Marqeta's Q3 2025 Earnings Call: Contradictions in European Market Growth and TransactPay Acquisition Impact

Business Commentary:

* Revenue and Profitability Growth: - Marqeta reported Q3 net revenue of $163 million, up 28% year-over-year, and adjusted EBITDA of $30 million, reaching a 19% margin. - The growth was driven by strong performance across various use cases, including buy now, pay later (BNPL) and lending services.

• Transaction Volume and Market Expansion:
• Total processing volume (TPV) for Marqeta was $98 billion in Q3, a 33% increase year-over-year, marking the highest growth rate since Q1 2024.

• This growth was supported by geographic expansion and the adoption of pay-anywhere card solutions in multiple markets.

• Impact of Acquisitions and New Services:

• The acquisition of TransactPay played a significant role in driving growth, contributing approximately one point to Q3 gross profit growth and enabling program management in Europe.

• This acquisition has increased Marqeta's ability to serve as a single provider for processing, program management, and EMI license in Europe.

• Customer and Market Diversification:

• Non-Block TPV grew two and a half times faster than Block TPV, with lending and BNPL use cases driving much faster growth than the overall company.
• This diversification is due to new partnerships and product offerings that have expanded Marqeta's customer base and geographic reach.
  

Contradiction Point 1

European Market Growth and TransactPay Acquisition Impact

It highlights the differing perspectives on the impact and growth potential of the TransactPay acquisition, which is a strategic move aimed at expanding Marqeta's European market presence, directly impacting the company's international expansion strategy and revenue projections.

Could you elaborate on the Klarna partnership, including volume expectations and yield? - Timothy Kiyota(UBS)

2025Q3: TransactPay makes it easier for customers to move between North America and Europe. It removes barriers by offering similar solutions across regions, making it more attractive for customers to expand. - Mike Milotich(CEO)

How do you assess European market growth and the impact of the TransactPay acquisition? - Darrin David Peller(Wolfe Research)

2025Q2: Europe continues to grow over 100%. TransactPay acquisition supports deeper engagement and standardized offerings across geographies, enhancing customer support. - Michael Milotich(CFO & Interim CEO)

Contradiction Point 2

Sustainability of High Growth in Europe

It involves differing views on the sustainability and growth trajectory of Marqeta's European operations, which is a critical market for the company's expansion and strategic planning.

What drives the sustainability of growth in Europe, and how is the product mix shifting across use cases? - Connor(JPMorgan)

2025Q3: Europe remains over 100% growth, driven by neobanking, lending, buy now, pay later, and expense management. Sustainability might slow slightly but will continue to outpace company growth due to TransactPay's integration, expanding offerings, and targeting enterprise customers. - Mike Milotich(CEO)

How do you view European market growth and the potential impact of the TransactPay acquisition? - Darrin David Peller(Wolfe Research)

2025Q2: The growth rate in Europe is unsustainable as it is just a market share capture. Competition is fierce, and we don't expect our market share here to grow faster than the overall market. - Michael Milotich(CFO & Interim CEO)

Contradiction Point 3

European Market Growth and Expansion

It involves differing perspectives on the sustainability and growth trajectory of Marqeta's European market expansion, which is crucial for the company's global strategy and revenue projections.

How sustainable is Europe's high growth, and what are the use-case mix shifts? - Connor(JPMorgan)

2025Q3: Europe remains over 100% growth, driven by neobanking, lending, buy now, pay later, and expense management. Sustainability might slow slightly but will continue to outpace company growth due to TransactPay's integration, expanding offerings, and targeting enterprise customers. - Mike Milotich(CEO and CFO)

Can you elaborate on the growth of non-block customers and the impact of earned wage access? - James Faucette(Morgan Stanley)

2025Q1: We're starting to see material growth outside of our top 5 as well, especially in the European opportunity set. We're seeing strong growth in non-block customers outside of our top 5. Now, with that opportunity set, we are also seeing favorable business mix, which is driving growth as well. - Mike Milotich(Interim CEO & CFO)

Contradiction Point 4

TransactPay Acquisition and Strategic Value

It highlights differing perspectives on the strategic value and regulatory aspects of the TransactPay acquisition, which could impact Marqeta's expansion strategy and regulatory compliance efforts.

Can you discuss new initiatives, program ramp-ups, and the pipeline, and how they relate to existing business growth? - Brian Keene(Citi)

2025Q3: TransactPay makes it easier for customers to move between North America and Europe. It removes barriers by offering similar solutions across regions, making it more attractive for customers to expand. - Mike Milotich(CEO and CFO)

What does the TransactPay acquisition specifically include, and why not develop it internally? - Tien-Tsin Huang(JPMorgan)

2024Q4: TransactPay is a bin sponsorship provider licensed with an e-money institution. This license allows Marqeta to control the bins as the member of the network, enhancing our offering. Building this capability would take significant time and regulatory compliance efforts. - Mike Milotich(Interim CEO and CFO)

Contradiction Point 5

Cross River Bank and Bank Partner Expansion

It highlights differing statements about the progress and impact of adding new bank partners, which is vital for Marqeta's growth strategy and market penetration.

How is Cross River Bank addressing the backlog, and what opportunities exist with American Express? - Craig Maurer(ST Partners)

2025Q3: Cross River Bank offers capabilities that align with our platform and customer needs. It will be a part of new business, enhancing our offerings. American Express partnerships are ongoing, focusing on unique solutions leveraging each company's strengths. - Mike Milotich(CEO and CFO)

What's the status on adding new bank partners? - Darrin Peller(Wolfe Research)

2025Q1: We are on track to add two new banks by year-end. I would say that we are making progress with both of them. One is in final discussions. The other one is in initial discussions. So making good progress there. - Mike Milotich(Interim CEO & CFO)