10-Q: Marqeta Q3 2025: Revenue Growth Amidst Net Losses

Marqeta reports strong Q3 2025 revenue and processing volume growth, driven by strategic acquisition, despite continued net losses and a significant legal settlement.

Summary

• Net revenue for the three months ended September 30, 2025, increased by 28% to $163.3 million, compared to $127.9 million in the same period of 2024.
• Net revenue for the nine months ended September 30, 2025, increased by 22% to $452.7 million, compared to $371.2 million in the same period of 2024.
• Total Processing Volume (TPV) increased by 33% to $97.96 billion in Q3 2025, compared to $73.90 billion in Q3 2024.
• TPV for the nine months ended September 30, 2025, increased by 30% to $273.82 billion, compared to $211.19 billion in the same period of 2024.
• Gross profit for Q3 2025 increased by 27% to $114.6 million, with gross margin remaining flat at 70%.
• Gross profit for the nine months ended September 30, 2025, increased by 25% to $317.3 million, with gross margin improving by 2 percentage points to 70%.
• Net loss for Q3 2025 was $3.6 million, a significant improvement from a net loss of $28.6 million in Q3 2024.
• Net loss for the nine months ended September 30, 2025, was $12.5 million, a shift from a net income of $54.4 million in the same period of 2024.
• Adjusted EBITDA for Q3 2025 was $30.3 million, up from $9.0 million in Q3 2024.
• Adjusted EBITDA for the nine months ended September 30, 2025, was $78.9 million, up from $16.4 million in the same period of 2024.
• The company completed the acquisition of TransactPay on July 31, 2025, for approximately $59.9 million, enhancing its card program management and digital payment capabilities in Europe.
• A preliminary settlement of $13.0 million was reached on November 3, 2025, for securities class action lawsuits, with $4.3 million recognized as legal contingency expense in Q3 2025, largely covered by D&O insurance above a $5.0 million self-insured retention.
• The 2024 Share Repurchase Program ($200 million) was fully completed, and $212.4 million has been repurchased under the new $300 million 2025 Share Repurchase Program, with $87.6 million remaining as of September 30, 2025.
• Michael (Mike) Milotich was promoted to Chief Executive Officer, effective September 8, 2025, and will continue as Chief Financial Officer until a successor is appointed.

Sentiment

Score: 6

Explanation: The company exhibits strong underlying business growth with significant increases in net revenue and Total Processing Volume, indicating robust demand for its platform. The strategic acquisition of TransactPay expands its market reach and capabilities in Europe. However, the company continues to report net losses, and the nine-month period saw a shift from net income to net loss year-over-year, which is a concern. High customer concentration with Block, Inc. (44-45% of revenue) and reliance on a single Issuing Bank (Sutton Bank for 63% of TPV) present concentration risks. The legal settlement, while largely covered by insurance, adds to operational expenses. The increase in Adjusted EBITDA is a positive sign of improving operational efficiency, but the overall profitability trend is negative.

Positives

• Strong net revenue growth of 28% in Q3 2025 and 22% for the nine months ended September 30, 2025, demonstrating continued business expansion.
• Significant Total Processing Volume (TPV) growth of 33% in Q3 2025 and 30% for the nine months, driven by strong performance across financial services, lending (including buy-now-pay-later), and expense management.
• Improved net loss in Q3 2025, reducing from $28.6 million in Q3 2024 to $3.6 million.
• Substantial increase in Adjusted EBITDA, reaching $30.3 million in Q3 2025 (up from $9.0 million) and $78.9 million for the nine months (up from $16.4 million), indicating improved operational efficiency.
• Gross margin remained strong at 70% in Q3 2025 and improved by 2 percentage points to 70% for the nine months.
• Strategic acquisition of TransactPay strengthens the company's card program management and digital payment capabilities in the UK and Europe, expanding its international footprint.
• Net cash provided by operating activities increased significantly to $109.3 million for the nine months ended September 30, 2025, compared to $33.4 million in 2024.
• Ongoing share repurchase programs (2024 program completed, 2025 program active) demonstrate management's confidence in the company's valuation and commitment to returning capital to shareholders.

Negatives

• Continued net losses, with a net loss of $3.6 million in Q3 2025 and $12.5 million for the nine months ended September 30, 2025.
• The nine-month period saw a significant shift from a net income of $54.4 million in 2024 to a net loss of $12.5 million in 2025.
• Unfavorable shifts in card program mix, particularly the expansion of programs with minimal or no program management, partially offset overall revenue growth.
• Significant customer concentration, with Block, Inc. accounting for 44% of net revenue in Q3 2025 and 45% for the nine months.
• Other income, net, decreased by 47% in Q3 2025 and 37% for the nine months, primarily due to lower interest income from a reduced short-term investment portfolio (due to share repurchases) and lower average yields.
• Increased legal contingency expense of $4.3 million recognized in Q3 2025 related to the securities class action lawsuit.
• Increased depreciation and amortization expense by 58% in Q3 2025 and 59% for the nine months, driven by higher amortization of internally developed software.
• Several key executives and directors adopted Rule 10b5-1 trading arrangements for selling Class A Common Stock, which could be perceived negatively by some investors.

Risks

• Uncertainties related to U.S. and global economies and their effect on business, results of operations, and financial condition.
• Fluctuations in future financial performance, including net revenue, costs of revenue, gross profit, and operating expenses, and the ability to achieve future profitability.
• Ability to scale new products and services, such as the credit card platform.
• Ability to effectively manage or sustain growth and expand operations.
• Ability to enhance the platform and services and develop and expand capabilities.
• Ability to further attract, retain, diversify, and expand the customer base.
• Ability to maintain relationships with Issuing Banks, Card Networks, and other third parties.
• Impact of political, social, and/or economic instability or military conflict.
• Ability to develop and protect the brand.
• Changes or developments in laws and regulations and the ability to comply.
• Ability to successfully defend litigation brought against the company.
• Ability to attract and retain qualified employees and key personnel.
• Ability to repurchase shares under authorized share repurchase programs and receive expected financial benefits.
• Ability to maintain effective disclosure controls and internal controls over financial reporting.
• Concentration of credit risk in cash and cash equivalents, short-term investments, and accounts receivable.
• Significant portion of payment transactions settled through one Issuing Bank, Sutton Bank (63% of TPV in Q3 2025).
• Significant revenue concentration from one customer, Block, Inc. (44% of net revenue in Q3 2025).
• Exposure to market risks, including interest rate risk and foreign currency exchange risk.

Future Outlook

The company expects to incur net losses from operations for the foreseeable future as it invests in new products, customer acquisition, brand development, international expansion, and platform infrastructure. It believes its existing cash and cash equivalents and short-term investments of $830.5 million as of September 30, 2025, will be sufficient to meet its working capital and capital expenditure needs for at least the next 12 months. The company is currently evaluating the operational and financial reporting implications of new accounting standards (ASU 2024-03 and ASU 2025-06) and does not expect the recently enacted Tax Act to have a material impact on its overall tax expense or effective tax rate for 2025 due to a full valuation allowance on its net deferred tax assets.

Management Comments

• "Marqeta's mission is modernizing financial services by making the entire payment experience native and delightful."
• "Marqeta's modern platform empowers our customers to create customized and innovative payment card programs with configurability and flexibility."
• "We expect to incur net losses from operations for the foreseeable future as it incurs costs and expenses related to creating new products for customers, acquiring new customers, developing its brand, expanding into new geographies and continued development of the existing platform infrastructure."
• "We believe that our cash and cash equivalents of $747.2 million and short-term investments of $83.2 million as of September 30, 2025 are sufficient to fund its operations through at least the next twelve months from the issuance of these financial statements."

Industry Context

The company operates in a highly competitive and rapidly evolving digital payments and fintech industry. Its focus on a global, cloud-based, open API platform for modern card issuing and transaction processing positions it within the growing trend of embedded finance. The acquisition of TransactPay strengthens its presence in the European e-money institution (EMI) market, aligning with the increasing demand for localized regulatory compliance and digital payment solutions. Robust TPV growth across financial services, lending (including buy-now-pay-later), and expense management indicates strong market adoption of its core offerings in key fintech sectors.

Comparison to Industry Standards

• The filing does not provide specific global benchmarks or comparable companies/projects for direct assessment against industry standards.
• The company's gross margin of 70% is a strong indicator of its platform's value proposition, but without direct industry comparisons, its relative performance cannot be definitively assessed.
• The significant customer concentration with Block, Inc. (44-45% of net revenue) is a notable characteristic, which is common in platform-based business models but also represents a concentration risk compared to more diversified industry players.

Management Changes

Corporate Governance

Legal Proceedings

• **Securities Class Action Lawsuits (Consolidated as *In re Marqeta, Inc. Securities Litigation*)**: Filed: December 9, 2024 (Wai v. Marqeta, Inc., et al.) and December 10, 2024 (Ford v. Marqeta, Inc., et al.). Allegations: False or misleading statements regarding performance, revenue, and gross profit expectations, violating federal securities laws. Class Period: Between February 28, 2024, and November 4, 2024. Status: Preliminary settlement reached on November 3, 2025, for $13.0 million, subject to further documentation and judicial approvals. Company's Liability: Recorded $4.3 million legal contingency expense in Q3 2025, representing the probable loss amount based on the remaining $5.0 million self-insured retention of its Directors & Officers Insurance Policy (after $0.7 million paid as of September 30, 2025). Insurance proceeds are expected to cover any amount of the settlement above the $5.0 million self-insured retention.
• **Shareholder Derivative Lawsuits (Consolidated as *In re Marqeta, Inc. Derivative Litigation*)**: Filed: February 4, 2025 (Smith v. Khalaf, et al.), February 21, 2025 (Ojserkis v. Khalaf, et al.), and February 27, 2025 (Preciado v. Khalaf, et al.). Allegations: Breach of fiduciary duties and violations of federal securities laws by the company's former Chief Executive Officer, Chief Financial Officer, and Board of Directors. Status: Currently stayed pending developments in the consolidated Securities Actions.

Related Party Transactions

• The largest customer, Block, Inc., accounted for 44% of net revenue for the three months ended September 30, 2025, and 45% for the nine months ended September 30, 2025.
• An amendment to the Master Services Agreement with Block, Inc. was effective June 30, 2025, regarding the onboarding and utilization of Pathward as a new backup Issuing Bank for Block's Cash App Program. This includes specific fee structures, funding requirements, and a monthly Backup Issuing Fee of [***] starting July 1, 2025, until Pathward becomes an active Issuing Bank.

Stakeholder Impact

• **Shareholders**: Impacted by continued net losses, which could pressure share price, but also by share repurchase programs that may support valuation. The legal settlement represents a financial outflow, though mitigated by insurance. Insider Rule 10b5-1 trading plans could influence investor sentiment.
• **Employees**: Affected by executive leadership changes (CEO promotion) and potential retention bonuses. Share-based compensation remains a significant component.
• **Customers**: Benefit from platform enhancements, new product development, and expanded services, particularly in Europe through the TransactPay acquisition. The new backup Issuing Bank arrangement for Block's Cash App Program aims to ensure service continuity.
• **Issuing Banks/Card Networks**: Continued strong relationship with Sutton Bank, which settles a significant portion of TPV (63% in Q3 2025). A new relationship with Pathward as a backup Issuing Bank for Block's Cash App Program is established.
• **Regulatory Authorities**: The TransactPay acquisition brings e-money institution (EMI) licenses, requiring ongoing compliance with European safeguarding requirements for customer funds.

Next Steps

• Further documentation and judicial approvals for the $13.0 million securities class action settlement.
• Continued evaluation of the operational and financial reporting implications of ASU 2024-03 (effective fiscal 2027) and ASU 2025-06 (effective fiscal 2028).
• Annual reviews with Pathward and Marqeta once Pathward becomes an Issuing Bank for the Cash App Program.
• Potential modifications to funding requirements for the Cash App Custodial Account due to unexpected growth or shortfalls.
• Development and initiation of remediation plans for excessive chargebacks, transaction disputes, or fraud in the Cash App Program.
• Discussions about increasing the Deposit Commission rate if the net monthly average balance of deposits in Subject Accounts exceeds [***].
• Appointment of a successor Chief Financial Officer.

Key Dates

Recommendation

Marqeta demonstrates strong underlying business growth with significant increases in net revenue and Total Processing Volume, indicating robust demand for its platform. The strategic acquisition of TransactPay expands its market reach and capabilities in Europe. However, the company continues to report net losses, and the nine-month period saw a significant shift from net income to net loss year-over-year, which is a concern. High customer concentration with Block, Inc. (44-45% of revenue) and reliance on a single Issuing Bank (Sutton Bank for 63% of TPV) present concentration risks. The legal settlement, while largely covered by insurance, adds to operational expenses. The increase in Adjusted EBITDA is a positive sign of improving operational efficiency. Given the mixed financial performance, strong growth metrics, strategic expansion, but also persistent losses and concentration risks, a 'hold' recommendation is appropriate for investors to monitor the company's path to sustained profitability and diversification.

Keywords

Marqeta, MQ, 10-Q, quarterly report, financial results, payment processing, card issuing, fintech, digital payments, TPV, net revenue, gross profit, net loss, Adjusted EBITDA, share repurchase, TransactPay, acquisition, legal settlement, securities class action, corporate governance, Block Inc., Cash App