M–$140M).
• Share Buybacks: Repurchased 700,000 shares in Q3 at an average price of $16.25; remaining authorization is $140 million.
• Valuation: Management believes current valuation "does not fairly represent the company's value or the market opportunity ahead of us."
• Share Count Adjustment: EPS figures reflect a one-for-four reverse stock split effective June 30, 2026.