What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-02-28 compared with 2022-03-11 · 255 added, 205 removed, 792 unchanged (37% of the section changed)

4 unchanged sentences

Consolidated Balance Sheets

Consolidated Statements of Operation s and Comprehensive Loss

Consolidated Statements of Operations and Comprehensive Loss

Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)

8 unchanged sentences

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2103 framework), and our report dated February 28, 2023, expressed an unqualified opinion thereon.

Basis for Opinion

1 unchanged sentence

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

1 unchanged sentence

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates.

Revenue Share, Consideration Payable to Customers

Description of the Matter For the year ended December 31, 2022, the Company’s net revenue was $748.2 million, and as of December 31, 2022, the Company’s revenue share payable was $142.2 million.

As described in Note 2 to the consolidated financial statements, the Company's contracts with its customers typically include provisions under which the Company shares a portion of interchange fees with its customers, referred to as revenue share.

Revenue share payments are incentives to customers to increase their processing volume on the Company’s platform, computed as a percentage of the interchange fees earned or processing volume, and paid to customers monthly.

As customers’ processing volumes increase, the customers may earn an increased percentage of revenue share.

Revenue share, determined to be consideration payable to customers, is recorded as a reduction to net revenue in the consolidated statements of operations and comprehensive loss.

The Company records the amount due to the customer as revenue share payable on the consolidated balance sheets.

Auditing the Company’s revenue share amounts was challenging because the revenue share calculation includes a significant volume of data and multiple inputs that could be different across customers.

Further, the revenue share calculation for certain customers is performed manually by the Company because of the bespoke and complex nature of certain contractual terms.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company's process to calculate and record revenue share, including controls over management’s review of the calculation and of the completeness and accuracy of data used in the revenue share calculation.

We performed the following audit procedures, among others, related to revenue share amounts.

We independently calculated total annual revenue share for a sample of customers based on the contractual terms of the customers’ agreements and other inputs, including processing volume, interchange fees and card network and issuing bank fees using source data and compared our independent calculations of revenue share to the Company’s recorded amounts.

For this same sample of customers, we inspected the underlying customer agreements and used the revenue share rates per the contract to calculate each customer’s total annual revenue share.

Additionally, we performed analytical procedures to assess the reasonableness of the revenue share for all other customers entitled to revenue share over the fiscal year and evaluated any significant deviations from developed expectations that considered contractual revenue share rates and processing volume, among other factors.

We tested the completeness and accuracy of the underlying payment transaction data used in the revenue share calculation and also compared the revenue share payable as of December 31, 2022, to amounts paid in subsequent periods.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2018.

Redwood City, California

March 11, 2022

San Mateo, California

February 28, 2023

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Marqeta, Inc.

Opinion on Internal Control Over Financial Reporting

We have audited Marqeta, Inc.'s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), (the COSO criteria).

In our opinion, Marqeta, Inc.

(the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2022 and 2021, and the related consolidated statements of operations and comprehensive loss, redeemable convertible preferred stock and stockholders' equity (deficit) and cash flows for each of the three years in the period ended December 31, 2022, and the related notes and our report dated February 28, 2023 expressed an unqualified opinion thereon.

Basis for Opinion

The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Report on Internal Control Over Financial Reporting.

Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

San Mateo, California

February 28, 2023

Marqeta, Inc.

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Total assets $ 1,770,346 $ 1,830,378

Liabilities, redeemable convertible preferred stock, and stockholders’ equity (deficit)

Liabilities and stockholders’ equity

Current liabilities:

3 unchanged sentences

Total current liabilities 282,879 237,968

Redeemable convertible preferred stock warrant liabilities — 2,517

Operating lease liabilities, net of current portion 9,034 12,427

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Commitments and contingencies (Note 7)

Redeemable convertible preferred stock, $ 0.0001 par value;

zero and 352,047,950 shares authorized;

zero and 351,844,340 shares issued and outstanding;

aggregate liquidation preference of zero and $ 552,868 as of December 31, 2021 and December 31, 2020, respectively

Stockholders’ equity (deficit):

Stockholders’ equity:

Preferred stock, $ 0.0001 par value;

100,000,000 and zero shares authorized, no shares issued and outstanding as of December 31, 2021 and December 31, 2020, respectively

100,000,000 and 100,000,000 shares authorized, no shares issued and outstanding as of December 31, 2022 and December 31, 2021, respectively

Common stock, $ 0.0001 par value:

1,500,000,000 and zero Class A shares authorized, 421,792,153 and zero shares issued and outstanding as of December 31, 2021 and December 31, 2020, respectively.

1,500,000,000 and 1,500,000,000 Class A shares authorized, 486,530,334 and 421,792,153 shares issued and outstanding as of December 31, 2022 and December 31, 2021, respectively.

600,000,000 and 600,000,000 Class B shares authorized, 54,833,765 and 119,591,365 shares issued and outstanding as of December 31, 2022 and December 31, 2021, respectively

Additional paid-in capital 2,082,373 1,993,055

Accumulated other comprehensive income (loss) ( 2,230 ) 25

Accumulated other comprehensive loss ( 7,237 ) ( 2,230 )

Accumulated deficit ( 602,233 ) ( 417,453 )

Total stockholders’ equity (deficit) 1,573,426 ( 213,717 )

Total liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit) $ 1,830,378 $ 457,680

Total stockholders’ equity 1,472,956 1,573,426

Total liabilities and stockholders’ equity $ 1,770,346 $ 1,830,378

See accompanying notes to consolidated financial statements.

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Compensation and benefits 415,094 318,116 129,802

Professional services 18,443 7,188 7,157

Technology 52,361 33,637 13,239

Professional services 23,479 18,443 7,188

Occupancy 4,514 4,181 4,337

8 unchanged sentences

Net loss $ ( 184,780 ) $ ( 163,929 ) $ ( 47,695 )

Deemed dividend to redeemable convertible preferred stockholders — — ( 64,149 )

Net loss attributable to common stockholders $ ( 184,780 ) $ ( 163,929 ) $ ( 47,695 )

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Shares Amount Shares Amount

Balance as of January 1, 2019 287,216,434 $ 114,842 121,411,803 $ 12 $ 2,870 $ ( 1 ) $ ( 87,788 ) $ ( 84,907 )

Issuance of Series E redeemable convertible preferred stock at $ 3.89 per share, net of issuance costs of $ 7,010

38,552,483 142,990 — — — — — —

Exchange of common stock for Series E redeemable convertible preferred stock 11,074,661 13,767 ( 11,074,661 ) — ( 13,767 ) — — ( 13,767 )

Deemed dividend upon the exchange of Series A and Series C redeemable convertible preferred stock for Series E redeemable convertible preferred stock — 64,149 — — ( 4,308 ) — ( 59,841 ) ( 64,149 )

Issuance of common stock upon exercise of vested options — — 7,767,038 — 515 — — 515

Issuance of common stock upon early exercise of unvested options — — 762,440 — — — —

Repurchase of early exercised stock options — — ( 436,589 ) — — — —

Vesting of early exercised stock options — — — — 298 — — 298

Share-based compensation expense — — — — 21,757 — — 21,757

Change in other comprehensive income (loss) — — — — — 47 — 47

Net loss — — — — — — ( 58,200 ) ( 58,200 )

Balance as of December 31, 2019 336,843,578 $ 335,748 118,430,031 $ 12 $ 7,365 $ 46 $ ( 205,829 ) $ ( 198,406 )

8 unchanged sentences

Share-based compensation expense — — — — 28,211 — — 28,211

Change in other comprehensive income (loss) — — — — — ( 21 ) — ( 21 )

Change in accumulated other comprehensive income (loss) — — — — — ( 21 ) — ( 21 )

Net loss — — — — — — ( 47,695 ) ( 47,695 )

10 unchanged sentences

Share-based compensation expense — — — — 142,660 — — 142,660

Change in other comprehensive income (loss) — — — — — ( 2,255 ) — ( 2,255 )

Change in accumulated other comprehensive income (loss) — — — — — ( 2,255 ) — ( 2,255 )

Net loss — — — — — — ( 163,929 ) ( 163,929 )

Balance as of December 31, 2021 — $ — 541,383,518 $ 54 $ 1,993,055 $ ( 2,230 ) $ ( 417,453 ) $ 1,573,426

Issuance of common stock upon exercise of options — — 7,785,748 — 9,754 — — 9,754

Repurchase of early exercised stock options — — ( 45,958 ) — — — — —

Issuance of common stock under employee stock purchase plan — — 683,485 — 4,762 — — 4,762

Issuance of common stock upon net settlement of restricted stock units — — 3,214,677 — ( 15,362 ) — — ( 15,362 )

Vesting of common stock warrants — — — — 8,621 — — 8,621

Share-based compensation expense — — — — 160,743 — — 160,743

Repurchase and retirement of common stock — — ( 11,657,371 ) ( 1 ) ( 79,200 ) — — ( 79,201 )

Change in accumulated other comprehensive income (loss) — — — — — ( 5,007 ) — ( 5,007 )

Net loss — — — — — — ( 184,780 ) ( 184,780 )

Balance as of December 31, 2022 — $ — 541,364,099 $ 53 $ 2,082,373 $ ( 7,237 ) $ ( 602,233 ) $ 1,472,956

See accompanying notes to consolidated financial statements.

10 unchanged sentences

Non-cash operating leases expense 2,281 2,115 2,029

Amortization of premium (accretion of discount) on marketable securities 1,162 543 ( 499 )

Provision for doubtful accounts 173 39 370

Amortization of premium on marketable securities 277 1,162 543

Gain on sale of equity method investment ( 17,889 ) — —

Impairment of other financial instruments 11,616 — —

Other 649 3,110 1,929

8 unchanged sentences

Operating lease liabilities ( 3,020 ) ( 2,772 ) ( 1,515 )

Net cash provided by (used in) operating activities 56,972 50,273 ( 15,428 )

Net cash (used in) provided by operating activities ( 12,966 ) 56,972 50,273

Cash flows from investing activities:

Purchases of property and equipment ( 2,319 ) ( 2,743 ) ( 2,375 )

Purchase of patents ( 1,600 ) — —

Purchases of marketable securities ( 70,495 ) ( 455,266 ) ( 216,200 )

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Purchase of equity method investment and purchase option — ( 20,000 ) —

Net cash used in investing activities ( 329,121 ) ( 57,562 ) ( 100,318 )

Sale of equity method investment 25,732 — —

Net cash provided by (used in) investing activities 28,718 ( 329,121 ) ( 57,562 )

Cash flows from financing activities:

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Proceeds from issuance of redeemable convertible preferred stock, net of issuance costs — — 166,942

Payment of bank loan and related fees — — ( 5,005 )

Proceeds from exercise of stock options, including early exercised stock options, net of repurchase of early exercised unvested options 9,249 4,539 3,144

2 unchanged sentences

Taxes paid related to net share settlement of restricted stock units ( 15,362 ) ( 23,552 ) —

Repurchase of common stock ( 78,136 ) — —

Payment of deferred offering costs — ( 4,760 ) ( 2,708 )

Net cash provided by financing activities 1,299,297 167,378 139,049

Net increase in cash, cash equivalents, and restricted cash 1,027,148 160,089 23,303

Net cash (used in) provided by financing activities ( 79,487 ) 1,299,297 167,378

(Decrease) Increase in cash, cash equivalents, and restricted cash ( 63,735 ) 1,027,148 160,089

Cash, cash equivalents, and restricted cash - Beginning of period 1,255,381 228,233 68,144

15 unchanged sentences

Purchase of property and equipment accrued and not yet paid $ 563 $ 1,190 $ 159

Deemed dividend upon the exchange for Series A and Series C redeemable convertible preferred stock for Series E redeemable convertible preferred stock

$ — $ — $ 64,149

Repurchase of common stock accrued and not yet paid $ 1,065 $ — $ —

Deferred offering costs not yet paid $ — $ — $ 426

6 unchanged sentences

Marqeta, Inc., or the Company, creates digital payment technology for innovation leaders.

The Company's modern card issuing platform, or the Platform, places control over payment transactions into the hands of its customers, or Customers, enabling them to develop modern state-of-the-art product experiences.

The Company's modern card issuing platform places control over payment transactions into the hands of its customers, or customers, enabling them to develop modern state-of-the-art product experiences.

The Company provides all of its customers issuer processor services and for most of its customers it also acts as a card program manager.

The Company primarily earns revenue from processing payment card transactions for its customers.

The Company was incorporated in the state of Delaware in 2010 and is headquartered in Oakland, California, with offices in the United States, United Kingdom, and Australia, and a presence in Singapore.

The Company was incorporated in the state of Delaware in 2010 and is headquartered in Oakland, California, with offices in the United States, United Kingdom, and Australia and legal entities in Singapore and Brazil as of December 31, 2022.

Initial Public Offering

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All intercompany balances and transactions have been eliminated in consolidation.

Certain prior period amounts reported in our consolidated financial statements and the related notes have been reclassified to conform to the current period presentation.

Use of Estimates

The preparation of the financial statements requires management to make estimates and assumptions relating to reported amounts of assets and liabilities, disclosure of contingent liabilities, and reported amounts of revenue and expenses.

Significant estimates and assumptions relate to the fair value of equity awards and warrants, share-based compensation, the estimation of variable consideration in contracts with Customers, the reserve for contract contingencies and processing errors, the fair value of equity method investments and a purchase call option to acquire the remaining interest in the equity method investee, the incremental borrowing rate used to determine operating lease liabilities, the useful lives of property and equipment, and the collectability of accounts receivable.

Significant estimates and assumptions relate to the fair value of equity awards and warrants, share-based compensation, the estimation of variable consideration in contracts with customers, the reserve for contract contingencies and processing errors, and the fair value of equity method investments and a purchase call option to acquire the remaining interest in the equity method investee.

Actual results could differ materially from these estimates.

Marqeta, Inc.

Notes to Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

Business Risks and Uncertainties

3 unchanged sentences

The Company believes that its cash and cash equivalents of $ 1.2 billion and marketable securities of $ 440.9 million as of December 31, 2022 are sufficient to fund its operations through at least the next twelve months from the issuance of these financial statements.

In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic.

Since then, the COVID-19 pandemic has continued to spread throughout the United States and the world.

While the Company has not been adversely affected by the COVID-19 pandemic to date, the prolonged disruption to the economy and the long-term financial impact of the pandemic cannot be reasonably estimated.

The Company continues to monitor the situation and may take actions that alter its operations and business practices as may be required by federal, state, or local authorities or that the Company determines are in the best interests of its Customers, vendors, and employees.

Marqeta, Inc.

Notes to Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

Summary of Significant Accounting Policies

Revenue Recognition

On January 1, 2019, the Company adopted Accounting Standards Codification, or ASC, 606, Revenue from Contracts with Customers (Topic 606) , using the full retrospective method.

Revenue is recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.

6 unchanged sentences

The Company’s primary performance obligation is to provide customers continuous access to the Company’s platform used to process all customers’ transactions as needed.

This obligation includes authorizing, settling, clearing and reconciling all transactions and managing the interactions with the Issuing Banks and Card Networks on behalf of its Customers.

This obligation includes authorizing, settling, clearing and reconciling all transactions under MxM and PxM arrangements and managing the interactions with the Issuing Banks and Card Networks on behalf of its customers under MxM arrangements.

All these services are collectively considered a single performance obligation.

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The Company satisfies its performance obligation to provide platform services over time as customers have continuous access to the Company's platform and the Company stands-ready to process customer transactions throughout their term of access.

Marqeta, Inc.

Notes to Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

The Company recognizes revenue when the underlying transactions are complete, and its performance obligation is satisfied.

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When pricing terms are not consistent throughout the entire term of the contract, the Company estimates variable consideration in its customer contracts primarily using the expected value method.

The standard term of the Customer contracts is three years, with automatic renewal for successive one-year periods thereafter unless either party provides written notice of its intent not to renew.

The standard term of the customer contracts range from three to five years , with automatic renewal for successive one-year periods thereafter unless either party provides written notice of its intent not to renew.

The Company develops estimates of variable consideration on the basis of both historical information and current trends and does not expect or anticipate significant reversal of revenue in the future periods.

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Any service level payment is recorded as a reduction to net revenue in the consolidated statements of operations and comprehensive loss.

The Company does not capitalize costs to acquire contracts.

Marqeta, Inc.

Notes to Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

Historically, the Company did not capitalize material costs to acquire contracts.

Revenue Share

1 unchanged sentence

Revenue Share payments are incentives to customers to increase their processing volume on the Company’s platform, and is computed as a percentage of the Interchange Fees earned or processing volume and is paid to customers monthly.

The Company records Revenue Share as a reduction to net revenue in the consolidated statements of operations and comprehensive loss.

The Company records Revenue Share as a reduction to revenue in the consolidated statements of operations and comprehensive loss.

The Company records the amount due to the customer as Revenue Share payable on the consolidated balance sheets.

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Deferred revenue arises when customers are billed for services in advance of the Company's revenue recognition.

The Company's deferred revenue is primarily due to undelivered card fulfillment services and variable consideration from customer contracts where pricing terms are not consistent throughout the entire term of the contract, non-refundable upfront setup fees that are billed at contract inception, and card fulfillment services that are billed to customers in advance of the delivery of the ordered cards.

Arrangements that include rights to additional goods or services that are exercisable at a customer’s discretion are generally considered options.

1 unchanged sentence

This material right is valued by estimating the discount that will be redeemed by the customer during the optional renewal period.

Marqeta, Inc.

Notes to Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

Reserve for Contract Contingencies and Processing Errors

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The Company's contracts with Card Networks and Issuing Banks typically have terms ranging from three to five years which may be renewed in one-year to two-year increments as agreed by both parties.

Issuing Bank costs compensate Issuing Banks for issuing cards to the Company’s Customers and sponsoring the Company’s card programs with the Card Networks and are generally equal to a specified percentage of the processing volume or a fixed amount per transaction, subject to monthly minimum amounts.

Issuing Bank costs compensate Issuing Banks for issuing cards to the Company’s customers and sponsoring the Company’s card programs with the Card Networks and are generally equal to a specified percentage of the processing volume or a fixed amount per transaction,

Marqeta, Inc.

Notes to Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

subject to monthly minimum amounts.

Card fulfillment costs include physical cards, packaging, and other fulfillment costs.

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The functional currency of the Company’s foreign subsidiary is its respective local currency.

Translation adjustments arising from the use of differing exchange rates from period to period are included in accumulated other comprehensive income (loss) within the consolidated balance sheets and the consolidated statements of redeemable convertible preferred stock and stockholders’ deficit.

Foreign currency transaction gains and losses are included in other income (expense), net in the consolidated statements of operations and comprehensive loss.

2 unchanged sentences

Revenue and expenses are translated at the average exchange rate during the period, and equity balances are translated using historical exchange rates.

Marqeta, Inc.

Notes to Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less from the date of purchase to be cash equivalents.

The Company considers all highly liquid investments and investments with original maturities of three months or less from the date of purchase to be cash equivalents.

Cash and cash equivalents consist primarily of bank deposit accounts and investments in money market funds.

Restricted Cash

Restricted cash consists of a deposit with one of the Company’s Issuing Banks to provide the Issuing Bank collateral in the event that Customers’ funds are not deposited at the Issuing Bank in time to settle Customers’ transactions with the networks that provide the infrastructure for settlement and card payment information flows, or Card Networks.

Restricted cash consists of deposits with financial institutions that issue payment cards (credit, debit, or prepaid) either on their own behalf or on behalf of businesses that issue customized card products to their end users, or Issuing Banks, to provide the Issuing Bank collateral in the event that customers’ funds are not deposited at the Issuing Banks in time to settle customers’ transactions with the networks that provide the infrastructure for settlement and card payment information flows, or Card Networks.

Restricted cash also includes cash used to secure a letter of credit for the Company’s lease of its office headquarters in Oakland, California.

1 unchanged sentence

The Company's marketable securities include U.S.

government securities, commercial paper, asset-backed securities, and corporate debt securities.

treasury securities, U.S.

agency securities, commercial paper, asset-backed securities, and corporate debt securities.

The Company's marketable securities are accounted for as securities available-for-sale and are classified within current assets in the consolidated balance sheets as the Company may sell these securities at any time for use in its operations, even prior to maturity.

The Company carries these marketable securities at fair value, and records any unrealized gain and loss, net of taxes, in accumulated other comprehensive income (loss), a component of stockholders’ equity (deficit).

The Company carries these marketable securities at fair value and periodically evaluates them for unrealized losses.

For unrealized losses in securities that the Company intends to hold and will not more

Marqeta, Inc.

Notes to Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

likely than not be required to sell before recovery, the Company further evaluates whether declines in fair value below amortized cost are due to credit or non-credit related factors.

In making this assessment, the Company considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and any adverse conditions specifically related to the security, among other factors.

The Company considers credit related impairments to be changes in value that are driven by a change in the creditor’s ability to meet its payment obligations, and records an allowance on the consolidated balance sheets with a corresponding loss in other income (expense), net in the consolidated statements of operations and comprehensive loss when the impairment is incurred.

Unrealized non-credit related losses and unrealized gains are recorded as a separate component in accumulated other comprehensive income (loss), a component of stockholders’ equity (deficit) until realized.

The Company records any realized gains or losses on the sale of marketable securities in other income (expense), net in the consolidated statements of operations and comprehensive loss.

Management regularly reviews whether marketable securities are other-than-temporarily impaired.

If any impairment is considered other-than-temporary, the Company writes down the investment to its then fair value and records the corresponding charge through other income (expense), net in the consolidated statements of operations and comprehensive loss.

Equity Investments and Purchase Options

1 unchanged sentence

Under the equity method, the Company’s records its share of each entity’s profit or loss in other income (expense), net in the consolidated statements of operations and comprehensive loss on a one quarter lag when the most recent financial information of the investee becomes available.

The Company regularly reviews investments accounted for under the equity method for impairment.

The Company periodically reviews investments accounted for under the equity method for impairment.

Investments in other entities not accounted for under the equity method of accounting, including options to purchase these entities, are accounted for at cost less impairment, if applicable.

3 unchanged sentences

The carrying amounts of the equity method investment and the option at December 31, 2021 were $ 8.4 million and $ 11.6 million, respectively.

The option is reflected within Prepaid expenses and other current assets in the consolidated balance sheets.

The Company applies the measurement alternative and will continue to measure the option at cost, less any impairment.

If an indicator of impairment exists or if the Company decides to not exercise its option, which expires on June 30, 2022, the Company will record an impairment charge accordingly.

As of December 31, 2021, the option was reflected within prepaid expenses and other current assets in the consolidated balance sheets.

The Company applied the measurement alternative to measure the option at cost, less any impairment.

During the year ended December 31, 2022, the Company recorded an impairment of $ 11.6 million related to the option based on the Company’s decision not to exercise the option.

During the year ended December 31, 2022, the Company sold its equity method investment in a private company.

The carrying amount of this investment was $ 7.8 million as of the date of sale and the purchase price was $ 25.7 million.

As a result, the Company recorded a gain of $ 17.9 million in the year ended December 31, 2022 in Other income (expense), net on the Consolidated Statement of Operations.

Accounts Receivable

Accounts receivable are recorded at invoiced amounts and do not earn interest.

The Company estimates an allowance for accounts receivable based on its assessment of the collectability of accounts by considering its historical accounts receivable collection experience for each customer, the age of each outstanding invoice and an evaluation of current expected risk of credit loss based on current economic conditions and reasonable and supportable forecasts of future economic conditions over the life of the receivable.

The Company assesses collectability on an individual basis when it identifies specific customers with collectability issues and by reviewing accounts receivable on an aggregated basis where similar characteristics exist.

As of December 31, 2022 and 2021, the allowance for accounts receivable was $ 0.3 million and $ 0.2 million, respectively.

Marqeta, Inc.

1 unchanged sentence

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

Accounts Receivable

Accounts receivable are recorded at invoiced amounts and do not earn interest.

The Company estimates an allowance for doubtful accounts receivable by making its best estimate of specific uncollectible accounts considering its historical accounts receivable collection experience and the information that management has about the current status of accounts receivable balances.

As of December 31, 2021 and 2020, the allowance for doubtful accounts receivable was $ 0.2 million and $ 0.1 million, respectively.

Settlements Receivable

Settlements receivable represent Interchange Fees earned on customers’ card transactions, net of pass through Card Network fees, and are due from Issuing Banks.

Interchange Fees are typically received within one or two business days of the transaction date and are due from well-established Issuing Banks, mitigating the associated risk of collection.

No valuation allowance has been established.

Interchange Fees are typically received within one or two business days of the transaction date and are due from well-established Issuing Banks with no historical collections issue, mitigating the associated risk of collection.

No allowance has been established.

The Company does not generate revenue from Issuing Banks.

21 unchanged sentences

In instances where there is limited or no observable market data, fair value measurements for assets and liabilities are based primarily upon the Company’s own estimates, and the measurements reflect information and assumptions that management believes a market participant would use in pricing the asset or liability.

Marqeta, Inc.

Notes to Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

The Company’s financial instruments consist of cash equivalents, marketable securities, accounts receivable, unbilled customers' receivable, settlements receivable, accounts payable, accrued liabilities, and prior to the IPO, redeemable convertible preferred stock warrant liabilities.

1 unchanged sentence

Marketable securities are carried at fair value.

Accounts receivable, unbilled Customers' receivable, settlements receivable, accounts payable, and accrued liabilities are stated at their carrying value, which approximates fair value due to the short time to the expected receipt or payment date.

Accounts receivable, unbilled customers' receivable, settlements receivable, accounts payable, and accrued liabilities are stated at their carrying value, which approximates fair value due to the short time to the expected receipt or payment

Marqeta, Inc.

Notes to Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

The redeemable convertible preferred stock warrant liabilities were carried at fair value.

15 unchanged sentences

Lease Obligations

On January 1, 2019, the Company adopted Accounting Standards Update, or ASU, 2016-02, Leases (Topic 842), or Topic 842, using the modified retrospective method, which resulted in the recognition of operating lease right-of-use assets and lease liabilities on the Company’s consolidated balance sheets as of December 31, 2019, with no impact to its consolidated statements of operations and comprehensive loss for the year ended December 31, 2019.

The Company measures lease liabilities based on the present value of the total lease payments not yet paid discounted based on the Company’s incremental borrowing rate, which is the estimated rate the Company would be required to pay for a collateralized borrowing equal to the total lease payments over the term of the lease.

Marqeta, Inc.

Notes to Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

The Company measures right-of-use assets based on the corresponding lease liability adjusted for (i) payments made to the lessor at or before the commencement date, (ii) initial direct costs the Company incurs and (iii) tenant incentives under the lease.

2 unchanged sentences

The Company has no finance leases.

Marqeta, Inc.

Notes to Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

In 2016, the Company entered into a lease agreement for its corporate headquarters in Oakland, California for 19,000 square feet of office space, which was subsequently amended resulting in a total of 63,000 square feet of office space being leased.

18 unchanged sentences

RSUs granted on or after April 1, 2021, vest upon the satisfaction of a service condition.

The service condition for these awards is satisfied over four years and the grant date fair value of these RSUs will be recorded as share-based compensation expense over the service period.

In general, the service condition for these awards is satisfied over four years and the grant date fair value of these RSUs will be recorded as share-based compensation expense over the service period.

The fair value of RSUs is based on the closing price of the Company’s Class A common stock on the grant date.

9 unchanged sentences

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

CEO Long-Term Performance Award

In April and May 2021, the Company’s board of directors granted the Company’s Chief Executive Officer equity incentive awards in the form of performance-based stock options, or collectively, the CEO Long-Term Performance Award.

The CEO Long-Term Performance Award vests upon the satisfaction of a service condition and the achievement of certain stock price hurdles over a seven year performance period following the expiration of the lock-up period associated with the IPO.

Executive Chairman Long-Term Performance Award

In April and May 2021, the Company’s board of directors granted the Company’s Executive Chairman and then-Chief Executive Officer equity incentive awards in the form of performance-based stock options, or collectively, the Executive Chairman Long-Term Performance Award, formerly known as the CEO Long-Term Performance Award.

The Executive Chairman Long-Term Performance Award vests upon the satisfaction of a service condition and the achievement of certain stock price hurdles over a seven year performance period following the expiration of the lock-up period associated with the IPO.

The stock price hurdle will be achieved if the average closing price of a share of the Company’s Class A common stock during any 90 consecutive trading day period during the performance period equals or exceeds the requisite stock price hurdle for the performance period.

The grant date fair value of the CEO Long-Term Performance Award was estimated using a Monte Carlo simulation model that incorporated multiple stock price paths and probabilities that the Company stock price hurdles are met.

The grant date fair value of the Executive Chairman Long-Term Performance Award was estimated using a Monte Carlo simulation model that incorporated multiple stock price paths and probabilities that the Company stock price hurdles are met.

The Company records the resulting expense in the consolidated statements of operations and comprehensive loss over the derived service period of each of the seven separate tranches using the accelerated attribution method.

18 unchanged sentences

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

New Accounting Standards Not Yet Adopted

As an emerging growth company, the Jumpstart Our Business Startups Act, or the JOBS Act, allows the Company to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies.

The Company has elected to use this extended transition period under the JOBS Act.

Recently Adopted Accounting Pronouncements

The JOBS Act allowed “emerging growth companies” to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies.

Before December 31, 2021, the Company met the definition of an “emerging growth company” and has elected to use this extended transition period under the JOBS Act.

The adoption date discussed below reflects this election.

5 unchanged sentences

The CECL model requires a company to estimate credit losses expected over the life of the financial assets based on historical experience, current conditions and reasonable and supportable forecasts.

The guidance will be effective for the Company beginning January 1, 2023, and interim periods therein.

The amendment requires a modified retrospective approach by recording a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption.

Early adoption is permitted.

The Company is still evaluating the impact this ASU will have on its consolidated financial statements.

Marqeta, Inc.

Notes to Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

The Company adopted this new guidance as of December 31, 2022 upon the loss of “emerging growth company” status, with an effective date of January 1, 2022, using a modified retrospective approach.

The adoption did not have a material impact on the balances reported in the Company’s consolidated financial statements.

Disaggregation of Revenue

15 unchanged sentences

Total deferred revenue $ 21,250 $ 25,167

Contract assets related to the Company’s conditional right to consideration for the Company’s completed performance under the contract.

Contract assets relate to the Company’s conditional right to consideration for the Company’s completed performance under the contract.

Deferred revenue relates to payments received in advance of performance under the contract.

Net revenue recognized during the years ended December 31, 2022 and 2021 that was included in the deferred revenue balances at the beginning of the respective periods was $ 13.8 million and $ 4.1 million, respectively.

Remaining Performance Obligations

The Company has performance obligations associated with commitments in Customer contracts for future stand-ready obligations to process transactions throughout the contractual term.

Remaining performance obligations include related deferred revenue currently recorded and exclude contracts for which the Company recognizes revenue at the amount to which it has the right to invoice for services as performed.

The amount and timing of revenue recognition is largely driven by the Customer’s utilization of the Company’s Platform services.

As of December 31, 2021 and 2020, $ 4.2 million and $ 4.4 million of the deferred revenue balance represent a material right for discounted revenue share rates provided to a Customer as part of a contractual renewal option.

Marqeta, Inc.

1 unchanged sentence

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

Remaining Performance Obligations

The Company has performance obligations associated with commitments in customer contracts for future stand-ready obligations to process transactions throughout the contractual term.

As of December 31, 2021, $ 4.2 million of the deferred revenue balance represent a material right for discounted revenue share rates provided to a customer as part of a contractual renewal option.

As of December 31, 2022, the Company did not have a material right included in its deferred revenue balance.

Marketable Securities

3 unchanged sentences

Marketable securities

government securities $ 420,392 $ — $ ( 2,107 ) $ 418,285

treasury securities $ 384,951 $ — $ ( 6,949 ) $ 378,002

agency securities 29,012 47 — 29,059

Commercial paper 28,815 — — 28,815

Asset-backed securities 2,003 — ( 1 ) 2,002

Corporate debt securities 5,049 — ( 67 ) 4,982

3 unchanged sentences

Marketable securities

government securities $ 125,823 $ 47 $ ( 6 ) $ 125,864

treasury securities $ 420,392 $ — $ ( 2,107 ) $ 418,285

Commercial paper 13,878 — — 13,878

2 unchanged sentences

Total marketable securities $ 455,004 $ 3 $ ( 2,132 ) $ 452,875

The Company had nineteen and six separate marketable securities in unrealized loss positions as of December 31, 2021 and 2020, respectively.

The Company did not identify any marketable securities that were other-than-temporarily impaired as of December 31, 2021 and 2020.

The Company had thirteen and nineteen separate marketable securities in unrealized loss positions as of December 31, 2022 and 2021, respectively.

The Company does not intend to sell any marketable securities that have an unrealized losses at December 31, 2022 and it is not more likely than not that the Company will be required to sell such securities before any anticipated recovery.

There were no material realized gains or losses from marketable securities that were reclassified out of accumulated other comprehensive income for the year ended December 31, 2022.

For marketable securities that have unrealized losses, the Company evaluated whether (i) the Company has the intention to sell any of these investments, (ii) it is not more likely than not that the Company will be required to sell any of these available-for-sale debt securities before recovery of the entire amortized cost basis and (iii) the decline in the fair value of the investment is due to credit or non-credit related factors.

Based on this evaluation, the Company determined that for its marketable securities, there were no material credit or non-credit related impairments as of December 31, 2022.

The Company did not identify any marketable securities that were other-than-temporarily impaired as of December 31, 2021.

Marqeta, Inc.

Notes to Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

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

4 unchanged sentences

Total $ 447,827 $ 440,858 $ 455,004 $ 452,875

Marqeta, Inc.

Notes to Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

Fair Value Measurements

5 unchanged sentences

Marketable securities

government securities 418,284 — — 418,284

treasury securities 378,002 — — 378,002

agency securities — 29,059 — 29,059

Commercial paper — 28,815 — 28,815

Asset-backed securities — 2,002 — 2,002

Corporate debt securities — 4,982 — 4,982

5 unchanged sentences

Marketable securities

government securities 125,864 — — 125,864

treasury securities 418,284 — — 418,284

Commercial paper — 13,878 — 13,878

2 unchanged sentences

Total assets $ 1,631,827 $ 34,591 $ — $ 1,666,418

Other liabilities

Redeemable convertible preferred stock warrants $ — $ — $ 2,517 $ 2,517

Total liabilities $ — $ — $ 2,517 $ 2,517

The Company classifies money market funds, commercial paper, U.S.

government securities, asset-backed securities and corporate securities within Level 1 or Level 2 of the fair value hierarchy because the Company values these investments using quoted market prices or alternative pricing sources and models utilizing market observable inputs.

The Company classifies the redeemable convertible preferred stock warrants within Level 3 because the Company determines their fair value using unobservable inputs, including the fair value of the Company’s redeemable Series B convertible stock, which the Company determined in the same manner as the fair value of its common stock prior to the IPO.

The Company records the change in the fair value of redeemable convertible preferred stock warrants in other income (expense), net in the consolidated statements of operations and comprehensive loss.

treasury securities, U.S.

agency securities, asset-backed securities and corporate securities within Level 1 or Level 2 of the fair value hierarchy because the Company values these investments using quoted market prices or alternative pricing sources and models utilizing market observable inputs.

Immediately prior to the completion of the IPO in June 2021, the outstanding redeemable convertible preferred stock warrants were converted to Class B common stock warrants and the fair value of the liability as of that date was reclassified into the Company’s Class B common stock and additional paid-in capital.

3 unchanged sentences

The fair value of the redeemable convertible preferred stock warrant liabilities was estimated using the following assumptions:

2021 December 31,

Dividend yield 0.00 %

4 unchanged sentences

The following table sets forth a summary of the changes in the fair value of the redeemable convertible preferred stock warrant liabilities:

2021 December 31,

Balance, beginning of the period $ 2,517

9 unchanged sentences

Inventory 5,150 3,940

Prepaid Insurance 3,546 324

Prepaid hosting and data costs 6,443 2,455

Accrued interest receivable 3,983 392

Prepaid insurance 3,729 3,546

Card program deposits 2,128 2,167

17 unchanged sentences

Depreciation and amortization expense was $ 3.9 million, $ 3.5 million and $ 3.5 million for the years ended December 31, 2022, 2021 and 2020, respectively.

The Company did no t capitalize any internal-use software costs during the year ended December 31, 2022, because development costs meeting capitalization criteria were not material during the respective periods.

The Company capitalized $ 1.6 million as internal-use software costs during the year ended December 31, 2021.

The Company did no t capitalize any internal-use software costs during the years ended December 31, 2020 and 2019, because development costs meeting capitalization criteria were not material during the respective periods.

Accrued Expenses and Other Current Liabilities

2 unchanged sentences

Accrued costs of revenue $ 57,191 $ 41,339

Reserve for contract contingencies and processing errors 3,386 9,537

Accrued compensation and benefits 41,268 32,954

Deferred revenue 17,048 19,060

Operating lease liabilities, current portion 3,021 2,771

Accrued tax liabilities 4,978 3,240

Accrued professional services 4,784 2,454

Operating lease liabilities, current portion 3,394 3,021

Reserve for contract contingencies and processing errors 2,494 3,386

Other accrued liabilities 5,730 8,642

40 unchanged sentences

As of December 31, 2022, the Company had non-cancellable purchase commitments with certain service providers and Issuing Banks of $ 221.7 million, payable over the next 5 years.

These purchase obligations generally represent minimum commitments for cloud-computing services and issuing bank processing fees over the fixed, non-cancellable respective contract terms.

These purchase obligations include $ 212.6 million related to minimum commitments as part of a cloud-computing service agreement.

The remaining obligations are related to various service providers and Issuing Banks processing fees over the fixed, non-cancellable respective contract terms.

Defined Contribution Plans

22 unchanged sentences

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

Non-income Taxes

The Company may be subject to state and local indirect taxes in various jurisdictions in the United States.

In several of these jurisdictions the Company has reviewed and concluded that such indirect taxes are not applicable to the Company’s service offerings.

In a few of these jurisdictions the tax regulations are less clear.

While the Company believes its service offerings are not subject to tax in these jurisdictions, the Company is working with the respective state and local tax authorities to confirm the Company’s conclusions.

The Company has not recorded a liability associated with these matters as of December 31, 2021 as it believes it is not probable that the indirect taxes are applicable to the Company.

In the event that adverse information is received in response to the Company's state inquiries, and the Company chooses not to appeal, a potential tax liability for these tax matters would be $ 6.2 million as of December 31, 2021.

Stock Incentive Plans

8 unchanged sentences

Stock options 28,816 31,231 10,895

CEO Long-Term Performance Award 38,189 — —

Executive Chairman Long-Term Performance Award 53,214 38,189 —

Employee Stock Purchase Plan 2,619 1,946 —

3 unchanged sentences

On June 8, 2021, the Company completed its IPO and the liquidity condition for the RSUs granted prior to April 1, 2021 was satisfied and the Company recognized a cumulative $ 23.1 million of share-based compensation expense associated with RSUs that had service-vested as of the IPO completion date.

Subsequent to the IPO, the unamortized grant date fair value of these RSUs will be recorded as share-based compensation expense over the remaining service period.

Subsequent to the IPO, the unamortized grant date fair value of these RSUs is recorded as share-based compensation expense over the remaining service period.

RSUs granted on or after April 1, 2021, vest upon the satisfaction of a service condition.

The service condition for these awards is satisfied over four years .

During the year ended December 31, 2021, the Company recognized $ 34.3 million of share-based compensation expense related to these RSUs.

Marqeta, Inc.

Notes to Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

The service condition for these awards is generally satisfied over four years .

A summary of the Company's RSUs activity under the Plans was as follows:

2 unchanged sentences

Granted 8,409,821 22.20

Vested ( 2,641,196 ) 10.12

Canceled and forfeited ( 1,197,012 ) 14.23

9 unchanged sentences

These costs are expected to be recognized over a weighted-average period of 3.3 years.

Marqeta, Inc.

Notes to Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

Stock Options

24 unchanged sentences

(2) The 2011 Plan allows for early exercise of stock options and these balances include all exercisable stock options regardless of vesting status.

Marqeta, Inc.

Notes to Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

The weighted-average grant date fair value of options granted during the years ended December 31, 2022, 2021, and 2020, was $ 5.89 , $ 12.10 , and $ 1.81 , per share, respectively.

1 unchanged sentence

The total grant-date fair value of options vested during the years ended December 31, 2022, 2021, and 2020, was $ 40.0 million, $ 17.6 million, and 10.7 million, respectively.

As of December 31, 2021, aggregate unrecognized compensation costs related to unvested outstanding stock options, excluding the CEO Long-Term Performance Award, was $ 90.4 million.

As of December 31, 2022, aggregate unrecognized compensation costs related to unvested outstanding stock options, excluding the Executive Chairman Long-Term Performance Award, was $ 58.6 million.

These costs are expected to be recognized over a weighted-average period of 2.4 years.

Marqeta, Inc.

Notes to Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

The fair values of stock options granted were estimated using the Black-Scholes option pricing model and the following weighted-average assumptions:

13 unchanged sentences

Subsequent to the Company’s IPO, the Company uses the closing share price of its Class A common stock, which is traded on the Nasdaq Global Select Market to measure share-based compensation on the grant date.

CEO Long-Term Performance Award

In April and May 2021, the Company’s board of directors granted the Company’s Chief Executive Officer equity incentive awards in the form of performance-based stock options covering 19,740,923 and 47,267 shares of our Class B common stock with an exercise price of $ 21.49 and $ 23.40 per share, respectively, or collectively, the CEO Long-Term Performance Award.

Executive Chairman Long-Term Performance Award

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

The stock price hurdle will be achieved if the average closing price of a share of our Class A common stock during any 90 consecutive trading day period during the performance period equals or exceeds the Company stock price hurdle set forth in the table below.

Marqeta, Inc.

Notes to Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

The CEO Long-Term Performance Award is divided into seven equal tranches which vest upon the achievement of the following Company stock price hurdles:

The Executive Chairman Long-Term Performance Award is divided into seven equal tranches which vest upon the achievement of the following Company stock price hurdles:

Tranche Company Stock Price Hurdle Number of Options Eligible to Vest

7 unchanged sentences

Total 19,788,188

The weighted-average grant date fair value of the seven tranches of the CEO Long-Term Performance Award was estimated to be $ 10.53 per option share.

As of December 31, 2021, the aggregate unrecognized compensation cost of the CEO Long-Term Performance Award was $ 170.2 million, which is expected to be recognized over the remaining derived service period of 4.1 years.

The weighted-average grant date fair value of the seven tranches of the Executive Chairman Long-Term Performance Award was estimated to be $ 10.53 per option share.

As of December 31, 2022, the aggregate unrecognized compensation cost of the Executive Chairman Long-Term Performance Award was $ 117.0 million, which is expected to be recognized over the remaining derived service period of 3.1 years.

Marqeta, Inc.

Notes to Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

Secondary Sales of Common Stock

Prior to the completion of the IPO, certain economic interest holders acquired outstanding common stock from current or former employees for a purchase price greater than the Company's estimated fair value at the time of the transactions.

During the years ended December 31, 2021, 2020 and 2019, the Company recorded share-based compensation expense for the difference between the price paid and the estimated fair value on the date of the transaction of $ 11.6 million, $ 17.3 million and $ 14.8 million, respectively.

During the years ended 2021 and 2020, the Company recorded share-based compensation expense for the difference between the price paid and the estimated fair value on the date of the transaction of $ 11.6 million and $ 17.3 million, respectively.

Stockholders’ Equity Transactions

Warrants to Purchase Common Stock

5 unchanged sentences

The aggregate fair values of the warrants issued in 2021 and 2020 were $ 26.4 million and $ 5.7 million respectively.

As of December 31, 2021, 300,504 warrants were vested and the Company recorded $ 5.0 million as a reduction of revenue during the year then ended, related to these warrants.

As of December 31, 2020, 22,500 warrants were vested and the Company recorded an immaterial amount as a reduction of revenue during the year then ended, related to these warrants.

As of December 31, 2022 and 2021, 695,637 and 300,504 warrants were vested, respectively.

The Company recorded $ 7.3 million and $ 5.0 million as a reduction of net revenue related to these warrants during the years ended December 31, 2022 and 2021, respectively.

Upon vesting, the fair value of the vested warrants are recorded into the Company’s additional paid-in capital.

Timing differences caused by the pattern of processing volume generated by the customer over the term of the contract and the vesting schedules of the warrants can cause differences in the amount of grant date fair value that is credited to additional paid in capital upon vesting and the amount recorded as a reduction in net revenue during any particular reporting period.

Marqeta, Inc.

Notes to Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

The fair values of the warrants were estimated using the Black-Scholes option pricing model and the following assumptions as of the grant date of each warrant:

4 unchanged sentences

Risk-free interest rate 0.6 % 0.3 %

Share Repurchase Program

On September 14, 2022, the Company’s Board of Directors authorized a share repurchase program of up to $ 100 million of the Company’s Class A common stock beginning September 15, 2022.

Under the repurchase program, the Company was authorized to repurchase shares through open market purchases, in privately negotiated transactions or by other means, in accordance with applicable federal securities laws, including through trading plans under Rule 10b5-1 of the Securities and Exchange Act of 1934.

The number of shares repurchased and the timing of purchases are based on general business and market conditions, and other factors, including legal requirements.

The share repurchase program has no set expiration date.

During the year ended December 31, 2022, the Company repurchased and subsequently retired 11.7 million shares for $ 79.2 million under the repurchase program, for an average price of $ 6.77 .

The total price of the shares repurchased and related transaction costs are reflected as a reduction to common stock and additional paid-in capital on the Company’s consolidated balance sheets.

As of December 31, 2022, $ 20.8 million remained available for future share repurchases under this repurchase program.

Marqeta, Inc.

Notes to Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

Net Loss Per Share Attributable to Common Stockholders

2 unchanged sentences

2022 2021 2020

Net loss $ ( 163,929 ) $ ( 47,695 ) $ ( 58,200 )

Deemed dividend to redeemable convertible preferred stockholders

— — ( 64149 )

Net loss attributable to Class A and Class B common stockholders $ ( 184,780 ) $ ( 163,929 ) $ ( 47,695 )

6 unchanged sentences

All potentially dilutive shares of its equity method investee were excluded from the computation as they would have an anti-dilutive effect.

Marqeta, Inc.

Notes to Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

Potentially dilutive securities that were excluded from the computation of diluted net loss per share because including them would have had an anti-dilutive effect were as follows:

9 unchanged sentences

Total 133,504,403 118,313,973 389,002,257

In addition, the Company committed up to 320,000 common stock shares for future issuance, or the equivalent in cash, to fund and support the Company’s social impact initiatives over the next eight years .

In addition, the Company committed up to 280,000 common stock shares for future issuance, or the equivalent in cash, to fund and support the Company’s social impact initiatives over the next seven years .

Marqeta, Inc.

37 unchanged sentences

Research and development credits 77 77

Property and equipment 205 ( 47 )

Accruals and other 20,884 16,173

Share-based compensation 14,490 7,124

R&D capitalization expenditures 23,404 —

Reserve for contract contingencies and processing errors

5 unchanged sentences

Deferred tax liabilities:

Property and equipment ( 47 ) ( 309 )

Right-of-use asset ( 2,220 ) ( 2,728 )

1 unchanged sentence

Net deferred tax assets $ 1,207 $ 850

The Company believes that it is more likely than not that its U.S.

deferred tax assets will not be realized and has recorded a full valuation allowance against its net U.S.

deferred tax assets.

The available negative evidence as of December 31, 2021 and 2020 included historical and projected future operating losses.

In accordance with ASC 740 and based on all available evidence on a jurisdictional basis, the Company believes that it is more likely than not that its U.S.

deferred tax assets will not be utilized and has recorded a full valuation allowance against its net deferred tax assets in the U.S.

jurisdiction.

The Company assesses on a periodic basis the likelihood that it will be able to recover its deferred tax assets.

The Company considers all available evidence, both positive and negative, including historical levels of income or losses and expectations and risks associated with estimates of future taxable income in assessing the need for the valuation allowance.

If it is not more likely than not that the Company expects to recover its deferred tax assets, the Company will increase its provision for taxes by recording a valuation allowance against the deferred tax assets that it estimates will not ultimately be recoverable.

The available negative evidence at December 31, 2022 and 2021 included historical and projected future operating losses.

As a result, the Company concluded that an additional valuation allowance of $ 30.0 million and $ 32.4 million was required to reflect the change in its deferred tax assets prior to valuation allowance during 2022 and 2021, respectively.

As of December 31, 2022 and 2021, the Company considered it more likely than not that substantially all of its deferred tax assets would not be realized.

The Tax Cuts and Jobs Act of 2017 (TCJA) requires taxpayers to capitalize and amortize research and development (R&D) expenditures under Section 174 for tax years beginning after December 31, 2021.

This became effective for the Company during the year ending December 31, 2022, and resulted in the capitalization of R&D costs of $ 23.4 million.

The Company will amortize these costs for tax purposes over 5 years for R&D performed in the US and over 15 years for R&D performed outside of the US.

As of December 31, 2022, the Company had net operating loss carryforwards of approximately $ 130.0 million and $ 85.3 million for federal and state tax purposes, respectively.

If not utilized, these carryforwards will begin to expire in 2030.

Of the Company's federal net operating loss carryforwards as of December 31, 2021, $ 121.4 million can be carried forward indefinitely.

Of the Company's federal net operating loss carryforwards as of December 31, 2022, $ 121.5 million can be carried forward indefinitely but is limited to 80% of taxable income.

If not utilized, the federal and state net operating carryforwards will begin to expire in 2036 and 2025, respectively.

In addition, the Company has research and development tax credit carryforwards of approximately $ 0.2 million for federal income tax purposes.

If not utilized, the federal research and development tax credit carryforwards will begin to expire in 2031.

The California state research credit can be carried forward indefinitely.

Marqeta, Inc.

Notes to Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

Under Section 382 of the Internal Revenue Code of 1986, as amended , the Company's ability to utilize net operating loss carryforwards or other tax attributes in any taxable year may be limited if the Company has experienced an ownership change.

1 unchanged sentence

However, it is not expected that the annual limitations will result in the expiration of tax attribute carryforwards prior to utilization.

The Company files federal and various state tax returns in the U.S., as well as tax returns in the U.K.

As of December 31, 2021, the Company’s federal tax returns for 2017 and earlier, and the state tax returns for 2016 and earlier were no longer subject to examination by the taxing authorities.

However, tax periods closed in a prior period may be subject to audit and re-examination by tax authorities for which tax carryforwards are utilized in subsequent years.

The Company did no t have any material unrecognized tax benefits in 2021, 2020, and 2019.

The Company files federal and various state tax returns in the U.S., as well as tax returns in the U.K and Australia.

Due to tax attribute carryforward still being utilized, the Company's federal and state returns remain open for examination since inception.

The Company made an accounting policy election to provide for the Global Intangible Low-Taxed Income (GILTI) tax expense in the year the tax is incurred as a period cost.

The Company elected and applied the tax law ordering approach when considering GILTI as part of its valuation allowance.

The Company did no t have any material unrecognized tax benefits in 2022, 2021, and 2020.

The Company did no t incur any interest expenses or penalties or have outstanding liabilities on the balance sheets associated with unrecognized tax benefits for the year ended December 31, 2022.

The Company does not expect any significant increases or decreases to its unrecognized benefits within the next twelve months.

Marqeta, Inc.

Notes to Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

Concentration Risks and Significant Customers

2 unchanged sentences

Management believes that these financial institutions are financially sound and, accordingly, minimal credit risk exists.

Cash and cash equivalents as of December 31, 2021 and December 31, 2020 included $ 1.2 billion and $ 203.6 million, respectively, of investments in three money market mutual funds which invest primarily in securities issued by the U.S.

Government or U.S.

Government agencies.

Cash and cash equivalents as of December 31, 2022 and December 31, 2021 included $ 0.5 billion and $ 1.2 billion, respectively, of investments in three money market mutual funds which invest primarily in U.S.

treasury securities and U.S.

agency securities.

As of December 31, 2022, marketable securities were $ 440.9 million, and there was no concentration of securities of the same issuer with an aggregate fair value greater than 5% of this total balance, except for U.S.

Treasuries, which amounted to $ 418.3 million, or 92 % of the marketable securities.

Treasuries and U.S.

Agency Securities, which amounted to $ 407.1 million, or 92 % of the marketable securities.

All debt securities within the Company's marketable securities portfolio are investment grade.

8 unchanged sentences

Customer A 71 % 69 % 70 %

Customer B * * 11 %

* Less than 10%

Marqeta, Inc.

Notes to Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

Percent of Customers' Receivables as of December 31,

Customer B 18 % *

Customer C * 20 %

Customer D * 13 %

Customer E * 14 %

* Less than 10%

1 unchanged sentence

The Company may enter into transactions with related parties.

The Company had an equity method investment in a private company, which was a related party up until the investment was sold in October 2022.

During the years ended December 31, 2022 and 2021, the Company earned net revenue of $ 2.7 million and $ 2.8 million from the private company, respectively.

The Company had $ 4.1 million in revenue share payable to this private company as of December 31, 2021.

Prior to the completion of the IPO, DFS Services LLC, a holder of more than 5 % of the Company's outstanding capital stock, was a related party.

During the years ended December 31, 2021 and 2020, the Company incurred $ 30.4 million and $ 14.4 million in Card Network fees, net, recorded within costs of revenue, to PULSE Network LLC, an entity affiliated with DFS Services LLC.

The Company has an equity method investment in a private company, which is a related party.

During the year ended December 31, 2021, the Company earned net revenue of $ 2.8 million from the private company and had $ 4.1 million in revenue share payable to this private company as of December 31, 2021.

Subsequent Event

On February 3, 2023, the Company acquired Power Finance Inc.

(Power Finance) for a purchase price of $ 221.9 million in cash, approximately one-third of which is payable over a two-year period subject to certain conditions.

The purchase price does not include potential future earn-out amounts tied to additional performance-based goals to be achieved within the next 12 months with a maximum payout of up to $ 53.1 million.

Power Finance’s cloud-native platform offers credit card program management services for companies creating new credit card programs.

This acquisition is expected to allow the Company’s customers to launch a wide range of credit products and constructs.

The Company is currently finalizing the accounting for this transaction and expects to complete the preliminary allocation of purchase consideration to the assets acquired and liabilities assumed by the end of the first quarter of 2023 .

Changes in and Disagreements With Accountants on Accounting and Financial Disclosures

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data