Bulletin
Investor Alert

New York Markets Open in:

Aug. 11, 2021, 4:15 p.m. EDT

10-Q: MARQETA, INC.

new
Watchlist Relevance
LEARN MORE

Want to see how this story relates to your watchlist?

Just add items to create a watchlist now:

or Cancel Already have a watchlist? Log In

(EDGAR Online via COMTEX) -- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q and in our final prospectus, or the Prospectus, dated June 8, 2021, filed with the SEC pursuant to Rule 424(b) under the Securities Act of 1933, as amended, or the Securities Act. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. As discussed in the section titled "Note About Forward Looking Statements", our actual results may differ materially from those discussed in these forward-looking statements as a result of various factors, including those set forth under the section titled "Risk Factors" under Part II, Item 1A below.

In June 2021, we completed our initial public offering, or the IPO, in which we issued and sold an aggregate of 52,272,727 shares of 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 public offering price of $27.00 per share. Our shares of Class A common stock began trading on the Nasdaq Global Select Market on June 9, 2021. We received aggregate net proceeds of $1.3 billion from the IPO deducting underwriting discounts and commissions of $91.6 million, and offering costs of $7.5 million. Immediately prior to the completion of the IPO, we filed our Amended and Restated Certificate of Incorporation which authorized a total of 1,500,000,000 shares of Class A common stock, 600,000,000 shares of Class B common stock, 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 shares of redeemable convertible preferred stock then outstanding were converted into 351,844,340 shares of common stock on a one-for-one basis and then reclassified into Class B common stock. Warrants exercisable for 2,569,528 shares of common stock were converted to an equivalent number of shares of warrants exercisable for Class B common stock and 203,610 shares of warrants exercisable for convertible preferred stock were converted to an equivalent number of warrants exercisable for shares of Class B common stock .

The unprecedented and rapid spread of COVID-19 and the resultant shelter-in-place orders, promotion of social distancing measures, restrictions on businesses deemed non-essential, and travel restrictions implemented throughout the United States in March 2020 significantly impacted many aspects of the economy during 2020, and have continued to do so during 2021 to date. While the U.S. economy appears to be on a path to recovery in 2021 with millions of Americans receiving the COVID-19 vaccine, decreases in general unemployment, and many states and municipalities increasingly easing shelter-in-place restrictions, the path of the U.S. economy continues to depend, in part, on the course of the COVID-19 pandemic, including the spread of new or novel strains of the virus.







        Table of Contents
        


In response to the COVID-19 pandemic, we implemented measures to focus on employee safety and Customer support, while at the same time seeking to mitigate any negative impact on our financial position and operations. We implemented remote working capabilities for our entire company and, to date, there has been minimal disruption to our operations.







        Table of Contents
        


Key Operating Metric and Non-GAAP Financial Measures We review a number of operating and financial metrics, including the key operating metric set forth below, to help us evaluate our business and growth trends, establish budgets, evaluate the effectiveness of our investments, and assess operational efficiencies. In addition to the results determined in accordance with GAAP, the following table sets forth a key operating metric and non-GAAP financial measures that we consider useful in evaluating our operating performance.







                                                       Three Months Ended June 30,                   Six Months Ended June 30,
                                                         2021                  2020                 2021                     2020
        Total Processing Volume (TPV) (in
        millions)                                 $       26,520           $  15,082          $     50,518               $  24,077
        Net loss (in thousands)                   $      (68,554)          $  (7,107)         $    (81,392)              $ (21,637)
        Net loss margin                                      (56)  %             (10) %                (35)  %                 (18) %
        Adjusted EBITDA (in thousands)            $      (10,637)          $  (3,029)         $     (8,990)              $ (13,440)
        Adjusted EBITDA margin                                (9)  %              (4) %                 (4)  %                 (11) %
        


Total Processing Volume (TPV) - Total Processing Volume (TPV) represents the total dollar amount of payments processed through our Platform, net of returns and chargebacks. We believe that TPV is a key indicator of the market adoption of our Platform, growth of our brand, growth of our Customers' businesses and scale of our business.







        Table of Contents
        


Components of Results of Operations Net Revenue







        Table of Contents
        


Marketing and Advertising. Marketing and advertising consist primarily of costs of general marketing activities and promotional activities. We expect that our marketing and advertising expenses will increase in absolute dollars as our business grows.







        Table of Contents
        








                                     Results of Operations
        The following table sets forth our results of operations for the periods
        presented:
                                                                Three Months Ended June 30,                 Six Months Ended June 30,
        (dollars in thousands)                                    2021                  2020                 2021                  2020
        Net revenue                                        $       122,266          $  69,402          $      230,249          $ 117,790
        Costs of revenue                                            75,291             41,785                 133,417             71,611
        Gross profit                                                46,975             27,617                  96,832             46,179
        Operating expenses:
        Compensation and benefits                                   95,204             25,901                 140,043             50,883
        Professional services                                        6,382              2,479                  12,643              4,825
        Technology                                                   7,569              2,660                  13,195              5,099
        Occupancy                                                      907              1,080                   1,993              2,167
        Depreciation and amortization                                  874                850                   1,781              1,707
        Marketing and advertising                                      495                343                     990                681
        Other operating expenses                                     3,530              1,101                   4,825              2,627
        Total operating expenses                                   114,961             34,414                 175,470             67,989
        Loss from operations                                       (67,986)            (6,797)                (78,638)           (21,810)
        Other income (expense), net                                   (481)              (295)                 (2,648)               200
        Loss before income tax expense                             (68,467)            (7,092)                (81,286)           (21,610)
        Income tax expense                                             (87)               (15)                   (106)               (27)
        Net loss                                           $       (68,554)         $  (7,107)         $      (81,392)         $ (21,637)
        


Table of Contents

Comparison of the Three Months Ended June 30, 2021 and 2020







        Net Revenue
                                                            Three Months Ended June 30,
        (dollars in thousands)                              2021                  2020                $ Change              % Change
        Net revenue:
        Net interchange fees                           $       95,146       $          56,795       $  38,351                       68  %
        Processing and other fees                              23,117                  10,455          12,662                      121  %
        Total platform services, net                   $      118,263       $          67,250          51,013                       76  %
        Other services                                          4,003                   2,152           1,851                       86  %
        Total net revenue                              $      122,266       $          69,402       $  52,864                       76  %
        Total Processing Volume (TPV) (in
        millions)                                      $       26,520       $          15,082       $  11,438                       76  %
        


Total net revenue increased by $52.9 million, or 76%, for the three months ended June 30, 2021 compared to the same period in 2020, of which $41.8 million was generated by Square. The increase in net revenue was primarily driven by a 76% increase in TPV. Net Interchange Fees in the three months ended June 30, 2021 increased primarily due to the increase in TPV, partially offset by a 78% increase in Revenue Share, compared to the same period in 2020.







        Costs of Revenue and Gross Margin
                                                                     Three Months Ended June 30,
        (dollars in thousands)                                        2021                   2020               $ Change              % Change
        Costs of revenue:
        Card Network fees, net                                          63,887                34,334          $  29,553                       86  %
        Issuing Bank fees                                                7,559                 5,440              2,119                       39  %
        Other                                                            3,845                 2,011              1,834                       91  %
        Total costs of revenue                                 $           75,291       $        41,785       $  33,506                       80  %
        Gross profit                                           $           46,975       $        27,617       $  19,358                       70  %
        Gross margin                                                        38  %                 40  %
        


Costs of revenue increased by $33.5 million, or 80%, for the three months ended June 30, 2021 compared to the same period in 2020. The increase was primarily due to increased Card Network fees as the result of the 76% increase in TPV and 77% increase in the number of corresponding transactions. Network fees are net of monetary incentives from Card Networks for processing volume through the respective Card Networks during the period.







        Table of Contents
        


As a result of the increases in net revenue and costs of revenue discussed above, our gross profit increased by $19.4 million, or 70%, for the three months ended June 30, 2021 compared to the same period in 2020. Our gross margin decreased by 2% during the three months ended June 30, 2021 compared to the same period in 2020.







        Operating Expenses
                                                             Three Months Ended June 30,
        (dollars in thousands)                                2021                   2020               $ Change              % Change
        Operating expenses:
        Salaries, bonus, benefits and payroll
        taxes                                                   39,668                22,983          $  16,685                       73  %
        Share-based compensation                                55,536                 2,918          $  52,618                     1803  %
        Total compensation and benefits                         95,204                25,901          $  69,303                      268  %
        Percentage of net revenue                                   78  %                 37  %
        Professional services                                    6,382                 2,479              3,903                      157  %
        Percentage of net revenue                                    5  %                  4  %
        Technology                                               7,569                 2,660              4,909                      185  %
        Percentage of net revenue                                    6  %                  4  %
        Occupancy                                                  907                 1,080               (173)                     (16) %
        Percentage of net revenue                                    1  %                  2  %
        Depreciation and amortization                              874                   850                 24                        3  %
        Percentage of net revenue                                    1  %                  1  %
        Marketing and advertising                                  495                   343          $     152                       44  %
        Percentage of net revenue                                    -  %                  -  %
        Other operating expenses                                 3,530                 1,101              2,429                      221  %
        Percentage of net revenue                                    3  %                  2  %
        


. . .

Aug 11, 2021

COMTEX_391405217/2041/2021-08-11T16:15:19

Is there a problem with this press release? Contact the source provider Comtex at editorial@comtex.com. You can also contact MarketWatch Customer Service via our Customer Center.

(c) 1995-2021 Cybernet Data Systems, Inc. All Rights Reserved

This Story has 0 Comments
Be the first to comment

Story Conversation

Commenting FAQs »

Partner Center

Link to MarketWatch's Slice.