Ladies and gentlemen, welcome to Marqeta Inc fourth quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Stacey Finerman, Vice President of Investor Relations. Please go ahead. Thanks, Operator. Before we begin, I would like to remind everyone that today's call may contain forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including those 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, 2024, and our subsequent periodic filings with the SEC. Actual results may differ materially from any forward-looking statements we make here 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 material, which are available on our Investor Relations website. Hosting today's call is Mike Milotich, Marqeta's interim CEO and CFO. With that, I'd like to turn the call over to Mike to begin. Thank you, Stacey, and thank you for joining us for Marqeta's First Quarter 2025 earnings call. To start, I'll briefly highlight our Q1 results, followed by an update on the progress we are making on deepening our platform breadth and expanding the solutions we offer. I'll conclude with more details about our Q1 financial results and our expectations for Q2 and full year 2025. Our first quarter results demonstrate our ability to execute on our growth plans while simultaneously increasing our level of profitability. Total processing volume, or TPV, was $84 billion in the first quarter. This is a 27% increase compared to the same quarter of 2024, with the lapping of leap year reducing growth by one point. Q1 net revenue of $139 million grew 18% year over year, driven by the wide variety of use cases we enable for our customers. Gross profit was $99 million, a 17% increase versus Q1 2024, resulting in a gross margin of 71%. Adjusted EBITDA was $20 million in the quarter, translating into a 14% margin, fueled by both gross profit growth and operating expense discipline, efficiency, and scale. Marqeta has been at the forefront of modern issuer processing, which started many years ago with the Novo programs, predominantly for fintechs with innovative and disruptive initiatives that leverage cards in new ways. Over the past couple of years, we have heard from many prospects with existing card programs that they are interested in the capabilities, flexibility, and control that modern issuer processing enables, yet are reluctant to undergo what they perceive to be a complex and risky migration. In response, in 2024, we deepened our platform depth by building a product to facilitate migrations to reduce the burden and the risk of moving existing programs to Marqeta. We completed a migration of millions of cards for Klarna last year, and this quarter we began migrating a U.S. consumer credit program and an innovative debit program in Europe. While migrations and flips are still relatively rare given their complexities, we are building expertise and our track record with regard to this capability. The combination of our advanced capabilities, scale, expertise, and experience smoothly executing migration makes Marqeta's platform a strong candidate for more established brands and programs that are looking for a modern provider. In Q1, we started migrating our first consumer credit program with Perpay, showcasing our ability to convert credit in addition to debit. Perpay has an excellent embedded finance offering, as their unique credit builder card enables customers to earn rewards based on repayment via their paychecks. Perpay had already found product-market fit and a significant client base. However, they were looking to switch from their processing provider to one that had more sophisticated, scalable, and responsive capabilities. The company chose Marqeta due to our flexibility and ability to support their unique underwriting and repayment structure. As of February, Marqeta has been supporting all new issuance for Perpay and has started to migrate its active credit card accounts. Platform breadth also means having product and solution parity when our customers operate in multiple geographies. We continue to see significant growth in Europe, with TPV growth remaining over 100% in Q1. Adding program management is a key lever for enhancing our offering to provide a more holistic solution for customers operating in Europe. We started by partnering with TransactPay before moving to acquire the company late last year. The acquisition of TransactPay is currently on track to close by the end of Q3, and we expect it to be a significant step in delivering our program management offering that is comparable to other geographies like the U.S. and Canada. The transaction is driving significant customer interest, as it means more control of the entire card offering and seamless geographic expansion. Our second migration this quarter was Bitpanda, a European crypto platform. Of the three recently signed European customers that we will support with program management, this program is the first to launch. We have been powering cards that allow consumers to spend their cryptocurrency via card for several years. Our early innovations with just-in-time funding allow fiat currency to be spent at the point of sale using a crypto wallet. This flip had a tight turnaround due to the previous partner wanting an accelerated timeline to fully migrate the program. Our commitment and willingness to work quickly was also a key reason for Bitpanda to choose Marqeta. Not only did we sign and launch the full program in the same quarter, but the launch was executed simultaneously in 26 countries and 10 currencies. In Q1, we also continued expanding our solutions to accelerate card program launches while minimizing customer development needs. A few quarters ago, we introduced our UX Toolkit, a comprehensive library of pre-built UI components fully optimized for Marqeta's APIs and vetted for regulatory compliance. These SDKs make it easier for customers to embed payments into their existing mobile app or web experiences by offering product-ready flows for onboarding, card management, transaction history, and more. While the UX Toolkit serves customers ready to deeply embed financial products, some customers want to launch a card program quickly without relying on internal app engineering resources or taking on the day-to-day management of the cardholder experience. For these customers, we expect to have a standalone white-label app available later this year, giving customers a fully branded, out-of-the-box solution managed by Marqeta. This mobile app will incorporate the same SDK components from our UX Toolkit, enhanced with expanded banking and rewards functionality, along with pre-configured flows for onboarding, account setup, transaction monitoring, and support. Customers will be able to tailor their app to reflect their brand identity and launch it alongside their primary application, with the option to embed it later using the same SDKs. The intended benefit for our customers will be the ability to establish a market presence quickly with our Marqeta-managed app experience, then transition to a fully embedded solution over time without redoing compliance work or re-engineering core user flows. This dual-path approach should not only accelerate speed to market, but also maintain continuity and consistency across the user experiences. To wrap up before moving to the details of our financial results, the business had nice momentum exiting Q1 and puts us in a good trajectory for the remainder of 2025 and beyond. Specifically, both Perpay and Bitpanda showcase our ability to migrate programs in a timely and efficient manner, a core capability we added in late 2024. These program wins also demonstrate that our customer base and prospects in the market are looking for a technology partner that is flexible, responsive, and has experience with innovative solutions. As the wave of card issuing modernization accelerates in the coming years, the experience of migrating platforms and programs while solving specific pain points with flexible solutions will serve us well in the future. These capabilities give us confidence that as more established brands with both the Novo and existing card programs look to offer their customers new modern experiences, Marqeta will be the partner of choice. Now, let me transition to discussing our Q1 financial results, which reflect a strong start to the year, outperforming our expectations across all metrics. Q1 TPV growth of 27% remains strong and steady, coupled with outperformance across net revenue, gross profit, and operating expense, delivering higher Adjusted EBITDA of $20 million in the quarter. Net revenue and gross profit growth outperformed the midpoint of our guidance by three and five points respectively, primarily due to favorable business mix. This business outperformance, combined with moderating expense growth, delivered an improved Adjusted EBITDA margin of 14%. Q1 TPV was $84 billion, an increase of 27% year- over- year, despite a one-point growth headwind due to the lapping of leap year. This growth, on an ever-expanding base, continues to show our ability to grow the business at scale. Non-block TPV grew more than two times faster than block TPV, fueled by a wide range of customers across several use cases. Consistent with the last several quarters, financial services, lending, including buy now, pay later, and expense management drove the bulk of our TPV growth. Growth within financial service use cases was in line with the overall company and continues to be fueled by the rapid expansion of our non-Block neobanking customers, where our TPV almost doubled year- over- year. Both lending and expense management TPV continued to grow over 30%, and both accelerated a bit from last quarter. Lending, including buy now, pay later, growth is driven by the combination of Klarna's migration to our platform in Europe, our BNPL customers benefiting from the increased adoption of pay-anywhere card solutions, and distribution through wallets. Both are supported in part by newly available flexible network credentials and strong user growth among SMB lending solutions. Expense management growth remains driven by our customers sustaining strong end-user acquisition as AP automation and modern corporate card platforms continue to gain share. On-demand delivery growth remained in the single digits due to the maturity of the use case. Despite the changing macro environment, we did not see a shift in the mix of spend on our platform in Q1. Breaking down the spend by low, medium, and high discretionary TPV based on merchant category reveals no meaningful shift in the mix of spending in Q1 versus the past several quarters. Q1 net revenue was $139 million, growing 18% year- over- year. Although this growth was approximately three percentage points higher than we expected, the outperformance would have been six percentage points, which is more in line with the gross profit beat, had it not been for one unplanned change in terms with a partner. Very similar to last year, we recently renegotiated a platform partner agreement with reduced pricing, improving our economics. Based on the terms of the Cash App contract and the associated revenue presentation, we passed through the proportional savings to Cash App, which reduces our revenue but has no impact on gross profit. As a result, our net revenue growth was reduced by three points in Q1 versus our expectations. Again, this is a very similar situation to last year and another reminder why we focus more on our gross profit when discussing our business performance. Block net revenue concentration was 45% in Q1, decreasing one point from Q4 2024 and down four points from Q1 2024. Non-block net revenue growth was on par with last quarter and remains over 10 points higher than block net revenue growth, driven mostly by strong performance among our larger non-block customers and the ramping of new programs launched since the start of 2024. Our net revenue take rate of 16 basis points was one point lower than last quarter, which is the typical seasonality following the holidays. Q1 gross profit was $99 million, resulting in a year-over-year growth of 17% and a gross margin of 71%. This growth was approximately five points higher than we expected at the end of the last quarter, primarily driven by two factors. First, more than half of the outperformance was due to favorable business mix. Our Q1 TPV growth was slightly above our expectations, despite the fact that a few of our largest customers underperformed. As a result, our gross profit take rate was higher than expected since our pricing is generally commensurate with the amount of volume on our platform. Second, as I mentioned earlier, we are pleased with our ability to migrate significant programs on our platform efficiently and expediently, enabling these new customers to benefit from the capabilities, flexibility, and scale of our modern platform. Unfortunately, one of our planned migrations later this year will no longer take place as we reached an agreement with Varo to terminate the deal we announced in 2024. Instead, Varo has chosen to focus on its existing products. The early termination lifted Q1 gross profit growth by approximately one point. Non-Block gross profit growth continues to grow many points faster than the overall company and is in line with non-Block revenue growth. Our gross profit take rate was 12 basis points, consistent with last quarter. Q1 adjusted operating expenses were $79 million, growing 5% year over year, a little better than expected. We continue to be focused on our hiring and utilizing multiple geographic locations to find the best talent. In addition, the combination of our size and growth continues to afford us better economies of scale. Q1 Adjusted EBITDA was $20 million, a margin of over 14%, a new all-time high for both metrics as we progress on our path to profitability. We feel the adjusted EBITDA margin on the basis of gross profit, which was 20%, better reflects the nature of our business and profitability. The Q1 GAAP net loss was $8 million, including $10 million of interest income. We ended the quarter with approximately $1 billion of cash and short-term investments. Subsequent to reporting our Q4 2024 results, we restarted our share repurchase activity as we continue to believe the current valuation does not fairly represent the company's value or the market opportunity ahead of us. In Q1, we repurchased 26.2 million shares at an average price of $4.22. As of the quarter end, we had $270 million remaining on our buyback authorization. Now, let's transition to our expectations for Q2 2025. We expect Q2 net revenue growth to be between 11% and 13%. This is approximately four percentage points lower than we anticipated at the time of our last call due to the impact of the renegotiated platform partner agreement I referenced earlier that has no impact on gross profit. Consistent with what we shared last quarter, Q2 gross profit growth is expected to be in the range of 23%-25%, with an eight-point lift from the incentive accounting change we discussed last quarter. As expected, even if you put the incentive accounting change aside, we expect Q2 will be our highest gross profit growth quarter as new programs ramp and new services are adopted, but we do not yet have headwinds from renewals, and we have the easiest year-over-year comparison. As a reminder, starting in Q2 2025, we will accrue incentives each quarter based on the forecasted annual contract tier we expect to achieve. As a result, we expect that there will be much less variation in the quarterly incentives recorded in the BNPL, even though this does not impact what we earn in any given incentive contract year. This change will create noise in our gross profit growth rates as we grow over the previous incentive methodology. We continue to be focused with our investments, which are primarily directed toward platform capabilities and innovation. We are also focused on hiring additional resources in key areas like go-to-market to meet growing demand and compliance to further enhance our expertise and service levels. Q2 adjusted operating expenses are expected to grow in the low to mid single digits due to an easier year-over-year comparison. Q2 Adjusted EBITDA margin is expected to be 10%-11%, one point higher than we had shared last quarter due to lower adjusted operating expenses. We continue to improve the efficiency and effectiveness of our resources and technology investments. For the full year, while we recognize the increasing levels of macroeconomic uncertainty, we are not currently seeing any notable shift in spend behavior. As such, we are assuming consistent macroeconomic conditions for the remainder of the year, but noting the risk. We expect 2025 net revenue growth to be between 13% and 15%, three percentage points lower than what we shared last quarter due to the renegotiated platform partner agreement. I want to reiterate that this impact is accounting-related based on our Cash App agreement and does not lower gross profit. The impact of this new agreement should be relatively consistent each quarter. Therefore, we expect net revenue growth to be 13%-15% in Q3 and 14%-16% in Q4. Since the impact of this new platform partner agreement is due to our revenue presentation with no impact on gross profit, our expectations for the underlying business trajectory for 2025 remain unchanged from last quarter. We still expect 2025 gross profit growth to be between 14% and 16%. While Q1 did come in higher than expectations, the beat was not large enough for us to revise our gross profit outlook upwards for the entire year given the new levels of macroeconomic uncertainty. We want to be clear that our gross profit projections for the remaining nine months of the year are essentially consistent with what we guided to at the time of our fourth quarter call. Therefore, we expect to be on the higher end of the original 2025 gross profit growth range based on our Q1 outperformance. We do, however, expect 2025 Adjusted EBITDA margin to be approximately one point higher than what we shared last quarter at 10%-11%. This upward revision of our expectations is due to lower expenses as we grow more efficiently, as well as the smaller revenue denominator due to the accounting for the renegotiated platform partner agreement. The Q3 and Q4 Adjusted EBITDA margin is expected to be in line with the full year. In conclusion, we are starting 2025 on a solid foundation as our Q1 results outperform across all our primary metrics. Even as our TPV continues to rise, we are sustaining a relatively stable TPV growth rate with increasing levels of profitability, which keeps us on our desired path to profitability. Our confidence to continue this trajectory is primarily driven by four factors. First, our portfolio migration abilities and growing track record executing flips make us a strong candidate for established programs and brands that are looking for the increased control and advanced capabilities of a modern provider with proven scale. The combination of de novo program wins and a shift toward modernization among existing programs should result in Marqeta capturing an increasing share of the market. Second, our customer base and large prospects in the market are looking for a true technology partner that is flexible, responsive, and innovative to solve their card issuing and money movement pain points, as well as drive increasing levels of engagement with their users. We believe Marqeta is relatively unique in our ability to meet those needs. Third, our European business continues to expand rapidly, and our recent launch of program management in Europe is a promising and valuable expansion of Marqeta's platform breadth and capabilities. Finally, our platform continues to reach new levels of economies of scale. The rapid Adjusted EBITDA margin expansion is evidence of our ability to reach our profitability potential and fuel long-term value creation as the business grows. I will now turn it back over to the operator for questions. Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you would like to ask a question, please press star and one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Ladies and gentlemen, we request you to limit to one question and one follow-up question per participant. We take the first question from the line of Timothy Chiodo from UBS. Please go ahead. Great. Thank you for taking the question. I want to touch on something that was announced by both the card networks recently around their efforts in agentic commerce. This is more of an industry question, Mike. If you could talk about it specific to Marqeta or broadly speaking within issuer processing, it would just seem that someone like Marqeta would be able to play a big role there given the importance of controls and potentially single-use virtual cards and how that could all play a role in a future world where agentic commerce is a larger portion of purchases being made. Thank you. Yeah, thank you for your question, Tim. We agree with your quick assessment. This is exactly the kind of innovation that we have a track record of enabling and giving people dynamic capabilities where they can make decisions in real time, intaking data and making very quick responses from a platform perspective. This is exactly the kind of innovations that we think we're well-positioned to enable for people. Even just, I would say, stepping back, if you look at where we're focused in AI as a business in general, there really are three areas that we're focused on from a strategy perspective. One is product innovation, agentic commerce obviously being one of them, where we're looking to add AI capabilities to new or existing products that create more value for our customers. That includes areas like you're mentioning, but also areas like risk products that we have, program management offerings around disputes and fraud, as well as this ability to do dynamic rewards and very personalized offers and personalized experience for each individual cardholder. The other areas that we're focused from an AI perspective are internal productivity, so making our employees improve efficiency and reducing manual work, and then also operational efficiencies in terms of the support we offer cardholders by leveraging AI automation. So those are things we're focused on, but we are excited about the potential for agentic commerce. Thank you, Mike. Thank you. The next question comes from the line of Tien-tsin Huang from JPMorgan. Please go ahead. Thank you so much, Mike. Nice job. Twenty-eight minutes of talking, so hopefully you guys got a little bit of a breath here. I want to ask, Tim asked about agentic commerce. I want to ask just about conversions, and you're talking about this shift towards modernization of programs. Do you have the staff and the tools to do these conversions quickly, especially if these things start to level up or size up? Because there could be quite a bit of labor, I think, to drive that decision. And I'm curious, was that part of the Varo decision to terminate? I know you said they're going to focus more on products, but I didn't know if resourcing was also an issue in this uncertain time. Yeah, so resourcing is not a concern for us, Tingen. So yes, it is. These conversions can be a lot of work and require a lot of support, which we're very prepared to provide as the opportunities come our way. What we're really focused on is that migrations tended to be fairly rare in the past because a lot of times people weren't moving necessarily for a big difference in capability. It more had to do with relationship souring or maybe a better price. What we're really focused on is with our modern platform and all the capabilities we have across multiple use cases, both credit and debit, across many geographies, that there's a significant enough capability difference that we can make people interested. If we show that we have the capability and the track record of executing well and providing them the kind of support that they need, as you mentioned, we can get them kind of past that hurdle and get them thinking about migrating to a modern platform like ourselves. This is something that we think is possible, but the resourcing required is not a barrier from our perspective. Got it. That's good to know. Mike, if you do not mind, just a quick follow-up. Glad to hear the consumers is not surprising you here. How about on the backlog and the pipelines? Are there changes in conversation there? Is there any lengthening of cycles of ROI? No changes to cycles or level of investment right now. I mean, I think so far, and I think you've heard from many other payment companies, everything looks pretty good, stable right now. Even if you look at our numbers in April, our TPV growth was a few points higher than what we saw in Q1. Things look stable from that perspective. I think if there were risks that come about, they could take place in sort of two forms. One that you mentioned, which is programs that have either signed and not launched or even people who are on our pipeline holding back or taking a pause to see how the macro environment shakes out. We haven't seen that yet, but that is something we're certainly watching out for. The second area where it could impact us would be just if we get to more of a recession situation, obviously spending can be impacted, which would impact any of our existing programs. To date, we're not seeing that. If anything, we have several people on our pipeline now who are actually looking to move more quickly. I think as we talk to larger brands who maybe have spent a lot of time sort of planning and thinking about how to execute, we're having many conversations with people who are—we're still talking to them now, but they are very motivated to launch within the year. That's a little bit of a change. We'll see what happens, but that's the kind of inputs we're getting from the market. Thank you. The next question comes from the line of Ramsey Clark Al-Assal from Barclays. Please go ahead. Hi. Good results here, and thanks for taking my question. I wanted to follow up on Tingin's question, but with a little bit of a different overlay, which is regulation, or rather deregulation. Have you seen any impact in terms of the behavior of your bank partners in the context of a lot of the deregulation that we're seeing on the financial services side? Are you sensing they can move a bit faster with things like due diligence or onboarding, or are we still sort of back in the environment that you guys called out a couple of quarters ago? Thanks for your question, Ramsey. Some of the changes that have been announced, or there have been others that have been signaled, right now, I'd say the execution still sort of getting pushed down through the ecosystem, I would say, is still relatively slow and moves at a slow pace. At this point, we're not seeing any change in how our banks are operating. I would say together, both of us continue to just be focused on optimizing the onboarding to meet sort of the raised bar that happened over in the last year or two. That's what we are seeing. We continue to believe that the possible lighter touch from regulators, if you will, would be beneficial to us, but more in the form of innovation. People looking to do more innovative programs because they feel like they have a little bit more freedom to operate. Just given our track record and the type of platform we have that really caters to disruptive innovative companies, that would be a benefit to us. Okay. A quick follow-up from me. Good to hear about the Bitpanda card. I was wondering if you could comment a little bit further on the pipeline in Europe. Is that the type of thing where you've got a lot of pressure building up in the sort of sales pipe such that you get one of these implementations under your belt, and we could see quite a few on the heels of it? Maybe a little more color there would be helpful. Thanks. Sure. Yeah. Our European pipeline is strong. We definitely are getting—we have a lot of good traction that we can demonstrate and a lot of customers who are quite well-respected, who are performing well on our platform and utilizing the capabilities to the fullest. I think that's creating momentum. Our announcement last quarter of the pending acquisition of TransactPay also helps because it makes our solution even more complete, a little more holistic offering we can offer customers. We do have a strong pipeline. I think the thing that's encouraging about Bitpanda is that we are obviously building capabilities and talking a lot about our ability to migrate platforms. We want that availability to be there for potential customers, but it's still relatively rare. I think what's very promising, though, about Bitpanda is that it does demonstrate that if everyone is very aligned and focused and doesn't make changes, you can actually move very quickly. This was sort of a deal done in record time where we literally signed and launched the program in Q1, which probably is a first for Marqeta. I can't remember that ever happening. It moved very quickly, and part of that was out of need, but it also shows that when everyone is very motivated and focused, it can happen quickly. That's probably the exception rather than the rule at this point, but it is encouraging to see that it can be done. Their launch was not easy, as I mentioned, many geographies, many currencies at the same time. We felt great about executing that well. As good for Bitpanda, I think their business is doing great. Thank you. The next question comes from the line of Darrin Peller from Wolfe Research. Please go ahead. Hey, thanks, guys. Nice results. Mike, I think I heard you say that you're looking at the—obviously, the EBITDA guidance is raised for the year, and you're looking towards the high end of the range for gross profit outlook, just given the beat in the quarter, if I heard that correctly. And then just thinking about what's incorporated into that now, I mean, correct me if I'm wrong, but you're taking the current trends, flowing it through for the rest of the year, more or less, with what you know. Can we just revisit in terms of the opportunities and the range of outcomes in that range of guidance based on different macro scenarios and remind us again of what you perceive as the opportunities that are idiosyncratic versus the macro categories of your business that could potentially be the most notable swing factors to the downside as well in a tougher macro? Sure. First, you did hear correctly. We have raised our EBITDA projections for the year. We just continue to really execute well in terms of being very much more just efficient and effective. It's an area we've been improving a lot in the last couple of years, and we continue to do so. On a gross profit basis, we essentially kept Q2- Q4 the same as what we told you last quarter. With the Q1 beat, we essentially are at the higher end of the range of what we said for full year, although we did keep the range the same. In terms of where we could see things going well or the risk, I think the things that are promising about the business from my perspective is a few of the things we highlighted. First, this migration expertise. This is now a migration we completed last quarter. We had two in Q1. We are definitely showing that we have that capability, and customers are taking advantage of it. In Europe, the fact that our TPV continues to grow over 100%, and we have sort of more capabilities on the way as we still assume the TransactPay acquisition will close by the end of Q3. We have signed three programs already in program management, one of them being Bitpanda as the first to launch. All this efficiency and EBITDA, we feel like positions us well to grow and probably have some upside. The macro risk that you mentioned, it is something, again, we have not seen anything yet. Even in the month of April, the mix of spending between how we bucket things between sort of high, medium, low discretionary, we are not seeing big changes. If anything, in April, the higher discretionary actually increased a little bit, which just could be the timing from Easter or any of the other changes. That is really what drove the acceleration in growth. We are not really seeing anything. I think from our perspective, what could be idiosyncratic to us is that when we look at our business, because of the base of business that we have, we're less exposed to direct discretionary spending than most. A lot of our use cases sort of target a little bit of the underserved whose spend just generally is less discretionary in nature. And when we look at our spending, less than a quarter of the spending on our platform we view to be in high discretionary categories. I think that everyday spending tends to hold up well even in economic slowdowns. I think that could be a benefit to us relative to other people in the ecosystem. But we're still a spend-based economic model, so we would feel some pain, but we might have a little less than others whose exposure might be more to the higher-end consumer where there's more discretionary spending. All right. Mike, thanks. Just a quick follow-up on the banks. Just where are you on adding incremental partners? I know that was something you guys were hoping to get done in the next couple of quarters going back from fourth or third quarter, I think it was. That's right. We plan to add two new banks before the end of the year. I would say both of them are progressing well. With one of them, the technology work is essentially done. A lot of the connectivity is placed, and now we're kind of moving on to more of the testing and sort of the finer points. We're very far along. The other one is there have just been some kickoff meetings just in the last few weeks. Both of those are on track, and we feel good about not only the capacity that that adds to our business, but also some of the capabilities that some of those banks bring that we can pass on to our customers and offer an even more compelling value proposition for them. Thank you. The next question comes from the line of James Fawcett from Morgan Stanley. Please go ahead. Great. Thank you so much. Mike, just wanted to follow up on your comments around kind of increasing your or essentially decreasing your reliance on Block and that kind of thing. Can you give us a little more color on what types of customers or implementations are showing faster growth? I guess I'm wondering how much of a contributor things like earned wage access are and how we should think about that and other programs out of traditional debit or even credit as long-term drivers. Yeah. I think thanks for your question, James. What we kind of always shared with you is we still think there's a lot of growth still to come for Block, and we think we can absolutely help them with that and enable that. To really judge our non-Block growth in terms of how we lower our concentration, because of course, we still want to support Block and help them thrive. Our non-Block business, we want to be growing at a good clip, which is what we've been doing up to this point. I would say the growth is really coming across all the different use cases. Even within financial services, which is a lot of neobanking and wage access use cases, like you mentioned, that is growing. The volume almost doubled in Q1 versus Q1 a year ago, so that continues to grow really well. Buy now, pay later and expense management, both those businesses, the TPV is growing over 30%. Just to give you a sense for I talked about the outperformance in our gross profit really coming from favorable business mix. When we look at the TPV for customers who are outside of our top five customers, that TPV grew at more than twice the rate of the company as a whole. It really is fairly broad-based, and it's a combination of both customers who have been our customers for a while who are expanding with us into either their business is just thriving or they're also launching new products or new geographies with us, as well as getting a little bit more contribution from new programs as those begin to ramp up. It really is broad-based, which is what's the most encouraging. Yep. No, I'm sure it is. Then separately, you mentioned in terms of some of the changes in renegotiation with customers, etc., that you've improved your economics. You can see that in the way that your guidance and outlook for the rest of the year has come together. Can you talk a little bit about how we should think about what the moving parts are that allow you to improve the economics and what you're doing either from a cost perspective or something like that? Just trying to make sure that we're sensitive to focusing on the profitability and the bottom line, if you will. Sure. Just to be clear, I guess the renegotiation that we talked about is for a platform partner of ours, so not a customer. The improving economics are good for us in terms of improving our gross profit. Because of the way we've structured our relationship with Cash App post-renewal, we also pass on the proportional benefit to them where their volume is also a driving force of those savings. That's what's causing the impact to our revenue. That does not impact gross profit because there's a corresponding offset within our cost of revenue. I would say generally, when it comes to the customer renegotiations we mentioned last quarter, we have a couple of big ones this year. Generally, what we tend to focus on is the value we're adding and the benchmarks in the market and looking to, in some cases, our sort of core price where the bids on volume that they have might come down. We might add a tier or two if they've grown a lot that they can move into. We're working pretty effectively to offset some of that with additional services that we're selling. As we add a lot more capabilities, either more program management services that can be purchased on an à la carte basis or value-added services like our risk services, tokenization, even some of the things I mentioned with this white-label app that we're building to help customers, these are all things that add additional value that we can charge for. That also is an effort to offset some of the just reduced core economics that generally happen as the volume grows more and more. Typically, people are going to continue to get a little bit of a favorable price change from you. Thank you. The next question comes from the line of Craig Maurer from FT Partners. Please go ahead. Yes. Hi. Thanks for taking the question. I wanted to ask about the US neobanking environment. We've seen some significant underperformance from several players. You talked about Varo choosing not to move forward with the program with you. I was wondering if U.S. neobanking has the potential to become a drag on growth if things do not accelerate. Thanks. Thank you for your question, Craig. I think that there is, I guess from our perspective, what we are seeing is there is just a lot more people looking to launch a neobanking-like offering, right? It might not be a standalone neobank, but it might be a large brand that has another business where they are looking to offer banking services to their customers and/or their employees. I would say it is becoming more competitive to drive the growth because consumers do have more options than they had a few years back. I think from our perspective, as long as we can capture our fair share of that and enable a lot of these newer people who may be launching, then I think we do not see that as something that could be a drag on our growth. Again, our neobanking use cases outside of Block are continuing to grow very quickly. I think it is getting more competitive, but we are trying to demonstrate our leadership and our capabilities in this area so that we can power as many of those as possible. Therefore, that increased competition should minimize the impact on us if we are successful doing that. Thanks. Thank you. The next question comes from the line of Cassie Chan from Bank of America. Please go ahead. Hey, thanks for taking my question. I just wanted to follow up just again to make sure I'm understanding the gross profit outlook for 2025. You guys kind of said that it was you kept it at 14%-16%, but obviously, if there's macro deterioration from here, it seems like it can accommodate that. Fair to say at the midpoint, it can accommodate some of the further macro deterioration. How much is the Varo termination having an impact on 2025? Can you also just talk a little bit about if there were any updated expectations for Block performance within your guidance expectations, just given obviously they've revised their forecasts and, well, there's still a significant portion of your revenue. Thank you. Sure. Just to clarify the gross profit, yes, we maintained our four-year gross profit growth guidance of 14%-16%. What we said is we now believe we'll be on the high end of that range just based on our Q1 outperformance and essentially holding Q2- Q4 consistent with where we were last quarter. That's kind of where we are. We're at the higher end of that range. We are assuming macroeconomic stability in that assumption as we're not seeing any changes in spend trajectory or even the spend mix in our business at this point. We feel like that's the best assumption to be making at this time. Obviously, there's a lot of uncertainty out there, and we're going to watch closely. The Varo termination impact, the early termination we reached did raise our gross profit growth in Q1 by approximately one point. There will be some, I guess, lower growth in Q3, Q4. We had expected that to launch in the second half of the year. We will be losing some revenue and gross profit associated with that. We did not change the trajectory of our projections in total because we are seeing other parts of our business perform better than we had expected. We are essentially absorbing that impact in the second half, and we still believe that we can deliver the growth expectations that we discussed last quarter. There are a lot of, in addition to, I guess, what we feel good about, there is even, as I referenced to earlier, new opportunities that have surfaced recently where there are prospects who are looking to move quickly and therefore could contribute in 2025. We feel like, based on the visibility we have, that we feel good about the range we've set being at the high end of our 14-16%. We'll continue to monitor it and absorbing the Varo termination. The last piece, the last question you asked was about Block expectations. Obviously, we're very close partners, and we're in very regular contact. Anything that they have shared publicly, absolutely, it has been factored into our projections as we're in contact with them on a, if not daily, then certainly weekly basis. We're in pretty close sync in terms of how we think about the trajectory of their business and how that impacts our performance. Okay. That's helpful. Just to follow up on credit, obviously, Perpay was a really nice win. It's nice to see that go live. Can you just talk a little bit about what you're expecting credit to contribute to 2025 now with this? And in general, how do those volumes transactions look like relative, obviously, your traditional debit business in terms of what that looks like on the impact of the P&L and what we maybe it changes the shape of that a little bit going forward as it becomes a more meaningful part of the business? Thank you. Yeah. So yeah, we're excited about Perpay coming onto the platform. And again, we've been doing the new issuance for them since late February, and we're starting to migrate their existing cardholders. Just kind of stepping back, where we are from a credit standpoint is with Perpay doing new issuance, and we already had a commercial customer live. So we now have a commercial and a consumer program live on the platform. We already have signed another consumer co-brand that we talked about last quarter, as well as there's another commercial program as well that has been signed and is in implementation. We know there are at least two additional programs that we expect to launch later in 2025. We're getting some traction. We're getting the experience driving some volume so we can show what our capabilities can deliver and have more proof points for prospective customers. Its impact in 2025 is still small, and I would say even in 2026 would be relatively small. I mean, Perpay is a migration, so that's nice. You get the volume immediately. The other three programs are all new programs. That will take some time to ramp. I would expect that the contribution from credit to our revenue and gross profit won't really be meaningful until probably late 2026 or even into 2027 when these programs have ramped up more fully and maybe we've onboarded a few additional ones in addition to just those four. In terms of unit economics, typically in credit, it's going to be a little bit better than debit as just there's a lot more complexity and a lot more opportunity to add value. In terms of what you're doing from a ledgering perspective, the statementing, the reward support, these are all areas that are just a little more complicated and involved than they are in debit. Typically, the unit economics reflect that. Thank you. The next question comes from the line of Sanjay Sakhrani from KBW. Please go ahead. Hey, thank you. Hey, Mike, could you just talk about where you are with this CEO search? Happy to, Sanjay. Thank you for the question. The board is committed to taking the time it needs to find the right CEO for Marqeta. The search process is ongoing. We will update you when there's news. I think what the board feels comfortable with is with me in the interim and the rest of the executive team here in place that the business can continue to perform well and not miss a beat in this interim period. They are going to take the time that they feel they need to hire the right candidate. Okay. Great. You're doing a great job, by the way. Just specific to the line of questioning on Block and sort of how it ties into your performance, could you maybe just talk a little bit about the difference in spending behavior they're seeing versus you're seeing? Because it seemed like that consumer that they're exposed to kind of looks a lot like your consumer, but the spending behavior is different. Any analysis there that you guys have done? Yeah. I mean, obviously, I can't speak to their business specifically. I'll leave that to them. I would say what we see on a broad basis is that we're seeing the whole neobanking market based on many customers who use our platform, for example. It's a bigger population. There's also for us, for an example, for some detail, is when we look at all the buy now, pay later use cases as an example, and we look at the breakdown in spending between high discretionary, kind of medium discretionary, and low discretionary, one of the areas we see growing a little faster and taking share within buy now, pay later is actually the low discretionary. That use case is being applied and the footprint of it is expanding. Particularly as we enable these customers with these pay-anywhere cards where essentially the buy now, pay later functionality is embedded in a card rather than the merchant accepting that buy now, pay later, that gives consumers a little more flexibility in terms of where they apply it. That's just an example where just based on our much broader view, the behaviors may be a little different for us. I mean, there's still obviously a very large customer for us and drive 45% of our revenue. That means that's more than half of our business that is coming from other customers that might have a slightly different mix or target audience. Thank you. Ladies and gentlemen, we take the last question from the line of Andrew Butch from Wells Fargo. Please go ahead. Hey, guys. I'll just bookend it here with a thematic question. Good to hear about your facilitation of cryptocurrency spend through your ecosystem. How does this all kind of dovetail around stablecoins? Are you hearing more demand for stablecoin functionality from your client base? How do you see Marqeta fitting into the stablecoin trend? It seems to be a lot more topical today than it has been in years past. I wonder how Marqeta would fit in that type of environment. Yeah. Thanks for your question, Andrew. Yeah, obviously, things have really heated up again in the last few months from a crypto and stablecoin perspective. I think the way we look at it is because of the way our platform works and the flexibility we provide as well as the way we use our just-in-time funding, we've always been a pioneer in crypto that allows cards to be spending in a fiat currency but have the stored balance essentially be in something else, a crypto, or it could be a stablecoin. I think where we could see an opportunity for us is if you assume that acceptance is going to be how people transact with stablecoins, if they're going to use it for kind of everyday spending, either consumers or small, medium-sized businesses where it might be a card-like use case, if the acceptance isn't there and how it works for both the merchant and the issuer, then transacting in fiat is obviously a much easier way to do it and just have the balance come from a stablecoin. That's something, given our track record in crypto and the types of customers that we have and who we support for that offering, we think that's very applicable, obviously. We've certainly demonstrated leadership, and that was a part of why Bitpanda in Europe selected us. It's still early, but obviously, there's a lot of activity. Assuming people want to go down that path, even if it's in the more short to medium term until maybe there is broader adoption of acceptance or issuance of products that would use stablecoin directly, we could be a bridge to that later state. Great. Congrats on the quarter. Thank you. Thank you. Ladies and gentlemen, with that, the conference of Marqeta has now concluded. Thank you for your participation. You may now disconnect your lines.