Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the Marqeta Fourth Quarter 2021 Earnings Conference Call. As a reminder, this conference call is being recorded. I'd now like to turn the call over to Stacey Finerman, Vice President of Investor Relations, to begin.

Thanks, operator. Before we begin, I would like to remind everyone that today's call may contain forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including those set forth in our filings with the SEC, which are available on our Investor Relations website, including our quarterly report on Form 10-Q for the quarterly period ended September 30, 2021, and our subsequent periodic filings with the SEC. Actual results may differ materially from any forward-looking statements we make today. These forward-looking statements speak only at the time of this call, and the company does not assume any obligation or intent to update them, except as required by law. In addition, today's call includes non-GAAP financial measures. These measures should be considered as a supplement to and not a substitute for GAAP financial measures. Reconciliations to the most directly comparable GAAP measures can be found in today's earnings press release or earnings release supplemental materials, which are available on the Investor Relations website. Hosting today's call are Jason Gardner, Marqeta's Founder and CEO; and Mike Milotich, Marqeta's Chief Financial Officer. With that, I'd like to turn the call over to Jason to begin.

Thank you, Stacey. Thank you, everyone, for joining us for Marqeta's Fourth Quarter of 2021 Earnings Call. We are excited to share our strong fourth quarter and full year results as well as our plans for 2022. I'd like to begin with our fourth quarter results. We ended the year in a position of strength, with financial results that serve as a true reflection of everything Marqeta accomplished in 2021, as a result of the strong execution and continued customer focus from all Marqetans across the world. Total processing volume, or TPV, was $33 billion in the fourth quarter, a 76% increase compared to the same quarter of 2020, an acceleration from the 60% growth rate in the third quarter. This represents the achievement of a significant milestone. In December, we saw our TPV for the first year cross the $100 billion threshold for the first time as we processed $111 billion for all of 2021. This demonstrates our ability to provide modern infrastructure that enables fast-growing companies to deliver innovative, high-volume card programs globally. Our net revenue of $155 million in the quarter was a 76% increase from the previous year, representing an acceleration from the 56% growth rate in the third quarter. We saw significant outperformance from the buy now, pay later vertical as this mode of payment was extremely popular during the holidays. We witnessed another decline in our Block concentration from 68% of total net revenue in the third quarter to 63% in the fourth quarter of 2021. Our phenomenal fourth quarter is a testament to the outstanding growth Marqeta has demonstrated over the last three years as our TPV grew over 400% from 2019 to 2021. Much of this growth was fueled by digital commerce disruptors that grew significantly due to shifts in consumer behavior during the pandemic. Our platform and products help make much of this growth possible, enabling our customers to offer experiences that have changed commerce in remarkable ways. Our ability to help our customers scale successfully amid this unprecedented growth has earned us valuable trust. With 2022 underway, we are starting to see some stabilization regarding the pandemic. It is clear that the new commerce experiences, like on-demand delivery and buy now, pay later, are here to stay. And customers' trust in financial services offered by neobanks is increasingly on par with our trust in typical financial institutions. These commerce experiences play to Marqeta's strength. We have already built trusted relationships with companies that have become household names like Klarna and Cash App that have a track record of expanding on our platform. For the next set of disruptors looking for a trusted partner who can help them scale, this serves as a proof point. Importantly, we have a foothold into large financial institutions like Marcus by Goldman Sachs, JPMorgan and now Citi that need a technology partner to deliver solutions consumers want. As we look forward to the remainder of 2022, the remarkable growth we participated in during the pandemic required significant focus to help our customers scale. As a result, our newer solutions like credit and digital banking did not get as much focus as we would have liked because of how fast our existing customers were growing. We began to significantly ramp up hiring for these efforts towards the latter part of 2021. Our approach in 2022 will be more balanced between fueling our existing customers' success and building for the future. Therefore, our focus areas in 2022 will be threefold. We will continue to fuel our customers' success. While we are focused on broadening our base, our existing customers still represent Marqeta's core and a significant source of future growth. These customers can tap into our modern card issuing expertise that allows them to build customized and contemporary payment solutions when paired with our platform's agility and scale. Our dollar-based net revenue retention rate of 175% for 2021 demonstrates how our customers grow in our platform. Let me share two examples. After a competitive process, Divvy, a Bill.com company, began using Marqeta in late 2020. Divvy was in hyper-growth mode, and it was important for the company to have a card-issuing partner that could help them build best-in-class products and do so at scale. Once onboard the Marqeta platform, Divvy was able to ramp quickly. As a result, Divvy rapidly added new customers to their program and extended their service to even more businesses and cardholders. Divvy is one of the reasons we have seen the expense management vertical gain such significant traction, approaching $2 billion in TPV this quarter. In contrast, this segment was insignificant a year ago. After launching with Klarna in the U.S. in 2018 and supporting its launch in Australia and New Zealand in 2020 and 2021, Klarna chose to extend its partnership with Marqeta into 13 new European markets last November. Klarna is a digital disruptor experiencing tremendous market traction in the last few years, and Marqeta has provided vital support to their growth trajectory globally. As a result of their success on our platform in the U.S. and APAC, the company recently expanded its partnership with Marqeta by moving over volume from another provider. Klarna has seen firsthand how they've been able to quickly make program improvements or launch new card products, often within complex markets and environments working with Marqeta. This expansion, especially in European markets where Klarna has a long track record of success, is a testament to the maturity of our European business and the strength of our partnership. We will continue to build a resilient and reliable global platform. 2021 TPV of $111 billion represents more than 50x growth in four years. However, to truly connect the world through global money movement and unlock the potential in front of us, we must be thinking more extensively about the breadth and depth of what our platform can support. Eight months into his role, our CTO, Randy Kern, has already made significant strides towards building our scale and resiliency to handle the next wave of growth. Proactive capacity planning with our customers, organizing our internal teams around a mandate to scale, and new key infrastructure developments have had huge impacts on the degrees to which we can scale card programs. We expanded our platform globally by adding local network certification and card issuance capabilities in three new markets: the Philippines, Thailand, and Singapore. The Philippines and Thailand are large high-growth markets for digital payments adoption, still well below 50%, and the younger populations are urbanizing steadily. The Marqeta platform is enabled in 39 countries with more countries to come later this year. The geographic expansion is an integral part of our roadmap as we want to allow our customers to build once and launch anywhere. We will broaden our business in three ways: the customers we serve, the solutions we offer, and the verticals we support. To truly diversify our business, we need to target large customers focusing on additional credit, digital banking, and money movement offerings. Established financial institutions represent a large portion of the total issuer processing volume worldwide. While making significant inroads will likely take time, these customers are essential to achieving our goals of connecting the world through global money movement and achieving durable long-term growth. We are thrilled about our new partnership with Citi and their commercial cards team. Citi plans to use Marqeta's unique Tokenization-as-a-Service capabilities to power mobile wallet provisioning in more than 40 markets worldwide. Marqeta's modern card issuing platform will integrate with Citi's existing systems and enable Citi's global commercial cardholder base to seamlessly provision corporate plastic cards and virtual cards into mobile wallets. Citi recognizes Marqeta's leadership in card tokenization and the impact this can have on their commercial cardholders, especially against the backdrop of rapid change in payment preferences post-pandemic. We see this as an opening step of what we hope is a long and fruitful partnership. As discussed last quarter, we see partnerships as an efficient way to broaden our product offering. Our partnership with the First National Bank of Omaha, FNBO, expands our credit ecosystem and allows Marqeta's customers to launch and design an embedded credit card program quickly. By partnering with FNBO, we combine FNBO's decades of deep experience in credit card programs with the flexibility and control of Marqeta's modern card issuing platform. Similar to our partnership with Deserve, FNBO will handle program management capabilities. At the same time, Marqeta will act as the issuer processor, bringing the technology that allows customers to create customized card experiences lacking in credit. Our recent partnership with Plaid underscores our desire to move beyond moderate card issuing into enabling global money movement. This partnership will simplify ACH transfers, allowing customers to seamlessly and securely authenticate their bank accounts and fund their accounts to power more immediate card shopping. As a result, developers building on the Marqeta platform can quickly and easily authenticate users' bank accounts versus the traditional cumbersome ACH process. Plaid works with over 12,000 financial institutions. This scale, combined with its commitment to information security, makes them a perfect partner for Marqeta. I am excited about our progress in 2021, especially how we ended the year on such a solid foundation. With over $500 million in yearly revenue, we are capitalizing on the changes in consumer preferences to ensure the performance of the business for years to come. Mike will touch on our growth and additional investment in his remarks, which brings me to the vital role of CFO. I want to take a moment to recognize the work of our outgoing CFO, Tripp Faix. Tripp led Marqeta through a very successful IPO and two major fundraising rounds. His partnership and friendship have been important to me as a CEO and our company as a whole. I wish him every success for his next chapter. I am also thrilled to welcome Mike Milotich as our new incoming CFO, who will shepherd us into the next phase of our growth. With that, I will turn the call over to Mike to discuss our results and outlook for 2022.

Thank you, Jason. Although I know many of you on the call today, I'm excited to speak with you in my new capacity as the CFO at Marqeta after joining the company two weeks ago. While Marqeta has already reached significant scale with over $110 billion in TPV in 2021, there is still a massive opportunity to support innovative partners who are meeting evolving consumer needs in digital commerce and global money movement. I look forward to partnering with Jason, the executive team, and all of our employees to help the disruptors scale and those at scale become more disruptive. Marqeta delivered a very strong quarter to close out our first fiscal year as a public company with both TPV and net revenue growth accelerating to 76%. Net revenue of $155 million and adjusted EBITDA of positive $1 million were meaningfully better than we expected primarily for two reasons: one, stronger holiday and overall consumer spending drove the majority of the upside, benefiting the BNPL and digital banking verticals in particular; and two, higher card network incentives as a result of reaching a new performance tier. So let's dive into the Q4 TPV, which was $33 billion, growing 76%, accelerating 16 points from Q3. BNPL benefited from the increased consumer spend during the holiday season, growing over 50% sequentially versus Q3. Digital banking growth accelerated 15 points versus Q3, in line with the overall TPV acceleration. Newer clients and growing verticals increased their contribution to our growth as we continue to diversify our customer base. Our top five customers continue to perform well with TPV growth over 50% in Q4, while the remaining customers grew over 200%. As further evidence of our growing diversification, newer customers who joined our platform since 2019 grew three times faster than customers who joined the platform prior to 2019. The growth of these newer customers and outperformance from the BNPL vertical were a big reason why we saw another significant decline in our top customer concentration, which Jason highlighted earlier. Net revenue growth of 76% was consistent with TPV growth and accelerated 20 points versus Q3. The net revenue take rate declined less than one basis point versus Q3 purely due to changes in the mix of volume. In fact, the Q4 take rate improved versus Q3 within several of our large verticals. Gross profit grew 108% on a year-over-year basis, over 30 points faster than revenue. The gross profit margin of 49% improved 4 points versus Q3 for two reasons, each contributing approximately 2 points. First, incentives. We amended one of our card network incentive agreements in Q2, and we hit a new volume tier in Q4 that resulted in a higher incentive being applied to volume over the past three quarters. Therefore, the three-quarter catch-up benefit was booked in Q4, which made the impact more significant. These incentive agreements are a testament to our strategic relationships and strong alignment with network partners, as well as the powerful operating leverage that can be achieved in our business as we scale. The second factor was volume mix. The holiday season had a TPV mix that provided more favorable gross profit. Our GAAP net loss was $37 million driven mostly by continued investment in people and technology that are fueling the growth of our business and the scaling of our platform. On a non-GAAP basis, adjusted EBITDA for the quarter was positive $1 million, which exceeded our expectations by roughly $10 million, entirely due to higher gross profit. To quickly summarize full year 2021 performance, TPV of $111 billion and net revenue of $517 million delivered robust growth of 85% and 78%, respectively. Gross profit grew 97% with a gross profit margin of 45%, which is on the high end of our long-term target range of 40% to 45% due to improved scale and favorable network incentives. Adjusted EBITDA was negative $13 million, equating to a negative 2% adjusted EBITDA margin. We ended the year with over $1.7 billion in available liquidity in cash and marketable securities. Now let me move on to 2022. First, let me share some of the key assumptions informing our Q1 guidance that was noted in our press release. We expect Q1 net revenue growth to be between 48% and 50%. Our take rate should be relatively similar to last quarter. Therefore, the lower growth compared to Q4 '21 is related to volume growth, mostly due to two factors. Q1 is facing tougher comps due to the government stimulus in the first quarter of 2021, and to a much smaller degree, the beginning of the ramp in BNPL volume. Our sequential net revenue growth last year from Q4 '20 to Q1 '21 was 22% compared to an average of 15% growth from Q4 to Q1 in 2019 and 2020. This tough comp is partially offset by the tax season returning to April this year, where the benefits of tax refunds are split across Q1 and Q2 versus last year when the benefit was mostly in Q2. Also, January got off to a bit of a slower start as Omicron likely impacted volume in many of our verticals with the exception of on-demand delivery, which thrived as more people stayed home. Volume did pick up in February as the Omicron wave passed, with February volume comfortably exceeding January despite having three fewer days. Q1 gross profit margin should be in the 43% to 44% range, which is consistent with the first three quarters of 2021. This is lower than Q4 '21, which benefited from the catch-up incentives and favorable volume mix during the holiday season. We expect the Q1 adjusted EBITDA margin to be negative 8% to 9% due to elevated investment levels to drive long-term sustainably high net revenue growth. I will talk more about our investment priorities for 2022 in a minute. Amid the current economic uncertainty, I did want to share some preliminary thoughts on 2022, and we'll plan to share more next quarter once I'm completely settled in here at Marqeta. It remains to be seen whether Russia's invasion of Ukraine will have any broader implications that may impact our business. Similar to previous years, we expect the majority of our growth to come from our largest customers, which are spread across the digital banking, on-demand delivery, BNPL, and expense management verticals. Our newer customers are growing several multiples faster than our top customers, and therefore, growing in share, but even our largest customers keep growing at a strong pace, as evidenced by our high revenue retention of 175% in 2021. Our business massively expanded during COVID. 2021 net revenue was more than 3.5 times that of 2019 net revenue. The pandemic accelerated consumer adoption and usage of newer commerce experiences, such as on-demand delivery and BNPL, where Marqeta was an early innovator and market leader supporting many of the top companies in those categories. The increased shift to digital payments during COVID has also led to increases in consumers using digital bank or neobank offerings, which tend to provide great digital user experiences. Again, this is a market where Marqeta established early leadership. As a result, we are growing off a much larger base of business in 2022. The pandemic recovery is now well underway, and consumers' new commerce habits are sticking and stabilizing. Therefore, we expect our net revenue growth to be at least mid-30s for full year 2022. To put the change in scale during the pandemic into context, let me share one fact. We expect our year-over-year revenue growth in dollars in 2022 to be larger than our total net revenue just three years ago in 2019. Consistent with the scaling over time, net revenue will grow the fastest in Q1, step down several points sequentially in both Q2 and Q3 before a larger step down in Q4 as we lap the incredible quarter we just finished. Also note that Block's acquisition of Afterpay, who is also a meaningful client for us, means we don't expect to make progress on our Block concentration as we add Afterpay performance to Block starting in Q1 2022. If we were to normalize for the acquisition and combine the companies for past years, we do expect a minor reduction in our concentration. We expect 2022 TPV to grow faster than net revenue at over 40%, with take rates declining slightly on a year-over-year basis, on par with the decline in 2021 as customers who grow in our platform enjoy better pricing. This is partially offset within gross profit by achieving better pricing from our card network and bank partners. We expect our gross profit margin to be in the low to mid-40s, consistent with our long-term guidance of 40% to 45% on an annual basis. Network incentives can be inconsistent, as we just saw in Q4 '21, so let me share a few more details to help with the quarterly cadence. Our incentives operate on a contract year that runs from April through March, which means volume tiers reset in Q2 of each year. This means Q2 will typically be a lower gross profit margin quarter, generally at the bottom of our long-term range, while Q3 to Q1 of the following year typically benefit from growing cumulative volumes. If we hit certain volume milestones in individual quarters, we can be above the long-term range. Based on our client pipeline, and because of the time it takes to onboard and ramp new clients, we need to invest in advance of the revenue to best position us for success. Therefore, we expect the adjusted EBITDA margin to be negative high single digits in 2022, and relatively consistent with each quarter, except Q2 will be a few points lower due to the lower gross profit margin. While the investments we make in 2022 will result in negative EBITDA in the short term, we are looking to achieve sustainably rapid growth while also being committed to a path to profitability. In the long run, we remain confident the business will operate at a 20%-plus adjusted EBITDA margin once we have captured more of the enormous market opportunity. We began stepping up our level of investment as we progressed through 2021 as it became clear our revenue and gross profit were scaling rapidly. We plan to stay on that investment cadence through 2022. The investment is mostly directed towards technology and product, primarily through hiring in those areas, as well as increasing software and services to support our platform. The primary focus of the investment is new capabilities in digital banking and credit, international expansion, and platform scale. Once the volume is captured, our unit economics are very attractive due to low marginal operating costs with the ability to generate positive EBITDA as we did in this most recent quarter. To close, Marqeta just completed a fantastic year, surpassing $500 million in net revenue. Looking ahead, we have a wealth of opportunities ahead of us, including new products, geographies, and verticals, all while our existing customers thrive on our platform. We believe our differentiated offering will continue to be the destination for disruptors as digital commerce and global money movement rapidly evolve, fueling strong growth for many years to come. I will now turn the call back over to Stacey and the operator for questions.

Our first question is from Sanjay Sakhrani with KBW.

Congrats, Mike. Maybe a question about the investments in tech and product. As we think about the different channels that Marqeta can grow into, can you help us think about where internationally that will come from?

Yes. Thank you for your question, Sanjay. I mean, as we talked about, modern card issuing is a global phenomenon. We're actively working to address the large addressable market. A couple of things that we're doing is, I think, number one, we're constantly assessing where our customers are looking to launch, what markets they want to launch in and which hold the most immediate potential for our technology. So as we've talked about, we are in 39 countries today. We recently announced Singapore, Thailand, the Philippines, and we'll look to set up an APAC hub probably in Singapore. As we go international, we found that modern card issuing is indeed a global phenomenon. And if we talk about what our rallying cry this year is for Marqeta is to connect the world through global money movement. Our customers truly come to us to unlock value, not just here in the U.S., Canada, Europe, and Asia, but in many countries, cities, and continents where they're looking to really bring their business. And we'll continue to focus on the verticals that have done well for us, like buy now, pay later, digital banking, expense management, and many others. So we're really excited about the progress we've made to date. As Mike talked about, we did $517 million in net revenue, which is a solid, solid foundation. And I look forward to updating you with new market announcements and international partnerships in future quarters.

Great. And just a follow-up on BNPL. Obviously, it's seen tremendous growth for you guys and as an industry. But as we go into 2022, there's difficult comps. There's probably a little bit more competition on the margin for those types of loans from the incumbents and perhaps even shifting merchant preferences. I guess, when we think about the growth potential of BNPL, specifically for you guys, is it that you're just expanding inside your existing relationships? Or should we expect some pressure on growth?

When we began our work in buy now, pay later about five years ago, we encountered Klarna at Money 20/20 in Europe. At that time, we weren't fully aware of their operations, but we learned about the buy now, pay later concept. We have successfully tailored our approach to specific verticals, which has allowed Klarna, Affirm, Sezzle, and Afterpay to showcase the strength and competitive edge of Marqeta's platform. Buy now, pay later remains a significant growth driver for Marqeta, constituting over 10% of total payment volume. Other key developments include our role as a launch partner for Mastercard's new installment program, collaboration with Sezzle on their deal with Target, and our partnership with Amount to bring buy now, pay later options to financial institutions. We're also powering Figure's new Figure Pay product, which integrates digital payment capabilities with inherent BNPL functionality. We see multiple growth avenues, including international expansion, new geographies, and technologies. Our customers are increasingly exploring tokenization and physical card products, seeking Marqeta's support. Therefore, I wouldn't limit the buy now, pay later functionality to just virtual cards; our platform will see various card types as businesses diversify in the upcoming quarters.

Our next question is from Mike Ng with Goldman Sachs.

I appreciate all the detail when you talked about TPV performance by vertical. I was just wondering if you could talk a little bit about some of the assumptions as you think about the 40% TPV growth in 2022. Any qualitative or quantitative detail would be very helpful.

Yes. Thank you for your question. It really is more of the same just with tougher comparisons. Obviously, as even Sanjay just pointed out on the previous question, I mean, BNPL had explosive growth during 2021. And as the base is bigger, the growth will slow a little bit. But we still think most of our growth is going to be fueled by the primary use cases with everything roughly comparable to 2021, just maybe a little bit of a slower rate. And that's in digital banking, BNPL, and expense management being some of the big ones. So I would say the mix of the business, we're not expecting to fundamentally change a lot. It's just tougher comps bringing the growth rate down a little bit.

Great. That's very helpful. And I just wanted to ask a housekeeping question. The mix benefit to gross margins in the fourth quarter, could you just give a little bit more detail around that? And should we see a sequential improvement from that mix every fourth quarter?

Yes. I mean, I guess, it's hard to say to predict the future exactly. So I don't know if I can answer the second part of your question. But if you think about interchange dynamics, right, it's predicated on all different scenarios in terms of what type of card is being used. Is it consumer, commercial, credit, debit, prepaid? What type of merchant is being used? What’s the size of the ticket? So there's a lot of those factors that will ultimately impact the rate that applies. And then on top of that, we have different types of agreements with our customers in terms of how we work with them, in terms of how much we share with them versus how much is kept here at Marqeta. So those are kind of all the different levers and variables that play into that number. And so what happened, at least in this case, in the holiday season is really the type of spend in terms of where it was directed in terms of merchants and the types of products that were used is what drove the benefit for us.

Our next question is from Ramsey El-Assal with Barclays.

I wanted to ask about the Citi partnership. And if you could describe sort of the path from a project like this, into a deeper issuance relationship at a large bank like Citi, what challenges kind of stand in your way to sort of moving a little deeper into an organization like this?

Thanks, Ramsey. Yes, winning the business of large financial institutions is a major strategic initiative for Marqeta. And as we've talked about in the past, I mean, we really had this DNA match with commerce disruptors. We then went into large digital banks like Cash App and Lydia in France. We then went to large tech giants like Uber and Google. And we always have been focusing on sort of the long game within large financial institutions. So as we talked about in my opening remarks, we are excited to announce the Citi deal in their commercial card team. So what they're doing is in 40 markets is using our Tokenization-as-a-Service capabilities to power the mobile wallet provisioning. And obviously, Citi recognizes Marqeta's leadership in card tokenization. And we see this deal as really just the beginning of what we hope is a long-term partnership. Large financial institutions typically don't move fast nor do they make decisions quickly. Our goal with these programs truly is over time just to get a foot in the door and then expand our relationship, as you referred to, like more issuance. As we've seen, these are very large from a technology perspective complex environments. So bringing us into that is something that's pretty significant for us. And then we're there to really prove our relationship, prove our technology, prove our services so we can expand not just Tokenization-as-a-Service, but so we can help them in areas where they can be more innovative, and we want to see value where we're really adding to their business and obviously trusting us. So while making inroads will take time, these customers are absolutely critical to achieving our goal of building out more durable long-term growth.

Okay. And on the higher card network incentives, I'm just curious, how should we think about the cadence of those types of opportunities to renegotiate those contracts, which is to say, can you go back and kind of renegotiate at will as you grow? Or are there sort of fixed contract timelines that when those expire, the time that you go back and can kind of take another bite at the apple in terms of renegotiating those fees?

Yes, I would say it's a little bit of both. There are contract terms and timelines, so you can’t go back at any time. However, as the business grows and you seek to collaborate more, such as with new card programs, there are always opportunities to explore. Additionally, if the business continues to grow as we expect, it may lead to early renewals and adjustments as necessary. Thus, it's a mix of both: there are agreed-upon terms, but we can always review them and look for ways to enhance our arrangements with both our network and bank partners as we pursue new opportunities.

Our next question is from Dan Dolev with Mizuho.

Congratulations, Mike. Great results. Could you provide some more specifics? I think last quarter, you mentioned the growth of the top five compared to other segments from a TPV perspective.

Yes. We mentioned that the top five customers experienced a growth of over 50% in Q4, while the remaining customers grew by more than 200%. Additionally, as we aim to diversify our customer base, we noted that customers who joined the platform since 2019 are growing more than three times faster than those who joined before that period.

Got it. So it's not as specific a number as the last quarter, right? I think last quarter, you mentioned some figures just over 200%.

Yes. I guess I can't specify. But yes, I guess maybe I'll have to take the blame for that one then, Dan, before being less specific.

Okay. No worries. Yes, yes, no worries. And then on Plaid. I mean, it looks like it definitely helps you diversify away from the reliance on debit cards. Like what are you seeing in terms of the opportunity there with the partnership?

I'm sorry, Dan, which partnership?

Plaid.

Oh, Plaid. Yes. So what Plaid does is Plaid is working with 12,000 banks. So it makes it really easy for our customers to leverage Plaid through Marqeta's platform to go build better experiences. So our business is truly predicated on money in, money out. So money in is ACH, and money out is through card, which is predominantly where we make our revenue. So what this does is that it actually shortens the time to market significantly for customers to bring more dollars into Marqeta's platform. So instead of a consumer knowing what their ABA routing number and account number is, now they just need their username and password for their bank account to begin bringing money into Marqeta's ecosystem through our customers.

Our next question is from Tien-Tsin Huang with JPMorgan.

Great results as well from my side. And welcome to the call, Mike. Just wanted to ask on the visibility. I know Sanjay and others asked about buy now, pay later. It seemed like that carried a lot of growth in '21. On-demand delivery, I think of in 2020 being a big contributor. What about in '22, what verticals do you think will step up and sort of carry the load here? And I'm curious where Banking as a Service might rank as an example for growth this year?

Yes, I'll begin by saying that Marqeta customers are very focused on global money movement, utilizing specific tools to address business needs and create value. In terms of specific sectors such as buy now, pay later, expense management, on-demand delivery, and digital banking, these are the areas we aim to enter, and the approach remains consistent. Our daily focus is on how to connect the world through global money movement, which ultimately revolves around addressing business needs within targeted sectors. We continue to see growth in our primary sectors, with our business expanding significantly over the years. Mike shared some specific data on the transaction volume on our platform within these areas. Our strategy involves identifying these sectors early, developing distinctive technology, and empowering our customers. For our strategy this year, we are concentrating on international growth, as our customers aim to expand globally by introducing new features in specific sectors. As they grow and explore new market areas, we are prepared to support them with our technology. Additionally, we are committed to ensuring our existing customers succeed, such as through the acquisition of Divvy by Bill.com, ensuring Divvy has the resources it needs and aligning that strategy with Bill.com. As we seek to expand our market and revenue opportunities, we are focusing on the core areas previously mentioned: commerce disruptors and identifying new sectors aligned with our strengths. We continue to see growth, particularly in buy now, pay later, as demonstrated in the fourth quarter. We're also enhancing our offerings in digital banking, as shown by Cash App’s introduction of the Team Card last year. Furthermore, we are collaborating with large technology firms and major financial institutions. As we penetrate the market further, especially with partnerships like Citi in Tokenization as a Service across 40 markets, we're enthusiastic about future developments with large financial institutions while concentrating on the key sectors where we've experienced growth, entering new markets, and aiding our customers in their expansion.

Got it. That's very clear, Jason. So just as a follow-up, regarding expenses and hiring, I noted that you increased your hiring in credit and digital banking. Are you optimistic about the potential to hire internationally to support what you've outlined from a workforce perspective? I know there's a lot of discussion about attracting top talent, and I've noticed that theme, so I wanted to bring it up as well.

The job market is not only a challenge for Marqeta; it's a global issue that affects everyone. Specifically, finding engineering and product talent is difficult and highly competitive. As we seek to expand in the credit space, it's important to note that 50% of consumers in the United States possess credit cards. Credit is still developing in other regions, but we anticipate significant growth. We expect Asia to become the largest card market globally in the near future. Therefore, we are committed to enhancing and adding new features in these domains. In 2021, we made substantial investments in credit, and by year-end, we recognized the scale of our customer base and their investments as well. There is much more to come in both credit and digital banking, focusing on essential functionalities rather than just Banking-as-a-Service. Our customers want to utilize our Marqeta platform to expand their capabilities globally, so we aim to introduce more features for them to leverage on our platform.

Our next question is from Andrew Jeffrey with Truist.

I appreciate you taking the question. I wanted to ask more about the expansion and diversification of your business, which is very exciting, especially regarding Block and the acquisition of Afterpay. Can you discuss the potential impact on customers, particularly with Cash App, and how it might accelerate and possibly represent a larger portion of your revenue in 2022 and perhaps into 2023? If Block can successfully integrate those two ecosystems and enhance engagement, it seems this could be a significant growth driver for Marqeta. What are your thoughts on this?

Yes, that's a great point. Afterpay is a key customer of Marqeta. The acquisition by Cash App is a strategic move to enhance their ecosystem and provide more opportunities for their cardholders. Additionally, with Block acquiring Credit Karma's tax preparation services, we see them diversifying their offerings. This diversification leads to increased volume on the platform, which ultimately benefits us. Our success is tied to our customers' success, and we expect to see growth in that area. The critical question is whether they can effectively execute that growth on the platform, and we certainly hope so because our profitability depends on it. Their achievements translate into our achievements, so if they succeed, it's a win for everyone involved, including our shareholders. Our objective is to ensure they have everything they need to thrive. Our partnership with Block, especially with Cash App, Square Card, and now Team Card, is extremely important to us and has yielded positive results for both companies over the years.

I look forward to seeing how that develops. Can you provide more clarity about Plaid? What are the key performance indicators for that business? Will it primarily rely on interchange revenue, or does it also include a software-as-a-service element? I want to understand how that compares to our issuing business.

Yes, they perform two main functions for us. Firstly, they help us speed up our go-to-market strategy and enhance our banking and money movement services. Most consumers know their bank's username and password but not their ABA routing and account numbers. Plaid collaborates with 12,000 financial institutions and is dedicated to both information security and tokenized account verification, which is significantly more secure. This enables us to expedite the transfer of funds to our platform through our customers. We earn revenue through interchange, making these aspects interconnected. The higher the volume of ACH transactions from banks to our platform and the more money spent using cards, the more interchange revenue we generate. Therefore, our focus is on streamlining the ACH verification process and making it easier for our customers to create better experiences for their own customers on our platform.

Our next question is from Andrew Bauch with SMBC Nikko.

Nice set of results here. The first one is more of a technical point. I see that there's some investments in due diligence around potential acquisitions. So can you give us a sense of what you guys are looking at? Or what kind of solutions you would like to bring into the platform that could help the offering?

Yes. Our goal is to maintain our first-mover advantage by focusing on product and technology. We are a product-led company, meaning our product is central to our customer roadmap, experience, and journey. We consider how we can create value for our customers. Recently, we expanded our corporate development team, as we plan to actively pursue mergers and acquisitions to launch new products and enter new verticals. We see M&A as a way to speed up market entry in areas where we lack core competencies, as well as to expand globally. Our business is quite unique; card issuing and processing is a global trend, but it varies by country. As we enter new markets, particularly those with significant card growth and various payment options, we'll work to benefit both Marqeta and local companies, as well as our customers. We will seek M&A to close gaps in our roadmap or to accelerate our product development.

I would like to add that more reasonable valuations in the sector are advantageous, and we have a strong balance sheet. We will be cautious, but we believe there are opportunities to speed up our plans, as Jason mentioned.

Yes. It probably could be a good new talent acquisition lever as well. My comment is thinking about the partners added post-2019, is there a good way that we can dimensionalize the growth in that part of your business? And what I'm trying to get at is you have a lot of these new partnerships and relationships coming on. And I would assume that you're kind of slow to ramp those up to their full run rate. I guess what inning are we on some of the new things that you have coming out? And maybe, call it, like a wallet share gain-type metric with your existing partners in that world.

I've discussed this previously, and Mike would agree that what sets Visa and Mastercard apart is their ability to connect every merchant worldwide, both online and offline, that wishes to accept payment cards. Marqeta addresses the final step in modern card issuing. We've welcomed many customers to our platform, including several well-known names. These customers are in sectors that weren't as recognized five years ago, such as on-demand delivery, buy now, pay later, and expense management. We identified these sectors early and believe there are many more opportunities as businesses expand while serving the current sectors. For instance, we aim to assist companies like Affirm in broadening their reach globally and expedite the onboarding of merchants to their platforms, whether online or offline. While we don't break down specifics on growth by sector, the figures Mike mentioned regarding our achievement of 3.5 times net revenue growth from 2019 to 2021 reflect the success we've seen. The pandemic has generated tailwinds that altered consumer behavior, affecting how they shop and order food. Additionally, various other sectors, both domestically and internationally, are increasingly reliant on modern card issuing and different payment forms. I've mentioned before that we currently process less than 1% of the card volume in the U.S., which is $6 trillion, and significantly less on a global scale of $30 trillion. Therefore, considering our current position, we're still in the early stages of the potential growth on our platform and the international expansion involving existing customers, new customers, and emerging sectors.

And I suppose maybe

Go ahead.

I want to add that we expect continued acceleration in growth from our newer customer cohorts. It may take about a year, or hopefully less, for them to join the platform, and then it typically requires several quarters for them to increase their activity. We are still optimistic about significant growth from these new customers, as they are growing rapidly and contributing more over time, with additional potential still ahead.

Got it. Mike, congratulations on the new role.

Thank you.

Our next question is from Bob Napoli with William Blair.

Welcome, Mike, to the call. You're there one month, and you deliver a phenomenal quarter. That's a nice job.

Two weeks.

A lot of great questions have been asked, and I'm really intrigued by the partnership with Plaid and open banking. Is this a global relationship with Plaid? There's a lot happening in open banking in Europe. Will you deepen your involvement in open banking? Will Plaid also serve as a channel partner?

They're currently a channel partner only for the U.S. However, I've known Zach for many years, and we've discussed working together several times. We have finally figured out how to collaborate in order to enhance the customer experience. We believe strongly in open banking. As neobanks start to compete with large financial institutions, our platform can assist these companies in developing more products and expanding their reach. Our objective is to grow internationally. I've mentioned before a company named Lydia, which is a digital bank from France that uses our services. As we work to introduce more of Plaid's technology to the 39 countries we operate in, we will certainly pursue that.

I'd like to know which new areas you're planning to invest in before you make that information public so I can consider investing in some of those companies privately. Looking at your current pipeline for new business, how does it compare in terms of mix? Is there a greater focus on international markets or new areas? How do you view the size of the pipeline relative to new business? You have had a continuous stream of announcements since your IPO, but how does the pipeline appear today and how does it differ from a year or a couple of years ago?

It's different in that there are three main areas we are focusing on. First, we are looking at our existing customers and their future needs, and we are developing new features to meet those demands. Second, we are expanding into specific sectors like credit, forming partnerships with companies like FNBO and Deserve to support their growth. Lastly, we have an international focus. In the past, when we entered Europe, we mistakenly applied our U.S. strategies, but we quickly learned that different regions have unique payment preferences. We found that potential customers in these areas are interested in our technology and that there are new payment methods, such as account-to-account transfers, that we should consider integrating into our platform. Our aim is to create value by providing tools to both current and potential clients to help them grow. Referring back to the pipeline, we see multiple avenues for growth. We currently hold less than 1% of the card market in the U.S., and even less internationally, indicating that there are significant growth opportunities ahead.

Our next question is from Ashwin Shirvaikar with Citi.

Jason, Mike, good results. And Mike, welcome. Let me start by discussing the appropriate way to view net revenue retention in 2022, especially given the strong performance you've had. Additionally, I have a related question regarding your insights into full-year gross margins, considering the mix and other factors.

Yes. I can address that. If we examine our revenue retention, in 2020 it was 200%, largely driven by the boom in on-demand delivery. In 2021, we saw more involvement in BNPL and additional growth in digital banking. If we consider our client base and how they are expanding and diversifying, as Jason noted regarding BNPL, there will be various approaches to continue broadening that offering. We believe that retention rates may decrease as revenue growth slows down with the larger base. However, we have a rapidly growing customer base looking to expand into new regions and diversify their offerings. We are actively supporting them in these efforts. Therefore, we anticipate that the retention rate can stay relatively high. While it will likely decrease as the base grows, it will still be a significantly high number compared to what most companies experience. In response to your second question regarding our visibility on gross profit margin, it is more challenging to predict in the short term due to uncertainty about the volume mix. However, if we consider a longer time frame, such as our expectations for all of 2022, the impact of shorter-term fluctuations lessens, allowing for a more predictable volume mix. While there may still be some variability, given the size of our business, the trends we've observed so far, and our expectations for customer growth, we believe we can make reasonable projections. We will, of course, provide updates as we progress through each quarter and as circumstances evolve.

Got it. And really appreciate the cadence comments you had. But just to put a finer point on it, as I think of Q1 versus Q2, could you quantify the tax impact? And looking further out, the true-up impact from network incentives versus upside due to BNPL? Because I think the latter might discontinue, and true-up obviously is onetime in nature.

Yes. The timing of tax filings and refunds is uncertain, but we are noticing that it's happening earlier compared to last year. Currently, we believe the impact will be roughly divided between the two quarters, with some filings occurring in late February and March, while others will wait until the filing deadline. Consequently, we expect to see the associated benefits in April and early May. This is our assumption, but the timing ultimately depends on how quickly individuals choose to file.

Our next question is from Josh Beck with KeyBanc Capital Markets.

This is Alex on for Josh. I wanted to check back in around the crypto vertical. I may have missed it. I don't think we heard anything in the prepared remarks. Would just appreciate any thoughts around fourth quarter momentum and kind of what you're excited about in this vertical looking into '22.

Thank you, Alex. As mentioned in our previous quarter, our platform serves as a link between fiat and cryptocurrencies for partners such as Coinbase, Bakkt, Fold, and Shakepay. We are experiencing substantial interest in this capability, even with the volatility in cryptocurrency prices. Through the Marqeta platform, crypto innovators can now allow their customers to make fiat purchases. Consumers, especially crypto holders, find this offering appealing. For example, Coinbase users can use a Marqeta-powered card at the point of sale, prompting us to send an authorization request to Coinbase to verify the user's crypto balance. Once approved, Coinbase converts cryptocurrency to fiat and completes the transaction. This process occurs in real-time, providing a smooth experience for Coinbase users who can spend directly from their wallets without needing to transfer funds. While we do not disclose specific customer performance, we are witnessing notable traction with these clients. Revenue from them has reached millions, compared to being nearly nonexistent last year. Similar to what we did for sectors like on-demand delivery and buy now, pay later, they are utilizing our just-in-time funding technology to develop this capability. We are enthusiastic about this vertical and are increasing our investments as demand grows. Recently, with President Biden's order to examine regulation, I believe that regulation in the crypto market is vital and could potentially unlock greater value for companies like Marqeta and their clients.

Great. I appreciate all the thoughts there. Maybe just lastly, with respect to the Citi relationship, do you view this as more or less representative of the kind of size and scope of the opportunities in the FI pipeline, just kind of thinking about the initial land opportunity?

Yes.

That's your answer?

To clarify, we've discussed during the road show and in recent quarters that large financial institutions play a crucial role in our strategy. We're in the business of providing essential tools, and we have a strong alignment with commerce disruptors who require these tools to grow their businesses. Recently, we've attracted different types of companies, particularly in the large financial institution sector, as they explore how Marqeta's technology can assist them in developing new features, functionalities, and business models. This is a strategic priority for us, and we intend to focus on and report more about it in the future.

We have reached the end of the question-and-answer session. And I will now turn the call over to Jason Gardner for closing remarks.

Thank you, Kyle. Thank you, Mike, two weeks on the job joining us for Q4 of '21 earnings. Also, thanks to Stacey. Thank you to everyone that asked the questions. Thank you for everyone joining the call. Have a great 2022. We very much look forward to talking about our Q1 of '22 results, and we'll let you know sometime in the future when that's going to happen. So thank you again, and stay safe. Take care, everybody. Bye-bye.

This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.