• Total Processing Volume (TPV): $74 billion in Q3, a 30% increase year over year.
• Net Revenue: $128 million in Q3, an 18% increase year over year.
• Gross Profit: $90 million in Q3, a 24% increase year over year.
• Adjusted Operating Expenses: $81 million in Q3, a 9% increase year over year.
• Adjusted EBITDA: $9 million in Q3, with a margin of 7%.
• Net Revenue Take Rate: 17 basis points in Q3.
• Gross Profit Margin: 70% in Q3.
• Interest Income: $14 million in Q3.
• GAAP Net Loss: $29 million in Q3.
• Share Repurchase: Over 9 million shares repurchased at an average price of $5.15, totaling $49 million.
• Cash and Short-term Investments: $1.1 billion at the end of Q3.
• Q4 Net Revenue Growth Outlook: Expected between 10% and 12%.
• Q4 Gross Profit Growth Outlook: Expected between 13% and 15%.
• Full-Year 2024 Net Revenue Growth: Approximately negative 26%.
• Full-Year 2024 Gross Profit Growth: Approximately 6%.
• Q4 Adjusted EBITDA Margin Outlook: Expected between 5% and 7%.
• Full-Year 2024 Adjusted EBITDA Margin: Approximately 5%.

• Warning! GuruFocus has detected 8 Warning Signs with CENX.

Release Date: November 04, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Marqeta Inc (NASDAQ:MQ) reported a 30% year-over-year increase in total processing volume (TPV) for Q3 2024, reaching $74 billion.
• Net revenue for the quarter was $128 million, marking an 18% increase compared to the same period in 2023.
• Gross profit grew by 24% year-over-year to $90 million, indicating strong financial performance.
• The company successfully launched Portfolio Migration, a new product that simplifies upgrading existing card programs onto Marqeta's platform, enhancing customer transition experiences.
• Marqeta Inc (NASDAQ:MQ) introduced Marqeta Flex, a solution aimed at revolutionizing BNPL payment options, with plans to roll it out in mid-2025, showcasing innovation in the BNPL landscape.

Negative Points

• The company faced delays in launching new programs due to increased regulatory scrutiny, impacting Q4 growth expectations.
• 15 expected program launches in Q3 were delayed by an average of 70 days, affecting gross profit growth.
• Some sophisticated fintech customers are taking more program management responsibilities in-house, reducing Marqeta's gross profit growth by 2 to 3 points.
• The time to launch new programs increased by 30% to 40% compared to 2023, due to heightened regulatory requirements.
• The company's Q4 guidance reflects a 6- to 9-point reduction in expected net revenue and gross profit growth, attributed to regulatory challenges and customer shifts.

Q & A Highlights

Q: Can you comment on your visibility regarding regulatory-driven changes and whether you expect further deterioration? Also, is there a risk of bookings being terminated if implementation timelines stretch too long? A: Simon Khalaf, CEO: We have visibility and believe we have bottomed out. The changes are procedural rather than material, and we are over the hump in terms of what needs fixing. We don't expect customers to lose patience as both parties are committed to the partnership. Mike Milotich, CFO: The regulatory scrutiny increased significantly, causing delays, but we have good visibility now and are implementing solutions to address these challenges.

Q: You mentioned new programs that launched are not performing as expected. Can you provide more color on this and whether the trajectory can change? A: Michael Milotich, CFO: We view new program launches as a portfolio, and some customers may need to refine their value proposition. The smaller sample size due to delays lacks diversification, but we are working with customers to improve performance.

Q: What gives you confidence that existing customers won't be impacted by regulatory changes, and how are you managing new customer onboarding? A: Simon Khalaf, CEO: We've reviewed all programs and are confident in their compliance. We've advised customers to reduce changes to avoid delays and are consulting with them to get it right the first time. Michael Milotich, CFO: More than half of our bookings are with existing customers who understand the broader industry changes.

Q: Are there any changes required on the Marqeta platform due to increased scrutiny? A: Simon Khalaf, CEO: There are no significant changes needed that we weren't already working on. We are enhancing automation and reporting for better visibility, but conceptually, requirements remain the same.

Q: How is the new sales environment given the current challenges, and are you shifting resources to manage the backlog? A: Simon Khalaf, CEO: We have moved resources to help with delivery and are prioritizing pipeline management. Despite the challenges, our pipeline continues to grow, particularly from embedded finance customers.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.