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Marqeta Reports Third Quarter 2023 Financial Results

The global modern card issuer reported $57 billion in total processing volume with net revenue of $109 million in the third quarter of 2023.

Marqeta, Inc. (NASDAQ: MQ), the global modern card issuing platform, today reported financial results for the third quarter ended September 30, 2023.

The Company reported total processing volume (TPV) of $57 billion, representing a year-over-year increase of 33% driven by volume growth across several use cases.

Marqeta's Q3 earnings are the Company's first full quarter of financial results reflecting its Cash App contract renewal announced in August. Marqeta reported net revenue of $109 million, a decrease of 43% year over year, which included a 60 percentage point negative growth impact due to the change in revenue presentation caused by the new Cash App contract. Gross profit was $73 million for the quarter, resulting in a gross margin of 67%. Gross profit decreased 9% year over year, primarily as a result of new Cash App pricing. GAAP operating expenses and net loss for the quarter were $142 million and $55 million, respectively. Adjusted operating expenses were $75 million, a year-over-year decrease of 20% driven by cost reduction initiatives, which resulted in an Adjusted EBITDA loss of $2 million.

“Our Q3 results represent the new baseline for Marqeta, post Block’s Cash App renewal. We've shown continued sales bookings momentum against a backdrop of operational discipline, continued scale, and new innovations through the launch of our credit platform,” said Simon Khalaf, CEO of Marqeta. “We are in a good position to return to strong growth by Q3 2024 as we lap the Cash App contract and expect to accelerate that growth in future years as the market for embedded finance continues to materialize.”

Recent Business Updates:

Marqeta highlighted several recent business updates that demonstrate its current business momentum:

  • Marqeta announced its new credit platform, adding intuitive credit card program management tools and creating a one-stop shop for launching consumer and commercial credit programs. Through Marqeta, customers won’t have to build credit cards with black box legacy infrastructure or from a patchwork of different solutions. Instead, through one single, modern tech stack that has been proven at scale, they can build out a credit product closely tailored to the needs of consumer and commercial cardholders.
  • Marqeta announced multiple updates to its long-standing relationship with Block. It extended the term of the Square Debit Card program through June 30, 2028 and extended the term of the Cash App program for one additional year, also through June 30, 2028. As part of the agreement Marqeta will be the default provider of issuing processing and related services in current or future markets outside of the U.S. where Block intends to operate and the Company is able to provide issuing and processing services.
  • Marqeta announced that with the Block extensions complete, it has now signed contract renewals in the last 6 quarters with customers accounting for over 75% of its TPV, securing a solid customer base to drive growth in the coming years.
  • Marqeta announced that consumer cards offered by Buy Now, Pay Later (BNPL) providers to give their customers the ability to pay in installments at any merchant that accepts cards, drove almost 10% of all BNPL TPV. This rapid growth is testament to the innovation and comprehensive nature of the Marqeta platform in both commercial and consumer programs.

Operating Highlights

In thousands, except percentages and per share data. % change is calculated over the comparable prior-year period (unaudited)

Three Months Ended

September 30,

 

%

Change

 

Nine Months Ended

September 30,

 

%

Change

2023

 

2022

 

 

2023

 

2022

 

Financial metrics:

 

 

 

 

 

 

 

 

 

 

 

Net revenue

$

108,891

 

 

$

191,621

 

 

(43)%

 

$

557,349

 

 

$

544,401

 

 

2%

Gross profit

$

72,508

 

 

$

80,102

 

 

(9)%

 

$

246,281

 

 

$

232,877

 

 

6%

Gross margin

 

67

%

 

 

42

%

 

 

 

 

44

%

 

 

43

%

 

 

Total operating expenses

$142,334

 

 

$139,598

 

 

2%

 

$472,960

 

 

$388,362

 

 

22%

Net loss

($54,990

)

 

($53,168

)

 

(3)%

 

($182,587

)

 

($158,454

)

 

(15)%

Net loss margin

 

(51

)%

 

 

(28

)%

 

 

 

 

(33

)%

 

 

(29

)%

 

 

Net loss per share - basic and diluted

($0.10

)

 

($0.10

)

 

—%

 

($0.34

)

 

($0.29

)

 

(17)%

Key operating metric and Non-GAAP financial measures:

 

 

 

 

 

 

 

 

 

 

 

Total Processing Volume (TPV) (in millions) 1

$

56,650

 

 

$

42,473

 

 

33%

 

$

160,285

 

 

$

119,556

 

 

34%

Adjusted EBITDA 2

($2,062

)

 

($13,630

)

 

85%

 

($5,586

)

 

($34,308

)

 

84%

Adjusted EBITDA margin 2

 

(1.9

)%

 

 

(7.0

)%

 

 

 

 

(1.0

)%

 

 

(6.0

)%

 

 

Non-GAAP operating expenses 2

$

74,570

 

 

$

93,733

 

 

(20)%

 

$

251,867

 

 

$

267,185

 

 

(6)%

1 TPV represents the total dollar amount of payments processed through our platform, net of returns and chargebacks. We believe that TPV is a key indicator of the market adoption of our platform, growth of our brand, growth of our customers' businesses and scale of our business.

2 See "Information Regarding Non-GAAP Measures" for definitions of Adjusted EBITDA, Adjusted EBITDA margin, and Non-GAAP operating expenses and the reconciliations of the net loss to Adjusted EBITDA, and of the total operating expenses to Non-GAAP operating expenses.

Third Quarter 2023 Financial Results:

Net revenue decreased by $83 million, or 43% year-over-year, declining to $109 million from $192 million in the third quarter of 2022, primarily due to a contract renewal with Cash App and resulting change in revenue presentation. The impact of fees owed to Issuing Banks and Card Networks related to the Cash App primary Card Network volume, which are netted against revenue earned from the Cash App program within Net Revenue, was a reduction of $114 million, negatively impacting the growth rate by 60 percentage points. In prior periods, these costs were included within Costs of Revenue.

Gross profit decreased by 9% year-over-year, declining to $73 million from $80 million in the third quarter of 2022 primarily due to reduced pricing from the Cash App renewal. Gross margin was 67% in the third quarter of 2023.

Net loss increased by $2 million year-over-year to $55 million in the quarter. Our decrease in gross profit in conjunction with a slight increase in operating expenses was partially offset by increases in interest income earned on our short-term investments and cash deposits. Net loss margin was 51% in the third quarter of 2023.

Total Processing Volume increased by 33% year-over-year, rising to $57 billion from $42 billion in the third quarter of 2022.

Adjusted EBITDA loss decreased by $12 million year-over year, declining to a loss of $2 million, in the third quarter of 2023 from an Adjusted EBITDA loss of $14 million in the comparable prior year period. Adjusted EBITDA margin was (2)% in the third quarter of 2023, an increase of 5 percentage points year-over-year.

Conference Call

Marqeta will host a live conference call today at 1:30 p.m. Pacific time (4:30 p.m. Eastern time). To join the call, please dial-in 10 minutes in advance: toll-free at 1-877-407-4018 or direct at 1-201-689-8471. The conference call will also be available live via webcast online at http://investors.marqeta.com.

The telephone replay dial-in numbers are 1-844-512-2921 and 1-412-317-6671 and will be available until November 14, 2023, 8:59 p.m. Pacific time (11:59 p.m. Eastern time). The confirmation code for the replay is 13740965.

Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements expressed or implied in this press release include, but are not limited to, statements relating to Marqeta’s quarterly guidance; statements regarding expected accounting treatment and changes to revenue and gross profit; statements regarding Marqeta’s business plans, business strategy and the continued success and growth of our customers; statements and expectations regarding Marqeta's partnerships, new product introductions, and product capabilities, including credit card issuing; and statements made by Marqeta’s CEO and CFO. Actual results may differ materially from the expectations contained in these statements due to risks and uncertainties, including, but not limited to, the following: the effect of uncertainties related to global economies, our business, results of operations, financial condition, demand for our platform, sales cycles and customer retention; the risk that Marqeta’s anticipated accounting treatment may be subject to further changes or developments; the risk that Marqeta is unable to further attract, retain, diversify, and expand its customer base; the risk that Marqeta is unable to drive increased profitable transactions on its platform; the risk that consumers and customers will not perceive the benefits of Marqeta’s products, including credit card issuing, as Marqeta expects; the risk that Marqeta's technology platform, including hosted solutions, do not operate as intended resulting in system outages; the risk that Marqeta will not be able to achieve the cost structure that Marqeta currently expects; the risk that Marqeta’s solution will not achieve the expected market acceptance; the risk that competition could reduce expected demand for Marqeta’s services, including credit card issuing; the risk that changes in the regulatory landscape adversely affects the gross interchange or other revenue Marqeta earns or adversely affects the bank and network costs Marqeta incurs; the risk that Marqeta may be unable to maintain relationships with Issuing Banks and Card Networks; the risk that Marqeta is not able to identify and recognize the anticipated benefits of any acquisition; the risk that Marqeta is unable to successfully integrate any acquisition to businesses and related operations; the risk of ongoing financial services and banking sector instability and follow on effects to fintech companies, general economic conditions in either domestic or international markets, including inflation and recessionary fears, conditions resulting from geopolitical uncertainty and instability or war, including the direct and indirect effects on U.S. and global economies, our business, results of operations, financial condition, and demand for our platform; and the risk that Marqeta may be subject to additional risks such as inflation or currency fluctuations due to its international business activities. Detailed information about these risks and other factors that could potentially affect Marqeta’s business, financial condition and results of operations are included in the “Risk Factors” disclosed in Marqeta's Annual Report on Form 10-K for the year ended December 31, 2022 and subsequent Quarterly Reports on Form 10-Q, as such risk factors may be updated from time to time in Marqeta’s periodic filings with the SEC, available at www.sec.gov and Marqeta’s website at http://investors.marqeta.com.

The forward-looking statements in this press release are based on information available to Marqeta as of the date hereof. Marqeta disclaims any obligation to update any forward-looking statements, except as required by law.

Disclosure Information

Investors and others should note that Marqeta announces material financial information to its investors using its investor relations website, SEC filings, press releases, public conference calls and webcasts. Marqeta also uses social media to communicate with its customers and the public about Marqeta, its products and services and other matters relating to its business and market. It is possible that the information Marqeta posts on social media could be deemed to be material information. Therefore, Marqeta encourages investors, the media, and others interested in Marqeta to review the information we post on social media channels including the Marqeta Twitter feed (@Marqeta), the Marqeta Instagram page (@lifeatmarqeta), the Marqeta Facebook page, and the Marqeta LinkedIn page. These social media channels may be updated from time to time.

Use of Non-GAAP Financial Measures

Reconciliations of non-GAAP financial measures to the most directly comparable financial results as determined in accordance with GAAP are included at the end of this press release following the accompanying financial data. For a description of these non-GAAP financial measures, including the reasons management uses each measure, please see the section of the tables titled "Information Regarding Non-GAAP Financial Measures".

About Marqeta, Inc.

Marqeta’s modern card issuing platform empowers its customers to create customized and innovative payment cards. Marqeta’s modern architecture gives its customers the ability to build more configurable and flexible payment experiences, accelerating time-to-market and democratizing access to card issuing technology. Marqeta’s open APIs provide instant access to highly scalable, cloud-based payment infrastructure that enables customers to launch and manage their own card programs, issue cards and authorize and settle payment transactions. Marqeta is headquartered in Oakland, California and is certified to operate in more than 40 countries globally.

Marqeta® is a registered trademark of Marqeta, Inc.

Marqeta, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except share and per share amounts)

(unaudited)

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2023

 

2022

 

2023

 

2022

Net revenue

$

108,891

 

 

$

191,621

 

 

$

557,349

 

 

$

544,401

 

Costs of revenue

 

36,383

 

 

 

111,519

 

 

 

311,068

 

 

 

311,524

 

Gross profit

 

72,508

 

 

 

80,102

 

 

 

246,281

 

 

 

232,877

 

Operating expenses:

 

 

 

 

 

 

 

Compensation and benefits

 

115,846

 

 

 

105,887

 

 

 

390,393

 

 

 

304,103

 

Technology

 

13,930

 

 

 

13,422

 

 

 

41,674

 

 

 

37,960

 

Professional services

 

4,197

 

 

 

6,620

 

 

 

14,507

 

 

 

17,184

 

Occupancy

 

1,074

 

 

 

1,125

 

 

 

3,285

 

 

 

3,388

 

Depreciation and amortization

 

3,108

 

 

 

934

 

 

 

7,582

 

 

 

2,834

 

Marketing and advertising

 

346

 

 

 

688

 

 

 

1,348

 

 

 

2,133

 

Other operating expenses

 

3,833

 

 

 

10,922

 

 

 

14,171

 

 

 

20,760

 

Total operating expenses

 

142,334

 

 

 

139,598

 

 

 

472,960

 

 

 

388,362

 

Loss from operations

 

(69,826

)

 

 

(59,496

)

 

 

(226,679

)

 

 

(155,485

)

Other income (expense), net

 

15,074

 

 

 

6,333

 

 

 

37,508

 

 

 

(3,542

)

Loss before income tax expense

 

(54,752

)

 

 

(53,163

)

 

 

(189,171

)

 

 

(159,027

)

Income tax expense (benefit)

 

238

 

 

 

5

 

 

 

(6,584

)

 

 

(573

)

Net loss

$

(54,990

)

 

$

(53,168

)

 

$

(182,587

)

 

$

(158,454

)

Net loss per share attributable to common stockholders, basic and diluted

$

(0.10

)

 

$

(0.10

)

 

$

(0.34

)

 

$

(0.29

)

Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted

 

529,488,986

 

 

 

548,990,212

 

 

 

535,797,471

 

 

 

545,614,599

 

 

Marqeta, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

 

 

September 30,

2023

 

December 31,

2022

 

(unaudited)

 

 

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

947,749

 

 

$

1,183,846

 

Restricted cash

 

7,800

 

 

 

7,800

 

Short-term investments

 

349,395

 

 

 

440,858

 

Accounts receivable, net

 

15,656

 

 

 

15,569

 

Settlements receivable, net

 

19,505

 

 

 

18,028

 

Network incentives receivable

 

34,575

 

 

 

42,661

 

Prepaid expenses and other current assets

 

32,535

 

 

 

38,007

 

Total current assets

 

1,407,215

 

 

 

1,746,769

 

Property and equipment, net

 

17,022

 

 

 

7,440

 

Operating lease right-of-use assets, net

 

7,145

 

 

 

9,015

 

Goodwill

 

123,000

 

 

 

 

Other assets

 

48,867

 

 

 

7,122

 

Total assets

$

1,603,249

 

 

$

1,770,346

 

Liabilities and stockholders' equity

 

 

 

Current liabilities

 

 

 

Accounts payable

$

1,707

 

 

$

3,798

 

Revenue share payable

 

146,483

 

 

 

142,194

 

Accrued expenses and other current liabilities

 

148,677

 

 

 

136,887

 

Total current liabilities

 

296,867

 

 

 

282,879

 

Operating lease liabilities, net of current portion

 

6,145

 

 

 

9,034

 

Other liabilities

 

5,154

 

 

 

5,477

 

Total liabilities

 

308,166

 

 

 

297,390

 

Stockholders' equity :

 

 

 

Preferred stock

 

 

 

 

 

Common stock

 

53

 

 

 

53

 

Additional paid-in capital

 

2,081,689

 

 

 

2,082,373

 

Accumulated other comprehensive loss

 

(1,838

)

 

 

(7,237

)

Accumulated deficit

 

(784,821

)

 

 

(602,233

)

Total stockholders’ equity

 

1,295,083

 

 

 

1,472,956

 

Total liabilities and stockholders' equity

$

1,603,249

 

 

$

1,770,346

 

 

Marqeta, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

 

Nine Months Ended September 30,

 

2023

 

2022

Cash flows from operating activities:

 

 

 

Net loss

$

(182,587

)

 

$

(158,454

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

Depreciation and amortization

 

7,582

 

 

 

2,834

 

Share-based compensation expense

 

135,712

 

 

 

115,662

 

Non-cash postcombination compensation expense

 

32,430

 

 

 

 

Non-cash operating leases expense

 

1,870

 

 

 

1,689

 

Amortization of premium (accretion of discount) on short-term investments

 

(5,525

)

 

 

449

 

Impairment of other financial instruments

 

 

 

 

11,616

 

Other

 

1,068

 

 

 

445

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

 

(1,108

)

 

 

271

 

Settlements receivable

 

(1,477

)

 

 

916

 

Network incentives receivable

 

8,086

 

 

 

3,336

 

Prepaid expenses and other assets

 

7,760

 

 

 

(11,596

)

Accounts payable

 

(4,350

)

 

 

(891

)

Revenue share payable

 

4,289

 

 

 

(5,084

)

Accrued expenses and other liabilities

 

3,331

 

 

 

13,144

 

Operating lease liabilities

 

(2,499

)

 

 

(2,231

)

Net cash provided by (used in) operating activities

 

4,582

 

 

 

(27,894

)

Cash flows from investing activities:

 

 

 

Purchases of property and equipment

 

(722

)

 

 

(1,700

)

Capitalization of internal-use software

 

(9,488

)

 

 

 

Business combination, net of cash acquired

 

(135,630

)

 

 

 

Purchases of patents

 

 

 

 

(600

)

Purchases of short-term investments

 

(972,430

)

 

 

(21,660

)

Sales of marketable securities

 

637,913

 

 

 

 

Maturities of short-term investments

 

437,034

 

 

 

24,900

 

Realized gain/loss on investments

 

(73

)

 

 

 

Net cash (used in) provided by investing activities

 

(43,396

)

 

 

940

 

Cash flows from financing activities:

 

 

 

Proceeds from exercise of stock options, including early exercised stock options, net of repurchase of early exercised unvested options

 

4,081

 

 

 

5,733

 

Payment on acquisition-related contingent consideration

 

(53,067

)

 

 

 

Proceeds from shares issued in connection with employee stock purchase plan

 

1,775

 

 

 

2,775

 

Taxes paid related to net share settlement of restricted stock units

 

(18,553

)

 

 

(11,576

)

Repurchase of common stock

 

(131,519

)

 

 

(12,702

)

Net cash used in financing activities

 

(197,283

)

 

 

(15,770

)

Net decrease in cash, cash equivalents, and restricted cash

 

(236,097

)

 

 

(42,724

)

Cash, cash equivalents, and restricted cash- Beginning of period

 

1,191,646

 

 

 

1,255,381

 

Cash, cash equivalents, and restricted cash - End of period

$

955,549

 

 

$

1,212,657

 

 

Marqeta, Inc.

Financial and Operating Highlights

(in thousands, except per share data or as noted)

(unaudited)

 

 

 

2023

 

2022

 

Year over

Year Change

Q3'23 vs

Q3'22

 

 

Third Quarter

 

Second Quarter

 

First Quarter

 

Fourth Quarter

 

Third Quarter

 

Operating performance:

 

 

 

 

 

 

 

 

 

 

 

 

Net revenue

 

$

108,891

 

 

$

231,115

 

 

$

217,343

 

 

$

203,805

 

 

$

191,621

 

 

(43

)%

Costs of revenue

 

 

36,383

 

 

 

146,506

 

 

 

128,179

 

 

 

116,681

 

 

 

111,519

 

 

(67

)%

Gross profit

 

 

72,508

 

 

 

84,609

 

 

 

89,164

 

 

 

87,124

 

 

 

80,102

 

 

(9

)%

Gross margin

 

 

67

%

 

 

37

%

 

 

41

%

 

 

43

%

 

 

42

%

 

25 pps

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

115,846

 

 

 

126,788

 

 

 

147,759

 

 

 

110,991

 

 

 

105,887

 

 

9

%

Technology

 

 

13,930

 

 

 

13,154

 

 

 

14,590

 

 

 

14,401

 

 

 

13,422

 

 

4

%

Professional services

 

 

4,197

 

 

 

4,873

 

 

 

5,437

 

 

 

6,295

 

 

 

6,620

 

 

(37

)%

Occupancy and equipment

 

 

1,074

 

 

 

1,057

 

 

 

1,154

 

 

 

1,126

 

 

 

1,125

 

 

(5

)%

Depreciation and amortization

 

 

3,108

 

 

 

2,494

 

 

 

1,980

 

 

 

1,019

 

 

 

934

 

 

233

%

Marketing and advertising

 

 

346

 

 

 

561

 

 

 

441

 

 

 

1,862

 

 

 

688

 

 

(50

)%

Other operating expenses

 

 

3,833

 

 

 

5,103

 

 

 

5,236

 

 

 

5,753

 

 

 

10,922

 

 

(65

)%

Total operating expenses

 

 

142,334

 

 

 

154,030

 

 

 

176,597

 

 

 

141,447

 

 

 

139,598

 

 

2

%

Loss from operations

 

 

(69,826

)

 

 

(69,421

)

 

 

(87,433

)

 

 

(54,323

)

 

 

(59,496

)

 

17

%

Other income (expense), net

 

 

15,074

 

 

 

10,762

 

 

 

11,672

 

 

 

28,468

 

 

 

6,333

 

 

n/m

 

Loss before income tax expense

 

 

(54,752

)

 

 

(58,659

)

 

 

(75,761

)

 

 

(25,855

)

 

 

(53,163

)

 

3

%

Income tax expense (benefit)

 

 

238

 

 

 

138

 

 

 

(6,960

)

 

 

471

 

 

 

5

 

 

4660

%

Net loss

 

$

(54,990

)

 

$

(58,797

)

 

$

(68,801

)

 

$

(26,326

)

 

$

(53,168

)

 

3

%

Loss per share - basic and diluted

 

$

(0.10

)

 

$

(0.11

)

 

$

(0.13

)

 

$

(0.05

)

 

$

(0.10

)

 

%

TPV (in millions)

 

$

56,650

 

 

$

53,615

 

 

$

50,020

 

 

$

46,704

 

 

$

42,473

 

 

33

%

Adjusted EBITDA

 

$

(2,062

)

 

$

824

 

 

$

(4,346

)

 

$

(7,488

)

 

$

(13,630

)

 

(85

)%

Adjusted EBITDA margin

 

 

(1.9

)%

 

 

0.4

%

 

 

(2.0

)%

 

 

(4.0

)%

 

 

(7.0

)%

 

5 pps

Financial condition:

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

947,749

 

 

$

950,157

 

 

$

1,050,414

 

 

$

1,183,846

 

 

$

1,204,857

 

 

(21

)%

Restricted cash

 

$

7,800

 

 

$

9,375

 

 

$

7,800

 

 

$

7,800

 

 

$

7,800

 

 

%

Short-term investments

 

$

349,395

 

 

$

432,354

 

 

$

408,675

 

 

$

440,858

 

 

$

441,132

 

 

(21

)%

Total assets

 

$

1,603,249

 

 

$

1,704,143

 

 

$

1,774,183

 

 

$

1,770,346

 

 

$

1,774,455

 

 

(10

)%

Total liabilities

 

$

308,166

 

 

$

331,528

 

 

$

340,533

 

 

$

297,390

 

 

$

262,117

 

 

18

%

Stockholders' equity

 

$

1,295,083

 

 

$

1,372,615

 

 

$

1,433,650

 

 

$

1,472,956

 

 

$

1,512,338

 

 

(14

)%

pps = percentage points

n/m = not meaningful

 

Marqeta, Inc.

Reconciliation of GAAP to NON-GAAP Measures

(in thousands)

(unaudited)

Information Regarding Non-GAAP Measures

In addition to the financial measures prepared in accordance with generally accepted accounting principles in the United States (“GAAP”), this press release contains certain non-GAAP financial measures. Marqeta considers Adjusted EBITDA, Adjusted EBITDA Margin, and Non-GAAP operating expenses as supplemental measures of the company’s performance that are not required by, nor presented in accordance with GAAP.

We define Adjusted EBITDA as net income (loss) adjusted to exclude depreciation and amortization; share-based compensation expense; payroll tax related to share-based compensation; restructuring charges; acquisition-related expenses which consist of due diligence costs, transaction costs and integration costs related to potential or successful acquisitions, and cash and non-cash postcombination compensation expenses; income tax expense (benefit); and other income (expense), net, which consists of interest income from our short-term investments, realized foreign currency gains and losses, our share of equity method investments’ profit or loss, impairment of equity method investments or other financial instruments, and gain from sale of equity method investments. We believe that Adjusted EBITDA is an important measure of operating performance because it allows management and our board of directors to evaluate and compare our core operating results, including our operating efficiencies, from period to period. Additionally, we utilize Adjusted EBITDA as an input into our calculation of our annual employee bonus plans.

Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by net revenue. This measure is used by management and our board of directors to evaluate our operating efficiency.

We define Non-GAAP operating expenses as total operating expenses adjusted to exclude depreciation and amortization; share-based compensation expense; payroll tax related to share-based compensation; restructuring charges; and acquisition-related expenses which consists of due diligence costs, transaction costs and integration costs related to potential or successful acquisitions, and cash and non-cash postcombination compensation expenses. We believe that non-GAAP operating expenses is an important measure of operating performance because it allows management and our board of directors to evaluate and compare our core operating results, including our operating efficiencies, from period to period.

Adjusted EBITDA, Adjusted EBITDA Margin, and Non-GAAP operating expenses should not be considered in isolation, or construed as an alternative to net loss, or any other performance measures derived in accordance with GAAP, or as an alternative to cash flow from operating activities or as a measure of the company's liquidity. In addition, other companies may calculate Adjusted EBITDA differently than Marqeta does, which limits its usefulness in comparing Marqeta’s financial results with those of other companies.

The following table shows Marqeta's GAAP results reconciled to non-GAAP results included in this release:

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2023

 

2022

 

2023

 

2022

GAAP net revenue

$

108,891

 

 

$

191,621

 

 

$

557,349

 

 

$

544,401

 

GAAP net loss

$

(54,990

)

 

$

(53,168

)

 

$

(182,587

)

 

$

(158,454

)

GAAP net loss margin

 

(51

)%

 

 

(28

)%

 

 

(33

)%

 

 

(29

)%

GAAP total operating expenses

$

142,334

 

 

$

139,598

 

 

$

472,960

 

 

$

388,362

 

 

 

 

 

 

 

 

 

GAAP net loss

$

(54,990

)

 

$

(53,168

)

 

$

(182,587

)

 

$

(158,454

)

Depreciation and amortization expense

 

3,108

 

 

 

934

 

 

 

7,582

 

 

 

2,834

 

Share-based compensation expense

 

45,548

 

 

 

43,509

 

 

 

138,603

 

 

 

115,662

 

Payroll tax expense related to share-based compensation

 

541

 

 

 

509

 

 

 

1,818

 

 

 

1,768

 

Acquisition-related expenses (1)

 

18,270

 

 

 

913

 

 

 

64,420

 

 

 

913

 

Restructuring

 

297

 

 

 

 

 

 

8,670

 

 

 

 

Other (income) expense, net

 

(15,074

)

 

 

(6,333

)

 

 

(37,508

)

 

 

3,542

 

Income tax expense (benefit)

 

238

 

 

 

5

 

 

 

(6,584

)

 

 

(573

)

Adjusted EBITDA

$

(2,062

)

 

$

(13,631

)

 

$

(5,586

)

 

$

(34,308

)

Adjusted EBITDA Margin

 

(1.9

)%

 

 

(7.0

)%

 

 

(1.0

)%

 

 

(6.0

)%

 

 

 

 

 

 

 

 

GAAP Total operating expenses

$

142,334

 

 

$

139,598

 

 

$

472,960

 

 

$

388,362

 

Depreciation and amortization expense

 

(3,108

)

 

 

(934

)

 

 

(7,582

)

 

 

(2,834

)

Share-based compensation expense

 

(45,548

)

 

 

(43,509

)

 

 

(138,603

)

 

 

(115,662

)

Payroll tax expense related to share-based compensation

 

(541

)

 

 

(509

)

 

 

(1,818

)

 

 

(1,768

)

Restructuring

 

(297

)

 

 

 

 

 

(8,670

)

 

 

 

Acquisition-related expenses

 

(18,270

)

 

 

(913

)

 

 

(64,420

)

 

 

(913

)

Non-GAAP operating expenses

$

74,570

 

 

$

93,733

 

 

$

251,867

 

 

$

267,185

 

_______________

(1) Acquisition-related expenses, which include transaction costs, integration costs and cash and non-cash postcombination compensation expense, have been excluded from Adjusted EBITDA as such expenses are not reflective of our ongoing core operations and are not representative of the ongoing costs necessary to operate our business; instead, these are costs specifically associated with a discrete transaction.

 

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