Good afternoon, and welcome to the Marqeta second quarter 2023 earnings call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your touch-tone phone. To withdraw your question, please press star then two. Please note that this event is being recorded. I would now like to turn the conference over to Stacey Finerman. Please go ahead. Thanks, operator. Before we begin, I would like to remind everyone that today's call may contain forward-looking statements, including statements regarding anticipated future financial and operating results and further changes in our developments regarding accounting treatment, among others. These forward-looking statements are subject to numerous risks and uncertainties, including the risk that our accounting treatment may be subject to further changes or developments set forth in our filings with the SEC, which are available on our investor relations website, including our annual report on Form 10-K for the period ended December 31st, 2022, and our subsequent periodic filings with the SEC. Actual results may differ materially from any forward-looking statements we make today. These forward-looking statements speak only as of the time of this call, and the company does not assume any obligation or intent to update them, except as required by law. In addition, today's call includes non-GAAP financial measures. These measures should be considered as a supplement to, and not a substitute for, GAAP financial measures. Reconciliations to the most directly comparable GAAP measures can be found in today's earnings press release or earnings release supplemental materials, which are available on our investor relations website. A reconciliation of forward-looking non-GAAP guidance is not available without unreasonable effort due to the challenges and intractability with estimating some of the items, such as share-based compensation, depreciation, and amortization expense, and payroll tax expense, the effect of which could be significant. Hosting today's call are Simon Khalaf, Marqeta's CEO, and Mike Milotich, Marqeta's Chief Financial Officer. With that, I'd like to turn the call over to Simon to begin. Thank you, Stacy, and thank you everyone for joining our second quarter 2023 earnings call. We had a strong quarter, and we just renewed our partnership with Cash App for four years. Our second quarter net revenue, gross profit, and operating expenses were better than we expected, resulting in positive adjusted EBITDA for the quarter. In addition, we've once again exceeded our sales bookings. The Cash App renewal represents the final major step in a year-long effort to reestablish long-term sustainable growth for Marqeta. This effort started by sharpening our go-to-market operation, expanding our product line through the acquisition and fast integration of Power Finance, and reducing our operating expenses. I am proud of the tremendous progress we have made, and I firmly believe that Marqeta is extremely well-positioned to capitalize on the fast-growing embedded finance market. Let me go back to our financial performance. Total processing volume, or TPV, increased 33% compared to the same quarter of 2022. This was the second consecutive quarter where our TPV exceeded $50 billion. Our net revenue of $231 million in the quarter represented 24% growth year-over-year. Gross profit was $85 million in the quarter, an 8% increase versus Q2 2022, while our adjusted operating expenses were $84 million, a 5% decrease versus Q2 2022, resulting in positive adjusted EBITDA for the quarter. As we've done in the last few quarters, we continue to grow our business while being very disciplined about our costs. Now, moving on to Cash App. We're excited to continue our partnership for another 4 years. We believe this renewal, as well as our renewal with Afterpay earlier this year, demonstrate the value Block sees in our platform and our partnership. This value is exemplified by the scale, flexibility, innovation, and myriad of services we provide to Cash App and Block. While this will impact our financial results in the short term, it's something we expected and proactively made decisions based on this outcome. It also positions us well for the long term, extending our Cash App partnership through the middle of 2027, so we can focus on maximizing our growth for years to come. By working together and continuing to expand the scope of what our two companies can do together, we can both capitalize on this amazing opportunity ahead of us. In addition to the Cash App renewal, we've steadily improved our execution across the company. We've seen considerable sales momentum in the last three quarters after implementing the changes in our go-to-market organization in the fall of 2022. Our bookings for the last 3 quarters combined grew 150% from the same period a year ago. Notably, we saw a 50/50 split between net new customers and expansion deals with existing customers, setting us up for a durable growth into 2024. On a sequential basis, our bookings for the second quarter grew 60% from the prior quarter, driven by embedded finance, which accounted for two-thirds of our bookings. One-third of the deals we signed in the quarter were flip deals, where we replaced an incumbent provider, that speaks to our superior platform and scale. Similar to the first quarter, our international business continues to be a source of new customers, as over 40% of net new customer bookings came from markets outside the United States. We expect that international momentum will be a key growth driver going forward and represents a key advantage for Marqeta. Our single stack platform allows customers to easily launch in more than 40 countries where Marqeta platform is enabled. The most recent expansion is in Brazil with our new partner, FitBank. This partnership gives us a foothold into the largest fintech market in Latin America and one of the fastest-growing fintechs market in the world, and where many of our existing customers also have growth aspirations. We also continue to make headway with disruptors, looking to embed financial products into their platform. We recently signed a partnership with a well-known cloud-based HR, IT, and employee management solutions company. This company sought a new provider for their global expense management product to replace an incumbent and a Marqeta competitor who couldn't support them outside the United States. This customer also is looking to move their new U.S. volume to Marqeta, a further vote of confidence in our platform. Our focus on increased execution has not been limited to our go-to-market strategy. It's also evident in our ability to offer new products to our customers in a rapid manner. As planned, we fully integrated our acquisition of Power into the Marqeta platform. In late June, we finished integrating PowerScope, and as a result, their APIs are now fully integrated. We are on track to offer general availability of the Marqeta credit platform before the end of 2023, with program management, origination, servicing, back office, and ancillary service for consumer and commercial card programs. This improved execution is crucial as we look to unlock additional embedded finance opportunities. As a matter of fact, Marqeta has been in the embedded finance game for over 10 years, way before it was even a buzzword, giving us both expertise and a nice competitive advantage. Our modern card issuing platform has been a foundational element for on-demand delivery, accelerated wage access, mobile banking, expense management, and buy now, pay later. Our gains regarding improved efficiency mirror our focus on execution. We have reduced our operating expenses by $40 million-$45 million on an annual run rate basis. In short, we're delivering, we're executing, we're winning against the competition, all while being operationally efficient. We're also innovating. We're deploying generative AI tools in our risk, our customer service offering to streamline our support and risk operations. We also use generative AI to make our product teams more efficient. As an example, our credit and banking teams use generative AI to help generate code, reducing the time spent on code generation and testing tasks by up to 75%. We're also working on a purpose-built generative AI tools created to reduce the time to launch for our customers using OpenAI, OpenAI's large length language learning model. It allows our customers to expedite their integration with Marqeta's API and accelerate their time to market. In summary, I'm happy with all we have accomplished this year. We have renewed our partnership with Cash App, Afterpay, and 50% of our non-Block volume. We significantly reduced our operating costs and solved our go-to-market problems. We did all this while winning against the competition, acquiring a company, and integrating its product in record time, in 5 months. These accomplishments, not to mention our strong balance sheet, position us exceptionally well as we look to deliver sustainable, profitable growth in the near future. With that, I'll turn it over to Mike for his prepared remarks. Thank you, Simon. Good afternoon, everyone. We are excited about the Cash App renewal, as well as the progress we have made over the last year on both go-to-market and efficiency initiatives. Before we discuss the financial aspects of the renewal, let me highlight our strong quarterly results. Second quarter net revenue growth of 24%, gross profit growth of 8%, and a positive adjusted EBITDA margin were all above our expectations, driven by stronger volume growth from several of our top customers, as well as expense savings achieved through efficiency efforts, particularly within technology, as well as our restructuring in May. Q2 TPV was $54 billion, growing 33% year-over-year, continuing to demonstrate our growth at scale. The financial services vertical continues to be the highest contributor to growth, growing several points faster than the company as a whole. This was fueled by Cash App's continued growth in transacting active cardholders and higher spend per active user, as well as customers with accelerated wage access use cases ramping rapidly. Lending, including buy now, pay later, growth was boosted by increased travel spend, as well as the relatively new offerings that deliver our customers BNPL value proposition through a card that can be used at any merchant. Excluding Klarna, which migrated a portion of one program in Q3 2022, BNPL growth was similar to the overall company growth. Expense management TPV also grew in line with the overall company as a whole, slowing when compared to prior quarters due to tougher comps and maturity of the vertical. Q2 net revenue was $231 million, growing 24% year-over-year, as growth remained strong across multiple verticals, including financial services and on-demand delivery, as well as our Powered by Marqeta business. Block continues to be a strong contributor to growth as our net revenue concentration increased to 78% in Q2, up about 2 points from Q1. Our net revenue take rate was consistent with last quarter and 3 bps lower than Q2 of last year. The decline versus last year is mostly driven by a mix shift toward Powered by Marqeta volume, as our Managed by Marqeta take rate increased 2 bps, driven by increases in each of our major verticals, except for BNPL. Q2 gross profit was $85 million, growing 8%. This growth is about five points faster than we expected, roughly a third of which was driven by stronger volumes, and the remainder driven by an unexpected initiative, incentive benefit that was a catch-up from previous periods following a review with one of our network partners. Gross profit growth was low in the quarter for four primary reasons. One, we renewed approximately 50% of our non-Block TPV between Q2 of 2022 and Q1 of 2023, lowering growth by mid-to-high single digits. Two, we lost a portion of our TPV from one Klarna program starting in Q3 last year, lowering growth by mid-single digits. Three, incentive timing, as our incentive contracts run from April to March each year, meaning that every Q2, we are starting from zero and build up our volume towards incentive tiers. Due to changes in Visa incentives, we filled the tiers slower in Q2 than we did last year, lowering growth by low single digits. 4, we lost full Visa incentives for 2 of our customers at the start of 2023, lowering growth by mid single digits. Finally, the unexpected incentive benefit in Q2 was partially offset by lower ticket sizes, which lowers gross profit because of the per transaction component of networks fees versus the per transaction component of interchange. The first 3 of these factors will no longer be impactful by the end of this year. We believe these were relatively unique situations that impacted us all at once because of how much our business accelerated coming out of the pandemic. The fourth factor will lap in Q1 '24 and shouldn't reoccur based on our new contract with Visa. Gross margin was 37%. Q2 is typically our lowest margin quarter of the year because of the incentive timing. While the Block net revenue concentration has steadily, steadily increased over the past 4 quarters, the Block gross profit concentration has remained relatively steady. This is due to less favorable volume mix within the Block business and improving margins in our non-Block business. The increasing revenue concentration is weighing on our overall margin since our Block margin is over 40 points lower than the rest of the business. Our Q2 gross profit growth, excluding Block, Klarna, and normalizing for items like the unexpected incentive benefit, is about 2.5x faster than the business as a whole, driven by customers with higher margins growing faster than others, which is more than offsetting the impact from renewals we are still lapping, as well as the loss of certain Visa incentives at the start of this year. Q2 adjusted operating expenses were $84 million, a decrease of 10% from last quarter and a 5% decrease year-over-year, despite a one point of organic growth driven by the inclusion of Power. Our restructuring in late May reduced our workforce by approximately 20%, resulting in Q2 savings of $6 million. On a run rate basis going forward, we expect quarterly restructuring savings of approximately $11 million after we reinvest in new headcount in priority areas, resulting in a net reduction of over 15% of the pre-restructuring headcount plan. Our expense reduction in Q2 was not just the result of restructuring. We have many efficiency initiatives underway. Our technology expenses, which include cloud and SaaS tool costs, were flat in Q2 versus last year, despite year-over-year transaction growth of over 40%. We are leveraging automation and executing thorough reviews of our usage to improve efficiency while simultaneously improving our uptime, security, and performance. We also continue to be mindful of hiring, as well as costs associated with headcount, such as travel, and reducing our usage of contractors and consultants. We recorded a one-time restructuring charge of $8 million related to severance, net of the release of bonus accruals and share-based compensation forfeitures, all of which is excluded from adjusted operating expenses and EBITDA. Q2 adjusted EBITDA was positive $1 million, a margin of 0.4%. This result was better than expected, driven by gross profit growth and cost management successes. Interest income was $11 million, driven by elevated interest rates. The Q2 GAAP net loss was $59 million, including a $10 million one-time non-cash post-combination expense related to the Power acquisition, as well as the one-time restructuring cost of $8 million. During Q2, we announced a stock buyback of $200 million. As of quarter end, we purchased 10.2 million shares for an average price of $4.75 for $48.5 million. We ended the quarter with $1.4 billion of cash and short-term investments. Let's shift to our Q3 outlook as well as the Cash App renewal. Let me set aside the Cash App renewal for a minute and talk briefly about the business trajectory. The underlying performance of the business is a little stronger coming out of Q2 than we expected a quarter ago. In addition, some of the drags on gross profit growth in Q2 are dissipating in Q3. We expect high single-digits percentage points, less drag in Q3 versus Q2 from just two factors, the lapping of the Klarna volume loss and starting to lap some of the heavy renewal activity last year. We will continue to see low single-digit percentage point gross profit growth headwinds in Q3 from incentive timing as we ramp through the tiers more slowly in 2022, but that will correct itself by year-end. Moving on to the Cash App renewal. We are excited to extend our partnership another four years as both parties recognize the growth and innovation that we enable and the success we enjoy together. As we anticipated, Cash App is receiving improved economics given their growth trajectory since our last renewal in 2021. We believe the best proxy for our price, and therefore, the way to measure the economic impact of the renewal, is the impact to our gross profit take rate, which measures how much gross profit we earn for every dollar of Cash App TPV. Looking ahead to Q3 and Q4 of 2023, we expect the gross profit take rate we earn on Cash App volume to be approximately 40% lower as a result of the renewal. We believe this price is very fair for both parties, commensurate with market rates for Cash App scale, while accounting for the additional services we provide and our differentiated platform capabilities. We are excited to move forward for the next 4 years. The renewal has two structural changes that are important to note. First, the pricing construct. We previously used a net interchange pricing construct, where we aggregate the interchange, network fees, and bank fees together, and then determine the split between Marqeta and Cash App based on volume tiers. In the new pricing construct, starting from July 2023, we will charge Cash App a price for the services we provide based on volume tiers, while the interchange, network, and bank fees are passed directly to Cash App. This new construct more clearly defines the price we charge for the value we provide, while reducing volatility caused by several business mix factors. We already use this pricing construct with a few other customers, and in those cases, it does not change how the business is presented in our P&L. The second structural change is consequential to our revenue presentation. As part of the renewal, Cash App is taking responsibility for the primary payment network relationship. While we still provide Cash App with the same level of support on every other aspect of the program, they will manage the primary payment network relationship. Although we do not receive incentives on Cash App volume from that network, this change is significant because the costs associated with Cash App's primary payment network volume will, in substance, no longer be reflected in our P&L. Previously, we were responsible for this relationship, and therefore, these costs were presented in both our net revenue and cost of revenue. That will no longer be the case starting in Q3 2023. To be clear, this expected change in revenue presentation has zero impact on our gross profit, but it will materially reduce our reported net revenue. To put the net revenue impact in perspective, in Q3 and Q4 of 2023, the impact of the accounting change will reduce our net revenue by approximately 6 times the amount of the price reduction tied to the Cash App renewal. Now, let's talk specifically about our Q3 outlook. First, let me reiterate that the underlying performance of the business is a little stronger coming out of Q2 than what we thought a quarter ago. Second, for each of the next 4 quarters, we plan to share the impact of the Cash App renewal on our numbers, given the significance. Our expectations for Q3 are as follows: Net revenue is expected to contract by between 49% and 51%, with an approximately mid-70s percentage point decline due to the Cash App renewal. Roughly 15% of the renewal impact is a result of the new pricing terms, while the remaining 85% is due to our anticipated shift in accounting treatment. Gross profit is expected to contract between 9% and 11%, with an approximately mid to high 20s percentage point decline due to the Cash App renewal. Our gross margin should be in the low 70s. Given the success of our efficiency efforts year to date, as well as the restructuring completed in Q2, we expect adjusted operating expenses to decline by a high single-digit%. Therefore, adjusted EBITDA margin is expected to be negative 12%-14% on an organic basis, excluding the 1 percentage point negative margin impact of the Power acquisition. This includes an approximately mid-teens percentage point decline due to the Cash App renewal, almost half of which is due to the new accounting treatment because of the lower revenue denominator. Consistent with what we thought a quarter ago, we expect our Q4 performance to be a little better than Q3 as we continue to lap the impact of heavy renewal activity in 2022. Compared to Q3, we expect net revenue growth to be 1-2 points better, gross profit to be 3-4 points better, and adjusted EBITDA margin to be 4-5 points better. We anticipate that the Cash App renewal impact will be similar in both quarters. Therefore, full year 2023 performance is expected to be the following: Net revenue is expected to contract by a low-teens%, with an approximately low-40s percentage point decline due to the Cash App renewal, the large majority of which is due to the anticipated change in accounting treatment for Cash App-related revenue. Gross profit growth is expected to be positive, low single-digits, with an approximately low-to-mid-teens percentage point negative impact due to the Cash App renewal. Adjusted EBITDA margin is expected to be negative, low to mid-single digits on an organic basis, excluding approximately 1 point negative margin impact of the Power acquisition. This includes an approximately mid to high single-digit decline due to the Cash App renewal. This 2023 adjusted EBITDA margin, even with the negative impact of the Cash App renewal and the expected new revenue presentation for half of the year, is consistent with our expectations at the beginning of the year, excluding the Block renewal. This is primarily due to our cost reduction efforts, which have been achieved while accelerating sales and without a slowdown in innovation. Without the Cash App renewal, we believe we would have been EBITDA positive this year, whereas now we expect to exit 2024 at a positive EBITDA run rate. To wrap up, we delivered a strong Q2 across all metrics and have been making significant progress to position the company for long-term success. Our bookings continue to show strong growth and momentum as we capitalize on the expanding embedded finance opportunities, which should help diversify our business with strong, sustainable growth. We made significant progress toward our operating efficiency goals with our restructuring efforts, as well as our overall focus on reductions across all spend categories. Of course, our renewal with Cash App establishes a new baseline and sets us up for sustained long-term profitable growth. Before we go to Q&A, we understand the longer-term trajectory of the business, including the Cash App renewal impacts, are of great interest, we will not be discussing 2024 performance implication during today's call beyond the fact that we will exit 2024 with positive EBITDA. However, we plan to host an Investor Day in Q4 to discuss the longer term with more details to follow. Now let's turn it over to Q&A. We will now begin the question-and-answer session. To ask a question, you may press star, then one on your touch tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. The first question comes from Tien-Tsin Huang with J.P. Morgan. Please go ahead. Thanks so much, and good afternoon, and thanks for going through all the Cash App renewal stuff. I, I know we're all gonna dig into the numbers, as you shared it, but I, I'm just curious at a high level here, as we think about the benchmarking exercise here, and I know it's tough to negotiate and talk about it publicly too much, but can you walk us through the, the benchmarking exercise of, of the pricing and the new deal on the take rate and just the general fairness, right, to all stakeholders on, on the renewal? Just I know a lot of people are listening on, you know, competitors and other clients, et cetera, but just love to understand a little bit more about the benchmarking exercise. Thank you. Thanks, Tien-Tsin. Really appreciate the question, good to be talking again. Let, let me put it this way: We strongly believe the deal is extremely fair for both parties. It is actually commensurate with the scale and the volume that Cash App has achieved, and also commensurate to the value, the differentiation, and the premium that Marqeta commands over kind of like what the market price is. It is a very, very fair deal for both parties and honestly, sets us up for the right amount of growth for the next four years as we baked into the existing renewal, the right tiers that we believe we will be on as Cash App grows. Mike, anything to add? No. Perfect. No, appreciate that. Just my quick follow-up, just to verify, the exclusivity on the deal is... Just maybe visibility, as you just said there, Simon, just thinking about visibility from here, not only from Cash App, but as you want to, you know, reorient towards gross profit growth. Again, can you talk to visibility and what the growth algorithm is, starting with the second half of this year? Sure. Let me address the first part, and then I'll hand it over to Mike. In terms of exclusivity, there are actually no changes to that part of the contract. It's exactly what, what it was. I would say that there's two reasons companies actually diversify. One of them is economical, and the second one is more stability, which is kind of like, you distribute your load on multiple, multiple providers, so that you actually have some form of redundancy. We've addressed both, as in like in the agreement, we bake the economical incentive for us to capture the vast majority of the volume, right? We've done a lot of work on the redundancy and the stability of the platform, and something we've demonstrated. there is, we've almost reduced the reason- ... for diversification almost to something nonexistent. In terms of a gross profit, yes, that's fundamentally how we look at our business, and we believe that gross profit growth is going to come from three areas. One is, are the bookings that we have, we've been exceeding on, are eventually going to translate into revenue and, and gross profit. Second one is our base will continue to grow, and there is plenty of opportunity with growth, with Block, through Cash App, through Square, and through Afterpay. That's where we expect the growth, the gross profit growth to come from. Yeah, the only thing I would add, Simon, is that when you, when you think about what's weighing on our growth right now, it, it really does stem from the incredible weak growth that we saw sort of in the 2021 timeframe coming out of the pandemic. Many of our customers' business just absolutely boomed, and that meant that a lot of our deals needed to be adjusted because their businesses were just much bigger. That process started last year. As we've talked about, about 50% of our non-Block volume, we renewed over a 4-quarter period, ending in Q1 of this year. This year, we've renewed Cash App as well as Afterpay. We've really now renewed a lot of the business of that we had before that just incredibly grew. Once we get past that, now we're in, you know, good longer-term contracts that we can grow the business on with the customers we already have, and you combine that with the sales momentum we have because of just how differentiated our combination of modern, flexible platform that's global in scale for both debit and credit. It's just a very unique value proposition. You know, that's where we think the growth is going to come from. Obviously, the next 4 quarters is gonna be noise in the revenue, and we'll do our best to try to, you know, help everyone understand how much of that is just coming from the revenue accounting change. As long as you focus on gross profit growth, you'll have a sense for how the business is performing. Great. Thank you so much. Glad to get you over and out of the way. Our next question comes from Darrin Peller with Wolfe Research. Please go ahead. Congrats, guys, on these announcements. Great to see. Maybe just, if you don't mind, just a little bit more plain vanilla clarification on the Block renewal in terms of, like, what it actually does to your gross profit dollars. Just to be clear, from pre to post on a either second half 2023 basis or an annualized basis, just maybe if you can bring it down to us a little bit. There was a lot of moving parts in the growth rate impacts you talked about. Yes. Then just very quickly, also on that, I, I heard Afterpay was renewed earlier, I think, and obviously Cash App here. I don't think I heard about Seller. Just a quick update. Thanks, guys. Yeah. Let me, yeah, take the first part, and then I'll hand it over to Simon to talk about, Afterpay and Square. The way to think about it, Darrin, is it's a 40% reduction in our price. And by that, by our price, what I mean is the gross profit take rate. The amount of gross profit we make for every $ of volume- Got it. -which really is the best measure in this case. The accounting change, I guess, let me just take a minute to try to explain it in simple terms. I mean, essentially, what we used to do in our net interchange structure, right, is we took interchange network fees and bank fees and combined that together and then said, "How should we split that between Cash App and Marqeta?" Obviously, they got the bulk of it. When we were determining that split, we knew we were responsible for those network and bank fees, and that had to be incorporated in how much we kept, because we have a cost to pay in our cost of revenue. In the new structure, what's happening is now the primary network fees are not going to be our responsibility. What we essentially book in our revenue will no longer have to account for the fact that we're going to have to pay that cost. What happens is our revenue is significantly reduced, but so is our cost of revenue. Mm-hmm. Yep. It's, it's not impactful to the gross profit ultimately, but it will be, you know, very meaningful, as I said to the, to the revenue growth, and we'll just, you know, do our best to help you, you know, sort of normalize for this impact. Okay. over the next 4 quarters. Okay. net-net, 40% of what you would have otherwise earned in gross profit terms, less than, you know, going forward, I guess, less than before, correct? That's exactly right. Okay. All right. That's clear. Thank you. Then just on the other side, Simon, if you can. Yep. Mm-hmm. Yeah. Yes. We did renew the Afterpay partnership before. We just renewed Cash App, and like I, I think we said multiple times, there's so much activity going on between Block and ourselves, so it's a very fluid situation. Seller is not due to be renewed till later in 2024. Mm-hmm. We'll be working on that as well. Again, between now and then, I expect a lot of great work that will happen between us, Cash App, Afterpay, and, and Seller. It is a very symbiotic relationship. It's a daily relationship. The growth they have, they have witnessed is fascinating and, and we're actually celebrating every moment of that. Okay. Just to be clear, and I'll, I'll turn it back to the queue, but you got the Seller, Well, the Cash App and the, and the Afterpay combined is the vast majority of your gross profit contribution from Block? That's right. That's right. Correct. Okay, good. All right. Congrats again, guys. Thanks. Thank you. Thank you. Our next question comes from Ramsey El-Assal with Barclays. Please go ahead. Hi, thanks for taking my question this evening. Following up a little bit on, on Darren's question, can you help us think through on sort of a hypothetical run rate basis, what the revenue and gross profit, you know, concentrations will be for, with, you know, Block versus non-Block? I, I assume, you know, that might be the silver lining here, that this deal will have Block be a, a lower concentration of your overall business on a percentage basis, but just wondering your thoughts there. Y- yes, you are correct, Ramzi. What we expect based on this is that our revenue concentration is likely to fall sort of in the mid-to-high 20s percentage points, and gross profit concentration was likely to fall around 10 percentage points based on this deal going forward. Terrific. On, I wanted to ask a question on bookings conversion. You've had another, you know, terrific sales quarter. Remind us again about the bookings conversion timing. You've now had three quarters of solid sales. At what point are you gonna really start to feel those, you know, maybe the earlier sales in that, in that three-quarter period start converting to revenues? Is this still a, a 2024 kind of an event, or could we start to see something start to show up here before the end of the year? Thank you for the question. It actually... I think we're gonna start seeing something before the end of the year. Just to guide you, on average, commercial programs take us between, call it 60 days to 180 days for them to go live, and then they ramp from there. Consumer program take about 1 year to launch and then, and then start ramping from there. The bulk is gonna be seen, the sustainable growth will be seen in 2024, but we're gonna start seeing some of those program accelerated and trickling in towards the tail end of 2023. Ramzi, it's a priority for us to accelerate delivery, like all eyes are on the delivery, giving this oversized bookings number. No pressure, delivery team, but that's what we're working on. Fantastic. Well, congratulations on the renewal. Appreciate your answers. Thank you. Thank you, Ramzi. Our next question comes from Ashwin Shirvaikar with Citi. Please go ahead. Hi, thanks. Let me add my congratulations on getting, getting this, getting this done. In terms of just kinda thinking about the gross profit margin range going forward, could you maybe add some color to, you know, to what happens to, to that? Part of the question is, it's I don't know if I heard this right, but you're kinda, as you've been signing these renewals and the newer bookings, you're leaning more towards just looking at things on a gross, on a gross profit basis. What percent of your total volume, if you will, is on that basis today, if that makes sense? Sure. To answer the first part of your question, Ashwin, I said that in Q3, we expect our margin to be in the low 70s. As we've talked about previously, our Block margin, you know, is sort of, you know, under 30%. The rest of our business is over 70%. There was a, you know, more than 40% gap in the margin, and a lot of that was fueled by the, you know, the high network costs. We've talked a lot about what made Block lower margin in the past. By removing those costs from both, therefore, our, our revenue as well as our cost of revenue, then the, the margin now for the company is going to, is going to be more reflective of the, the non-Block business in the past. That's what you should expect to see. Understood. Just kind of going back to Simon, your comment with regards to embedded finance being sort of, it seemed to me, an overwhelming portion of the of the newer bookings. Could you maybe break that down for us in terms of, you know, the types of use cases and the types of functionality that you're bringing to the table for that? Sure, absolutely. The good news here is that the use cases are diverse, based on the segment, and also they're diverse from a global perspective. I'd say there's few core use cases that are coming to us. One from the retail, and the broader retail and the marketplaces. They're looking at us for three types of solutions. The first one is your traditional co-brand. You create basically a co-brand card, but it interacts with the marketplace. As consumers go to the marketplace and shop, the behavior of the card, especially in terms of rewards, is actually changing. The card is alive. The second thing they're looking for us is point-of-sale lending, whether it's BNPL or something more creative like that, whether they do it themselves or they do it with, with partners of ours. Last but not least, seller financing. Given that we can cover all these bases because of our credit solution, we become attractive to the retail marketplaces in general. The second I'd say use case that's growing fast for us is accelerated wage access. Whether it's shift or gig work, or actually, that are in liquid marketplaces or in large retailers that do employ a large contingency workforce. That actually use case, accelerated wage access, getting a pay card, that they get their wages immediately without burdening their working capital, is something that I'd say is, is a very strong demand, and it, it's global. Third thing is expense management and supplier payments and cardifying those. Using the card networks, Visa and Mastercards and others, in order to streamline and simplify supplier payments, even extending credit to some suppliers, given given the economical situation. I think that gives you some flavors of, of the, the breadth and depth of the solutions that we are seeing. There's a lot more. Ashwin, I just realized that I didn't answer the second part of your question in terms of looking at things on more of a gross profit basis. You're right. I think what we don't look as much at the gross profit margin, because for things like in the credit business, for example, you do have a little bit of higher cost to deliver that product, but you can charge for it. The margin might be a little lower than in debit, but the gross profit take rate, so how much money you're making in gross profit for every dollar volume, is better. That typically, you know what we tend to really focus on. That also helps us normalize the differences between our powered by and managed by businesses, right? That have very different revenue structures, but on a gross profit basis, they're, they're much more comparable. You know, that's really the, the lens with which we, you know, we evaluate the business and, you know, existing customers as well as new customers when we're bidding on business. Thank you for that. Thanks. Our next question comes from Craig Maurer with FT Partners. Please go ahead. Yeah, hi. Thanks for taking the question. Wanted to ask about the new BIN sponsorship in Brazil. Brazil is a pretty crowded market with some strong issuer processors. Wanted to ask what your expectations are for that market and whether or not you're seeing demand from players outside Brazil looking to issue in Brazil. That might be part of the motivation. Thanks. Great, great question. We agree, Brazil is, is, moving very fast. Craig, to answer you directly, most of the demand we're seeing today, given kind of where our brand resonates, is international customers that are expanding into Brazil. That's where we're getting, I'd say, the most traction. That does not mean that, since we're there, we will not take what I call, some domestic companies that are looking to grow. The vast majority of what we have in the pipe is, is, U.S. companies or European companies, setting their eyes on Brazil to expand. Because it's so seamless, Craig, to do that on our platform, what we often find is with many of our multinational customers, once they use us and expand into a few markets, and they see just how seamless and easy it is, then, you know, once they've done a couple, then they say, "Okay, we, we need to sit down and talk about where else I wanna go." Because, you know, we make it pretty, pretty pain-free, and, you know, that's, that's pretty unusual in, in our business, that you could move from market to market and, and not have to do new integrations and new setups. Thank you. Our next question comes from Bob Napoli with William Blair. Please go ahead. Thank you, Simon, Mike, yeah, good to get that deal behind you. I know you had mentioned, I wasn't clear, though, on EBITDA positive exiting 2024. Any thoughts on... I, I know you've been working on this deal for a long time and profitability post-deal. Just any thoughts on what kind of, when your EBITDA positive post this deal and what you think the long-term model looks like from a growth and profitability perspective now that this deal is behind you? Yeah, thanks for the question, Bob. I think that the, the way we look at it is, I, I think, probably consistent, we may have talked about in the past, which is as a platform business, we sort of naturally get the scale benefits. And up until really, I guess, the Power acquisition was the, was the last piece. You know, last year, we added our, our banking and money movement capabilities. We added our risk product suite. Both those were done sort of in the second half of 2022, and then we acquired Power early this year. We really feel like that has, you know, put all the key components of the platform are in place. Of course, we will still add capabilities, but, you know, the, the foundations and the anchor tenants, if you will, are in place. As well, in addition to that, you know, we've built up a, a good-sized team where we feel like we have a lot of investment capacity to continue to support our growing business and continue to innovate. What that means is we can start lowering or slowing the pace of our incremental investment, given that we have the platform is, is ready, and we're more just making improvements to it, and we have a lot of capacity to do so. If, if you then see the, the new sales kicking in, and us, you know, lapping some of these, all the renewal activity that we've done, and, and we've said in the past that a lot of these deals are more than three years. You know, you're looking at deals that are pushing out 2026, 2027, 2028. You know, we think the combination of those two factors means we're gonna get back to an exciting growth, and we will very quickly may be adding profitability in chunks, right? It's not gonna be this, this slow ascent. We should be able to deliver, you know, pretty strong gross profit growth without high expense growth, at least for a year or 2, to make a lot of progress in the profitability we can deliver. Great. Thank you. I guess just on, on maybe following up on Power and on the credit business, how, and maybe any, a little bit more color on how Power is progressing, the cross-sell capability, and just the outlook that you see for your credit business? Sure. Progressing well. We're done integrating the technology. Now, our customers can get the APIs and start testing. In terms of cross-sale, the nice thing here, Bob, is that Marqeta has been in the credit business. It has not been the program manager. So our pipeline did not start right after the acquisition. Our pipeline was actually booted up before. We have very strong deals in the pipeline, and we're comfortable we're gonna close a few strong partnerships in the next half of the year. Yeah, the only thing I would also add, Bob, is I feel like we're, we're also getting a little bit of a, a halo benefit from the acquisition in the sense that we have customers or prospective customers who may be looking to do debit first, but they, they know they might wanna do credit in the future. The fact that they could do that seamlessly with us is a big benefit, and vice versa. Customers who may be looking for a credit product, but they say, "You know, might we do something in debit down the road?" "Yes, the fact that we could seamlessly do that with you is a, is a big benefit." So, I think that's also helping us, it, just more broadly in our sales, not just credit sales. Thank you. Our next question comes from Bryan Keane with Deutsche Bank. Please go ahead. Hi, guys. I'll also echo my congratulations on the deal. Just a clarification. I wanted to try to isolate business loss with Block, either going in-house or any work going to competitors, and then what new scope work is expected from the contract, if any? Good, good question. I don't believe there's anything going in-house, that we know about. From a pragmatic perspective, it is continuing and strengthening our partnership. Brian, there's a lot good we're, we're doing with Block across the board, ranges from small changes to programs to some really cool and highly innovative products, that will probably see the light of day in the next six months to 12 months. Early to talk about, but there's a lot being worked on. Got it. Got it. Then once we, we get past the anniversary, this, this contract renewal for just the Block aspect, in the second half of 2024, how will the contract grow? Will it grow by, you know, Cash App transaction growth or accounts or. Will it, will it have positive growth with the growth of the business? Great question. Mike, you wanna take it? Yeah, I would say. So, yes, it will continue to grow. We have it set up where, you know, the best way to set up these contracts, we believe, Brian, is to make it a win-win. The way you try to set up the pricing and the tiering is that as they continue to get bigger, you know, it's still accretive to us, but they maybe get a little bit. They grow a little faster than we do. They accrue a little bit more of the upside as they get bigger, as they should, but we still get nice growth as well. That's really how we tried to set it up, which aligns our interests and is a win for both parties. Got it. Thanks so much. Our next question comes from Andrew Jeffrey with Truist Securities. Please go ahead. Hey, this is Julian Broche on for Andrew. Thanks for taking the question. Switching gears here, from my Cash App questions. What is your primary competition on earned wage access? I know you touched about it, touched about it on the, on the call here. You said there was strong demand, and it's global business. W ho is your primary competition there? Yep. Yeah. The way we've implemented accelerated wage access is actually unique to Marqeta. I don't want to go into an extreme level of detail, but it's done in a way that the companies are not draining their working capital. So there is no solution in the market today that does what we do. Now, that's something specific. Now in broader terms, there are, I'd say, independent software developers, some of them based on Marqeta, some of them others, that take an independent approach, like they're fintechs. They go to a labor marketplace and say, "I give you a solution." So that, that is there. But also it depends on the size of the marketplace. And we have some very deep relationship with some of those ISVs, like Branch. We work very closely with them on, on accelerated wage access, and they, they're a great customer of ours. I mean, to summarize, I'd say the way we've, we've done it, no one has done it this way. It doesn't mean that, that, there's other perspectives on how people can implement accelerated wage access. Again, what we're trying to do with accelerated wage access is to be the, the entity that gets the employee what they want without having the, the, without burdening the balance sheet of the technical employer. Got it. Thank you for the clarification. That's helpful. Sure. Maybe time for one last question? Sure. Our next question comes from Jason Kupferberg with Bank of America in Merrill Lynch. Please go ahead. Hey, this is Cassie Chan on for Jason. Thanks for taking the question. Just quickly wanted to ask about July trends. Anything you can share there relative to June or the second quarter around TPV or ticket size, maybe Managed by versus Powered by? A ny color there. Thank you. Yeah, I would say overall, you know, the trends are stable. We're not seeing a meaningful change in the trajectory of the business. Yeah, steady as it goes. Okay, if I could sneak in a quick follow-up. Sure. I know you guys mentioned for the second quarter, you guys had some unexpected incentive benefits. Mm-hmm. Could you just elaborate a little bit about that? How much did that contribute to gross profit growth in the quarter? Just to clarify, you're not expecting that to continue into, you know, the third quarter, correct? That's correct. Our, our gross profit growth was about 5 points faster than we expected, and, and roughly two-thirds of that is driven by these unexpected incentives. And, and really how it, it came about is we're obviously in close contact with all, all the networks and, and constantly talking about the business that we're doing together. As, as part of that, we discovered that we had actually been owed more incentives than we had been paid in the past. You know, as, as part of that discovery, you know, we were, we were, I guess, paid our appropriate compensation. That was really just a one-time catch-up for, for prior periods that we benefited from, so it, it's not something that will reoccur. Great. Thanks so much, guys, and congrats on the quarter. Thank you. Maybe we do have time for one more. Yeah. Oh, well, no, I said it. There are no- we'll No more questions in the queue. Oh, perfect! Right. Thank you. Our Q&A session has been concluded. Thank you for attending today's presentation. You may now disconnect. Thank you.