Marqeta, Inc.
Q2 2022 Earnings Call Transcript

Published: 10 Aug 2022

[Operator:]

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the Marqeta Second Quarter 2022 Earnings Conference Call. At this time, lines have been placed on mute to prevent any background noise. After the speakers remarks we will open the line for your questions. As a reminder, this conference call is being recorded. I would now like to turn the conference call over to Stacey Finerman, Vice President of Investor Relations, to begin. Please go ahead, ma'am.

[Stacey Finerman:]

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 31, 2021, 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 at 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. Hosting today's call are Jason Gardner, Marqeta's Founder and CEO; and Mike Milotich, Marqeta's Chief Financial Officer. With that, I'd like to turn the call over to Jason to begin.

[Jason Gardner:]

Thank you, Stacey. Good afternoon, everyone, and thank you for joining us for Marqeta's second quarter of 2022 earnings call. I'll start with an overview of our results for the quarter, and then I'll discuss an update on our three strategic priorities. Total processing volume, or TPV, was $40 billion in the quarter, representing a 43% increase in alignment with the rise we posted in the first quarter. The scale of our platform continues to increase dramatically. Our TPV for the three months ending June of 2022 exceeds our TPV for the 12 months ending June of 2020. Our net revenue of $187 million in the quarter represents a 53% increase from the previous year. The main drivers of growth throughout 2021 and into the start of 2022 continue to propel our business. Payment habits that gained traction during the pandemic are still popular with consumers and driving our top line growth, including digital banking; buy now, pay later; and on-demand delivery. Expense management continues to scale as businesses look for efficiencies and business travel returns. Block accounted for 69% of our net revenue, up from 66% in the first quarter, with Afterpay included in the entire quarter and Cash App volumes continuing to grow meaningfully post-tax season. This percentage represents a decline in concentration from 72% of net revenues in the second quarter of 2021. TPV from customers outside our top 5 grew at 3 times the pace of our top 5 customers. The revenue associated with customers outside the top 5 more than doubled compared with the comparable quarter of 2021. This continues to be a testament to the impact of the Marqeta platform enabling business growth for our customers. We have again made significant progress on our three critical growth pillars in the quarter

[Mike Milotich:]

Thank you, Jason, and good afternoon, everyone. We had a great Q2 with TPV and net revenue growth of 53%, which is in line with last quarter. The strong net revenue growth was broad-based with 20 of our top 30 customers growing at least 40% and the customers outside the top 30 as a group growing much faster. Gross profit and adjusted EBITDA margins were above our expectations as a result at 42% and negative 5.5%, respectively. The net revenue and gross profit outperformance was primarily driven by three factors where results exceeded our expectations for the quarter

[Jason Gardner:]

Thanks, Mike. My highest aspiration for Marqeta is to fulfill our vision, defining and powering the future of money movement for the world's leading innovators. While I've succeeded in leading Marqeta to its present state as the founder and CEO to maximize the next stage of growth as we diversify the business and the capabilities we offer in the geogographies we serve, we want to be very proactive and begin our succession planning process by looking for the next CEO to lead Marqeta. I always knew this time would come. When we went public in 2021, I promised the hand leadership to the best person at the appropriate time. After thoughtful consideration of what the next phase of growth will require, I've concluded that now is the time to begin the search for this person. We will search for a CEO with deep experience scaling an innovative, high-growth business. I have led Marqeta from 0 to 1, and soon it will be time to pass the baton to the best person to lead it from 1 to infinity. I'm sharing this with you because I've always valued thoughtful transparency and because this transparency will allow me and the Board to attract, select and hire the best CEO to drive even higher levels of success for our customers, employees and shareholders. Once we hire the next CEO, I will become Executive Chairman. As Executive Chairman, I plan to spend my time in the three areas I can contribute the most

[Operator:]

[Operator Instructions] The first question we have is from Tien-Tsin Huang from JPMorgan.

[Tien-Tsin Huang:]

Jason, I appreciate your comments there in the interim succession. You sound quite at peace with that, and I admire you for that. So I just want to say that upfront.

[Jason Gardner:]

Thank you.

[Tien-Tsin Huang:]

If you don't mind, I wanted to ask about -- we got a little bit of a scare from FIS when they talked about working with the Cash Card or Block on the network side. So would you mind just commenting on if there's any implications to Marqeta and if there's any update on the relationship in general and the timing of the renewal, et cetera, given the scare that we got?

[Jason Gardner:]

Yes. There's -- thanks, Tien-Tsin. There's no implication for Marqeta. That was just an unfortunate thing that was said, and it doesn't affect the cash card or our relationship specifically with Block. I mean issuing processing is an incredibly complex industry. You know that. We work very closely with Block to provide a wide variety of services and support to fuel their growth. And just as a reminder, we have multiple contracts with Block and Afterpay that go throughout 2024. Our relationship has only grown since we started working with Cash App. We provide a wealth of services to Block across our platform. So to point those out specifically is within Cash App is direct deposit, ATM, Cash App Card and Tencor and on the seller card is cards in the U.S. and Canada and bank account services. And obviously, we power Afterpay. So we're very uniquely positioned to power this business while legacy processors are not. Marqeta was built for developers. We're built for innovation. We're cloud-based. It's a single platform. So you integrate once, you can launch everywhere. And everything is in one place. So we're very, very flexible in regards to how we can support not only Block but really all of our customers. You also asked about the renewal. So we understand that the market is eagerly waiting a renewal, and we'll share updates when we have them. As everyone knows, this is a critical relationship for both Block and Marqeta, and our two companies work closely together in service to our important relationship.

[Operator:]

The next question we have is from [Marina Kumar] from UBS.

[Unidentified Analyst:]

You mentioned that you have some investments that moved from Q2 to Q3. Could you specify what types of investments that are at your top priorities of investments for '22?

[Mike Milotich:]

Sure. So it's really just the timing of some technology-related investments as well as the timing of hiring. So we have a lot of pending starts. So they're just people who have been hitting the P&L in the second quarter but are about to start, and so it really is as simple as that. The focus of our investments this year are really, I would say, three primary things, and most of it is almost all geared around product and technology. So one is just the increasing the reliability and resiliency that Jason touched on in his remarks. The second is continuing to expand our credit capabilities and launching with more and more customers, which, again, Jason also highlighted. And then the third area is expanding our Banking-as-a-Service-like capabilities. So more cash in, cash out, money in, money out type capabilities in support of our customers is we're just finding more and more of our customers and potential customers are -- have some aspect of a neo bank-like aspirations in their business, where they're taking deposits of multiple forms and then want to offer their customers flexibility to use those in different ways. And so those are really the three primary focus areas of our investment. We're also investing in additional go-to-market resources both in sales in North America as well as Europe. But I would say the bulk of it is mostly geared at product and technology.

[Unidentified Analyst:]

And just touching on your credit platform announcement, you mentioned 40 new credit APIs. Do you expect that to help Marqeta gain traction with more traditional financial institutions? And any key milestones we should watch out for?

[Jason Gardner:]

Yes. So thanks, Marina. So given the massive opportunity to modernize credit, this is a consistent investment in our product road map. And you're right, as we recently launched more than 40 new credit APIs, it really enables our customers to more easily design, test and launch new card programs. And the two, obviously, the aspects of the program pattern is really the flexible rewards engine and the newly announced instant credit decisioning. We also recently announced the GreenLight Family Card, which is an expansion our FNBO relationship. So I'd say we're still in the early days of our credit journey, but it's important for us to build trust within the s pace. And then when it comes to large FI progress, they want similar capabilities to the disruptors, I mean, making them really a great potential partners for Marqeta. Our level of engagement there have increased. Large FIs typically have long-standing partnerships that will take time for establish ourselves. Our goal with these programs to get a foot in door and expand over time and that we can help them in areas that we want to -- where they want to be more innovative. So currently, revenue is not a big driver of our growth. I mean, really, the platform puts us in a great position as FIs look to build for the future. And we can do this faster. We can do this with a shorter time to market for a large FI. And I think most importantly is lower total cost of ownership to our highly configurable cloud-based platform. So while making inroads will take time in these sales cycles with the large FIs, we're encouraged by the fact that these conversations have increased greatly over the last year and many of them specifically around credit and other issuing processing capabilities of Marqeta.

[Operator:]

The next question we have is from Darrin Peller from Wolfe Research.

[Darrin Peller:]

When we look at the actual results this quarter, they were very strong across volume, gross profit. Really, it underscores the trends you're having with your core customers, as you mentioned. But what's interesting is when we hear your guidance, it really does apply an element of conservatism that doesn't seem to be showing up in the data from the past quarter. I guess, first of all, are you seeing anything in the current trends themselves in terms of a change in behavior from your current customers? Or are you just trying to be conservative given what you hear in -- or what we're all hearing about in the market about different end markets you service? And then more importantly, if you could just give us a sense of what are the top couple of verticals that you are really most excited about having sustainability. Expense management has been one, obviously. And I mean there's been a handful of really great new places you've got. So if you could just give us some color.

[Mike Milotich:]

Yes. Sure. So Darren, I feel we are not being, I guess, conservative, which assume that we're maybe sort of being a little bit biased. I would say we really feel like we're being cautious and sort of really assessing what's happening in market and sort of pausing for now to see how it plays out. So it's not anything specifically in our numbers. It's more that we are hearing from some customers. So there -- we really have two types of customers, if I step back. There are customers where our card value proposition is sort of integral to their core business. And then we have customers where they're using the card program more for an increased engagement and maybe an additional monetization play. And what we're hearing from some customers is where it's core to their business, there were areas where they were maybe going to launch another product with us or expand to another geography. And they're saying, "I'm going to pause and wait a little bit and see what happens." And then customers where it's more of a monetization play and maybe not central to their business, they're saying, "Well, we're scaling back on some investment, and a lot of that is going to be directed at the core business and not some of the additional new things we're going to try to do." So it's not broad-based yet, but we have heard it from a few customers. And so we really just want to be cautious right now. And then certainly, we did expect a decent amount of growth from these newer customers, as I mentioned. So people have signed in the last 12 months or so as well as some of the new crypto customers. If you went back a few months, we were really expecting a nice ramp on those customers similar to what we've seen in the past. But what we now feel is going to happen is it's going to move a little bit more slowly as people are not going to invest quite as much in the launch of their programs because the launch of a new card program typically requires a good amount of upfront investment to drive that usage. And so that's really what we're cautious about is to see how it plays out over the next couple of months. And hopefully, the pausing that we're maybe hearing from some people will pass, and we'll get back to performing as we have earlier in the year. The only other thing I would point out about Q3, Darrin, is just that if you -- we just have some very tough comps as well, and that's the reason for the lower growth. So BNPL, if you look back at last year, the Q4 revenue was higher than all of the first half, so higher than Q1 and Q2 overall last year. So that's a tough comp. In expense management, Divvy flipped their business to us from a competitor, and that started in late 2021 and sort of scaled through the first half. So it was sort of on full blast, if you will, by the second half. And so those are just some of the factors that are informing our guide.

[Darrin Peller:]

Jason, just one quick follow-up. I mean from all the deals you've been winning, it does seem like you guys are pulling ahead of even the neo issuer processor competitors out there that we were -- we would hear more about a year ago, let's say. I mean, are you seeing any real changes from a competitive standpoint where it's -- you pulled out of the back in some ways or any other nuances?

[Jason Gardner:]

Yes. So we have a proven scaled platform and are in a very strong financial position to continue to invest. So in regards to kind of the small folks that you referred to -- and we have significantly more experience and scale. I mean these competitors aren't even close to the same proven track record that we have. To win large volumes, we need to be able to show both. I mean we've had 20 days -- 20% of the days in Q2 of '22, we processed over $500 million in TPV. That's an average of more than once a week. Marqeta has taken companies from start-up to enterprise. We have involved early with household names like DoorDash, Instacart, Block, multiple BNPL players. When customers are choosing critical platform/partner experience, an expertise will matter. So running their core operations or revenue-generating businesses on our platform, we have first-mover advantage in modern card issuing. I would also say, specifically within issuing and processing, smaller competitors may need to start preserving cash to extend runway. We have $1.7 billion in liquidity. We're cash flow-positive in this quarter. We can invest in our platform and maintain our financial position. So we are hiring. We're going to hire the same amount of people we did in 2021. We're investing in product. We're investing in technology. We're spreading our wings even further and allows us basically -- because our scale, our size, our expertise and liquidity really make us the preferred partner for companies seeking modern card issuing.

[Operator:]

The next question we have is from Ramsey El-Assal from Barclays.

[Ramsey El-Assal:]

I was wondering if you could elaborate a little bit on your rationale and sort of timing of kind of transitioning right now out of the role that you're in. I'm just curious as to sort of what is the -- some of the deeper in and maybe what your future plans might be.

[Jason Gardner:]

Ram, we're having real difficulty trying to hear you. You talked about transition out of?

[Ramsey El-Assal:]

Let me here. Is that any better?

[Jason Gardner:]

Much better.

[Mike Milotich:]

Much better.

[Ramsey El-Assal:]

Sorry, my apologies. I wanted to ask Jason to elaborate a little bit on the -- his reasoning for transitioning out of the CEO role at this point and maybe any commentary on what the future plans might be. Just curious sort of the timing and the reasoning.

[Jason Gardner:]

Yes. So it basically came down to -- when I kicked off the succession planning process, I recognized that we'll be a better CEO to lead Marqeta at this upcoming stage of growth. I mean, really, I'm not the best person to execute at this upcoming stage of growth. I am just getting way ahead of this. And really, this is what is best for Marqeta. I'm being proactive in the decision making, looking at the future growth and how the business will become more complex as we diversify. And Ramsey, to be clear, I am starting our succession planning, not leaving the CEO job for several months at least and then to be very active as Executive Chairman. So I would say, too, is that I will entirely support Marqeta as Executive Chairman once we hire the CEO. And also, it's like in the past few years, I've come to realize that I'm a pretty good entrepreneur. I'm a gold medalist, a professional athlete when it comes to building a business. And in the time since we've gone public, I have also begun to realize that I am not the best person to execute at this stage of growth. I want to hire the best person for this stage. People, products and customers is where I'm going to spend my time and my scale on behalf of Marqeta, our customers and our investors. I'm entirely committed to this company's success. This is where I'll be the best for Marqeta will benefit from the focus. As an entrepreneur, Marqeta is my baby, kind of my youngest child. I care deeply for it. I'm its founder and its largest shareholder. So it's my duty as the Founder, Chairman, CEO and largest shareholder to make the best, most prudent decisions in service to Marqeta, our people, our customers and our shareholders.

[Ramsey El-Assal:]

I appreciate that. That's a great and honest response.

[Jason Gardner:]

Thank you.

[Ramsey El-Assal:]

Maybe I can ask a quick follow-up then, which is on the additional services, meaning the service is not tied to TPV. Can you give us a little more sense of the opportunity to kind of expand that part of your business for that to become kind of a bigger long-term driver when we think about how revenues will trend over time?

[Mike Milotich:]

Yes. Sure. So where we're seeing the benefits there, Ramsey, is just the expertise and the scale with which we can do things on behalf of our customers, particularly if they're newer to the space. It's just -- they would much rather buy those services from us, where not only can we pass on some of our scale to them, but we can just -- we're already experts at it. So when it comes to -- if you're launching a new consumer program and you need to handle disputes, if you want to do know your customer, know your business-type checks, right, you need to order cards for your program. Like these are things that aren't necessarily going to be core to an innovator's business. And we just have rich experience and expertise there that they can leverage. And so what we're finding over time as we keep growing into new verticals and expanding our customer base that more and more people are taking it up -- taking us up on it to say, "It would be nice if you would just handle that aspect of it." And it's relatively small in terms of the overall size of our revenue, but it is growing faster. And because it doesn't come with the same cost of revenue dynamics, then it's helpful to the gross margin.

[Operator:]

[Operator Instructions] The next question we have is from Sanjay Sakhrani from KBW.

[Sanjay Sakhrani:]

A couple of follow-ups. One to Darrin's question, another one. Mike, just a follow-up. Have you now sort of taken -- given all the fintech caution, have you taken out growth that you were expecting in the second half before out of the equation? And then how does this cycle into next year? And then maybe just a follow-up question for Jason. What exact attributes are we looking for this new person that might come in to take the company in the direction you intend it to go?

[Mike Milotich:]

Yes. So to answer your first question, Sanjay, so what we're doing is this is mostly the impact of much newer customers who would be very small revenue in the last couple of quarters but we were expecting to ramp significantly. So if you think about the way our business works, right, once we sign a deal that might take a customer six months to connect to the platform and then anywhere from one to three quarters to really ramp their business to scale before it gets -- it starts to hit a nice run rate. And what we're really saying is for those newer customers, we don't think it's going to be one to three quarters. It might take longer because they're not going to invest behind it like they have in the past. And so it could have some implications for '23. But right now, I would say, minor unless we really go into recession and things -- that investment not doesn't become a pause but becomes more of a permanent decision. But right now, what we're hearing from customers is that everybody is a little bit in a wait-and-see mode or they're saying, "Well, I'm going to invest, but less than I was originally planning. And so I might ramp over a longer period of time." At this point, we don't think it has significant implications for '23. But obviously, we'll see what happens over the next couple of months, and that will be a bigger determining factor.

[Jason Gardner:]

Yes. And Sanjay, so being transparent is a core tenet. It was actually one of the core tenets when I started the business. And I felt really strongly about telling what our plan is today because I felt it just will allow us really to attract, select and hire the best CEO possible. So the next stage is really as we begin to diversify our business, we head into more geographies, we add more products and features and functions. To start the succession process now and get sort of way ahead, which is even more complexity in the business in the coming years, I thought was really the right thing to do, right thing to do for the business. And I felt, as I mentioned, it's kind of like my duty as the founder and CEO to make sure that we're setting ourselves up for success in the future. And I want that as the Chairman, the founder and the largest shareholder in the business. So as I think about what's next in regards to the attributes of this person, it's really experience, experience running a large public company or being involved with an executive team of a large public company, understanding the complexities of running a business like payments, really seeing around corners and what's next. And for me, too, is I love our people, I love our products, and I love our customers. I can be far more effective by focusing on those three things and not focusing on the day-to-day duties of running a public company if I can work with somebody in full support of them to go really build for the future with those attributes with that expertise of running a type of business at scale like Marqeta, then we'll all be successful in that process. So that really comes down to as far as the attributes. But I thought the transparency was really important because that really allow us to have really open conversations with a whole host of people out there. And I think there's a lot of great people out there who would be very interested in being the CEO of an amazing business like Marqeta. And I'm really looking forward to having a lot of those conversations in the coming weeks and months.

[Operator:]

The next question we have is from Ashwin Shirvaikar from Citi.

[Ashwin Shirvaikar:]

Jason, happy for you that you have the choice to do what you're doing. That's great.

[Jason Gardner:]

Thank you.

[Ashwin Shirvaikar:]

So because you mentioned sort of the pacing of client decisions and decision-making and ramps and things like that, I just wanted to get more color on a couple of different lines. One is, would you expect is, would you expect sort of more traction with, say, Powered by versus Managed by in terms of your offerings? And then the second thing I want to ask is maybe younger, smaller fintechs are worrying more about their cash flow and stretching out their ramps, but you do have a very large component of plants, such as Block, JPMorgan, Goldman, that don't necessarily worry about that. I wanted to kind of clarify how widespread the concern or caution is from your perspective.

[Mike Milotich:]

So maybe I'll go first and then Jason might have something to add. I mean I think, Ashwin, you're hitting on a great point. The caution we're seeing is from newer customers, mostly in the fintech space who are -- again, are saying, "I'm going to wait and see. Give me a month or two to see how this plays out." And -- but we actually believe, just like as Jason touched on in this environment, it gives us an advantage as a potential partner because we have the scale already and the sophistication and we have the liquidity to continue to invest. I think the same opportunity exists with our customers. We have several large customers, as you mentioned, who are already at scale, whether it's someone like Cash App or in the BNPL space or expense management. And they may find that this is a time for them to get a little more aggressive and maybe take some share as some of the smaller upstarts who would have been investing heavily may not be to the same degree. So it's very possible that that's how this plays out. And again, just all this is so new, just in the last month or two. That's why we just want to keep reiterating. We sort of are trying to be cautious here based on what we're hearing. But how it will play out is -- I guess, remains to be seen over the next couple of months.

[Jason Gardner:]

Yes. I would echo Mike. Depending on who you talk to, the myriad of experts out there, they can't tell us whether we're in a recession, not in a recession. Obviously, in the start-up landscape, a lot of the VC money has dried up and it's dried up in a dramatic fashion. So a lot of these companies are just focused on their core products. If that core product is a card, they bet on Marqeta. We have a very strong financial position, massive scale. We operate in 39 position, massive scale. We operate in 39 countries. So as companies are thinking about right now about the cards they're going to build, whether it supports their core business or is their core business, we believe it's going to be with Marqeta. And then I would add, too, is we power a wide range of business models across both consumer and commercial businesses. I mean that's been our go-to-market strategy since day 1, which is commerce disruption, digital banks, large tech giants and then large financial institutions. I mean interesting stat we found was that roughly one-sixth of the volume on our platform is for highly discretionary items, I mean, large electronics, travel, home improvement, entertainment. Consumers will still spend money on things like grocery, gas and other essentials. So we believe we're the go-to platform. We invented this category called modern card issuing. We believe now is the time for really to invest and hire into our business and allow our customers to really spread their wings. But again, a lot of us don't know what's going to be happening. We're just taking a cautious approach like our customers are, but we're in a lot of healthy conversations with them where they want to invest and where they want to go. And we believe we're obviously very well positioned to grab their business in the future as things change, and there's more clarity in regards to the broader macroeconomic market.

[Ashwin Shirvaikar:]

A quick clarification. Square, 69%. If you remove Afterpay, are you able to comment the sort of apples-to-apples, how it used to be with and without Afterpay? I don't know if you are...

[Mike Milotich:]

Yes. You -- yes, Ashwin, you don't miss much as usual. So yes, Afterpay is a factor. It was only in two months for last quarter, and it's in for the full quarter. So that is one of the factors. The other factor is just really strong Cash App engagement, and you heard them talk a little bit about this last week. But they're just seeing strong engagement, in part due to more inflows from tax refunds. So it really is about the strength of Block and not that our all other customers are slowing because that's not really the factor here. And as we've always said, when it comes to this concentration, we obviously think it will go down over time. But we don't want it to go down because Block slows, right? We want it to go down because we're very successful in diversifying our business. And our customers outside of our top 5, their TPV this quarter grew more than 4 times faster than our top 5. So we are growing quickly and diversifying. But Block not only acquired a company that we already had a strong relationship with, but they're just really executing well, and that's causing the percentage to increase on our side in terms of revenue concentration.

[Operator:]

The next question we have is from Timothy Chiodo from Credit Suisse.

[Timothy Chiodo:]

So I think we've covered a lot of the main topics pretty well. So I want to go to something that's more of a product topic, which is around secured credit cards. So Chime, a large neo bank, has had a lot of success with a secured credit card. And I wanted to see if you could maybe talk around your capabilities there, either an offering you might either have or could offer to either your existing neobank customers or potentially bring on new neobank customers. And then the subcomponent to that is maybe you could just talk about the complexity associated with the secured credit card relative to a regular credit card. In other words, would you be able to do program management right upfront for secured credit cards? Maybe it's slightly more similar to debit, maybe not.

[Jason Gardner:]

Well, sort of. So a secured credit card allows the consumer to actually build credit with that card. You're making an assumption, they don't have credit to actually go build that credit. So they -- it's basically a two-pronged approach to health and consumer, which is a secured credit card is they put, say, $500 or $1,000 upfront and then build credit by spending that money over time. It's a fairly straightforward way of people who have no credit to basically go and build that credit. It's something that is a line item, I would say, on our product road map. I mean like any great technology company, we'd love to go chase all the opportunities out there. And Chime has done an amazing job, and Chris is a great leader and they built a tremendous business. For now, our customers are not asking for this. And we see it in regards to future is, yes, it's something that we think is important. It's something that we may invest in. As I mentioned, it's a line item on our road map. But for right now, it's something that's not strategic in the present to all the things we want to do, especially within credit, and then focusing on the companies, whether it's disruptors, digital banks, tech giants and large financial institutions. So I like the product. It's just not something that we've thought about investing in today.

[Operator:]

The next question we have is from Bob Napoli from William Blair.

[Bob Napoli:]

Jason, always knew you as a serial entrepreneur, a gold medal winner for sure. Should be job back to you.

[Jason Gardner:]

Thank you.

[Bob Napoli:]

One thing we haven't touched on is your -- I mean key focus for you is international. And I was just wondering if you could give an update there on international. And you do have a large war chest. Some of these fintechs and a lot of some of them are international maybe are hitting the wall a little bit from a liquidity perspective, maybe -- that Marqeta would use its balance sheet to add to its portfolio, if you would.

[Jason Gardner:]

Yes. So I think there's a -- there's two questions there. I think one is about international. So we definitely see a very strong appetite for Marqeta's modern card issuing platform globally. We talked about a couple of things in our prepared remarks. Our partnership with Western Union, I mean, Western Union is a very large established money movement company leveraging our innovative platform in Europe. After years of strong traction and growth in Europe, we have great momentum and a growing reputation in the market. We had a meaningful-sized operation on the ground in Europe as well. And then also, we talked about is partnering with Mastercard in Australia to power the launch of Opal Plus for transport in New South Wales. This is a very innovative use case on our platform in the transport vertical. And this is -- this partnership is one of Marqeta's first in the transit vertical, showing the flexibility of our modern platform and the ability to support new use cases. So we're actively laying the groundwork to launch in many new markets. Our approach to those new markets were mirror approach in building our U.S. business. So our -- and our customers do. We have a lot of customers in the U. S. that want to go internationally. A true benefit of our platform is you integrate once and you can launch anywhere, and we think that's really important as our customers decide to focus around the world. So -- going to like investment strategy, I think number one is -- and I said this a couple of times, is like we are hiring. We are investing more in the platform. We're looking to build out more features and functions based on where we think the world is going and where our customers are telling us that we want to go. And then we also see great opportunity within the M&A space. So because of where we're at today in the sort of the macroeconomic environment and companies are -- and a lot of companies in fintech, I mean this has been published over the last couple of years. I mean the amount of investment flowing into fintech is head-spinning. And they've broken down a lot of different pieces. There's a lot of great companies out there that are relatively small that could be very strategic to Marqeta. So we have been actively as a corp dev department really looking and scoping out like what is out there and how can we not only increase our road map but add new features and functions to our platform that allow us to grow, expand and build even deeper moats and taller walls around our technology. So we're pretty excited about what we're seeing out there. And obviously, more to talk about here in the coming quarters as we begin to execute on that plan.

[Operator:]

The last question we have is from Andrew Jeffrey from Truist Securities.

[Andrew Jeffrey:]

Appreciate all the color also on the vertical performance. Jason, you highlight Western Union as a new customer. I wonder if you could comment more broadly on cross-border aspirations, thinking about some of the treasury management or cross-border capital providers, companies like Bakkt or Do. Just generally, is that an area that you think offers fertile growth for Marqeta over time?

[Jason Gardner:]

Well, specifically DLocal is an acquirer, mostly out of South America. I mean we don't necessarily focus on the acquiring side of the payments ecosystem. There's thousands of companies that we talked about in that space. There's a few hundred within issuing and processing. It's just orders of magnitude more complex. And then as customers like Bakkt and others, especially in the expense management space, begin to spread their wings globally, this is, as I pointed out several times, the real value proposition of what we provide. And this is a core tenet of how we go and build products, which is we want you to be able to integrate once and then launch anywhere versus the legacy providers. They might have a dozen different systems that you need to integrate with in different parts of the world. So on the international strategy, when we go out and we talk to companies, especially scaled companies that are looking to grow internationally, this is something that we really, really talk about. I mean we've announced that we're in 39 countries today. We operate businesses all over the world. Customers are building in Australia, coming to the United States, United States to Australia, Australia to Europe, I mean this is really core to our platform. And our customers are just increasingly relying on the global functionality of our platform. And we see international markets as really a driver of our long-term growth. So we'll continue to invest in those areas as these companies want to build more in our platform. And I think we don't talk about this enough, which is just simply lowering total cost of ownership. To have to go integrate with a dozen different platforms as a provider is very, very expensive. So when you do it once, that total cost of ownership or that soft dollar cost impact to your business is significantly less with Marqeta than anybody else.

[Mike Milotich:]

And just if I could add just one thing, Andrew, I think that as we look to continue to expand our money movement capabilities, so even today, obviously, we do more than just card issuing. We support a lot of more Banking as a Service and money-moving capabilities. And as we continue to expand those, certainly, some of those opportunities will be in cross-border, and that is something I would say that we definitely are thinking about in the coming years.

[Operator:]

Thank you, sir. Ladies and gentlemen, we have reached the end of our question-and-answer session. I would like to turn the call back to Jason Gardner for closing remarks.

[Jason Gardner:]

Thank you, everybody. As always, I appreciate everyone's time, especially joining us for this call. Very much looking forward for the updates in our next quarterly call. Everyone, stay safe and have a great rest of the day. Thank you.

[Operator:]

Thank you, sir. Ladies and gentlemen, that then concludes today's conference. Thank you for joining us. You may now disconnect your lines.