Marqeta, Inc.

Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the Marketa First Quarter 2024 Earnings Conference Call. At this time, lines have been placed on mute to prevent any background noise. After the speaker's remarks, we will open the lines for your questions. As a reminder, this conference call is being recorded. I would now like to turn the conference over to Stacey Feinerman, Vice President of Investor Relations. Thank you, and you may 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 annual report on Form 10-K for the period ended December 31, 2023, 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 gap measures can be found in today's earnings press release or earnings release supplemental materials, which are available on our investor relations website. Hosting today's call are Simon Koloff, Marketas CEO, and Mike Miletic, Marketas CFO. With that, I'd like to turn the call over to Simon to begin.

Thank you, Stacey. And thank you for joining us for Marketas' first quarter 2024 earnings call. Our first quarter results demonstrate how the strong foundation we built in 2023 is leading to growth with new and existing Marketo customers and speaks volumes to the strength and depth of the Marketo platform. We started the year strong with net revenue, gross profit, and adjusted EBITDA outpacing expectations. Total processing volume, or TPV, was 67 billion in the first quarter, a 33% increase compared to the same quarter of 2023. In Q1, we had a day where we processed over 1 billion in TPV, a significant milestone for the company. Our net revenue of 118 million in the quarter contracted 46% year over year, which included a decrease of 58 percentage points from the revenue presentation change related to our cash app contract renewal. Gross profit was $84 million in the quarter, a contraction of 6% versus Q1 2023, primarily due to the cash app renewal pricing. Our gross margin for the quarter was 71%. our non-GAAP adjusted operating expenses were 75 million, a 20% decline year over year due to our restructuring in Q2 2023 and operational efficiencies. This resulted in a positive EBITDA, sorry, adjusted EBITDA of 9 million in the quarter. T1 was a solid quarter indeed. First and foremost, The accelerated bookings we started in late 2022 and our relentless focus on converting them to gross profit are starting to pay off. For example, we launched a program with Trade Republic, a new customer signed in late 2022. Trade Republic is Europe's largest broker and leading savings platform headquartered in Germany. Trade Republic uses Marketa to power an innovative consumer debit card that combines spending and savings for their 4 million customers across 17 markets. The company chose Marketa due to our ability to reliably deliver innovation and easy geographic expansion. Over 1 million people joined the waiting list for the highly innovative card in just a few weeks. Second, In addition to launching and scaling new customers, we continue to focus on expanding with our existing customers. Uber Eats recently expanded with us into Latin and South America, Canada, and Australia, bringing to nine the number of markets served. Also, Klarna announced that Klarna Card has been open to all US Klarna users. The offering is built into Klarna's app and provides flexible payment options with no revolving credit, personalized spending and budgeting recommendations, and up to 10% cashback. Beyond geographical expansion, our customers are growing with Marketo by leveraging our deep payments and program management expertise. Previously, several of our customers, namely FinTechs, chose to take program management and other services in-house only to reverse course later, given the complexity and regulatory requirements associated with scale. Now, many customers look to Marketo to ease a significant amount of operational burden. During the first quarter, about 20 of our existing customers added program management products and or optional services from our programs, like disputes, compliance reporting, and 3D secure. Going forward, we believe compliance-related services in particular will be a key selling point and differentiator for our platform. Many competitors do not offer the same level of service, and many prospective customers don't want to do this work themselves, especially when we have the advantage of both expertise and economies of scale. While ramping our previously booked programs is a top priority, we're also focused on the significant embedded finance opportunities right before us, like the $2 trillion market for accelerated wage access, or AWA. As we look to capture this tremendous opportunity, we're working with multiple distribution partners to increase our reach and expand our offering. While we've seen tremendous growth from early large adopters like Uber and Walmart's OneFinance, we're approaching other channels to bring our solution to a broader market. In April, we announced our new customer, Rain, a financial wellness benefits provider that uses technology to help companies give employees greater control over their finances. Rain's customers include global brands, like McDonald's, Taco Bell, Hilton, and Marriott. RAIN brings the technology and payroll acumen that come from integrating with multiple payroll providers to determine the proper withholdings along with what the employee has earned. This relationship delivers value for Marquetta on two fronts. First, RAINN will offer a plug-and-play AWA solution for employers, including the RAINN spending card, which Marketa will power. Second, we're working to offer a more comprehensive AWA solution that seamlessly combines our experience, scale, and reliability in modern card issuing with the technology and payroll acumen of AWA specialists, and the RAIN partnership is a significant step in achieving that end state. Another way we're approaching the accelerated wage access market opportunity is by working with labor marketplaces, like the deal we announced with Workwhile, a labor marketplace for shift workers. This offering is stated to go live in the next few months. This brings me to an important point. For many of our customers, especially labor marketplaces, offering accelerated wage access is only the beginning of their embedded finance journey. In fact, they believe that accelerated wage access is part of a comprehensive neo-banking solution for their workforce to increase retention in this tight labor market. As a result, these customers are coming to us for additional services such as banking and money movement. We believe that this conversion is not an isolated event, but rather part of a broader conversion and personalization trend giving consumers a spectrum of integrated payment options including debit, installment pay, and revolver with a global and personalized experience across all merchants. We believe that our platform, which has been strengthened with the addition of credit, positioned us extremely well to capitalize on this trend. In summary, we're starting the year strong and seeing the foundation we laid over the last year start to deliver solid financial results. Our revamped sales efforts are beginning to pay off as the new embedded finance customers gain traction. In addition, our strong existing customer base continues to expand with us, a testament to the value they get from our platform. Before I hand it over to Mike, I must mention Jason Garden's decision to step down as executive chairman of the company next month after one and a half years in the position. As our largest shareholder, Jason has always been focused on where he can contribute to maximize shareholder value. His persistence in value creation continues this tradition, which Mike will touch upon in his comments. He has contributed significantly to the company over the past 14 years, and this is just the latest chapter as we strive towards sustainable, profitable growth for long-term value creation. Since late 2022, we have made changes to mature and evolve the business. Jason felt that the company no longer required the ongoing support and governance that his executive chairman role provided. As a board member going forward, Jason plans to focus his role as chair of the board's new Payments Innovation Committee, helping oversee Marketa's platform capabilities and the acceleration of our innovation agenda. I am excited to work with Jason and the rest of the board on the massive opportunities ahead of Marketa as the embedded finance market grows. Over to you, Mike.