Marqeta, Inc. | SEC Filing

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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 September 30, 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 November 4, 2022, there were 490,231,421 shares of the registrant's Class A common stock, par value $0.0001 per share, outstanding and 54,871,194 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	8
	Notes to Condensed Consolidated Financial Statements	10
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	42
Item 4.	Controls and Procedures	43

	Part II - Other Information
Item 1.	Legal Proceedings	44
Item 1A.	Risk Factors	44
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	83
Item 3.	Defaults Upon Senior Securities	83
Item 4.	Mine Safety Disclosures	83
Item 5.	Other Information	83
Item 6.	Exhibits	84
	Signatures	85

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 and other public health emergencies 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 services and develop and expand our capabilities;

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

•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;

•the impact of increasing geopolitical uncertainty, rising inflation and increased labor market competition;

•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 repurchase shares under our share repurchase program and receive expected financial benefits;

•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)


	September 30, 2022		December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	1,204,857	$	1,247,581
Restricted cash	7,800		7,800
Marketable securities	441,132		452,875
Accounts receivable, net	12,800		13,187
Settlements receivable, net	10,350		11,266
Network incentives receivable	27,063		30,399
Prepaid expenses and other current assets	38,930		35,617
Total current assets	1,742,932		1,798,725
Property and equipment, net	8,030		9,687
Operating lease right-of-use assets, net	9,607		11,296
Equity method investment	7,843		8,384
Other assets	6,043		2,286
Total assets	$	1,774,455	$	1,830,378
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	2,741	$	2,693
Revenue share payable	116,095		121,179
Accrued expenses and other current liabilities	131,398		114,096
Total current liabilities	250,234		237,968

Operating lease liabilities, net of current portion	9,928		12,427
Other liabilities	1,955		6,557
Total liabilities	262,117		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 September 30, 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, 492,973,896 and 421,792,153 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively. 600,000,000 and 600,000,000 Class B shares authorized, 54,887,478 and 119,591,365 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively	54		54
Additional paid-in capital	2,098,764		1,993,055
Accumulated other comprehensive loss	(10,573)		(2,230)
Accumulated deficit	(575,907)		(417,453)
Total stockholders’ equity	1,512,338		1,573,426
Total liabilities and stockholders’ equity	$	1,774,455	$	1,830,378

See accompanying notes to condensed consolidated financial statements.

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Marqeta, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except share and per share amounts)

(unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Net revenue	$	191,621	$	131,512	$	544,401	$	361,761
Costs of revenue	111,519		72,438		311,524		205,855
Gross profit	80,102		59,074		232,877		155,906
Operating expenses:
Compensation and benefits	105,887		84,462		304,103		229,121
Technology	13,422		9,299		37,960		22,494
Professional services	6,620		4,704		17,184		12,731
Occupancy	1,125		1,091		3,388		3,083
Depreciation and amortization	935		786		2,834		2,567
Marketing and advertising	688		490		2,133		1,480
Other operating expenses	10,921		3,880		20,760		8,705
Total operating expenses	139,598		104,712		388,362		280,181
Loss from operations	(59,496)		(45,638)		(155,485)		(124,275)
Other income (expense), net	6,333		(57)		(3,542)		(2,706)
Loss before income tax expense	(53,163)		(45,695)		(159,027)		(126,981)
Income tax expense (benefit)	5		35		(573)		141
Net loss	$	(53,168)	$	(45,730)	$	(158,454)	$	(127,122)
Other comprehensive income (loss), net of taxes:
Change in foreign currency translation adjustment	(89)		(10)		(289)		(36)
Net change in unrealized gain (loss) on marketable securities	(291)		(285)		(8,054)		(372)
Net other comprehensive income (loss)	(380)		(295)		$	(8,343)	$	(408)
Comprehensive loss	$	(53,548)	$	(46,025)	$	(166,797)	$	(127,530)

Net loss per share attributable to common stockholders, basic and diluted	$	(0.10)	$	(0.08)	$	(0.29)	$	(0.42)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted	548,990,212		538,896,513		545,614,599		302,967,155

See accompanying notes to condensed consolidated financial statements.

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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 accumulated 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
Issuance of common stock upon exercise of options	—	—		1,314,467	—		1,543		—		—		1,543
Repurchase of early exercised stock options	—	—		(28,268)	—		—		—		—		—
Issuance of common stock under employee stock purchase plan	—	—		368,955	—		2,775		—		—		2,775
Issuance of common stock upon net settlement of restricted stock units	—	—		670,960	—		(3,878)		—		—		(3,878)

Vesting of common stock warrants	—	—		—	—		2,102		—		—		2,102
Share-based compensation expense	—	—		—	—		35,148		—		—		35,148
Change in accumulated other comprehensive income (loss)	—	—		—	—		—		(2,077)		—		(2,077)
Net loss	—	—		—	—		—		—		(44,688)		(44,688)
Balance as of June 30, 2022	—	$	—	545,933,730	$	54	$	2,067,435	$	(10,193)	$	(522,739)	$	1,534,557
Issuance of common stock upon exercise of options	—	—		3,113,941	—		2,356		—		—		2,356


Issuance of common stock upon net settlement of restricted stock units	—	—		772,585	—		(2,996)		—		—		(2,996)

Vesting of common stock warrants	—	—		—	—		2,315		—		—		2,315
Share-based compensation expense	—	—		—	—		43,509		—		—		43,509
Repurchase and retirement of common stock	—	—		(1,958,882)	—		(13,855)		—		—		(13,855)
Change in accumulated other comprehensive income (loss)	—	—		—	—		—		(380)		—		(380)
Net loss	—	—		—	—		—		—		(53,168)		(53,168)
Balance as of September 30, 2022	—	$	—	547,861,374	$	54	$	2,098,764	$	(10,573)	$	(575,907)	$	1,512,338

See accompanying notes to condensed consolidated financial statements.

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Marqeta, Inc.

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

(in thousands, except share amounts)

(unaudited)


	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 accumulated 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)
Issuance of common stock upon initial public offering, net of issuance costs	—	—		52,272,727	7		1,312,331		—		—		1,312,338
Conversion of redeemable convertible preferred stock to common stock upon initial public offering	(351,844,340)	(501,881)		351,844,340	34		501,847		—		—		501,881
Reclassification of redeemable convertible preferred stock warrant liabilities to common stock and additional paid-in capital upon initial public offering	—	—		—	—		5,438		—		—		5,438
Issuance of common stock upon exercise of options	—	—		859,343	—		1,161		—		—		1,161

Repurchase of early exercised stock options	—	—		(9,897)	—		—		—		—		—

Issuance of common stock upon net settlement of restricted stock units	—	—		730,186	—		(10,273)		—		—		(10,273)
Issuance of common stock upon exercise of common stock warrants	—	—		668,412	—		—		—		—		—
Vesting of common stock warrants	—	—		—	—		2,102		—		—		2,102
Share-based compensation expense	—	—		—	—		55,536		—		—		55,536
Change in accumulated other comprehensive income (loss)	—	—		—	—		—		(68)		—		(68)
Net loss	—	—		—	—		—		—		(68,554)		(68,554)
Balance as of June 30, 2021	—	$	—	538,883,451	$	54	$	1,920,936	$	(88)	$	(334,916)	$	1,585,986
Issuance of common stock upon exercise of options	—	—		153,374	—		401		—		—		401

Repurchase of early exercised stock options	—	—		(37,621)	—		—		—		—		—

Issuance of common stock upon net settlement of restricted stock units	—	—		574,211	—		(8,175)		—		—		(8,175)
Issuance of common stock upon exercise of common stock warrants	—	—		203,610	—		60		—		—		60
Vesting of common stock warrants	—	—		—	—		2,128		—		—		2,128
Share-based compensation expense	—	—		—	—		38,965		—		—		38,965
Change in other comprehensive income (loss)	—	—		—	—		—		(295)		—		(295)
Net loss	—	—		—	—		—		—		(45,730)		(45,730)
Balance as of September 30, 2021	—	$	—	539,777,025	$	54	$	1,954,315	$	(383)	$	(380,646)	$	1,573,340

See accompanying notes to condensed consolidated financial statements.

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Marqeta, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)


	Nine Months Ended September 30,
	2022		2021
Cash flows from operating activities:
Net loss	$	(158,454)	$	(127,122)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	2,834		2,567
Share-based compensation expense	115,662		105,893
Non-cash operating leases expense	1,689		1,579
Amortization of premium on marketable securities	449		974
Impairment of other financial instruments	11,616		—
Other	445		2,999
Changes in operating assets and liabilities:
Accounts receivable	271		974
Settlements receivable	916		(2,584)
Network incentives receivable	3,336		(20,002)
Prepaid expenses and other assets	(11,596)		(6,089)
Accounts payable	(891)		282
Revenue share payable	(5,084)		9,992
Accrued expenses and other liabilities	13,144		34,037
Operating lease liabilities	(2,231)		(2,147)
Net cash (used in) provided by operating activities	(27,894)		1,353
Cash flows from investing activities:
Purchases of property and equipment	(1,700)		(2,251)
Purchases of patents	(600)		—
Purchases of marketable securities	(21,660)		(375,089)

Maturities of marketable securities	24,900		114,688

Net cash (used in) provided by investing activities	940		(262,652)
Cash flows from financing activities:
Proceeds from initial public offering, net of underwriters’ discounts and commissions	—		1,319,809
Proceeds from exercise of stock options, including early exercised stock options, net of repurchase of early exercised unvested options	5,733		2,799
Proceeds from exercise of warrants	—		60
Proceeds from shares issued in connection with employee stock purchase plan	2,775		—
Taxes paid related to net share settlement of restricted stock units	(11,576)		(18,448)
Repurchase of common stock	(12,702)		—
Payment of deferred offering costs	—		(3,134)
Net cash (used in) provided by financing activities	(15,770)		1,301,086
Net (decrease) increase in cash, cash equivalents, and restricted cash	(42,724)		1,039,787
Cash, cash equivalents, and restricted cash- Beginning of period	1,255,381		228,233
Cash, cash equivalents, and restricted cash - End of period	$	1,212,657	$	1,268,020

See accompanying notes to condensed consolidated financial statements.

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Marqeta, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)


	Nine Months Ended September 30,
	2022		2021
Reconciliation of cash, cash equivalents, and restricted cash
Cash and cash equivalents	$	1,204,857	$	1,260,220
Restricted cash	7,800		7,800
Total cash, cash equivalents, and restricted cash	$	1,212,657	$	1,268,020
Supplemental disclosures of cash flow information:

Cash paid for income taxes	$	84	$	—
Supplemental disclosures of non-cash investing and financing activities:
Purchase of property and equipment accrued and not yet paid	$	715	$	1,193
Repurchase of common stock accrued and not yet paid	$	1,153	$	—
Deferred offering costs not yet paid	$	—	$	223

See accompanying notes to condensed consolidated financial statements.

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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 legal entity in Singapore as of September 30, 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 and nine months ended September 30, 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.

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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 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 and nine months ended September 30, 2022, the Company incurred net losses of $53.2 million and $158.5 million, respectively, and had an accumulated deficit of $575.9 million as of September 30, 2022. The Company expects 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 developing the existing Platform infrastructure. The Company believes that its cash and cash equivalents of $1.2 billion and marketable securities of $441.1 million as of September 30, 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 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. The economic effect of the pandemic combined with increased geopolitical uncertainty, rising inflation, and other public health emergencies might have an impact on the Company’s future reporting periods. The effects are difficult to predict and could result in material financial impact on the Company’s financial results.

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Marqeta, Inc.

Notes to Condensed Consolidated Financial Statements

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

(unaudited)

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 and nine months ended September 30, 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 and nine months ended September 30, 2022 and 2021, revenue outside of the United States, based on the billing address of the Customer, was not material. As of September 30, 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.

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. The Company will no longer qualify as an emerging growth company as of December 31, 2022.

In June 2016, the FASB issued Accounting Standards Update (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 December 31, 2022. 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. Based on its preliminary assessment, the Company does not expect the impact of this ASU to be material on its condensed consolidated financial statements.

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Marqeta, Inc.

Notes to Condensed Consolidated Financial Statements

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

(unaudited)

3. Revenue

Disaggregation of Revenue

The following table provides information about disaggregated revenue from Customers:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Platform services revenue, net	$	185,837	$	126,707	$	527,940	$	351,685
Other services revenue	5,784		4,805		16,461		10,076
Total net revenue	$	191,621	$	131,512	$	544,401	$	361,761

Contract Balances

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


Contract balance	Balance sheet line reference	September 30, 2022		December 31, 2021
Contract assets - current	Prepaid expenses and other current assets	$	389	$	950
Contract assets - non-current	Other assets	1,022		927
Total contract assets		$	1,411	$	1,877
Deferred revenue - current	Accrued expenses and other current liabilities	$	21,296	$	19,060
Deferred revenue - non-current	Other liabilities	1,955		6,107
Total deferred revenue		$	23,251	$	25,167

Net revenue recognized during the three months ended September 30, 2022 and 2021 that was included in the deferred revenue balances at the beginning of the respective periods was $3.3 million and $3.3 million, respectively. Net revenue recognized during the nine months ended September 30, 2022 and 2021 that was included in the deferred revenue balances at the beginning of the respective periods was $11.9 million and $2.9 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.

As of September 30, 2022 and December 31, 2021, $2.0 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.

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Marqeta, Inc.

Notes to Condensed Consolidated Financial Statements

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

(unaudited)

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:


	September 30, 2022
	Amortized Cost		Unrealized Gain		Unrealized Loss		Estimated Fair Value
Marketable securities
U.S. government securities	$	420,045	$	—	$	(10,053)	$	409,992
Commercial paper	18,192		—		—		18,192

Corporate debt securities	13,078		—		(130)		12,948
Total marketable securities	$	451,315	$	—	$	(10,183)	$	441,132


	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 sixteen and eight separate marketable securities in unrealized loss positions as of September 30, 2022 and December 31, 2021, respectively. The Company did not identify any marketable securities that were other-than-temporarily impaired as of September 30, 2022 and December 31, 2021. The Company does not intend to sell any marketable securities that have unrealized losses on September 30, 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:


	September 30, 2022				December 31, 2021
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due within one year	$	446,325	$	436,161	$	64,914	$	64,879
Due after one year through two years	4,990		4,971		390,090		387,996
Total	$	451,315	$	441,132	$	455,004	$	452,875

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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:


	September 30, 2022
	Level 1		Level 2		Level 3		Total Fair Value
Cash equivalents
Money market funds	$	468,921	$	—	$	—	$	468,921

Marketable securities
U.S. government securities	409,992		—		—		409,992
Commercial paper	—		18,192		—		18,192

Corporate debt securities	—		12,948		—		12,948
Total assets	$	878,913	$	31,140	$	—	$	910,053


	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 and nine months ended September 30, 2022 and the year ended December 31, 2021.

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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