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 March 31, 2023


☐			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 4, 2023, there were 485,797,546 shares of the registrant's Class A common stock, par value $0.0001 per share, outstanding and 54,829,777 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:	5
	Condensed Consolidated Balance Sheets	5
	Condensed Consolidated Statements of Operations and Comprehensive Loss	6
	Condensed Consolidated Statements of Stockholders' Equity	7
	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	39
Item 4.	Controls and Procedures	40

	Part II - Other Information
Item 1.	Legal Proceedings	42
Item 1A.	Risk Factors	42
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:

•uncertainties related to U.S. and global economies and the effect on 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, ongoing instability in the financial services and banking sectors, 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 recognize efficiencies from the restructuring plan announced in May 2023;

•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, including our ability to remediate our material weakness in our internal control 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.

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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, 2023		December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	1,050,414	$	1,183,846
Restricted cash	7,800		7,800
Marketable securities	408,675		440,858
Accounts receivable, net	13,939		15,569
Settlements receivable, net	11,260		18,028
Network incentives receivable	59,363		42,661
Prepaid expenses and other current assets	33,560		38,007
Total current assets	1,585,011		1,746,769
Property and equipment, net	10,662		7,440
Operating lease right-of-use assets, net	8,408		9,015
Goodwill	123,446		—

Other assets	46,656		7,122
Total assets	$	1,774,183	$	1,770,346
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	2,981	$	3,798
Revenue share payable	146,868		142,194
Accrued expenses and other current liabilities	176,459		136,887
Total current liabilities	326,308		282,879

Operating lease liabilities, net of current portion	8,096		9,034
Other liabilities	6,129		5,477
Total liabilities	340,533		297,390
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, 2023 and December 31, 2022, respectively	—		—
Common stock, $0.0001 par value: 1,500,000,000 and 1,500,000,000 Class A shares authorized, 485,602,152 and 486,530,334 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively. 600,000,000 and 600,000,000 Class B shares authorized, 54,829,468 and 54,833,765 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively	53		53
Additional paid-in capital	2,107,814		2,082,373
Accumulated other comprehensive loss	(3,183)		(7,237)
Accumulated deficit	(671,034)		(602,233)
Total stockholders’ equity	1,433,650		1,472,956
Total liabilities and stockholders’ equity	$	1,774,183	$	1,770,346

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 March 31,
	2023		2022
Net revenue	$	217,343	$	166,102
Costs of revenue	128,179		91,376
Gross profit	89,164		74,726
Operating expenses:
Compensation and benefits	147,759		100,348
Technology	14,590		11,384
Professional services	5,437		4,770
Occupancy	1,154		1,115
Depreciation and amortization	1,980		979
Marketing and advertising	441		559
Other operating expenses	5,236		4,843
Total operating expenses	176,597		123,998
Loss from operations	(87,433)		(49,272)
Other income (expense), net	11,672		(11,677)
Loss before income tax expense	(75,761)		(60,949)
Income tax expense (benefit)	(6,960)		(351)
Net loss	$	(68,801)	$	(60,598)
Other comprehensive income (loss), net of taxes:
Change in foreign currency translation adjustment	19		(19)
Net change in unrealized gain (loss) on marketable securities	4,035		(5,867)
Net other comprehensive income (loss)	4,054		(5,886)
Comprehensive loss	$	(64,747)	$	(66,484)

Net loss per share attributable to common stockholders, basic and diluted	$	(0.13)	$	(0.11)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted	539,744,130		542,565,992

See accompanying notes to condensed consolidated financial statements.

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Marqeta, Inc.

Condensed Consolidated Statements of Stockholders' Equity

(in thousands, except share amounts)

(unaudited)


	Common Stock		Additional Paid-in Capital			Accumulated Other Comprehensive Income (loss)		Accumulated Deficit		Total Stockholders’ Equity
		Shares			Amount
Balance as of December 31, 2022		541,364,099	$	53		$	2,082,373	$	(7,237)	$	(602,233)	$	1,472,956
Issuance of common stock upon exercise of options		803,333	—			1,051		—		—		1,051


Issuance of common stock upon net settlement of restricted stock units		1,469,996	—			(3,746)		—		—		(3,746)

Vesting of common stock warrants		—	—			2,102		—		—		2,102
Share-based compensation		—	—			47,027		—		—		47,027
Repurchase and retirement of common stock, including excise tax		(3,205,808)	—			(20,993)				—		(20,993)
Change in accumulated other comprehensive income (loss)		—	—			—		4,054		—		4,054
Net loss		—	—			—		—		(68,801)		(68,801)
Balance as of March 31, 2023		540,431,620	$	53		$	2,107,814	$	(3,183)	$	(671,034)	$	1,433,650


	Common Stock		Additional Paid-in Capital			Accumulated Other Comprehensive Income (loss)		Accumulated Deficit		Total Stockholders’ Equity
		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		—	—			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

See accompanying notes to condensed consolidated financial statements.

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Marqeta, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)


	Three Months Ended March 31,
	2023		2022
Cash flows from operating activities:
Net loss	$	(68,801)	$	(60,598)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	1,980		979
Share-based compensation expense	45,999		37,005
Non-cash postcombination compensation expense	32,430		—
Non-cash operating leases expense	607		548
Amortization of premium (accretion of discount) on marketable securities	(975)		184
Impairment of other financial instruments	—		11,616
Other	209		282
Changes in operating assets and liabilities:
Accounts receivable	1,554		4,223
Settlements receivable	6,768		2,173
Network incentives receivable	(16,702)		(15,322)
Prepaid expenses and other assets	7,203		(21,256)
Accounts payable	224		(801)
Revenue share payable	4,674		8,866
Accrued expenses and other liabilities	(24,907)		(13,937)
Operating lease liabilities	(809)		(721)
Net cash used in operating activities	(10,546)		(46,759)
Cash flows from investing activities:
Purchases of property and equipment	(577)		(612)
Capitalization of internal-use software	(3,032)		—
Business combination, net of cash acquired	(131,914)		—

Purchases of marketable securities	(70,807)		(10,022)

Maturities of marketable securities	108,000		9,800

Net cash used in investing activities	(98,330)		(834)
Cash flows from financing activities:

Proceeds from exercise of stock options, including early exercised stock options, net of repurchase of early exercised unvested options	1,016		1,971


Taxes paid related to net share settlement of restricted stock units	(3,746)		(4,702)
Repurchase of common stock	(21,826)		—

Net cash used in financing activities	(24,556)		(2,731)
Net decrease in cash, cash equivalents, and restricted cash	(133,432)		(50,324)
Cash, cash equivalents, and restricted cash- Beginning of period	1,191,646		1,255,381
Cash, cash equivalents, and restricted cash - End of period	$	1,058,214	$	1,205,057

See accompanying notes to condensed consolidated financial statements.

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Marqeta, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)


	Three Months Ended March 31,
	2023		2022
Reconciliation of cash, cash equivalents, and restricted cash
Cash and cash equivalents	$	1,050,414	$	1,197,257
Restricted cash	7,800		7,800
Total cash, cash equivalents, and restricted cash	$	1,058,214	$	1,205,057
Supplemental disclosures of cash flow information:

Cash paid for income taxes	$	77	$	9
Supplemental disclosures of non-cash investing and financing activities:
Purchase of property and equipment accrued and not yet paid	$	134	$	997
Share-based compensation capitalized to internal-use software	$	1,028	$	—
Repurchase of common stock, including excise tax, accrued and not yet paid	$	232	$	—

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 places control over payment transactions into the hands of its 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 Brazil, Canada, and Singapore as of March 31, 2023.

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, 2022 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, 2022, which was filed with the SEC on February 28, 2023. 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, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023, or for any other future annual or interim period.

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 include, but are not limited to, the fair value and useful lives of assets acquired and liabilities assumed through business combinations, the estimation of contingent liabilities, the estimation of variable consideration in contracts with customers, and the reserve for contract contingencies and processing errors. 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, 2023, the Company incurred a net loss of $68.8 million and had an accumulated deficit of $671.0 million as of March 31, 2023. 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 $1.1 billion and marketable securities of $408.7 million as of March 31, 2023 are sufficient to fund its operations through at least the next twelve months from the issuance of these 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)

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, 2022. There have been no significant changes to these policies during the three months ended March 31, 2023, except for the addition of new policies relating to business combinations, goodwill and acquisition-related intangible assets as described below.

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, 2023 and 2022, revenue outside of the United States, based on the billing address of the customer, was not material. As of March 31, 2023 and December 31, 2022, 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.

Capitalized Internal-use Software Development Costs

The Company capitalizes certain costs incurred in developing internal-use software when capitalization requirements have been met. Internal and external costs incurred in the preliminary project stage of internal-use software development are expensed as incurred. Once the software development process reaches the application development stage, qualifying internal costs including compensation and benefits costs of employees who are directly associated with and devote time to the software project as well as external direct costs are capitalized. Capitalization of costs ends when the developed software is substantially complete and ready for its intended internal use, which is typically upon completion of all substantial testing. Capitalized internal-use software development costs are included in property and equipment, net, and then amortized on a straight-line basis over the estimated useful life of the software. The amortization of these costs is recorded within depreciation and amortization expense on the condensed consolidated statements of operations and comprehensive loss.

Business Combinations

The Company allocates the purchase consideration for acquired companies to tangible and intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date, with the excess recorded to goodwill. These estimates are inherently uncertain and subject to refinement. During the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the fair value of these tangible and intangible assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the fair value of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the condensed consolidated statements of operations and comprehensive loss. Acquisition-related expenses and postcombination integration and employee compensation costs are recognized separately from the business combination and are expensed as incurred.

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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)

Goodwill and Acquisition-related Intangible Assets

Goodwill amounts are not amortized. Acquisition-related intangible assets with finite lives are amortized over their estimated useful lives on a straight-line basis. Goodwill and acquisition-related intangible assets are tested for impairment at least annually, and more frequently upon the occurrence of certain events.

Deferred Contract Costs

Deferred contract costs mainly consist of sales commissions and related fringe benefits that are incremental costs of obtaining contracts with customers. The Company amortizes the costs incurred on initial contracts on a straight-line basis over an estimated period of benefit determined to be approximately four years. The period of benefit is determined based on a review of customer contract terms and churn rates. The Company exercises the practical expedient to expense commissions on arrangements in which the amortization period is expected to be one year or less. Deferred contract costs that will be recognized during the succeeding 12-month period are recorded as prepaid expenses and other current assets, and the remaining portion is recorded as other assets. The amortization of these costs is recorded within compensation and benefits expenses on the condensed consolidated statements of operations and comprehensive loss.

3. Revenue

Disaggregation of Revenue

The following table provides information about disaggregated revenue from customers:


	Three Months Ended March 31,
	2023		2022
Platform services revenue, net	$	210,333	$	160,999
Other services revenue	7,010		5,103
Total net revenue	$	217,343	$	166,102

Contract Balances

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


Contract balance	Balance sheet line reference	March 31, 2023		December 31, 2022
Contract assets - current	Prepaid expenses and other current assets	$	134	$	621
Contract assets - non-current	Other assets	1,968		1,323
Total contract assets		$	2,102	$	1,944
Deferred revenue - current	Accrued expenses and other current liabilities	$	13,872	$	17,048
Deferred revenue - non-current	Other liabilities	5,028		4,202
Total deferred revenue		$	18,900	$	21,250

Net revenue recognized during the three months ended March 31, 2023 and 2022 that was included in the deferred revenue balances at the beginning of the respective periods was $4.6 million and $4.5 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.

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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:


	March 31, 2023
	Amortized Cost		Unrealized Gain		Unrealized Loss		Estimated Fair Value
Marketable securities
U.S. treasury securities	$	323,394	$	93	$	(3,031)	$	320,456
U.S. agency securities	54,097		45		(1)		54,141
Commercial paper	26,135		—		—		26,135

Corporate debt securities	7,983		4		(44)		7,943
Total marketable securities	$	411,609	$	142	$	(3,076)	$	408,675


	December 31, 2022
	Amortized Cost		Unrealized Gain		Unrealized Loss		Estimated Fair Value
Marketable securities
U.S. treasury securities	$	384,951	$	—	$	(6,949)	$	378,002
U.S. agency securities	29,012		47		—		29,059
Commercial paper	28,815		—		—		28,815

Corporate debt securities	5,049		—		(67)		4,982
Total marketable securities	$	447,827	$	47	$	(7,016)	$	440,858

The Company had eleven and thirteen separate marketable securities in unrealized loss positions as of March 31, 2023 and December 31, 2022, respectively. The Company does not intend to sell any marketable securities that have unrealized losses as of March 31, 2023, and it is not more likely than not that the Company will be required to sell such securities before any anticipated recovery of the entire amortized cost basis.

There were no realized gains or losses from marketable securities that were reclassified out of accumulated other comprehensive income for the three months ended March 31, 2023. For marketable securities that have unrealized losses, the Company evaluated whether (i) the Company has the intention to sell any of these investments, (ii) it is not more likely than not that the Company will be required to sell any of these available-for-sale debt securities before recovery of the entire amortized cost basis and (iii) the decline in the fair value of the investment is due to credit or non-credit related factors. Based on this evaluation, the Company determined that for its marketable securities, there were no material credit or non-credit related impairments as of March 31, 2023.

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


	March 31, 2023				December 31, 2022
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due within one year	$	408,654	$	405,716	$	447,827	$	440,858
Due after one year through two years	2,955		2,959		—		—
Total	$	411,609	$	408,675	$	447,827	$	440,858

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


	March 31, 2023
	Level 1		Level 2		Level 3		Total Fair Value
Cash equivalents
Money market funds	$	681,591	$	—	$	—	$	681,591

Marketable securities
U.S. government securities	320,456		—		—		320,456
U.S. agency securities			54,140				54,140
Commercial paper	—		26,136		—		26,136

Corporate debt securities	—		7,943		—		7,943
Total assets	$	1,002,047	$	88,219	$	—	$	1,090,266
Accrued expenses and other current liabilities
Contingent consideration liability	$	—	$	—	$	53,067	$	53,067
Total liabilities	$	—	$	—	$	53,067	$	53,067


	December 31, 2022
	Level 1		Level 2		Level 3		Total Fair Value
Cash equivalents
Money market funds	$	462,459	$	—	$	—	$	462,459

Marketable securities
U.S. government securities	378,002		—		—		378,002
U.S. agency securities	—		29,059		—		29,059
Commercial paper	—		28,815		—		28,815

Corporate debt securities	—		4,982		—		4,982
Total assets	$	840,461	$	62,856	$	—	$	903,317

The Company classifies money market funds, commercial paper, U.S. government securities, U.S. agency securities, and corporate debt 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.

The Company determines the fair value of contingent consideration based on a probability-weighted discounted cash flow analysis. The fair value remeasurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement as defined in the fair value hierarchy. In each period, the Company reassesses its current estimates of performance relative to the stated targets and adjusts the liability to fair value. Any such adjustments are included in other income (expense), net in the condensed consolidated statements of operations and comprehensive loss.

There were no transfers of financial instruments between the fair value hierarchy levels during the three months ended March 31, 2023 and the year ended December 31, 2022.

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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

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following:


	March 31, 2023		December 31, 2022
Prepaid expenses	$	8,570	$	9,082
Inventory	5,799		5,150
Prepaid hosting and data costs	4,814		6,443
Accrued interest receivable	3,343		3,983
Prepaid insurance	1,815		3,729
Card program deposits	2,128		2,128
Contract assets, current	134		621

Other current assets	6,957		6,871
Prepaid expenses and other current assets	$	33,560	$	38,007

Property and Equipment, net

Property and equipment consisted of the following:


	March 31, 2023		December 31, 2022
Leasehold improvements	$	8,110	$	8,110
Computer equipment	9,014		9,115
Furniture and fixtures	2,542		2,542
Internally developed and purchased software	7,177		3,082
	26,843		22,849
Accumulated depreciation and amortization	(16,181)		(15,409)
Property and equipment, net	$	10,662	$	7,440

Depreciation and amortization expense was $2.0 million and $1.0 million for the three months ended March 31, 2023 and 2022, respectively.

The Company capitalized $4.1 million and $0.0 million as internal-use software costs during the three months ended March 31, 2023 and 2022, respectively.

Other Assets

Other assets consisted of the following:


	March 31, 2023		December 31, 2022
Contract assets, noncurrent	$	1,968	$	1,323
Deferred tax assets	845		1,240
Other noncurrent assets	3,819		4,559
Acquired developed technology, net	40,024		—
Other assets	$	46,656	$	7,122

The amortization period for acquired developed technology is 7 years. Amortization expense for acquired developed technology was $1.0 million for three months ended March 31, 2023.

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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)

Expected future amortization expense for acquired developed technology was as follows as of March 31, 2023:


Remainder of 2023	$	4,393
2024	5,857
2025	5,857
2026	5,857
2027	5,857
Thereafter	12,203
Total expected future amortization expense for acquired developed technology	$	40,024

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following:


	March 31, 2023		December 31, 2022
Accrued costs of revenue	$	64,393	$	57,191
Contingent consideration liability	53,067		—
Accrued compensation and benefits	18,705		41,268
Deferred revenue	13,872		17,048
Accrued tax liabilities	5,600		4,978
Accrued professional services	3,035		4,784
Operating lease liabilities, current portion	3,522		3,394
Reserve for contract contingencies and processing errors	4,505		2,494
Other accrued liabilities	9,760		5,730
Accrued expenses and other current liabilities	$	176,459	$	136,887

Other Liabilities

Other liabilities consisted of the following:


	March 31, 2023		December 31, 2022
Deferred revenue, net of current portion	$	5,028	$	4,202
Other long-term liabilities	1,101		1,275
Other liabilities	$	6,129	$	5,477

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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)

7. Commitments and Contingencies

Operating Leases

The Company has a lease agreement for its corporate headquarters in Oakland, California for a total of 63,000 square feet. 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,
	2023		2022
Operating lease cost	$	843	$	843
Variable lease cost	131		157
Short-term lease cost	108		113
Total lease cost	$	1,082	$	1,113

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.

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, 2023	December 31, 2022
Weighted average remaining operating lease term (in years)	2.8	3.1
Weighted average discount rate	7.7%	7.7%

Maturities of the Company’s operating lease liabilities by year are as follows as of March 31, 2023:


Remainder of 2023	$	3,194
2024	4,472
2025	4,599
2026	780


Total lease payments	13,045
Less imputed interest	(1,427)
Total operating lease liabilities	$	11,618

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


	Three Months Ended March 31,
	2023		2022
Cash paid for operating lease liabilities	$	1,045	$	1,016

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.

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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)

Purchase Obligations

As of March 31, 2023, the Company had non-cancellable purchase commitments with certain service providers and Issuing Banks of $220.0 million, payable over the next 5 years. These purchase obligations include $204.1 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 eligible compensation that an employee contributes. During the three months ended March 31, 2023 and 2022, the Company contributed a total of $2.2 million and $2.2 million to its defined contribution plans, respectively.

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, 2023 and December 31, 2022, 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

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.

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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)

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 Company’s initial public offering, or 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,
	2023		2022
Restricted stock units	$	24,792	$	15,345
Stock options	7,483		7,659
Executive Chairman Long-Term Performance Award	13,121		13,121
Employee Stock Purchase Plan	603		880

Total	$	45,999	$	37,005

Restricted Stock Units

Restricted stock units, or RSUs, generally vest over three or four years.

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, 2022	34,146,546	$	9.74
Granted	24,245,655	4.43
Vested	(2,277,738)	11.40
Canceled and forfeited	(1,209,857)	10.16
Balance as of March 31, 2023	54,904,606	$	6.47

As of March 31, 2023, unrecognized compensation costs related to unvested RSUs was $364.4 million. These costs are expected to be recognized over a weighted-average period of 3.1 years.

Stock Options

Under the Plans, 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).

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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)

A summary of the Company's stock option activity under the 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, 2022(2)	36,156,445	$	16.37	7.67 years	$	29,101
Granted	6,080,148	5.35
Exercised	(803,333)	1.26
Canceled and forfeited	(189,034)	11.45
Balance as of March 31, 2023(2)	41,244,226	$	15.06	7.92 years	$	18,101
Vested as of March 31, 2023	8,158,299	$	7.92	5.81 years	$	14,540

(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, 2023, aggregate unrecognized compensation costs related to unvested outstanding stock options, excluding the Executive Chairman Long-Term Performance Award, was $72.2 million. These costs are expected to be recognized over a weighted-average period of 2.7 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,
	2023	2022
Dividend yield	0.0%	0.0%
Expected volatility	70.78%	58.62%
Expected term (in years)	6.04	6.08
Risk-free interest rate	3.78%	1.99%

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.

Executive Chairman Long-Term Performance Award

In April and May 2021, the Company’s board of directors granted the Company’s Executive Chairman and then-Chief Executive Officer equity incentive awards in the form of performance-based stock options covering 19,740,923 and 47,267 shares of the Company’s Class B common stock with an exercise price of $21.49 and $23.40 per share, respectively, or collectively, the Executive Chairman Long-Term Performance Award (formerly known as the CEO Long-Term Performance Award). The Executive Chairman 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 Company’s IPO in 2021. The stock price hurdle will be achieved if the average closing price of a share of the Company’s 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.

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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)

The Executive Chairman 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	$