Marqeta, Inc. | SEC Filing

View:

mq-20220331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number: 001-40465

Marqeta, Inc.

(Exact name of registrant as specified in its charter)


Delaware			27-4306690
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification Number)

180 Grand Avenue, 6th Floor, Oakland, California			94612
(Address of principal executive offices)			(Zip Code)

(888) 462-7738

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Class A common stock, $0.0001 par value per share

The Nasdaq Stock Market LLC

(Nasdaq Global Select Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☐

Emerging growth company

☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 6, 2022, there were 432,784,327 shares of the registrant's Class A common stock, par value $0.0001 per share, outstanding and 111,656,849 shares of the registrant's Class B common stock, par value $0.0001 per share, outstanding.

TABLE OF CONTENTS


		Page
Note About Forward-Looking Statements		3

	Part I - Financial Information
Item 1.	Condensed Consolidated Financial Statements:	4
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Operations and Comprehensive Loss	5
	Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders' Equity (Deficit)	6
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37
Item 4.	Controls and Procedures	38

	Part II - Other Information
Item 1.	Legal Proceedings	39
Item 1A.	Risk Factors	39
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	78
Item 3.	Defaults Upon Senior Securities	78
Item 4.	Mine Safety Disclosures	78
Item 5.	Other Information	78
Item 6.	Exhibits	79
	Signatures	80

Note About Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws, which are statements that involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “shall,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

•the effect of the COVID-19 pandemic on global economies, our business, results of operations, financial condition, demand for our Platform, sales cycles and Customer retention;

•our future financial performance, including our net revenue, costs of revenue and operating expenses and our ability to achieve future profitability;

•our ability to effectively manage or sustain our growth and expand our operations;

•our ability to enhance our Platform and develop and expand its capabilities;

•our ability to further attract, retain, diversify, and expand our Customer base;

•our expectations as to live events in 2022;

•our ability to maintain our relationships with our Issuing Banks and Card Networks;

•our strategies, plans, objectives, and goals;

•our plans to expand internationally;

•our ability to compete in existing and new markets and offerings;

•our estimated market opportunity;

•economic and industry trends, projected growth, or trend analysis;

•our ability to develop and protect our brand;

•our ability to comply with laws and regulations;

•our ability to successfully defend litigation brought against us;

•our ability to attract and retain qualified employees and key personnel;

•our ability to maintain effective disclosure controls and internal controls over financial reporting; and

•the increased expenses associated with being a public company.

We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q. You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, results of operations, financial condition, and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. The results, events, and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements. The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. Unless otherwise indicated or unless the context requires otherwise, all references in this document to “Marqeta”, the “Company”, the “Registrant,” “we”, “us”, “our”, or similar references are to Marqeta, Inc. Capitalized terms used and not defined above are defined elsewhere within this Quarterly Report on Form 10-Q.

Table of Contents

PART I - Financial Information

Item 1. Financial Statements

Marqeta, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share amounts)

(unaudited)


	March 31, 2022		December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	1,197,257	$	1,247,581
Restricted cash	7,800		7,800
Marketable securities	447,046		452,875
Accounts receivable, net	9,017		13,187
Settlements receivable, net	9,093		11,266
Network incentives receivable	45,721		30,399
Prepaid expenses and other current assets	43,789		35,617
Total current assets	1,759,723		1,798,725
Property and equipment, net	9,120		9,687
Operating lease right-of-use assets, net	10,748		11,296
Equity method investment	8,036		8,384
Other assets	5,856		2,286
Total assets	$	1,793,483	$	1,830,378
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	1,698	$	2,693
Revenue share payable	130,045		121,179
Accrued expenses and other current liabilities	102,146		114,096
Total current liabilities	233,889		237,968

Operating lease liabilities, net of current portion	11,618		12,427
Other liabilities	4,344		6,557
Total liabilities	249,851		256,952
Commitments and contingencies (Note 7)
Stockholders’ equity:
Preferred stock, $0.0001 par value; 100,000,000 and 100,000,000 shares authorized, no shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively	—		—
Common stock, $0.0001 par value: 1,500,000,000 and 1,500,000,000 Class A shares authorized, 431,305,181 and 421,792,153 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively. 600,000,000 and 600,000,000 Class B shares authorized, 112,302,435 and 119,591,365 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively	54		54
Additional paid-in capital	2,029,745		1,993,055
Accumulated other comprehensive loss	(8,116)		(2,230)
Accumulated deficit	(478,051)		(417,453)
Total stockholders’ equity	1,543,632		1,573,426
Total liabilities and stockholders’ equity	$	1,793,483	$	1,830,378

See accompanying notes to condensed consolidated financial statements.

Table of Contents

Marqeta, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except share and per share amounts)

(unaudited)


	Three Months Ended March 31,
	2022		2021
Net revenue	$	166,102	$	107,983
Costs of revenue	91,376		58,126
Gross profit	74,726		49,857
Operating expenses:
Compensation and benefits	100,348		46,904
Technology	11,384		5,626
Professional services	4,770		4,196
Occupancy	1,115		1,086
Depreciation and amortization	979		907
Marketing and advertising	559		495
Other operating expenses	4,843		1,295
Total operating expenses	123,998		60,509
Loss from operations	(49,272)		(10,652)
Other income (expense), net	(11,677)		(2,167)
Loss before income tax expense	(60,949)		(12,819)
Income tax expense (benefit)	(351)		19
Net loss	$	(60,598)	$	(12,838)
Other comprehensive income (loss), net of taxes:
Change in foreign currency translation adjustment	(19)		(14)
Change in unrealized gain (loss) on marketable securities	(5,867)		(31)
Net other comprehensive income (loss)	(5,886)		(45)
Comprehensive loss	$	(66,484)	$	(12,883)

Net loss per share attributable to common stockholders, basic and diluted	$	(0.11)	$	(0.10)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted	542,565,992		130,841,306

See accompanying notes to condensed consolidated financial statements.

Table of Contents

Marqeta, Inc.

Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders' Equity (Deficit)

(in thousands, except share amounts)

(unaudited)


	Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income (loss)		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount		Shares	Amount
Balance as of December 31, 2021	—	$	—	541,383,518	$	54	$	1,993,055	$	(2,230)	$	(417,453)	$	1,573,426
Issuance of common stock upon exercise of options	—	—		1,604,022	—		2,285		—		—		2,285
Repurchase of early exercised stock options	—	—		(22,751)	—		—		—		—		—

Issuance of common stock upon net settlement of restricted stock units	—	—		642,827	—		(4,702)		—		—		(4,702)

Vesting of common stock warrants	—	—		—	—		2,102		—		—		2,102
Share-based compensation expense	—	—		—	—		37,005		—		—		37,005
Change in other comprehensive income (loss)	—	—		—	—		—		(5,886)		—		(5,886)
Net loss	—	—		—	—		—		—		(60,598)		(60,598)
Balance as of March 31, 2022	—	$	—	543,607,616	$	54	$	2,029,745	$	(8,116)	$	(478,051)	$	1,543,632


	Redeemable Convertible Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income (loss)		Accumulated Deficit		Total Stockholders’ Deficit
	Shares	Amount		Shares	Amount
Balance as of December 31, 2020	351,844,340	$	501,881	130,312,838	$	13	$	39,769	$	25	$	(253,524)	$	(213,717)
Issuance of common stock upon exercise of vested options	—	—		1,904,186	—		1,410		—		—		1,410
Issuance of common stock upon early exercise of unvested options	—	—		319,883	—		—		—		—		—
Repurchase of early exercised stock options	—	—		(18,567)	—		—		—		—		—
Vesting of early exercised stock options	—	—		—	—		223		—		—		223
Share-based compensation expense	—	—		—	—		11,392		—		—		11,392
Change in other comprehensive income (loss)	—	—		—	—		—		(45)		—		(45)
Net loss	—	—		—	—		—		—		(12,838)		(12,838)
Balance as of March 31, 2021	351,844,340	$	501,881	132,518,340	$	13	$	52,794	$	(20)	$	(266,362)	$	(213,575)

See accompanying notes to condensed consolidated financial statements.

Table of Contents

Marqeta, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)


	Three Months Ended March 31,
	2022		2021
Cash flows from operating activities:
Net loss	$	(60,598)	$	(12,838)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	979		907
Share-based compensation expense	37,005		11,392
Non-cash operating leases expense	548		522
Amortization of premium on marketable securities	184		360
Impairment of other financial instruments	11,616		—
Other	282		2,324
Changes in operating assets and liabilities:
Accounts receivable	4,223		5,032
Settlements receivable	2,173		1,509
Network incentives receivable	(15,322)		(12,055)
Prepaid expenses and other assets	(21,256)		(426)
Accounts payable	(801)		(43)
Revenue share payable	8,866		14,122
Accrued expenses and other liabilities	(13,937)		7,750
Operating lease liabilities	(721)		(686)
Net cash (used in) provided by operating activities	(46,759)		17,870
Cash flows from investing activities:
Purchases of property and equipment	(612)		(604)
Purchases of marketable securities	(10,022)		(7,002)

Maturities of marketable securities	9,800		16,366

Net cash (used in) provided by investing activities	(834)		8,760
Cash flows from financing activities:

Proceeds from exercise of stock options, including early exercised stock options, net of repurchase of early exercised unvested options	1,971		1,711


Taxes paid related to net share settlement of restricted stock units	(4,702)		—
Payment of deferred offering costs	—		(1,144)
Net cash (used in) provided by financing activities	(2,731)		567
Net (decrease) increase in cash, cash equivalents, and restricted cash	(50,324)		27,197
Cash, cash equivalents, and restricted cash- Beginning of period	1,255,381		228,233
Cash, cash equivalents, and restricted cash - End of period	$	1,205,057	$	255,430

See accompanying notes to condensed consolidated financial statements.

Table of Contents

Marqeta, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)


	Three Months Ended March 31,
	2022		2021
Reconciliation of cash, cash equivalents, and restricted cash
Cash and cash equivalents	$	1,197,257	$	247,630
Restricted cash	7,800		7,800
Total cash, cash equivalents, and restricted cash	$	1,205,057	$	255,430
Supplemental disclosures of cash flow information:

Cash paid for income taxes	$	9	$	—
Supplemental disclosures of non-cash investing and financing activities:
Purchase of property and equipment accrued and not yet paid	$	997	$	140
Deferred offering costs not yet paid	$	—	$	894

See accompanying notes to condensed consolidated financial statements.

Table of Contents

Marqeta, Inc.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(unaudited)

1. Business Overview and Basis of Presentation

Marqeta, Inc., or the Company, creates digital payment technology for innovation leaders. The Company's modern card issuing platform, or the Platform, places control over payment transactions into the hands of its customers, or Customers, enabling them to develop modern, state-of-the-art product experiences.

The Company provides all of its Customers with issuer processor services and for most of its Customers it also acts as a card program manager. The Company primarily earns revenue from processing card transactions for its Customers.

The Company was incorporated in the state of Delaware in 2010 and is headquartered in Oakland, California, with offices in the United States, United Kingdom, and Australia and a presence in Singapore as of March 31, 2022.

Initial Public Offering

In June 2021, the Company completed an initial public offering, or the IPO, in which the Company issued and sold 52,272,727 shares of its newly authorized Class A common stock, which included 6,818,181 shares that were offered and sold pursuant to the full exercise of the underwriters’ option to purchase additional shares at a price of $27.00 per share. The Company received aggregate net proceeds of $1.3 billion after deducting underwriting discounts and commissions of $91.6 million and offering costs of $7.5 million.

Immediately prior to the completion of the IPO, the Company filed its Amended and Restated Certificate of Incorporation authorizing a total of 1,500,000,000 shares of Class A common stock which entitles holders to one vote per share, 600,000,000 shares of Class B common stock which entitles holders to 10 votes per share, and 100,000,000 shares of undesignated preferred stock. All shares of common stock then outstanding were reclassified as Class B common stock and all redeemable convertible preferred stock then outstanding were converted into 351,844,340 shares of common stock on a one-for-one basis and reclassified into Class B common stock. In addition, 2,569,528 shares of common stock warrants were converted to an equivalent number of shares of Class B common stock warrants and 203,610 shares of convertible preferred stock warrants were converted to an equivalent number of shares of Class B common stock warrants.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America, or GAAP, and the applicable rules and regulations of the Securities and Exchange Commission, or the SEC, for interim reporting. Certain information and note disclosures included in our annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. The condensed consolidated balance sheet as of December 31, 2021 has been derived from our audited consolidated financial statements, which are included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, which was filed with the SEC on March 11, 2022. The accompanying condensed consolidated financial statements should be read in conjunction with our consolidated financial statements and notes thereto included in the Annual Report on Form 10-K.

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, the accompanying condensed consolidated financial statements reflect all adjustments of a normal, recurring nature considered necessary for a fair presentation of the Company's consolidated financial position, results of operations, comprehensive loss, and cash flows for the interim periods presented. The interim results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022, or for any other future annual or interim period.

Table of Contents

Marqeta, Inc.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(unaudited)

Use of Estimates

The preparation of the financial statements requires management to make estimates and assumptions relating to reported amounts of assets and liabilities, disclosure of contingent liabilities, and reported amounts of revenue and expenses. Significant estimates and assumptions relate to the fair value of equity awards and warrants, share-based compensation, the estimation of variable consideration in contracts with Customers, the reserve for contract contingencies and processing errors, the fair value of equity method investments and a purchase call option to acquire the remaining interest in the equity method investee, the incremental borrowing rate used to determine operating lease liabilities, the useful lives of property and equipment, and the collectability of accounts receivable. Actual results could differ materially from these estimates.

Business Risks and Uncertainties

The Company has incurred net losses since its inception. For the three months ended March 31, 2022, the Company incurred net losses of $60.6 million, and had an accumulated deficit of $478.1 million as of March 31, 2022. The Company expects losses from operations to continue 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 developing the existing Platform infrastructure. The Company believes that its cash and cash equivalents of $1.2 billion and marketable securities of $447.0 million as of March 31, 2022 are sufficient to fund its operations through at least the next twelve months from the issuance of these financial statements.

In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic. Since then, the COVID-19 pandemic has continued to spread throughout the United States and the world. The prolonged disruption to the economy and the long-term financial impact of the pandemic cannot be reasonably estimated. The Company continues to monitor the situation and may take actions that alter its operations and business practices as may be required by federal, state, or local authorities or that the Company determines are in the best interests of its Customers, vendors, and employees.

2. Summary of Significant Accounting Policies

The Company’s significant accounting policies are discussed in “Consolidated Financial Statements — Note 2. Summary of Significant Accounting Policies” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021. There have been no significant changes to these policies during the three months ended March 31, 2022.

Segment Information

The Company operates as a single operating segment. The Company's chief operating decision maker is its Chief Executive Officer, who reviews financial information presented on a consolidated basis for purposes of making operating decisions, assessing financial performance, allocating resources, and evaluating the Company's financial performance.

For the three months ended March 31, 2022 and 2021, revenue outside of the United States, based on the billing address of the Customer, was not material. As of March 31, 2022 and December 31, 2021, long-lived assets located outside of the United States were not material.

Restricted Cash

Restricted cash consists of deposits with financial institutions that issue payment cards (credit, debit, or prepaid) either on their own behalf or on behalf of businesses that issue customized card products to their end users, or Issuing Banks, to provide the Issuing Bank collateral in the event that Customers’ funds are not deposited at the Issuing Banks in time to settle Customers’ transactions with the networks that provide the infrastructure for settlement and card payment information flows, or Card Networks. Restricted cash also includes cash used to secure a letter of credit for the Company’s lease of its office headquarters in Oakland, California.

Table of Contents

Marqeta, Inc.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(unaudited)

New Accounting Standards Not Yet Adopted

As an emerging growth company, the Jumpstart Our Business Startups Act, or the JOBS Act, allows the Company to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. The Company has elected to use this extended transition period under the JOBS Act. The adoption date discussed below reflects this election.

In June 2016, the FASB issued ASU No. 2016-13, Financial instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 replaces the incurred loss model with the current expected credit loss, or CECL, model to estimate credit losses for financial assets measured at amortized cost and certain off-balance sheet credit exposures. It also eliminates the concept of other-than-temporary impairment and requires credit losses related to available-for-sale debt securities to be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. The CECL model requires a company to estimate credit losses expected over the life of the financial assets based on historical experience, current conditions, and reasonable and supportable forecasts. The guidance will be effective for the Company beginning January 1, 2023. The amendment requires a modified retrospective approach by recording a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. Early adoption is permitted. The Company is still evaluating the impact this ASU will have on its condensed consolidated financial statements.

3. Revenue

Disaggregation of Revenue

The following table provides information about disaggregated revenue from Customers:


	Three Months Ended March 31,
	2022		2021
Platform services revenue, net	$	160,999	$	106,453
Other services revenue	5,103		1,530
Total net revenue	$	166,102	$	107,983

Contract Balances

The following table provides information about contract assets and deferred revenue:


Contract balance	Balance sheet line reference	March 31, 2022		December 31, 2021
Contract assets - current	Prepaid expenses and other current assets	$	627	$	950
Contract assets - non-current	Other assets	827		927
Total contract assets		$	1,454	$	1,877
Deferred revenue - current	Accrued expenses and other current liabilities	$	18,839	$	19,060
Deferred revenue - non-current	Other liabilities	3,894		6,107
Total deferred revenue		$	22,733	$	25,167

Net revenue recognized during the three months ended March 31, 2022 and 2021 that was included in the deferred revenue balances at the beginning of the respective periods was $4.5 million and $0.8 million, respectively.

Remaining Performance Obligations

The Company has performance obligations associated with commitments in Customer contracts for future stand-ready obligations to process transactions throughout the contractual term.

Table of Contents

Marqeta, Inc.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(unaudited)

As of March 31, 2022 and December 31, 2021, $4.4 million and $4.2 million of the deferred revenue balance represents a material right for discounted revenue share rates provided to a Customer as part of a contractual renewal option, respectively.

4. Marketable Securities

The amortized cost, unrealized gain (loss), and estimated fair value of the Company's investments in securities available for sale consisted of the following:


	March 31, 2022
	Amortized Cost		Unrealized Gain		Unrealized Loss		Estimated Fair Value
Marketable securities
U.S. government securities	$	420,277	$	—	$	(7,824)	$	412,453
Commercial paper	15,972		—		—		15,972
Asset-backed securities	—		—		—		—
Corporate debt securities	18,793		—		(172)		18,621
Total marketable securities	$	455,042	$	—	$	(7,996)	$	447,046


	December 31, 2021
	Amortized Cost		Unrealized Gain		Unrealized Loss		Estimated Fair Value
Marketable securities
U.S. government securities	$	420,392	$	—	$	(2,107)	$	418,285
Commercial paper	13,878		—		—		13,878
Asset-backed securities	2,003		—		(1)		2,002
Corporate debt securities	18,731		3		(24)		18,710
Total marketable securities	$	455,004	$	3	$	(2,132)	$	452,875

The Company had nineteen and eight separate marketable securities in unrealized loss positions as of March 31, 2022 and December 31, 2021, respectively. The Company did not identify any marketable securities that were other-than-temporarily impaired as of March 31, 2022 and December 31, 2021. The Company does not intend to sell any marketable securities that have unrealized losses on March 31, 2022 and it is not more likely than not that the Company will be required to sell such securities before any anticipated recovery.

The following table summarizes the stated maturities of the Company’s marketable securities:


	March 31, 2022				December 31, 2021
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due within one year	$	167,575	$	165,767	$	64,914	$	64,879
Due after one year through two years	287,467		281,279		390,090		387,996
Total	$	455,042	$	447,046	$	455,004	$	452,875

Table of Contents

Marqeta, Inc.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(unaudited)

5. Fair Value Measurements

The Company’s financial instruments consist of cash equivalents, marketable securities, accounts receivable, unbilled Customers' receivable, settlements receivable, accounts payable, and accrued liabilities. Cash equivalents are stated at amortized cost, which approximates fair value at the balance sheet dates, due to the short period of time to maturity. Marketable securities are carried at fair value. Accounts receivable, unbilled Customers' receivable, settlements receivable, accounts payable, and accrued liabilities are stated at their carrying value, which approximates fair value due to the short time to the expected receipt or payment date.

The following tables present the fair value hierarchy for assets and liabilities measured at fair value:


	March 31, 2022
	Level 1		Level 2		Level 3		Total Fair Value
Cash equivalents
Money market funds	$	1,155,612	$	—	$	—	$	1,155,612

Marketable securities
U.S. government securities	412,453		—		—		412,453
Commercial paper	—		15,972		—		15,972
Asset-backed securities	—		—		—		—
Corporate debt securities	—		18,621		—		18,621
Total assets	$	1,568,065	$	34,593	$	—	$	1,602,658


	December 31, 2021
	Level 1		Level 2		Level 3		Total Fair Value
Cash equivalents
Money market funds	$	1,213,543	$	—	$	—	$	1,213,543

Marketable securities
U.S. government securities	418,284		—		—		418,284
Commercial paper	—		13,878		—		13,878
Asset-backed securities	—		2,002		—		2,002
Corporate debt securities	—		18,711		—		18,711
Total assets	$	1,631,827	$	34,591	$	—	$	1,666,418

The Company classifies money market funds, commercial paper, U.S. government securities, asset-backed securities and corporate securities within Level 1 or Level 2 of the fair value hierarchy because the Company values these investments using quoted market prices or alternative pricing sources and models utilizing market observable inputs.

There were no transfers of financial instruments between the fair value hierarchy levels during the three months ended March 31, 2022 and the year ended December 31, 2021.

Table of Contents

Marqeta, Inc.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(unaudited)

6. Certain Balance Sheet Components

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following:


	March 31, 2022		December 31, 2021
Prepaid hosting and data costs	$	22,599	$	2,455
Prepaid expenses	7,408		6,492
Inventory	4,942		3,940
Prepaid insurance	1,955		3,546
Card program deposits	2,128		2,167
Contract assets	627		950
Other financial instruments	—		11,616
Other current assets	4,130		4,451
Prepaid expenses and other current assets	$	43,789	$	35,617

In 2021, the Company acquired a preferred equity interest in a private company that is accounted for under the equity method of accounting. Concurrent with this investment, the Company also acquired an option that gives the Company the right, but not the obligation, to purchase all of the remaining equity interests of the private company. During the three months ended March 31, 2022, the Company recorded an impairment of $11.6 million related to this option.

Property and Equipment, net

Property and equipment consisted of the following:


	March 31, 2022		December 31, 2021
Leasehold improvements	$	8,110	$	8,110
Computer equipment	8,921		8,581
Furniture and fixtures	2,459		2,459
Internally developed and purchased software	2,993		2,954
	22,483		22,104
Accumulated depreciation and amortization	(13,363)		(12,417)
Property and equipment, net	$	9,120	$	9,687

Depreciation and amortization expense was $1.0 million and $0.9 million for the three months ended March 31, 2022 and 2021, respectively.

The Company did not capitalize any material internal-use software costs during the three months ended March 31, 2022 and 2021 because development costs meeting capitalization criteria were not material during the respective periods.

Table of Contents

Marqeta, Inc.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(unaudited)

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following:


	March 31, 2022		December 31, 2021
Accrued costs of revenue	$	46,726	$	41,339
Accrued compensation and benefits	17,718		32,954
Deferred revenue	18,839		19,060
Reserve for contract contingencies and processing errors	3,764		3,386
Operating lease liabilities, current portion	3,109		3,021
Accrued professional services	3,785		2,454
Other accrued liabilities	8,205		11,882
Accrued expenses and other current liabilities	$	102,146	$	114,096

Other Liabilities

Other liabilities consisted of the following:


	March 31, 2022		December 31, 2021
Deferred revenue, net of current portion	$	3,894	$	6,107
Other long-term liabilities	450		450
Other liabilities	$	4,344	$	6,557

7. Commitments and Contingencies

Operating Leases

In 2016, the Company entered into a lease agreement for its corporate headquarters in Oakland, California for 19,000 square feet of office space, which was subsequently amended in 2018 and 2019, resulting in a total of 63,000 square feet of office space being leased. The non-cancellable operating lease expires in February 2026 and includes options to extend the lease term, generally at the then-market rates. The Company excludes extension options that are not reasonably certain to be exercised from its lease terms. The Company’s lease payments consist primarily of fixed rental payments for the right to use the underlying leased assets over the lease terms. The Company is responsible for operating expenses that exceed the amount of base operating expenses as defined in the original lease agreement.

The Company's operating lease costs are as follows:


	Three Months Ended March 31,
	2022		2021
Operating lease cost	$	843	$	869
Variable lease cost	157		112
Short-term lease cost	113		72
Total lease cost	$	1,113	$	1,053

The Company does not have any sublease income and the Company’s lease agreements do not contain any residual value guarantees or material restrictive covenants.

Table of Contents

Marqeta, Inc.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(unaudited)

The weighted average remaining operating lease term and the weighted average discount rate used in the calculation of the Company's lease assets and lease liabilities were as follows:


	March 31, 2022	December 31, 2021
Weighted average remaining operating lease term (in years)	3.8	4.1
Weighted average discount rate	7.7%	7.7%

Maturities of operating lease liabilities by year are as follows as of March 31, 2022:


Remainder of 2022	$	3,096
2023	4,239
2024	4,472
2025	4,599
2026	780

Total lease payments	17,186
Less imputed interest	(2,459)
Total operating lease liabilities	$	14,727

Supplemental cash flow information related to the Company's operating leases was as follows:


	Three Months Ended March 31,
	2022		2021
Cash paid for operating lease liabilities	$	1,016	$	1,033
Operating lease right-of-use assets obtained in exchange for new operating lease liabilities	$	—	$	—

Letters of Credit

In connection with the lease for its corporate headquarters office space, the Company is required to provide the landlord a letter of credit in the amount of $1.5 million. The Company has secured this letter of credit by depositing $1.5 million with the issuing financial institution, which deposit is classified as restricted cash in the condensed consolidated balance sheets.

Purchase Obligations

As of March 31, 2022, the Company had non-cancellable purchase commitments with certain service providers and Issuing Banks of $227.6 million, payable over the next 5 years. These purchase obligations include $219.0 million related to minimum commitments as part of a cloud-computing service agreement. The remaining obligations are related to various service providers and Issuing Banks processing fees over the fixed, non-cancellable respective contract terms.

Defined Contribution Plans

The Company maintains defined contribution plans for eligible employees, including a 401(k) plan that covers substantially all of its U.S. based employees and to which the Company provides a matching contribution of 50% of the first 6% of compensation that an employee contributes. The matching contribution vests after one year of service. During the three months ended March 31, 2022 and 2021, the Company contributed a total of $2.2 million and $0.8 million to its defined contribution plans, respectively.

Table of Contents

Marqeta, Inc.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(unaudited)

Legal Contingencies

From time to time in the normal course of business, the Company may be subject to various legal matters such as threatened or pending claims or proceedings. As of March 31, 2022 and December 31, 2021, there were no legal contingency matters, either individually or in aggregate, that would have a material adverse effect on the Company’s financial position, results of operations, or cash flows. Given the unpredictable nature of legal proceedings, the Company bases its assessment on the information available at the time. As additional information becomes available, the Company reassesses the potential liability and may revise the estimate.

Settlement of Payment Transactions

Generally, Customers deposit a certain amount of pre-funding into accounts maintained at Issuing Banks to settle their payment transactions. Such pre-funding amounts may only be used to settle Customers’ payment transactions and are not considered assets of the Company. As such, the funds held in Customers’ accounts at Issuing Banks are not reflected on the Company’s condensed consolidated balance sheets. If a Customer fails to deposit sufficient funds to settle a transaction, the Company is liable to the Issuing Bank to settle the transaction and would therefore incur losses if such amounts cannot be subsequently recovered from the Customer.

Indemnifications

In the ordinary course of business, the Company enters into agreements of varying scope and terms pursuant to which it agrees to indemnify customers, vendors, lessors, business partners, and other parties with respect to certain matters, including, but not limited to, losses arising out of the breach of such agreements, services to be provided by the Company or from intellectual property infringement claims made by third parties. With respect to Issuing Banks, the Company indemnifies the Issuing Bank for losses the Issuing Bank may incur for non-compliance with applicable law and regulation, if those losses resulted from the Company’s failure to perform under its program agreement with the Issuing Bank.

In addition, the Company has entered into indemnification agreements with its directors and certain officers and employees that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors, officers or employees. No demands have been made upon the Company to provide indemnification under such agreements and there are no claims that the Company is aware of that could have a material effect on its condensed consolidated balance sheets, condensed consolidated statements of operations and comprehensive loss, or condensed consolidated statements of cash flows.

The Company also includes service level commitments to its Customers warranting certain levels of performance and permitting those Customers to receive credits in the event the Company fails to meet the levels specified.

Table of Contents

Marqeta, Inc.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(unaudited)

8. Stock Incentive Plans

The Company has granted share-based awards to employees, non-employee directors, and other service providers of the Company under the Amended and Restated 2011 Equity Incentive Plan (2011 Plan) and the 2021 Stock Option and Incentive Plan (2021 Plan), collectively, the Plans. The 2011 Plan was terminated in June 2021 in connection with the IPO but continues to govern the terms of outstanding awards that were granted prior to the IPO. Additionally, the Company offers an employee stock purchase plan (ESPP), which allows employees to purchase shares of common stock at 85% of the fair value of the Company’s Class A common stock on the first or last day of the offering period, whichever is lower. The offering periods are six months long and start in May and November of each year.

The following table presents the share-based compensation expense recognized in the periods presented:


	Three Months Ended March 31,
	2022		2021
Restricted stock units	$	15,345	$	—
Stock options	7,659		5,505
CEO Long-Term Performance Award	13,121		—
Employee Stock Purchase Plan	880		—
Secondary sales of common stock	—		5,887
Total	$	37,005	$	11,392

Restricted Stock Units

Commencing in 2020, the Company began granting restricted stock units, or RSUs, to employees. RSUs granted prior to April 1, 2021 vest upon the satisfaction of both a service condition and a liquidity condition, which was deemed satisfied in connection with the Company’s IPO on June 8, 2021. The service condition for these awards is satisfied over four years. Because the liquidity condition had not been satisfied as of March 31, 2021, the Company had not recorded any share-based compensation expense for the RSUs at that date.

RSUs granted on or after April 1, 2021, vest upon the satisfaction of a service condition. The service condition for these awards is satisfied over four years. In the three months ended March 31, 2022, the Company recognized $15.3 million of share-based compensation expense related to these RSUs.

A summary of the Company's RSU activity under the Plans was as follows:


	Number of Restricted Stock Units	Weighted-average grant date fair value per share
Balance as of December 31, 2021	9,001,949	$	18.30
Granted	10,514,709	10.70
Vested	(994,910)	14.27
Canceled and forfeited	(1,854,776)	15.43
Balance as of March 31, 2022	16,666,972	$	14.07

During the three months ended March 31, 2022, share-based compensation expense recognized for RSUs was $15.3 million. As of March 31, 2022, unrecognized compensation costs related to unvested RSUs was $204.5 million. These costs are expected to be recognized over a period of 3.3 years.

Table of Contents

Marqeta, Inc.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(unaudited)

Stock Options

Under the 2011 Plan and the 2021 Plan, the exercise price of a stock option shall not be less than the fair market value per share of the Company’s common stock on the date of grant (and not less than 110% of the fair market value per share of common stock for grants to stockholders owning more than 10% of the total combined voting power of all classes of stock of the Company, or a 10% Stockholder). Options are exercisable over periods not to exceed ten years from the date of grant (five years for incentive stock options granted to 10% Stockholders).

A summary of the Company's stock option activity under both stock incentive plans was as follows:


	Number of Options	Weighted-Average Exercise Price per Share		Weighted-Average Remaining Contractual Life	Aggregate Intrinsic Value(1)
Balance as of December 31, 2021(2)	44,185,488	$	13.31	8.46 years	$	279,242
Granted	2,326,800	10.55
Exercised	(1,604,022)	1.25
Canceled and forfeited	(1,194,748)	5.79
Balance as of March 31, 2022(2)	43,713,518	$	13.81	8.32 years	$	140,555
Vested as of March 31, 2022	9,629,103	$	1.98	6.44 years	$	89,837

(1) Intrinsic value is calculated based on the difference between the exercise price of in-the-money-stock options and the fair value of the common stock as of the respective balance sheet dates.

(2) The 2011 Plan allows for early exercise of stock options and these balances include all exercisable stock options regardless of vesting status.

As of March 31, 2022, aggregate unrecognized compensation costs related to unvested outstanding stock options, excluding the CEO Long-Term Performance Award, was $88.6 million. These costs are expected to be recognized over a period of 2.6 years.

The fair value of stock options granted was estimated using the Black-Scholes option pricing model and the following weighted average assumptions:


	Three Months Ended March 31,
	2022	2021
Dividend yield	0.0%	0.0%
Expected volatility	58.62%	49.93%
Expected term (in years)	6.08	6.02
Risk-free interest rate	1.99%	0.36%

Subsequent to the completion of the IPO, the fair value of the Company’s common stock is determined by the closing price, on the date of grant, of its Class A common stock, which is traded on the Nasdaq Global Select Market.

CEO Long-Term Performance Award

In April and May 2021, the Company’s board of directors granted the Company’s Chief Executive Officer equity incentive awards in the form of performance-based stock options covering 19,740,923 and 47,267 shares of our Class B common stock with an exercise price of $21.49 and $23.40 per share, respectively, or collectively, the CEO Long-Term Performance Award. The CEO Long-Term Performance Award vests upon the satisfaction of a service condition and the achievement of certain stock price hurdles over a seven year performance period following the expiration of the lock-up period associated with the IPO. The stock price hurdle will be achieved if the average closing price of a share of our Class A common stock during any 90 consecutive trading day period during the performance period equals or exceeds the Company stock price hurdle set forth in the table below.

Table of Contents

Marqeta, Inc.

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(unaudited)

The CEO Long-Term Performance Award is divided into seven equal tranches which vest upon the achievement of the following Company stock price hurdles:


Tranche	Company Stock Price Hurdle	Number of Options Eligible to Vest
1	$67.50	2,826,884
2	$78.98	2,826,884
3	$92.40	2,826,884
4	$108.11	2,826,884
5	$126.49	2,826,884
6	$147.99	2,826,884
7	$173.15	2,826,884
Total		19,788,188

The grant date fair value of the CEO Long-Term Performance Award was estimated using a Monte Carlo simulation model that incorporated multiple stock price paths and probabilities that the Company stock price hurdles are met. The weighted-average grant date fair value of the seven tranches of the CEO Long-Term Performance Award was estimated to be $10.53 per option share.

As of March 31, 2022, the aggregate unrecognized compensation cost of the CEO Long-Term Performance Award was $157.1 million, which is expected to be recognized over the remaining derived service period of