Marqeta, Inc. Q4 FY2025 Earnings Call

Ladies and gentlemen, welcome to the Marqeta Fourth Quarter 2025 Earnings Conference Call. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Maria Greiser, Director of Investor Relations. Please go ahead.

Thanks, operator. Good afternoon, everyone, and welcome to Marqeta's Fourth Quarter 2025 Earnings Call. Hosting today's call are Mike Milotich, Marqeta's CEO; and Patti Kangwankij, Marqeta's CFO. 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 annual report on Form 10-K 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 as of 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 our Investor Relations website. With that, I'd like to turn the call over for Mike to begin.

Thank you, Maria, and thank you for joining us for Marqeta's Fourth Quarter 2025 Earnings Call. I'm excited to be joined on this call by Patti, our new CFO, who started on February 9. Patti is a proven finance executive with extensive experience across technology, financial services and payments, and we're excited about the value she will have at Marqeta. To start our call, I will briefly touch on our Q4 results, followed by a few Q4 highlights of the growth in our business across use cases, geographies and value-added services. I will then turn it over to Patti, who will cover the details of our Q4 financial results and our expectations for 2026. Our fourth quarter results were once again demonstrating our outstanding growth as we reached new levels of scale while continuing to increase our adjusted EBITDA as we trend towards GAAP profitability. Total processing volume, or TPV, was $109 billion in the fourth quarter, crossing the $100 billion threshold in a quarter for the first time in Marqeta's history. With a year-over-year increase of 36%, this was the third straight quarter in which our TPV growth has accelerated by 3 points from the previous quarter, demonstrating our strong business momentum as we exit 2025. Q4 net revenue of $172 million grew 27% year-over-year, driven by strong TPV growth across the use cases we enable. Q4 gross profit growth was $120 million, a 22% year-over-year increase, exceeding our expectations by several points. Our adjusted EBITDA was $31 million in the quarter, which was another all-time high, translating into an 18% margin and more than doubling the dollars on a year-over-year basis. This was fueled by strong gross profit growth and the benefit of our scale platform and efficiency initiatives. This quarter and throughout 2025, we drove significant growth by deepening our existing customer relationships through seamless geographic, use case and value-added service expansion while also successfully onboarding and ramping new customers. Our leadership and expertise powering innovative offerings continues to attract established brands seeking a proven partner to drive growth and user engagement by leveraging card programs. One area we highlighted throughout 2025 is the growth and traction we are seeing in Europe. TPV in Europe grew more than twice as fast as the overall company in the fourth quarter, which is the first quarter in nearly 2 years that the growth has been below 100% on a year-over-year basis due to the rapidly expanding base. As a testament to the scale we have achieved in Europe in a relatively short period of time, the TPV in Q4 2025 was nearly 40% higher than our annual TPV in 2023 and spans the breadth of the use cases we serve. In Q3 2025, we completed the acquisition of TransactPay, which enables us to deliver a complete offering in the U.K. and the EU across processing, program management and the EMI license comparable to what we offer in the U.S., Canada and Australia. The ability to offer an end-to-end solution across geographies is becoming increasingly important in serving enterprise customers, whether they are large fintechs or embedded finance multinationals. One such customer is Uber, a long-standing Marqeta customer. Our relationship started with enabling couriers for delivery in the U.S., which has since grown across many geographies. We then expanded into new use cases such as the Uber Pro card to support the financial needs of Uber drivers, which we are now helping to expand geographically to the U.K. Marqeta's solution now live allows Uber drivers in the U.K. to access their funds immediately, get rewards and keep their money in a high-yield savings account with a partner bank, all within an Uber-branded app developed by Marqeta. Last year, we highlighted our work on a white label app designed to give customers a fully branded out-of-the-box solution managed by Marqeta that accelerates customer time to market. This program is the first to deploy the white label app, utilizing the preconfigured flows for onboarding, account setup, transaction monitoring and support, all of which reflect Uber's brand. This exemplifies the breadth and depth of the Marqeta offering by delivering the full spectrum of processing, program management and value-added services. This includes banking and money movement with seamless integration with our banking partner in the U.K., processing, fraud monitoring, real-time decisioning, risk management and our white label app. The holistic approach enables Uber to work with one partner to deliver a robust solution with full banking functionality. This expansion also highlights the confidence and trust that a discerning customer like Uber has in Marqeta to deliver a scalable and comprehensive product to their target market. This solution showcases our ability to offer a complete end-to-end solution, which is important for enterprise and embedded finance customers who are looking for a single best-in-class provider operating at scale with a full offering across geographies. Lending, including Buy Now, Pay Later, continues to be one of the most compelling and fastest-growing use cases. We continue to see strong growth in demand in Q4, which is driven by our ability to support customers with innovation at scale across many geographies. BNPL started with Marqeta enabling virtual cards for seamless payment experiences without costly and time-consuming back-end integrations. The category has continued to evolve, and we have been at the forefront of enabling seamless geographic expansion and newer innovative solutions such as the Visa Flexible Credential and Payanywhere cards, which allow our customers to deliver a better value proposition that is clearly resonating with their users. In a testament to our leadership in BNPL and the unique combination of capabilities we enable globally, in Q4, we added yet another BNPL customer who will be flipping an established program to our platform. For Technologies, a BNPL provider that allows shoppers to split online purchases into 4 payments, was looking for a tech-forward partner with a proven track record and the expertise to support their ambitious growth goals. As a result, they are moving their business to Marqeta. In addition to helping existing customers expand into geographies and use cases with new programs, we continue to strengthen our offering by delivering additional value-added services, which helps create more durable relationships and bolster the economics of our business. In Q4 2025, value-added services contributed over 7% of our gross profit with 18 of our top 20 customers utilizing at least one of our value-added services. As we have highlighted in the past, our real-time decisioning product within our suite of risk services was built to be issuer-centric and allow customers to create rules and controls to manage transaction fraud by leveraging actual transaction data. In Q4, we launched an enhanced version of this product with a long-standing customer using artificial intelligence and machine learning capabilities for real-time risk evaluation during the authorization process. Our enhanced model uses many transaction level attributes and historical behavior patterns to predict risk at the time of the transaction, all with millisecond-level response times. We sought the input of several of our existing customers to create these models, which are self-learning and will work to continuously improve fraud detection and adapt to emerging threats. In Q4, we also signed 2 additional customers for this enhanced real-time decisioning capability. Both customers were looking for a flexible solution to help meet the different needs for neobanking and lending use cases across multiple geographies as they scale, appropriately balancing the expansion of their target audience and credit lines with fraud mitigation. To wrap up, as I reflect on our many accomplishments in 2025 and the efforts that are currently underway, I'm excited about our business momentum as we look forward into 2026 and beyond. First, given the long lead times in onboarding new business and the time it takes for new programs to ramp up, deal activity provides good insight into business momentum that takes time to impact the P&L. We are successfully shifting to targeting enterprise customers with embedded finance use cases, signing 3 Fortune 500 customers in 2025, and the average deal size increased over 20% year-over-year. We also executed a flip in each quarter, both credit and debit products, demonstrating our competitive differentiation. And over the past 2 years, we have signed approximately 40 new logos, while our top 15 customers are adding over 3 programs to our platform, with 14 of our top 15 customers adding at least 1. Second, our leadership in lending and Buy Now, Pay Later use cases continues to be a source of strength as commerce continues to shift toward these payment methods. Our success in lending and BNPL clearly illustrates what makes the Marqeta platform unique, modern, flexible processing that can support a wide range of value propositions from anywhere cards, distribution through wallets and virtual card solutions. We enable innovation for our customers, such as being the first to support flexible credentials in the U.S. and Europe, multinational reach that enables geographic expansion and reliability at scale to handle rapid growth even among very large programs. Third, our traction in Europe, where 2025 TPV was 8x the size of 2022 and should continue to be a source of strong growth. The addition of TransactPay significantly enhances our offering, enabling us to deliver a full solution set in Europe aligned with U.S., Canada and Australia. The launch of the Uber U.K. program this past quarter is just the beginning. Lastly, we continue to expand and enhance the solutions we offer, both within program management and value-added services, increasing the value we deliver for customers and strengthening our customer relationships. This should continue to be a growth vector for us going forward, particularly value-added services, which are still only 7% of gross profit exiting 2025, but more than doubled year-over-year. Our financial performance in 2025 demonstrates what can be delivered when the business is firing on all cylinders. Our 24% gross profit growth and 26% adjusted EBITDA margin on gross profit has us on the cusp of GAAP profitability. We believe the market is evolving in favor of modern multinational processors operating at scale, which is reflected in our recent deals and our sales pipeline. Although we expect 2026 gross profit growth to be impacted by 2 specific factors whose timing really weighs on 2026, make no mistake that the structural components of our business remain strong as we look to reach larger milestones in the years to come. With that, I will turn the call over to Patti to discuss our Q4 financial results and 2026 guidance in more detail.

Thank you, Mike, and good afternoon, everyone. I'm looking forward to getting to know all of you as I step into this role at a pivotal time for Marqeta, as we prepare for business growth and are close to achieving GAAP profitability. Our financial results for Q4 indicate a remarkable quarter and a stronger finish to the year than anticipated. Both net revenue and gross profit growth exceeded expectations by around 4 percentage points, mainly due to solid business momentum reflected in our TPV growth. For the third consecutive quarter, TPV growth increased by 3 percentage points sequentially, reaching 36% in Q4. With adjusted operating expenses aligned with our expectations, the increase in gross profit resulted in another record quarter for adjusted EBITDA, bringing us close to breakeven on GAAP net income for the third straight quarter. Let me provide some details about our robust TPV, which totaled $109 billion in Q4, up 36% year-over-year, with three of our four major use cases showing increased growth. Non-Block TPV continues to grow over twice as fast as Block TPV. The growth in our financial services use case picked up from the previous quarter, although it was slightly slower than overall company growth. Lending, including Buy Now, Pay Later, experienced somewhat of a slowdown from Q3 but remained strong, growing nearly 60% year-over-year, driven mainly by increased use of flexible network credentials and our customers expanding geographically on our platform. The growth did slow compared to Q3 due to the Klarna migration in Europe that was completed in October 2024. Expense management growth increased by several points from last quarter, exceeding 40%. This was largely because customers are effectively acquiring new end users while capitalizing on our customizable capabilities. On-demand delivery growth also accelerated and remains in double digits but is still below the company’s overall growth rate. Q4 net revenue came in at $172 million, showing a 27% increase year-over-year, while Block's net revenue represented 44% of the total, consistent with last quarter. Q4 gross profit was around $120 million, with year-over-year growth at 22%, about 4 points above expectations, driven by two main factors. First, TPV growth exceeded our projections across all use cases. Second, the addition of TransactPay contributed an extra 4 percentage points to gross profit growth, which was 1 percentage point above what we anticipated. The contribution from TransactPay may vary quarterly depending on implementation fees and various projects that were completed ahead of schedule in Q4. As a reminder, we updated our accounting policy for estimating and recognizing card network incentives starting in Q2 2025. Consequently, the Q4 gross profit growth faced a 5-point headwind due to the differences in methodologies for year-over-year comparison. Our gross profit take rate was 11 basis points, slightly more than 0.5 basis points lower than last quarter, largely due to the significant renewal completed in the quarter. Adjusted operating expenses in Q4 were $89 million, growing 4% year-over-year, in line with our expectations. We remain focused on operational efficiency and are realizing the benefits of our increased platform scale. Q4 adjusted EBITDA reached $31 million, with a margin of 18% based on net revenue and a 26% margin when considering gross profit, highlighting our business's profitability potential. Our Q4 GAAP net loss was slightly above $1 million, which included $7 million in interest income. We finished the quarter with roughly $770 million in cash and short-term investments. Share repurchase activities are ongoing, as we believe the current valuation does not accurately reflect the company's worth or the market opportunities ahead. In Q4, we repurchased 20.2 million shares at an average price of $4.76. For the full year 2025, we repurchased 84.8 million shares at around $4.59, reducing outstanding shares by nearly 17% as of the end of 2024. By December 31, we had $91 million left on our recent buyback authorization. To summarize our full year 2025 performance, it was a fantastic year. TPV growth stood at 31%, adding over $90 billion in volume compared to 2024. Net revenue grew by 23% and gross profit increased by 24% year-over-year, supported by strong TPV growth, delays in two major contract renewals, and a significant rise in the adoption of our value-added services starting in Q1. Gross profit growth exceeded expectations by 8 percentage points primarily due to three reasons. First, two major renewals we anticipated completing by mid-2025 were delayed as we explored additional opportunities tied to these contracts, adding 2 percentage points to gross profit growth. One renewal was completed in Q4 while the other shifted to 2026. Second, we experienced nonrecurring benefits in each quarter except for Q4, contributing around 1.5 percentage points of growth. The remainder of the upside was fueled by robust TPV growth across multiple use cases, particularly in lending, including BNPL. Adjusted EBITDA for the year reached $110 million, more than 3.5 times what we recorded in 2024. Our strong gross profit growth was accompanied by adjusted operating expense growth of only 1.5%, thanks to our efficiency initiatives, increased platform economies of scale, and delayed investments in the first half of the year following the CEO transition in Q1. Now, let's turn our attention to our expectations for 2026. I will start by outlining our full year 2026 expectations before sharing more details about the quarterly cadence. For TPV, we anticipate growth moderating into the high 20s due to increasingly challenging comparisons, especially in the second half. We expect this growth to contribute an additional $100 billion in TPV. For 2026, we project gross profit growth between 10% and 12%, leading to a gross profit dollar range of $481 million to $490 million. Two specific factors are anticipated to pressure gross profit growth by a combined 7 percentage points, with their timing amplifying their impact. First, the two large renewals we’ve discussed are expected to reduce our growth by 4 percentage points in 2026. The delay of these renewals benefited 2025 but raises the grow-over impact for 2026. These are the last two renewals where we expect meaningful pricing adjustments resulting from the fintech boom of recent years. Second, given the level of Block TPV as we exit 2025, we expect them to transition to the next pricing tier in their contract, reducing growth by another 3 percentage points. When the block contract was renewed in the second half of 2023, we determined the next level of scale for their business on our platform. To incentivize their growth, we included a pricing tier that steps down at twice the size of other pricing tiers in the contract. Block reached that tier in December 2025 and we anticipate they will stay there throughout 2026, creating a challenging year-over-year comparison. These two factors will affect 2026 growth due to their timing, but we do not foresee them impacting our growth trajectory in 2027 and beyond. Additionally, Cash App's diversification of new issuance is expected to reduce our gross profit growth by around 1.5 to 2 percentage points, assuming a gradual loss of new issuance in the first half of the year with no new issuance in the second half. Before continuing, let’s take a moment to reflect. At the beginning of 2025, we anticipated gross profit growth to be 14% to 16% for the year and in the low 20s for 2026. We exceeded in 2025 with 24% gross profit growth. The key factors driving this outperformance in 2025, such as TPV growth momentum and the timing of renewals, one-time items, and the surge in value-added services adoption in Q1 2025, are similar to those affecting the forecasted lower gross profit growth in 2026. However, the anticipated two-year CAGR from 2024 to 2026 of 17% to 18% and the absolute dollar amount of gross profit for 2026 remain unchanged. Through our efficient execution and increasing platform scale, we now expect both adjusted EBITDA and GAAP net income to exceed our earlier projections set at the beginning of last year. We forecast full year 2026 net revenue growth of 12% to 14%. Adjusted operating expenses in 2026 are anticipated to grow in the mid- to high-single digits. We are disciplined in our investments toward growth initiatives and are benefiting from efficiency and platform scalability. Delayed investments, which significantly lowered our first half 2025 expenses, are enhancing our growth rate in 2026. Thus, we expect full year 2026 adjusted EBITDA growth in the mid-20s, which is more than twice the gross profit growth rate. Consequently, we now expect to generate a modest GAAP net income in 2026, likely around $10 million. Now, let’s discuss the quarterly cadence. We anticipate TPV growth to be in the low 30s during the first half of 2026, moderating to the mid-20s by the end of Q4 2026 as we face strong year-over-year comparisons. For Q1, we expect gross profit growth between 17% and 19%, representing about a 4 percentage point decrease compared to Q4 2025, primarily due to a 3 percentage point headwind from Block price tiering and a 1 percentage point lower contribution from TransactPay. Q2 gross profit growth is anticipated to be around 3 percentage points lower than Q1, mainly due to the effect of the second major renewal. In the second half of the year, we expect gross profit growth to slow to the high single digits, primarily due to four factors: lapping the inclusion of TransactPay will reduce growth by 3 points, lapping the strong growth from our lending and BNPL use cases in the latter half of 2025 will decrease growth by approximately 1 point, incentive timing will favor the first half while reducing second half growth by around 1 point, and the expected loss of new issuance from Cash App will lower growth by 2 to 3 points. Q1 net revenue growth is expected to be 17% to 19%. Q2 net revenue is projected to be approximately 3 percentage points lower than Q1, consistent with the gross profit and likely in the low double digits for the second half of the year. Our 2026 investments will primarily focus on technology and product innovation, as well as enhancing our go-to-market and compliance resources to address growing demand. Q1 adjusted operating expenses are expected to grow in the low double digits, then rise to the high teens in Q2 due to a challenging comparison from investment delays in 2025. As you may remember, Q2 2025 expenses were unusually low. Growth in the second half is expected to be in the low to mid-single digits as we adjust to the inclusion of TransactPay and more typical investment levels. Q1 adjusted EBITDA growth is anticipated to be 45% to 50%, with Q2 growth expected at approximately 10% to 15% due to the tough expense comparison, and then second half growth projected at 20% to 25%. We expect to approach GAAP breakeven in the first two quarters of the year and start generating net income in the latter half. In closing, our accomplishments in 2025 have laid a solid foundation for ongoing success in 2026 and beyond. Our capability to transition customers in both credit and debit along with flipping several portfolios accelerates time to value, leading to gross profit and bottom line growth. We’re seeing significant progress in Europe, with rising demand and bookings following the acquisition of TransactPay, enabling us to provide a comprehensive end-to-end solution. This development not only expands our pipeline and growth opportunities but is also expected to enhance our gross profit take rate. Moreover, the strong traction we’re witnessing with value-added services fosters stickier customer relationships, contributing positively to gross profit. As we enter 2026, we are enthusiastic about the upward trajectory of our business. Our extensive expertise and capacity for enabling innovation at scale are yielding results, positioning us to achieve GAAP net income profitability in 2026, a critical milestone that will usher in a new phase of value creation. I will now turn it back to the operator for questions.

Our first question is from Timothy Chiodo with UBS.

Patti, great to be on the call with you. The Cash App topic, so I apologize for just getting right at this, but I did notice a little bit of a change there. So gradual on the new issuance in the first half and then turning off the new issuance in the second half. I was wondering if there was any update you could provide investors around maybe the longer-term messaging around to what extent this diversification might persist? Would it persist into 2027, '28, '29? Will there be some kind of a limit to it where we hit a happy medium across the various providers that Cash App is using? And then related to that, I also noticed that you mentioned the tiering that Block is hitting this year, and you expect them to be at that tier for the entirety of the year, which somewhat implies that the second half lack of new issuance isn't overly material to 2026 numbers as you've previously guided. But the follow-up question that if that lack of new issuance starts to catch up to the Block volumes next year, does Block potentially slip back into a lower tier and therefore, your take rate with Block returns to norms rather than the headwind that it sees this year?

Thanks, Tim. I'll cover some of the points you mentioned. We have slightly adjusted our expectations regarding the diversification of their new issuance. As of now, nearly at the end of February, we haven't noticed any significant impact on the new issuance we're receiving. Thus far, the effects have been minimal. However, we anticipate that they will begin diversifying soon. We now expect that during the first half of the year, our new issuance will gradually decrease, but by the second half, we won't see any new issuance at all. Regarding the long-term impact of diversification, it's worth noting that in payments, many clients utilize multiple providers, but they typically have one primary provider that handles the majority of their volume, about 80% to 90%, and a second provider for diversification. We're still evaluating how this will play out with Cash App, but we are confident in our position as their primary partner. Our platform offers unique capabilities that set us apart, and we have established a strong and long-standing relationship with them. We have a history of effective collaboration and responsiveness. Furthermore, many active users remain on our platform, making it challenging for them to transition away from us. The spending contributions from these users are significant, which strengthens our position as their main partner. We also offer them additional options; for instance, they could easily explore international expansion or adopt a more traditional credit card product on our platform, which may be more complex with their diversification partners. While the situation is uncertain, we feel optimistic about our solid relationship and our ability to continue providing value, and we'll keep monitoring it throughout the year. Regarding your second question on tiering, you're correct. Reflecting on our renewal three years ago, we aimed to determine when the business would reach a new level of scale to potentially adjust pricing accordingly. They reached that point in December, and while there are over 10 tiers in the contract, the tiers accommodate substantial volume blocks. This provides them room to stay within the current tier, even with some loss in new issuance. We still anticipate growth, and they should remain in that tier for the year. If they significantly diversify away from us, it would result in higher costs due to tier pricing and be their expense in choosing diversification. We'll see how things develop, but we feel confident in our relationship and our ability to continue delivering value.

Our next question is from Connor Allen with JPMorgan.

Patti, congrats on your role. Maybe a question for you, if you don't mind. Can you talk a little bit more about your choice to join Marqeta? I'm curious, considering your background across cards and payments, just what stood out for you in your diligence? What makes you the most excited here?

Thank you, Connor, it's great to meet you. I've been involved in payments for over a decade, including roles in acquiring, issuing, and banking, as well as experience with Stripe and Roofstock, where I worked on implementing embedded finance. I've been aware of Marqeta for years and recognized it as a category creator during my time at Stripe when they launched issuing. When I had discussions with Mike and the leadership team, I became excited about the opportunity to work with such a talented team and their impressive track record and growth potential. The relationships they have with significant customers like DoorDash, Klarna, Uber, and Block demonstrate the weight of their decisions and validate their achievements. Payment platforms are complex and require strong relationships, which makes my experience particularly relevant at this time of growth and investment. I am thrilled to be here and join the team.

Great. Appreciate that and share the same view on our side. Maybe one for you, Mike, if you don't mind. I wanted to ask a little bit about competition. There's been some discussion in the market about newer entrants competing for larger deals. I mean we gather that it's not necessarily happening where Marqeta typically participates. But I'm just curious at a high level, if you've seen any shift in the competitive environment, new faces and RFPs, et cetera?

We are not seeing any significant change in the competitive environment. I would say it's relatively stable. I think what is more changing from our perspective is a few years ago, in the fintech boom times, there were a lot more deals, a lot more uncertainty where you were making bets on customers and whether they would succeed. That was a big part of the process. Not only are you bidding for the business, but you're also trying to assess the chances of success. What's now happening is there are fewer deals, but they're much more substantial in size. And there are customers who already have a user base and a brand. And so from our perspective, have a much higher likelihood of success because they're really just looking to insert a card value proposition into an existing user base. And so the fact that there are more established companies has changed a little bit the dynamics of who we see because usually, they're only going to include players who have more substantial scale, and that's a much bigger part of the decision-making process because they're confident they're going to reach several billions of volume or maybe even to double-digit billions of volume annually and who has the platforms and the experience and track record of delivering on that kind of scale. And so it's mostly stable, but there is a slight change as we move upmarket, so to speak.

Our next question is from Darrin Peller with Wolfe Research.

Patti, nice to connect and congrats also, to connect again. I guess when I just think about the underlying trajectory of the business, Mike, I know we talked about 7 points of impact to your gross profit outlook really associated with the items that you discussed on Block as well as the renewals. And I guess there's another few points on pricing, which I think is a little bit more newer to us just given the scale of Cash App. And so the combination, you're really still growing your Cash App by somewhere over 20% when you look at your guide and those variables. A, is that how you want us to think about the trajectory? And, b, if that's true, maybe remind us of what you're seeing as the top drivers. I mean you're talking about flips in the business, where are you seeing the most strength? Just rank the top few strengths you're seeing driving that 20% plus algorithm.

Sure, thanks, Darrin. You're right; we see two significant impacts contributing to our growth, specifically related to renewals and Cash App tiering. These impacts are time-sensitive and are aligning perfectly with our 2026 growth. If the timing were different, these effects might spread out, which would lower our growth expectations to under double digits. We also have another 1.5 to 2 points coming from cash app diversification, and overall, TPV growth is moderating. In the second half, our growth has been particularly impressive given our scale, and while we expect it to remain strong, we don't anticipate growth exceeding 30%. If we summarize, we have about seven points from timing and an additional four to five points from other factors. We find excitement in several areas where we're seeing strong momentum. The TPV growth is notably impressive, especially in the Buy Now, Pay Later segment, which we believe will see wider adoption. Europe is quickly growing, and we've enhanced capabilities there, particularly with TPL in recent months. Our value-added services saw a significant increase in size in 2025, which is a stickier, higher-margin segment. Furthermore, we're onboarding new customers; 14 of our top 15 customers have engaged in new programs with us over the last two years, indicating strong expansion. These factors make us confident in the underlying momentum of our business. Additionally, we have a robust pipeline filled with enterprise customers interested in transitioning to card payments, and we are developing innovative new products that we hope will gain traction in 2026. We're also proceeding thoughtfully with credit and plan to focus more on it in the coming year or two. Lastly, I want to point out the advantageous mix of growth in Europe and value-added services, which are outpacing overall company growth. We anticipate this trend will continue as they capture more gross profit share, ultimately enhancing our overall gross profit growth rate. Thus, the growth we foresee in 2026 is quite specific, and we believe the core components and structural elements of our business are solid and on a positive trajectory, leaving us optimistic about our path forward.

Okay. Guys, just one quick follow-up would be to double-check that you reviewed the portfolio and don't feel any risk of incremental renewals, large renewals. I just want to see if there's anything else we should just keep an eye out for, for the year that would impact maybe guidance even into the next year. It may be too early to know the end of the year, but anything you see where your transparency is?

I think it's a bit premature to discuss 2027. Generally, we do have renewals happening frequently. However, the two we're mentioning are the last ones from the fintech boom. As we continue to grow our user base, you might see some pricing adjustments as they progress with us, but this is intended to encourage their growth with our services.

Yes, I would say we have pretty good visibility. I think we've included the typical elements we expect to see, so we feel confident that we've accounted for everything.

Our next question is from Sanjay Sakhrani with KBW.

Welcome, Patti. I'm just curious, I know, Mike, you talked a little bit about the expectations for moderating TPV growth in the second half. Obviously, you're growing over some difficult comparisons. But curious, is that sort of conservative given you have the pipeline and then obviously, BNPL is doing well? Or do you feel like there will be a little bit of a scale back in terms of issuance there?

Yes, that's a great question, Sanjay. The performance we've observed in the past quarter is quite remarkable. If we take a step back, our lending and Buy Now, Pay Later segments are growing nearly 60%, even though we are comparing against a strong performance from Klarna that began in October 2024. So, despite a tougher comparison, we are still seeing nearly 60% growth. Our expense management segment is also up over 40%, which is significant as it's the first time in three years we've seen such growth. Financial services, our largest segment, has grown over 30% in Q4, marking the first instance of this growth in 2025, again on a substantial base. Additionally, on-demand delivery, which previously saw single-digit growth over the last couple of years, has now accelerated to double-digit growth in recent quarters. We are witnessing exceptional performance overall. We aim to be realistic in our expectations. As mentioned, we anticipate that in the first half, our growth will stay above 30% due to the strong momentum. However, as we move into the second half, we expect to face challenging comparisons. If some of these trends continue at the same pace, it would certainly benefit the business, though we are not basing our assumptions on that. We believe the tough comparisons will likely moderate growth, but we still expect to grow in the mid- to high 20s on a nearly $400 billion volume base, which gives us confidence in the business's growth.

And then just a follow-up on value-added services and Europe. I guess when we think about the growth there, can you just maybe help us dimensionalize sort of what you're expecting this year versus last year? And what maybe the broader product rollouts are that could actually maybe accelerate the growth there as well?

Sure. Let me start with Europe. Europe now accounts for a bit more than the mid-teens percentage of our total payment volume. This is the first quarter in a couple of years that it hasn't exceeded 100% growth, as that base continues to expand. As I mentioned, we expect our business in Europe to grow eightfold from 2022 to 2025. Accordingly, we have significant momentum there, which has been achieved with a relatively limited set of services focused on our strong processing capabilities. With the TransactPay acquisition, we now have a much stronger value proposition for sale and marketing. We anticipate that Europe will continue to significantly outpace the overall company in both total payment volume and gross profit growth, making it a substantial contributor. Regarding value-added services, we are consistently adding new capabilities, and more customers are seeking scaled solutions. We expect growth to moderate somewhat in 2026, primarily due to a significant uptick in 2025 when several of our largest customers adopted our offerings, resulting in a doubled gross profit compared to 2024. While we believe growth will remain strong and faster than the company average, it won't sustain that rapid pace. Nonetheless, we expect it to be a meaningful contributor, as these are typically higher-margin products that enhance customer loyalty. We are quite excited about our expanding portfolio and our increasing penetration with these products among our customer base.

Our next question is from Craig Maurer with FT Partners.

Welcome, Patti. I wanted to put a finer point on Tim's question earlier considering a lot of what I had has already been asked and answered. Visa was pointed on their call to call out the win in cash for Cash App. They've been putting a lot of emphasis on their Issuer Services business. So I was wondering what you're seeing differently from them? Are they increasing their presence in the market in terms of what they're doing for fintechs? How is this changing how you're looking at the market, if at all?

Sure. Obviously, I don't know exactly. I can only see what Visa says publicly. But in my view, what Visa DPS particularly offers is, obviously, they have a lot of credibility to say they can handle your business at scale with great reliability. When you've gotten to that size, then they become an option, and they're used to managing customers of that size. And just because of the size of their platform and how long it's been around, my perception would be they're probably just not quite as flexible. So catching customers earlier in their life cycle is probably not prime hunting ground for them. But talking to prospects who have already achieved a lot of scale and have a lot of maturity, that's a good match for them and where their strengths, it sort of plays into their strength, so to speak. So I would say I think they have made platform improvements. I have no doubt they have more capabilities than they did a few years ago. But I think there's still a relatively small group of people that kind of have that kind of scale that they would target. I think we would still have big advantages, I think, in terms of nimbleness and thinking of more creative solutions to solve very specific problems for customers as opposed to something that's pretty stable processing and they know what they want. And so we may see them a little bit more a couple of years ago, we didn't really see them much. And I think as we go after bigger and bigger business, then that would be maybe a competitor we'll see a little more frequently. But we still feel very good that our value proposition is that we also can support a lot of scale and have programs that are quite big, but we still have a lot of agility and a lot of unique capability and configurability that allows people to do things that are a little bit different and differentiate themselves in the market, and that's really what sets Marqeta apart.

Our next question is from Michael Infante with Morgan Stanley.

This is Michael Infante on for James. Mike, I'd be curious to hear how you're thinking about the mix shift we're seeing in BNPL broadly with respect to a larger percentage of volume originating on Flex Credential cards as well as within digital wallets. So as that mix shift continues, what's the impact on your unit economics, if at all?

I would say there's not a significant impact on our unit economics; they remain relatively consistent. Typically, a consumer value proposition tends to have a slight premium compared to a single-use virtual card. Currently, the early adopters using flexible credentials are major players with substantial volume, which makes the economics fairly comparable. However, a notable difference is the lack of stickiness when transitioning from a virtual credential to a consumer credential. The consumer relationship tends to be stickier and more challenging for customers to diversify, as there isn’t much precedent for running a single program across multiple platforms. In contrast, with virtual cards, any transaction can easily be directed to a different platform if desired. Besides our leadership in this area and capability to manage consumer value propositions that many competitors lack experience in, this shift toward more consumer-focused solutions also creates a stickier business for us, making it more difficult for customers to diversify, which should be advantageous for us considering our early leadership position.

That's helpful, Mike. And then maybe just secondly, any quick update you can share just on the nature of your conversations with some of the larger financial institutions and in the areas that they're diligent in?

Sure. Our discussions with financial institutions are now more frequent and substantial than they were a couple of years ago. There's a notable shift in the market toward modernization. The fintech leaders have emerged and are growing into significant businesses. What used to be seen as expanding the market pie is now considered real competitive threats to banks, both for deposits and spending in consumer and commercial sectors. There's a wider acknowledgment that to effectively compete with these value propositions, more sophisticated technology and a flexible, configurable approach will be necessary. We are engaging in more conversations, although we recognize that these organizations remain cautious and we are likely to enter with a specific use case. The top two areas for us would likely be in commercial, given our success with various disruptors, and in lending, particularly with Buy Now, Pay Later services that many banks want to incorporate into their offerings. We have a strong leadership position and a proven ability to scale. We are working to establish our presence, and our conversations now appear much more promising than they did a couple of years ago when the outlook seemed distant.

Our next question is from Andrew Schmidt with Citi.

Welcome, Patti. So I just wanted to dig in on the implementation time frames and partner bank diversification. Maybe you could just give us an update there. And then for the enterprise customers for embedded use cases, if you could just elaborate on what implementation time frame looks like for that type of customer, that would be helpful.

Sure. In terms of new bank partnerships, we added a new U.S. bank and a U.K. bank last year. We're currently implementing another U.S. bank and a European bank in the first half of this year, which diversifies our bank offerings. In Europe, this is happening because we can now provide a combined value proposition. In the U.S., the diversification is focused on two aspects: first, some banks are not comfortable with all the types of use cases we serve, which means as our business diversifies, we might need different partners; second, some banks have been investing in unique capabilities that complement ours to meet customer needs. That's why we're expanding our bank portfolio. Regarding implementation time, we have improved our processes and resolved many challenges that previously slowed progress. We've also educated customers about how their changes impact timelines, which has helped us stabilize the situation. However, as we engage with more enterprise deals, they do tend to move slower compared to our previous customer base, where our value proposition was critical and they were eager to act quickly. Larger organizations have more complex decision-making processes, and they face greater scrutiny in terms of technology and security, which requires more time. While they are indeed moving slower, we're comfortable with this trade-off because we believe the probability of success is higher and their ability to quickly integrate our value proposition is also enhanced, given they already have a substantial user base, in contrast to a few years ago when new fintechs were building from the ground up.

Got it. I appreciate those comments. And then maybe we could just chat on value-add services for a moment. It's good to see the uptake on the enhanced risk product. Can you just talk about just expectations for attach there, monetization, that would be helpful. And then obviously, a more important point of all this is just the pipeline for other value-add services. It's important to keep iterating these. Maybe you can talk about kind of what you're targeting, what types of areas in the future.

Sure. I think the main change we're noticing is that the fintech customer base used to take pride in assembling best-in-class solutions as their modern tech stack, selecting various top-tier options to create something unique and exceptional in the market. They were somewhat open to picking a la carte options. However, when we engage with more enterprise customers, we find that if you have a solid solution, they prefer to get it from you rather than connecting with multiple providers to piece together their value proposition. If you offer a comprehensive solution and take the reins as the process and program manager, they are increasingly willing to adopt that solution to simplify their operations and accelerate their progress. This reflects a noticeable shift in uptake. In terms of our strengths, we excel in tokenization and have unique capabilities in that area, as well as in risk services. Every issuer will need some level of fraud management and monitoring. These are the two areas where we plan to continue investing to maintain our competitive edge. Moreover, we are exploring new areas such as rewards, our white label app, and enhanced data and analytics services as we grow and scale. While these areas may currently be small, we believe they hold significant potential for future expansion.

Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you again for your participation.