What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-28 compared with 2023-02-28 · 507 added, 412 removed, 635 unchanged (59% of the section changed)

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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.

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, 2023, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 28, 2024, expressed an adverse opinion thereon.

Basis for Opinion

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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.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate 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 matters 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 matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Revenue Share, Consideration Payable to Customers

Description of the Matter For the year ended December 31, 2023, the Company’s net revenue was $676.2 million, and as of December 31, 2023, the Company’s revenue share payable was $173.6 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 described in Note 2 to the consolidated financial statements, the Company's contracts with 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, and is computed as a percentage of the interchange fees earned or processing volume, and is paid to customers monthly.

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

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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.

How We Addressed the Matter in Our Audit 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.

Additionally, we performed analytical procedures to assess 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, 2023, to amounts paid in subsequent periods.

Valuation of an Acquired Developed Technology Intangible Asset

Description of the Matter

As discussed in Note 4 to the consolidated financial statements, the Company acquired Power Finance Inc.

on February 3, 2023 for a base cash purchase price of $221.9 million.

The Company accounted for this acquisition as a business combination and, accordingly, the assets acquired and liabilities assumed from Power Finance Inc.

were recorded at fair value as of the acquisition date.

Auditing the Company’s accounting for the acquisition of Power Finance Inc.

was complex due to the estimation uncertainty in the Company’s determination of the fair value of acquired developed technology of $41.0 million, which was estimated using an income approach.

The estimation uncertainty was primarily due to the determination of the underlying assumptions used in the fair value measurement of the acquired developed technology.

The significant assumptions used by management included revenue and EBITDA forecasts, obsolescence rate, and discount rate.

These significant assumptions are forward looking and could be affected by future economic and market conditions.

How We Addressed the Matter in Our Audit

To test the fair value of the acquired developed technology, our audit procedures included, among others, inspecting the underlying business combination agreements, and involving our valuation specialists to assist in evaluating management’s selected valuation methodology and testing the significant assumptions described above.

For example, we evaluated the discount rate by comparing the rate to those of the acquired business’s weighted internal rate of return, weighted-average return on assets, and venture capital rates of return.

To evaluate the assumptions used to project cash flows attributable to the acquired developed technology, we compared the significant assumptions to the Company’s historical trends and market data and performed a sensitivity analysis of the significant assumptions to evaluate the change in the fair value that would result from changes in the assumptions.

/s/ Ernst & Young LLP

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We have audited Marqeta, Inc.'s internal control over financial reporting as of December 31, 2023, 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.

In our opinion, because of the effect of the material weaknesses described below on the achievement of the objectives of the control criteria, Marqeta, Inc.

(the Company) has not maintained effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

The following material weaknesses have been identified and included in management’s assessment.

Management identified a material weakness related to the accounting for the Company’s acquisition of Power Finance, including a lack of sufficient precision in the performance of reviews supporting the purchase price allocation accounting, and a lack of timely oversight over third-party specialists and the reports they produced to support the accounting for the Power Finance acquisition.

Management identified a material weakness related to ineffective information technology general controls (“ITGCs”) in user access over certain information technology (“IT”) systems that support the Company’s revenue and related financial reporting processes.

As a result, the related process-level IT dependent manual controls, certain change management controls, and automated application controls for certain key IT systems were also deemed ineffective.

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, 2023 and 2022, 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, 2023, and the related notes.

These material weaknesses were considered in determining the nature, timing and extent of audit tests applied in our audit of the 2023 consolidated financial statements, and this report does not affect our report dated February 28, 2024, which expressed an unqualified opinion thereon.

Basis for Opinion

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Restricted cash 8,500 7,800

Marketable securities 440,858 452,875

Short-term investments

268,724 440,858

Accounts receivable, net 19,540 15,569

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Total current assets 1,388,698 1,746,769

Property and equipment, net 7,440 9,687

Operating lease right-of-use assets, net 6,488 9,015

Equity method investment — 8,384

Property and equipment, net 18,764 7,440

Intangible assets, net

Other assets 16,587 7,122

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Additional paid-in capital 2,067,776 2,082,373

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

Accumulated other comprehensive income (loss)

762 ( 7,237 )

Accumulated deficit ( 825,195 ) ( 602,233 )

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Loss before income tax expense ( 230,575 ) ( 184,882 ) ( 164,569 )

Income tax expense (benefit) ( 102 ) ( 640 ) 87

Income tax benefit

( 7,613 ) ( 102 ) ( 640 )

Net loss $ ( 222,962 ) $ ( 184,780 ) $ ( 163,929 )

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Change in foreign currency translation adjustment $ ( 40 ) $ ( 167 ) $ ( 14 )

Change in unrealized gain (loss) on marketable securities ( 4,840 ) ( 2,241 ) 43

Net change in unrealized gain (loss) on short-term investments

8,039 ( 4,840 ) ( 2,241 )

Net other comprehensive income (loss) 7,999 ( 5,007 ) ( 2,255 )

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Shares Amount Shares Amount

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

Issuance of Series E-1 redeemable convertible preferred stock at $ 8.34 per share, net of issuance costs of $ 8,058

20,989,756 166,942 — — — — — —

Conversion of Series A and Series C redeemable convertible preferred stock to common stock ( 5,988,994 ) ( 809 ) 5,988,994 1 808 — — 809

Issuance of common stock upon exercise of vested options — — 5,236,999 — 2,472 — — 2,472

Issuance of common stock upon early exercise of unvested options — — 847,184 — — — — —

Repurchase of early exercised stock options — — ( 190,370 ) — — — — —

Vesting of early exercised stock options — — — — 742 — — 742

Vesting of common stock warrants — — — — 171 — — 171

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

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

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

Balance as of December 31, 2020 351,844,340 501,881 130,312,838 13 39,769 25 ( 253,524 ) ( 213,717 )

Balance as of January 1, 2021 351,844,340 501,881 130,312,838 13 39,769 25 ( 253,524 ) ( 213,717 )

Issuance of common stock upon initial public offering, net of issuance costs — — 52,272,727 7 1,312,331 — — 1,312,338

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

Issuance of common stock upon exercise of options — — 3,353,103 1 5,398 — — 5,399

Repurchase of early exercised stock options — — ( 2,625 ) — — — — —

Issuance of common stock under employee stock purchase plan — — 792,140 — 3,066 — — 3,066

Issuance of common stock upon net settlement of restricted stock units — — 9,347,171 1 ( 26,662 ) — — ( 26,661 )

Issuance of common stock upon exercise of common stock warrants — — — — — — — —

Vesting of common stock warrants — — — — 8,715 — — 8,715

Share-based compensation expense — — — — 185,231 — — 185,231

Repurchase and retirement of common stock, including excise tax — — ( 34,510,913 ) ( 3 ) ( 190,345 ) — — ( 190,348 )

Change in accumulated other comprehensive income (loss) — — — — — 7,999 — 7,999

Net loss — — — — — — ( 222,962 ) ( 222,962 )

Balance as of December 31, 2023 — — 520,342,975 52 2,067,776 762 ( 825,195 ) 1,243,395

See accompanying notes to Consolidated Financial Statements.

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Non-cash operating leases expense 2,527 2,281 2,115

Amortization of premium on marketable securities 277 1,162 543

Non-cash postcombination compensation expense 32,430 — —

Amortization of premium on short-term investments

( 4,495 ) 277 1,162

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

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Operating lease liabilities ( 3,394 ) ( 3,020 ) ( 2,772 )

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

Net cash provided by (used in) operating activities

21,104 ( 12,966 ) 56,972

Cash flows from investing activities:

Purchases of property and equipment ( 762 ) ( 2,319 ) ( 2,743 )

Capitalization of internal-use software

( 11,889 ) — —

Business combination, net of cash acquired

( 135,777 ) — —

Purchase of patents — ( 1,600 ) —

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

Sales of marketable securities — — 71,981

Maturities of marketable securities 77,400 148,888 89,032

Purchases of short-term investments

( 892,430 ) ( 70,495 ) ( 455,266 )

Sales of short-term investments

Maturities of short-term investments

501,534 77,400 148,888

Realized gain/loss on investments ( 94 ) — —

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

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Proceeds from initial public offering, net of underwriters’ discounts and commissions — — 1,319,809

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

Proceeds from exercise of stock options, including early exercised stock options, net of repurchase of early exercised unvested options 5,289 9,249 4,539

Payment of contingent consideration ( 53,067 ) —

Proceeds from exercise of warrants — — 60

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Supplemental disclosures of cash flow information:

Cash paid for operating lease liabilities

$ 4,239 $ 4,112 $ 4,081

Cash paid for interest $ — $ — $ —

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Purchase of property and equipment accrued and not yet paid $ 113 $ 563 $ 1,190

Share-based compensation capitalized to internal-use software $ 4,492 $ — $ —

Repurchase of common stock accrued and not yet paid $ 991 $ 1,065 $ —

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

Conversion of redeemable convertible preferred stock to common stock $ — $ — $ 809

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

See accompanying notes to Consolidated Financial Statements.

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Business Overview and Basis of Presentation

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

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.

Marqeta, Inc., (“the Company”) creates digital payment technology for innovation leaders.

The Company's modern card issuing platform empowers its customers to create customized and innovative payment card programs, giving them the configurability and flexibility to build better payment 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 legal entities in Singapore and Brazil as of December 31, 2022.

The Company primarily earns revenue from processing 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 legal entities in Australia, Brazil, Canada, Poland, and Singapore as of December 31, 2023.

Initial Public Offering

In June 2021, the Company completed an initial public offering, or the IPO, in which the Company issued and sold 52,272,727 shares of its newly authorized Class A common stock, which included 6,818,181 shares that were offered and sold pursuant to the full exercise of the underwriters’ option to purchase additional shares at a price of $ 27.00 per share.

In June 2021, the Company completed an initial public offering (“IPO”), in which the Company issued and sold 52,272,727 shares of its newly authorized Class A common stock, which included 6,818,181 shares that were offered and sold pursuant to the full exercise of the underwriters’ option to purchase additional shares at a price of $ 27.00 per share.

The Company received aggregate net proceeds of $ 1.3 billion after deducting underwriting discounts and commissions of $ 91.6 million and offering costs of $ 7.5 million.

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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, and the fair value of equity method investments and a purchase call option to acquire the remaining interest in the equity method investee.

The preparation of the financial statements in conformity with GAAP requires management to make various 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 include, but are not limited to, the fair value and useful lives of assets acquired and liabilities assumed through business combinations, the estimation of contingent liabilities, 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 valuation of income taxes.

Actual results could differ materially from these estimates.

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The Company expects losses from operations to continue for the foreseeable future as it incurs costs and expenses related to creating new products for customers, acquiring new customers, developing its brand, expanding into new geographies and developing the existing platform infrastructure.

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.

The Company believes that its cash and cash equivalents of $ 981.0 million and short-term investments of $ 268.7 million as of December 31, 2023 are sufficient to fund its operations through at least the next twelve months from the issuance of these financial statements.

Marqeta, Inc.

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Summary of Significant Accounting Policies

Segment Information

The Company operates as a single operating segment and reporting unit.

The Company's chief operating decision maker is its Chief Executive Officer, who reviews financial information presented on a consolidated basis for purposes of making operating decisions, assessing financial performance, allocating resources and evaluating the Company's financial performance.

For the years ended December 31, 2023, 2022, and 2021, net revenue outside of the United States, based on the billing address of the customer, was not material.

As of December 31, 2023 and December 31, 2022, long-lived assets located outside of the United States were not material.

Business Combinations

The Company allocates the purchase consideration for acquired companies to tangible and intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date, with the excess recorded to goodwill.

These estimates are inherently uncertain and subject to refinement.

During the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the fair value of these tangible and intangible assets acquired and liabilities assumed with the corresponding offset to goodwill.

Upon the conclusion of the measurement period or final determination of the fair value of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the Consolidated Statements of Operations and Comprehensive Loss.

Acquisition-related expenses and postcombination integration and employee compensation costs are recognized separately from the business combination and are expensed as incurred.

Cash and Cash Equivalents

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

treasury bills.

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.

Restricted Cash

Restricted cash consists of deposits with 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 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.

Issuing Banks are financial institutions that issue payment cards (credit, debit, or prepaid) either on their own behalf or on behalf of a business.

Card Networks are networks that provide the infrastructure for settlement and card payment information flows.

Short-term Investments

The Company's short-term investments include U.S.

treasury securities, U.S.

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

The Company's short-term investments are classified as available-for-sale and are recorded 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 short-term investments 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 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

Marqeta, Inc.

Notes to Consolidated Financial Statements

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

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 short-term investments in Other income (expense), net in the Consolidated Statements of Operations and Comprehensive Loss.

Accounts Receivable

Accounts receivable are recorded at the invoiced amount, net of an allowance for credit losses 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, 2023 and 2022, the allowance for accounts receivable was $ 0.3 million and $ 0.3 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 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.

Lease Obligations

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.

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.

The Company begins to recognize rent expense when the lessor makes the underlying asset available to the Company.

For short-term leases, the Company records rent expense in the Consolidated Statements of Operations and Comprehensive Loss on a straight-line basis over the lease term and records variable lease payments as incurred.

The Company has no finance leases.

Property and Equipment

Property and equipment is stated at cost, less accumulated depreciation and amortization.

The Company uses the straight-line method of depreciation and amortization over the estimated useful lives of the assets;

generally three to five years for computer equipment, and furniture and fixtures.

Leasehold improvements are amortized over the shorter of the lease term, excluding renewal periods, or the estimated useful life of the leasehold improvement.

The Company capitalizes internal and external direct costs incurred related to obtaining or developing internal-use software.

Costs incurred during the application development stage are capitalized and are amortized using the straight-line method over the estimated useful lives of the software, generally three years commencing on the first day of the month following when the software is ready for its intended use.

Costs related to planning and other preliminary project activities and post-implementation activities are

Marqeta, Inc.

Notes to Consolidated Financial Statements

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

expensed as incurred.

The depreciation and amortization of property and equipment is recorded within Depreciation and amortization expense on the Consolidated Statements of Operations and Comprehensive Loss.

The excess purchase price over the fair value of identifiable net assets acquired is recorded as goodwill.

Goodwill amounts are not amortized.

Intangible Assets

Intangible assets with finite lives are carried at acquisition cost less accumulated amortization and are amortized over their estimated useful lives on a straight-line basis.

The amortization of these assets is recorded within Depreciation and amortization expense on the Consolidated Statements of Operations and Comprehensive Loss.

Impairment testing for goodwill is performed annually in the fourth quarter or more frequently whenever events or changes in circumstances indicate its carrying value may not be recoverable.

Such testing is performed at the reporting unit level.

Management has the option to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than the carrying amount, including goodwill.

If it is determined that it is more likely than not that the fair value of the reporting unit is less than the carrying amount, a quantitative assessment is performed by comparing the fair value of a reporting unit with its carrying amount.

An impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value, not to exceed the total amount of goodwill allocated to that reporting unit.

The Company also has the option to bypass the qualitative assessment and perform the quantitative assessment.

The Company reviews the valuation of long-lived assets, including property and equipment and finite-lived intangible assets, whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.

An asset is considered impaired if its carrying amount exceeds the future undiscounted cash flow the asset is expected to generate.

Based on management's assessment, the Company did not recognize any material impairment losses on its goodwill, finite-lived intangible assets or other long-lived assets during the periods presented herein.

Equity Investments and Purchase Options

The Company applies the equity method of accounting for investments in other entities when the Company exercises significant influence, but no control.

Under the equity method, the Company 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 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.

Additionally, the value of these investments may be adjusted to fair value resulting from observable transactions for identical or similar investments.

In 2021, the Company acquired a preferred equity interest in a private company that is accounted for under the equity method of accounting.

Concurrent with this investment, the Company also acquired an option that gave the Company the right, but not the obligation, to purchase all of the remaining equity interests of the private company.

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 within Other income (expense), net on the Consolidated Statement of Operations and Comprehensive Loss related to the option based on the Company’s decision not to exercise the option.

Marqeta, Inc.

Notes to Consolidated Financial Statements

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

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 and Comprehensive Loss.

Deferred Offering Costs

Deferred offering costs consist primarily of accounting, legal, and other fees related to the IPO.

Upon the completion of the IPO in June 2021, the deferred offering costs were reclassified to Stockholders’ equity (deficit) and recorded net against the proceeds from the IPO.

Revenue Recognition

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.

The Company’s contracts with customers typically include two performance obligations:

1) providing access to the Company's payment processing platform and 2) providing card fulfillment services .

Certain customer contracts require the Company to allocate the transaction price of the contract based on the relative stand-alone selling price of the performance obligations which are estimated using an analysis of the Company’s historical contract pricing and costs incurred to fulfill its services.

Contracts with customers are evaluated on a contract-by-contract basis as contracts may include the transfer of multiple services.

The Company’s contracts with customers typically include multiple performance obligations:

1) providing access to the Company's payment processing platform, 2) providing managed services or 3) providing card fulfillment services .

The Company accounts for individual services as a separate performance obligation if they are distinct because the service is separately identifiable from other items in the arrangement and a customer can benefit from the good or service on its own or with other resources that are readily available to the customer.

If these criteria are not met, the promised goods or services are accounted for as a combined performance obligation.

Certain customer contracts require the Company to allocate the transaction price of the contract based on the relative stand-alone selling price of the performance obligations which are based on prices at which the Company separately sells each service or estimated using an analysis of the Company’s historical contract pricing and costs incurred to fulfill its services.

The Company generates revenue from providing platform services and other services as described below.

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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 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.

The Company’s platform services revenue is primarily derived from Interchange Fees generated by customer card transactions and other transaction fees collected from customers.

The Company accounts for these Interchange Fees as revenue earned from its customers because the Company controls the services before delivery to the customer.

The Company’s platform services revenue consists of a stand-ready service of distinct transaction processing services that are substantially the same, with the same pattern of transfer to customers.

As such, the stand-ready obligation is accounted for as a single performance obligation that is a series of distinct services whereby the variability of the transaction value is satisfied daily as the performance obligation is satisfied.

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.

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

Transactions are considered complete when the Company has authorized the transaction, validated that the transaction has no errors and accepted and posted the data to its records.

The Company allocates variable consideration to the distinct month in which the platform services are delivered.

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 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.

As the Issuer Processor for its customers, the Company is the principal in providing the services under its contracts with customers.

To deliver the services required by its customers, the Company contracts with Card Networks for transaction routing, reporting, and settlement services and with Issuing Banks for card issuing, Card Network sponsorship, and regulatory compliance approval services.

The Company controls these integrated services before delivery to its customers;

it is primarily responsible for the delivery of the services to customers, and it has discretion in vendor selection.

As such, the Company records fees paid to the Issuing Banks and Card Networks as costs of revenue.

The Company's contracts with customers include certain service level agreements which could require the Company to make payments to customers if service levels are not met.

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

This obligation includes authorizing, settling, clearing and reconciling all transactions.

Additionally, for certain customer arrangements, the performance obligations also include managing the interactions with Card Networks and/or the Issuing Banks on behalf of its customers or other managed services, including dispute management, fraud scoring, and cardholder support services.

The Company’s platform services revenue is derived from Interchange Fees generated by customer card transactions.

The Company accounts for these Interchange Fees as revenue earned from its customers for performance obligations where the Company controls the services before delivery to the customer.

The Company’s platform services revenue also includes processing and other transaction fees from transactions that are based on either a percentage of processing volume or a fee per transaction basis.

The Company’s platform services revenue primarily consists of stand-ready obligations which are satisfied over time and are accounted for as a series of distinct services that are substantially the same and have the same pattern of transfer to customers.

The Company recognizes revenue when the promised services are complete, and its performance obligations are satisfied.

Platform services are considered complete when the Company has authorized the transaction, validated that the transaction has no errors, and accepted and posted the data to its records.

Marqeta, Inc.

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(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.

The Company allocates variable consideration to the distinct period in which the platform services are delivered.

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 ranges 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.

For net revenue generated from customer arrangements that involve third parties, the Company determines whether it has promised to provide the specified service itself (as principal) or to arrange for the specified service to be provided by another party (as an agent).

This determination depends on the facts and circumstance of each arrangement, and in some instances, involves significant judgment.

In order to deliver an integrated payment processing platform to its customers, the Company works with Issuing Banks and Card Networks in various capacities.

The Company is considered the principal in customer arrangements where the Company controls the services performed by the Issuing Banks and Card Networks before delivery of the promised services to its customers, it is primarily responsible for the delivery of the services to customers, and it has discretion in vendor selection.

As such, the Company records fees paid to the Issuing Banks and Card Networks as Costs of Revenue within the Consolidated Statements of Operations and Comprehensive Loss.

In instances where the Company is considered an agent in providing services to the customer, fees for services paid to Issuing Banks and Card Networks, if any, are recorded within Net Revenue such that Net Revenue in the Consolidated Statements of Operations and Comprehensive Loss reflects the net amount of consideration that the Company retains.

Revenue Share

The Company’s contracts with customers typically include provisions under which the Company shares a portion of the Interchange Fees with its customers, referred to as Revenue Share.

The Company’s contracts with customers typically include provisions under which the Company shares a portion of the Interchange Fees as consideration payable to its customers, referred to as Revenue Share.

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 revenue in the consolidated statements of operations and comprehensive loss.

The Company records Revenue Share 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.

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Therefore, the Company accounts for the discount as a reduction to revenue when the Company delivers the ordered cards to the customers.

Deferred Revenue

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.

Contract Assets and Deferred Revenue

Contract assets, reported within Prepaid expenses and other current assets or within Other Assets in the Consolidated Balance Sheets, are primarily from upfront payments provided to certain customers and variable consideration from customer contracts where pricing terms are not consistent throughout the entire term of the contract.

Deferred revenue, reported within Accrued expenses and other current liabilities or Other liabilities in the Consolidated Balance Sheets, arises when customers pay for services in advance of the Company's revenue recognition.

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

Marqeta, Inc.

Notes to Consolidated Financial Statements

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

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

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Costs of Revenue

Costs of revenue consist of Card Network costs, Issuing Bank costs, and card fulfillment costs.

Card Network costs are generally equal to a specified percentage of the processing volume or a fixed amount per transaction processed through the respective Card Network.

Costs of revenue consist of Card Network costs, Issuing Bank costs, and card fulfillment costs for customer arrangements where the Company is the principal in providing services to the customer and excludes depreciation and amortization, which is reported separately within the Consolidated Statements of Operations and Comprehensive Loss.

Card Network costs are mostly equal to a specified percentage of the processing volume or a fixed amount per transaction processed through the respective Card Network.

The Company incurs Card Network costs directly from contractual arrangements with the Card Networks that are passed entirely through Issuing Banks, or directly from the Card Networks.

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,

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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Uncollected incentives are included in Network incentives receivable on the Consolidated Balance Sheets.

The Company records these incentives as a reduction of costs of revenue on the consolidated statements of operations and comprehensive loss.

Segment Information

The Company operates as a single operating segment.

For the years ended December 31, 2022, 2021, and 2020, revenue outside of the United States, based on the billing address of the customer, was not material.

As of December 31, 2022 and December 31, 2021, long-lived assets located outside of the United States were not material.

Foreign Currency

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’ equity (deficit).

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

All assets and liabilities denominated in a foreign currency are translated into U.S.

dollars at the exchange rate on the balance sheet date.

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

Cash and 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 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.

Marketable Securities

The Company's marketable securities include U.S.

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 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.

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.

Equity Investments and Purchase Options

The Company applies the equity method of accounting for investments in other entities when the Company exercises significant influence, but no control.

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 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.

Additionally, the value of these investments may be adjusted to fair value resulting from observable transactions for identical or similar investments.

In 2021, the Company acquired a preferred equity interest in a private company that is accounted for under the equity method of accounting.

Concurrent with this investment, the Company also acquired an option that gives the Company the right, but not the obligation, to purchase all of the remaining equity interests of the private company.

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

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.

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

Marqeta, Inc.

Notes to Consolidated Financial Statements

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

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 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.

Deferred Offering Costs

Deferred offering costs consist primarily of accounting, legal, and other fees related to the IPO.

Upon the completion of the IPO in June 2021, the deferred offering costs were reclassified to stockholders’ equity (deficit) and recorded net against the proceeds from the IPO.

Property and Equipment

Property and equipment is stated at cost, less accumulated depreciation and amortization.

The Company uses the straight-line method of depreciation and amortization.

Estimated useful lives range from three to five years for purchased and internally developed software, computer equipment, and furniture and fixtures.

Leasehold improvements are amortized over the shorter of the lease term, excluding renewal periods, or the estimated useful life of the leasehold improvement.

Gains and losses realized on the sale or disposal of property and equipment are recognized or charged to other income (expense), net in the consolidated statements of operations and comprehensive loss.

The Company evaluates the carrying value of property and equipment on an annual basis, or more frequently whenever circumstances indicate a long-lived asset may be impaired.

When indicators of impairment exist, the Company estimates the future undiscounted cash flows attributable to such assets.

In the event cash flows are not expected to be sufficient to recover the recorded value of the assets, the assets are written down to their estimated fair value.

During the years ended December 31, 2022 and 2021, the Company did no t recognize any material impairment of long-lived assets.

Fair Value Measurements

Fair value is an exit price, representing the price that would be received to sell the financial asset or paid to transfer the financial liability in an orderly transaction between market participants at the measurement date.

The fair value hierarchy includes a three-level classification, which is based on whether the inputs to the valuation methodology used for measurement are observable:

• Level 1 ‑ quoted prices in active markets for identical assets as of the reporting date;

• Level 2 ‑ inputs other than Level 1 that are observable, either directly or indirectly;

• Level 3 ‑ unobservable inputs.

When developing fair value measurements, the Company maximizes the use of observable inputs and minimizes the use of unobservable inputs.

In instances where the Company lacks observable inputs in the market to measure the fair value of an asset or liability, the Company may use unobservable inputs which requires greater judgment in measuring fair value.

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.

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.

Cash equivalents are stated at amortized cost, which approximates fair value at the balance sheet dates, due to the short period of time to maturity.

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

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.

The Company records these incentives as a reduction of Costs of revenue on the Consolidated Statements of Operations and Comprehensive Loss in customer arrangements where the Company is the principal.

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.

Advertising Costs

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Research and development costs are expensed as incurred and are included in Compensation and benefits, and Technology expenses in the Consolidated Statements of Operations and Comprehensive Loss.

Share-based Compensation

The primary types of share-based compensation utilized by the Company are restricted share units (“RSUs”) and stock options and the use of the employee stock purchase plan (“ESPP”).

The Company determines compensation expense associated with RSUs based on the estimated fair value of its common stock on the date of grant.

The compensation expense associated with stock options is determined based

Marqeta, Inc.

Notes to Consolidated Financial Statements

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

on the estimated grant date fair value using the Black-Scholes option pricing model.

The Company generally recognizes compensation expense using a straight-line amortization method over the respective vesting period.

The Company accounts for forfeitures as they occur.

Defined Contribution Plans

The Company maintains defined contribution plans for eligible employees, including a 401(k) plan that covers substantially all of its U.S.

based employees and to which the Company provides a matching contribution of 50 % of the first 6 % of compensation that an employee contributes.

The matching contribution vests after one year of service.

Restructuring

Restructuring costs stem from employee related severance charges and include both cash and non-cash compensation.

The Company generally recognizes restructuring costs upon communication of the plan to the identified employees or when payments are probable and amounts are estimable, depending on the region an employee works.

Restructuring liabilities are classified in Accrued expenses and other current liabilities in the Consolidated Balance Sheets.

The Company accounts for income taxes under the asset and liability method.

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Uncertain tax positions are recognized only when the Company believes it is more likely than not that the tax position will be upheld on examination by the taxing authorities based on the merits of the position.

The Company recognizes interest and penalties, if any, related to uncertain tax positions in income tax expense (benefit) in the consolidated statements of operations and comprehensive loss.

Lease Obligations

The Company begins to recognize rent expense when the lessor makes the underlying asset available to the Company.

For short-term leases, the Company records rent expense in the consolidated statements of operations and comprehensive loss on a straight-line basis over the lease term and records variable lease payments as incurred.

The Company has no finance leases.

The Company recognizes interest and penalties, if any, related to uncertain tax positions in Income tax benefit in the Consolidated Statements of Operations and Comprehensive Loss.

Net Loss Per Share Attributable to Common Stockholders

The Company presents basic and diluted net loss per share attributable to common stockholders in conformity with the two-class method required for participating securities.

Prior to the completion of the IPO, all series of redeemable convertible preferred stock were considered participating securities.

Immediately prior to the completion of the IPO, all shares of redeemable convertible preferred stock then outstanding were converted into shares of Class B common stock.

The Company has not allocated net loss attributable to common stockholders to redeemable convertible preferred stock in any period presented because the holders of its redeemable convertible preferred stock were not contractually obligated to share in losses.

The Company calculates basic net loss per share attributable to common stockholders by dividing net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period.

Diluted net loss per share attributable to common stockholders gives effect to all potential shares of common stock, including common stock issuable upon conversion of redeemable convertible preferred stock and redeemable convertible preferred stock warrants, stock options, RSUs and common stock warrants to the extent these are dilutive.

Marqeta, Inc.

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(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.

The non-cancellable operating lease expires in February 2026 and includes options to extend the lease term, generally at the then-market rates.

The Company excludes extension options that are not reasonably certain to be exercised from its lease terms.

The Company’s lease payments consist primarily of fixed rental payments for the right to use the underlying leased assets over the lease terms.

The Company is responsible for operating expenses that exceed the amount of base operating expenses as defined in the original lease agreement.

Loss Contingencies

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Significant judgment is required to determine both the probability and the estimated amount.

See Note 7, "Commitments and Contingencies", for a full description of the Company's loss contingencies.

Share-based Compensation

Restricted Stock Units

Commencing in 2020, the Company began granting restricted stock units, or RSUs, to employees.

RSUs granted prior to April 1, 2021 vest upon the satisfaction of both a service condition and a liquidity condition.

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

On June 8, 2021, the Company completed its IPO and the liquidity condition for these awards was satisfied and the Company recognized a cumulative share-based compensation expense of $ 23.1 million 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.

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

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.

Prior to the IPO, the fair value of RSUs was based on the fair value of the underlying common stock on the grant date as determined by the Company’s board of directors at each meeting in which RSU awards were approved.

Stock Options

The Company grants stock option awards to certain employees and directors.

The Company estimates the fair value of stock option awards using the Black-Scholes option pricing model.

The model requires management to make a number of assumptions, including the expected future volatility of the Company’s Class A common stock, expected term, risk-free interest rate, and expected dividends.

The Company records the resulting expense in the consolidated statements of operations and comprehensive loss on a straight-line basis over the period for which the employee or director is required to perform services to vest in the award, which is generally four years .

The Company accounts for forfeitures as they occur.

Marqeta, Inc.

Notes to Consolidated Financial Statements

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

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 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.

Employee Stock Purchase Plan

In May 2021, the Company’s board of directors adopted, and its stockholders approved, the 2021 Employee Stock Purchase Plan, or the ESPP, which became effective in connection with the IPO.

The ESPP authorizes the issuance of shares of the Company’s Class A common stock pursuant to purchase rights granted to employees.

The fair value of purchase rights issued under the ESPP is estimated using the Black-Scholes option pricing model.

The model requires management to make a number of assumptions, including the fair value of the Company’s common stock, expected volatility, expected term, risk-free interest rate, and expected dividends.

The Company records the resulting expense in the consolidated statements of operations and comprehensive loss on a straight-line basis over the six-month offering period.

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 of its common stock at the time of the transactions.

For such secondary sales of common stock, 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.

Net Loss Per Share Attributable to Common Stockholders

The Company presents basic and diluted net loss per share attributable to common stockholders in conformity with the two-class method required for participating securities.

Prior to the completion of the IPO, all series of redeemable convertible preferred stock were considered participating securities.

Immediately prior to the completion of the IPO, all shares of redeemable convertible preferred stock then outstanding were converted into shares of Class B common stock.

Fair Value Measurements

The fair value hierarchy includes a three-level classification, which is based on whether the inputs to the valuation methodology used for measurement are observable:

• Level 1 ‑ Inputs are quoted prices in active markets for identical assets as of the reporting date;

• Level 2 ‑ Inputs other than Level 1 that are observable, either directly or indirectly;

• Level 3 ‑ Unobservable pricing inputs in the market.

When developing fair value measurements, the Company maximizes the use of observable inputs and minimizes the use of unobservable inputs.

The Company’s financial instruments consist of cash equivalents, short-term investments, accounts receivable, settlements receivable, accounts payable, accrued liabilities, and prior to the IPO, redeemable convertible preferred stock warrant liabilities.

Cash equivalents are stated at amortized cost, which approximates fair value at the balance sheet dates, due to the short period of time to maturity.

Short-term investments are carried at fair value.

Accounts 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.

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

Foreign Currency

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

For these foreign entities, the Company translates the financial statements into U.S.

dollars using average exchange rates for the period for income statement amounts and using end-of-period exchange rates for assets and liabilities.

There translation adjustments are included in Accumulated other comprehensive income (loss) within the Consolidated Balance Sheets and the Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit).

Foreign currency transaction gains and losses are included in Other income (expense), net in the Consolidated Statements of Operations and Comprehensive Loss.

Recent Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No.

2023-09, “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures” (“ASU 2023-09”), which modifies the rules on income tax disclosures to require entities to disclose (1) specific categories in the rate reconciliation, (2) the income or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign) and (3) income tax expense or benefit from continuing operations (separated by federal, state and foreign).

ASU 2023-09 also requires entities to

Marqeta, Inc.

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

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.

In June 2016, the FASB issued ASU No.

2016-13, Financial instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments .

ASU 2016-13 replaces the incurred loss model with the current expected credit loss, or CECL, model to estimate credit losses for financial assets measured at amortized cost and certain off-balance sheet credit exposures.

It also eliminates the concept of other-than-temporary impairment and requires credit losses related to available-for-sale debt securities to be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities.

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 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.

disclose their income tax payments to international, federal, state and local jurisdictions, among other changes.

The guidance is effective for annual periods beginning after December 15, 2024.

Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance.

ASU 2023-09 should be applied on a prospective basis, but retrospective application is permitted.

The Company is currently evaluating the potential impact of adopting this new guidance on the consolidated financial statements and related disclosures.

Disaggregation of Revenue

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Total deferred revenue $ 15,900 $ 21,250

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, 2023 and 2022 that was included in the deferred revenue balances at the beginning of the respective periods was $ 12.0 million and $ 13.8 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.

As of December 31, 2023 and 2022, the Company did not have a material right included in its deferred revenue balance.

Business Combination

On February 3, 2023, the Company acquired all outstanding stock of Power Finance Inc.

(“Power Finance”) for a base cash purchase price of $ 221.9 million.

The purchase price does not include a $ 53.1 million contingent consideration tied to performance-based goals which were expected to be achieved within 12 months from the date of acquisition.

The Company determined the acquisition-date fair value of the contingent consideration liability, based on the likelihood of payment related to the contingent earn-out clauses, as part of the consideration transferred.

Marqeta, Inc.

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(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

The amortized cost, unrealized gain (loss), and estimated fair value of the Company's investments in securities available for sale consisted of the following:

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

The acquisition of Power Finance will accelerate the Company’s credit product capabilities and allow the Company’s customers to launch a wide range of credit products and constructs.

The following table summarizes the components of the purchase consideration transferred (in thousands):

Base purchase price less contingent consideration

postcombination cash, non-cash expense and other purchase adjustments

cash acquired on acquisition date 7,089

Total purchase consideration, excluding contingent consideration 110,575

Contingent consideration 53,067

Purchase consideration $ 163,642

Of the $ 117.6 million postcombination compensation excluded from purchase consideration, approximately $ 32.4 million was recognized as non-cash postcombination compensation cost at closing as a result of the vesting provisions of the employee replacement awards on the acquisition date.

The remaining $ 85.1 million is subject to continuous employment and will be recognized as postcombination cash compensation cost over a weighted-average period of 2.2 years.

Postcombination expense recognized was $ 36.4 million for the year ended December 31, 2023 and is included within Compensation and benefits in the Consolidated Statements of Operations and Comprehensive Loss.

The assets acquired and liabilities assumed were recorded at fair value as of the acquisition date.

The final $ 163.6 million purchase consideration was attributed to $ 41.0 million of developed technology intangible assets (to be amortized over an estimated useful life of 7.0 years), $ 8.0 million of deferred tax liabilities, and $ 7.1 million of net assets acquired, with the $ 123.5 million excess of purchase consideration over the fair value of assets acquired and liabilities assumed recorded as goodwill.

The fair value of the developed technology intangible assets was estimated using the multi-period excess earnings method (“MPEEM”), a form of the income approach.

The principle behind this method is that the value of the intangible asset is equal to the present value of the after-tax cash flows attributable to the intangible asset.

The Company applied judgment which involved the use of certain assumptions with respect of the revenue and EBITDA forecasts, obsolescence rate, and discount rate.

The goodwill recognized was primarily attributable to the expected synergies from integrating Power Finance’s technology into the Company’s platform.

Goodwill was not considered deductible for tax purposes.

The financial results of Power Finance are included in the Company’s Consolidated Financial Statements from the date of acquisition.

Separate operating results and pro forma results of operations for Power Finance have not been presented as the effect of this acquisition was not material to the Company’s financial results.

Acquisition-related third-party transaction costs were $ 3.3 million for the year ended December 31, 2023 and are included in Professional services in the Consolidated Statements of Operations and Comprehensive Loss.

During the third quarter of 2023, the Company paid out $ 53.1 million as the performance-based goals tied to the contingent consideration were achieved during the second quarter of 2023.

Marqeta, Inc.

Notes to Consolidated Financial Statements

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

Goodwill and Intangible Assets

Goodwill consisted of the following:

Balance as of December 31, 2022 $ —

Goodwill from acquisition of Power Finance, Inc.

Measurement period adjustments

Balance as of December 31, 2023

Intangibles Assets, net

Intangible assets consisted of the following as of the dates presented:

2023 December 31,

Developed technology

Accumulated amortization

Intangibles, net

The amortization period for developed technology intangible assets is 7 years.

Amortization expense for developed technology was $ 5.4 million for year ended December 31, 2023.

Expected future amortization expense for intangible assets was as follows as of December 31, 2023:

Thereafter 6,345

Total expected future amortization expense for intangible assets

Short-term Investments

During 2023, the Company renamed the Marketable securities financial statement line item to Short-term investments in the Consolidated Balances Sheets to more accurately align with the Company’s current investment portfolio.

Marqeta, Inc.

Notes to Consolidated Financial Statements

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

The amortized cost, unrealized gain (loss), and estimated fair value of the Company's short-term investments consisted of the following:

December 31, 2023

Amortized Cost Unrealized Gain Unrealized Loss Estimated Fair Value

Marketable securities

Short-term Investments

treasury securities $ 239,297 $ 970 $ ( 11 ) $ 240,256

agency securities 15,000 — ( 7 ) 14,993

Commercial paper 28,815 — — 28,815

Asset-backed securities 10,438 62 — 10,500

Corporate debt securities 2,981 — ( 6 ) 2,975

Total marketable securities $ 447,827 $ 47 $ ( 7,016 ) $ 440,858

Total short-term investments $ 267,716 $ 1,032 $ ( 24 ) $ 268,724

December 31, 2022

Amortized Cost Unrealized Gain Unrealized Loss Estimated Fair Value

Marketable securities

Short-term Investments

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

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

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:

Total short-term investments $ 447,827 $ 47 $ ( 7,016 ) $ 440,858

The Company had four and thirteen separate short-term investments in unrealized loss positions as of December 31, 2023 and 2022, respectively.

The Company does not intend to sell any short-term investments that have an unrealized losses at December 31, 2023, and it is not more likely than not that the Company will be required to sell such securities before any anticipated recovery of the entire amortized cost basis.

There were no material realized gains or losses from short-term investments that were reclassified out of accumulated other comprehensive income for the years ended December 31, 2023 and 2022.

For short-term investments 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 short-term investments, there were no material credit or non-credit related impairments as of December 31, 2023 and 2022.

The following table summarizes the stated maturities of the Company’s short-term investments:

December 31, 2023 December 31, 2022

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Due within one year $ 90,438 $ 90,533 $ 447,827 $ 440,858

Due after one year through two years — — 390,090 387,996

Due after one year through five years

177,278 178,191 — —

Total $ 267,716 $ 268,724 $ 447,827 $ 440,858

Marqeta, Inc.

Notes to Consolidated Financial Statements

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

Fair Value Measurements

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Money market funds $ 627,983 $ — $ — $ 627,983

Marketable securities

treasury bills 230,602 — — 230,602

Short-term investments

treasury securities 240,256 — — 240,256

agency securities — 14,993 — 14,993

Commercial paper — 28,815 — 28,815

Asset-backed securities — 10,500 — 10,500

Corporate debt securities — 2,975 — 2,975

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Money market funds $ 462,459 $ — $ — $ 462,459

Marketable securities

Short-term investments

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

Total assets $ 840,461 $ 62,856 $ — $ 903,317

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

The Company classifies money market funds, U.S.

treasury bills, commercial paper, U.S.

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.

agency securities, asset-backed securities and corporate debt 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.

There were no transfers of financial instruments between the fair value hierarchy levels during the years ended December 31, 2023 and 2022.

Marqeta, Inc.

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

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

Dividend yield 0.00 %

Expected volatility 49.93 %

Expected term (in years) 2.34

Risk-free interest rate 0.31 %

Fair value of Series B redeemable convertible preferred stock $ 27.00

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

Balance, beginning of the period $ 2,517

Remeasurement of redeemable convertible preferred stock warrant liabilities 2,921

Reclassification of redeemable convertible preferred stock warrant liabilities to common stock and additional paid-in capital upon initial public offering ( 5,438 )

Balance, end of the period $ —

There were no transfers of financial instruments between the fair value hierarchy levels during the years ended December 31, 2022 and 2021.

Certain Balance Sheet Components

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Contract assets 1,461 621

Other financial instruments — 11,616

Other current assets 2,043 6,871

Prepaid expenses and other current assets $ 27,233 $ 38,007

Marqeta, Inc.

Notes to Consolidated Financial Statements

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

Property and Equipment, net

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Property and equipment, net $ 18,764 $ 7,440

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.

Depreciation and amortization expense related to property and equipment was $ 10.7 million, $ 3.9 million and $ 3.5 million for the years ended December 31, 2023, 2022 and 2021, respectively.

The Company capitalized $ 16.4 million as internal-use software development costs during the year ended December 31, 2023.

Internal-use software development costs during the year ended December 31, 2022 were no t material.

Other assets consisted of the following:

2023 December 31,

Contract assets, noncurrent $ 9,397 $ 1,323

Deferred tax assets 495 1,207

Other noncurrent assets 6,695 4,592

Other assets $ 16,587 $ 7,122

Marqeta, Inc.

Notes to Consolidated Financial Statements

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

Accrued Expenses and Other Current Liabilities

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Deferred revenue 11,829 17,048

Due to Issuing Banks

Accrued tax liabilities 4,929 4,978

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Other liabilities $ 4,591 $ 5,477

Marqeta, Inc.

Notes to Consolidated Financial Statements

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

Commitments and Contingencies

Operating Leases

The non-cancellable operating lease expires in February 2026 and includes options to extend the lease term, generally at the then-market rates.

The Company excludes extension options that are not reasonably certain to be exercised from its lease terms.

The Company’s lease payments consist primarily of fixed rental payments for the right to use the underlying leased assets over the lease terms.

The Company is responsible for operating expenses that exceed the amount of base operating expenses as defined in the original lease agreement.

The Company's operating lease costs are as follows:

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The Company does not have any sublease income and the Company’s lease agreements do not contain any residual value guarantees or material restrictive covenants.

Marqeta, Inc.

Notes to Consolidated Financial Statements

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

The weighted average remaining operating lease term and the weighted average discount rate used in the calculation of the Company's lease assets and lease liabilities were as follows:

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Total operating lease liabilities $ 9,034

Supplemental cash flow information related to the Company's operating leases was as follows:

Year Ended December 31,

2022 2021 2020

Cash paid for operating lease liabilities $ 4,112 $ 4,081 $ 3,192

Operating lease right-of-use assets obtained in exchange for new operating lease liabilities $ — $ — $ 192

Commitments and Contingencies

Letters of Credit

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The Company has secured this letter of credit by depositing $ 1.5 million with the issuing financial institution, which deposit is classified as Restricted cash in the Consolidated Balance Sheets.

Marqeta, Inc.

Notes to Consolidated Financial Statements

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

Purchase Obligations

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Defined Contribution Plans

The Company maintains defined contribution plans for eligible employees, including a 401(k) plan that covers substantially all of its U.S.

based employees and to which the Company provides a matching contribution of 50 % of the first 6 % of compensation that an employee contributes.

The matching contribution vests after one year of service.

During the years ended December 31, 2023, 2022 and 2021, the Company contributed a total of $ 5.5 million, $ 5.8 million and $ 3.1 million to its defined contribution plans, respectively.

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If a customer does not have sufficient funds to settle a transaction, the Company is liable to the Issuing Bank to settle the transaction and would therefore incur losses if such amounts cannot be subsequently recovered from the customer.

At December 31, 2023, we had $ 7.0 million in Restricted cash which included a deposit held at an Issuing Bank to provide the Issuing Bank collateral in the event that our

Marqeta, Inc.

Notes to Consolidated Financial Statements

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

customers' funds are not deposited at the Issuing Bank in time to settle our customers' transactions with the Card Networks.

Indemnifications

In the ordinary course of business, the Company enters into agreements of varying scope and terms pursuant to which it agrees to indemnify customers, Card Networks, Issuing Banks, vendors, lessors, and other parties with respect to certain matters, including, but not limited to, losses arising out of the breach of such agreements, services to be provided by the Company or from intellectual property infringement claims made by third parties.

With respect to Issuing Banks, the Company indemnifies the Issuing Bank for losses the Issuing Bank may incur for non-compliance with applicable law and regulation, if those losses resulted from the Company’s failure to perform under its program agreement with the Issuing Bank.

With respect to Issuing Banks, the Company has received requests for indemnification from time to time and may indemnify the Issuing Bank for losses the Issuing Bank may incur for non-compliance with applicable law and regulation, if those losses resulted from the Company’s failure to perform under its program agreement with the Issuing Bank.

In addition, the Company has entered into indemnification agreements with its directors and certain officers and employees that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors, officers or employees.

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The Company also includes service level commitments to its customers warranting certain levels of performance and permitting those customers to receive credits in the event the Company fails to meet those levels.

Marqeta, Inc.

Notes to Consolidated Financial Statements

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

Stock Incentive Plans

The Company has granted share-based awards to employees, non-employee directors, and other service providers of the Company under the Amended and Restated 2011 Equity Incentive Plan (2011 Plan) and the 2021 Stock Option and Incentive Plan (2021 Plan), collectively, the Plans.

The Company has granted share-based awards to employees, non-employee directors, and other service providers of the Company under the Amended and Restated 2011 Equity Incentive Plan (“2011 Plan”) and the 2021 Stock Option and Incentive Plan (“2021 Plan” and, together with the 2011 Plan, the “Plans”).

The 2011 Plan was terminated in June 2021 in connection with the IPO but continues to govern the terms of outstanding awards that were granted prior to the IPO.

Additionally, the Company offers an employee stock purchase plan (ESPP), which allows employees to purchase shares of common stock at 85 % of the fair value of the Company’s Class A common stock on the first or last day of the offering period, whichever is lower.

Additionally, the Company offers an ESPP, which allows employees to purchase shares of common stock at 85 % of the fair value of the Company’s Class A common stock on the first or last day of the offering period, whichever is lower.

The offering periods are six months long and start in May and November of each year.

The following table presents the share-based compensation expense recognized in the periods presented:

The following table presents the share-based compensation expense recognized within the following line items in the Consolidated Statement of Operations and Comprehensive Loss and Consolidated Balance Sheet in the periods presented:

Year Ended December 31,

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Secondary sales of common stock — — 11,642

Total $ 160,743 $ 142,660 $ 28,211

Share-based compensation recorded within Compensation and benefits

180,739 160,743 142,660

Property and equipment (capitalized internal-use software)

Total share-based compensation expense

$ 185,231 $ 160,743 $ 142,660

Marqeta, Inc.

Notes to Consolidated Financial Statements

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

Restricted Stock Units

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 is recorded as share-based compensation expense over the remaining service period.

Restricted Stock Units

RSUs granted prior to April 1, 2021 vest upon the satisfaction of both a service condition and a liquidity condition.

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

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.

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

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

In general, the service condition for these awards is satisfied over three or four years .

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

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

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Balance as of December 31, 2021

9,001,949 $ 18.30

Granted 36,159,090 8.91

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38,177,072 $ 6.64

During the year ended December 31, 2022, share-based compensation expense recognized for RSUs was $ 76.1 million.

As of December 31, 2023, unrecognized compensation costs related to unvested RSUs was $ 231.4 million.

These costs are expected to be recognized over a weighted-average period of 2.5 years.

Stock Options

Under the Plans, the exercise price of a stock option shall not be less than the fair market value per share of the Company’s common stock on the date of grant (and not less than 110 % of the fair market value per share of common stock for grants to stockholders owning more than 10 % of the total combined voting power of all classes of stock of the Company, or a 10 % stockholder).

Options are exercisable over periods not to exceed ten years from the date of grant ( five years for incentive stock options granted to 10 % stockholders).

Marqeta, Inc.

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

Stock Options

Under the 2011 Plan and the 2021 Plan, the exercise price of a stock option shall not be less than the fair market value per share of the Company’s Class A common stock on the date of grant (and not less than 110 % of the fair market value per share of Class A common stock for grants to stockholders owning more than 10 % of the total combined voting power of all classes of stock of the Company, or a 10 % Stockholder).

Options are exercisable over periods not to exceed ten years from the date of grant ( five years for stock options granted to 10 % Stockholders).

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

A summary of the Company's stock option activity under the Plans is as follows:

Number of Options Weighted-Average Exercise Price per Share Weighted-Average Remaining Contractual Life (Years) Aggregate Intrinsic Value (1)

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36,670,638 $ 16.09 7.45 $ 24,481

Exercisable as of December 31, 2023 (2)

10,677,680 $ 11.62 7.12 $ 17,426

Vested as of December 31, 2023

8,355,940 $ 10.12 6.84 $ 15,917

(1) Intrinsic value based is calculated based on the difference between the exercise price of in-the-money-stock options and the fair value of the common stock as of the respective balance sheet dates.

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

(1) Intrinsic value is calculated based on the difference between the exercise price of in-the-money-stock options and the fair value of the common stock as of the respective balance sheet dates.

(2) The 2011 Plan allows for early exercise of stock options.

Accordingly, options granted under this plan are included as exercisable stock options regardless of vesting status.

The weighted-average grant date fair value of options granted during the years ended December 31, 2023, 2022, and 2021, was $ 3.52 , $ 5.89 , and $ 12.10 , per share, respectively.

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These costs are expected to be recognized over a weighted-average period of 2.1 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:

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Risk-free interest rate 3.78 % 2.32 % 1.00 %

Prior to the completion of the IPO, the Company considered numerous objective and subjective factors to determine the fair value of the Company’s common stock including but not limited to (i) contemporaneous independent third-party valuations;

(ii) observed secondary sales;

(iii) rights, preferences, and privileges of redeemable convertible preferred stock relative to those of common stock;

(iv) the Company’s actual operating and financial performance;

(v) current business conditions and projections;

(vi) the likelihood of achieving a liquidity event, such as an initial public offering or sale of the company, given prevailing market conditions;

and (vii) precedent transactions involving the Company’s capital stock.

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.

Marqeta, Inc.

Notes to Consolidated Financial Statements

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

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.

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 the Company’s Class B common stock with an exercise price of $ 21.49 and $ 23.40 per share, respectively, (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 the Company’s 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.

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:

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Total 19,788,188

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, 2023, the aggregate unrecognized compensation cost of the Executive Chairman Long-Term Performance Award was $ 63.8 million, which is expected to be recognized over the remaining derived service period of 2.1 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

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.

During 2021, 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.

Stockholders’ Equity Transactions

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The grant date fair values of these warrants are recorded as a reduction to net revenue over the term of the respective customer contract based on the expected pattern of processing volume generated by the customer and the probability of vesting conditions being met.

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

Marqeta, Inc.

Notes to Consolidated Financial Statements

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

As of December 31, 2023 and 2022, 1,101,262 and 695,637 warrants were vested, respectively.

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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.

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:

March 31, 2021 September 30, 2020

Dividend yield 0.0 % 0.0 %

Expected volatility 50.0 % 50.0 %

Contract term (in years) 4.0 5.0

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.

Share Repurchase Programs

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 (“2022 Share Repurchase Program”).

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 2022 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.

however, repurchases under the program were complete as of March 31, 2023.

During the year ended December 31, 2023, the Company repurchased and subsequently retired 3.2 million shares for $ 21.0 million under the 2022 Share Repurchase Program, for an average price of $ 6.46 .

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

On May 8, 2023, the Company’s board of directors authorized a share repurchase program of up to $ 200 million of the Company’s Class A common stock (“2023 Share Repurchase Program”).

Under the 2023 Share Repurchase Program, the Company is 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 Exchange Act.

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 2023 Share Repurchase Program has no set expiration date.

During the year ended December 31, 2023, the Company repurchased and subsequently retired 31.3 million shares for $ 169.4 million under the 2023 Share Repurchase Program, for an average price of $ 5.41 .

As of December 31, 2023, $ 32.2 million remained available for future share repurchases under the 2023 Share Repurchase Program.

The total price of the shares repurchased and related transaction costs and excise taxes are reflected as a reduction to Common stock and additional paid-in capital on the Company’s Consolidated Balance Sheets .

Restructuring

During the second quarter of 2023, the Company approved a restructuring plan (the “Restructuring Plan”) intended to reduce operating expenses and improve profitability by reducing the Company’s workforce.

The net restructuring charges incurred in connection with the Restructuring Plan was approximately $ 8.7 million, which was completed as of December 31, 2023.

The Company recorded $ 8.7 million in restructuring charges during the year ended December 31, 2023, which consisted of $ 14.6 million primarily related to one-time severance and benefit payments, as well as a net reduction of stock-based compensation of $ 2.9 million related to the vesting of certain equity awards and the forfeiture of certain equity awards which are accounted for as occurred.

Additionally, the Company reduced previously accrued bonuses for impacted employees of $ 2.9 million due to the terms of the Restructuring Plan.

These costs were included in Compensation and benefits in the Consolidated Statements of Operations and Comprehensive Loss.

Marqeta, Inc.

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

The following table summarizes the Company’s restructuring liability that was included in Accrued expenses and other current liabilities on the Consolidated Balance Sheet:

Balance as of December 31, 2022 $ —

Restructuring charges 14,588

Cash payments ( 14,588 )

Balance as of December 31, 2023

Net Loss Per Share Attributable to Common Stockholders

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Net loss per share attributable to Class A and Class B common stockholders, basic and diluted $ ( 0.42 ) $ ( 0.34 ) $ ( 0.45 )

Basic net loss per share is the same as diluted net loss per share because the Company reported a net loss for the years ended December 31, 2022, 2021 and 2020.

The liquidation, dividend and other rights, held by of Class A common stockholders and Class B common stockholders are identical, except with respect to voting.

Basic net loss per share is the same as diluted net loss per share because the Company reported a net loss for the years ended December 31, 2023, 2022 and 2021 respectively.

The rights, including the liquidation and dividend rights, of the holders of Class A common stock and Class B common stock are identical, except with respect to voting.

As the liquidation and dividend rights are identical for Class A common stock and Class B common stock, the undistributed earnings are allocated on a proportionate basis and the resulting loss per share will, therefore, be the same for both Class A common stock and Class B common stock on an individual or combined basis.

The Company considered its proportionate share of the potentially dilutive shares issued by its equity method investee in its dilutive EPS calculation.

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

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:

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2023 2022 2021

Redeemable convertible preferred stock, all series — — 351,844,340

Warrants to purchase redeemable convertible preferred stock — — 203,610

Warrants to purchase Class B common stock 1,900,000 1,900,000 1,900,000

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Total 147,723,922 133,504,403 118,313,973

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.

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Foreign 1,215 730 591

Loss before income taxes $ ( 184,882 ) $ ( 164,569 ) $ ( 47,608 )

Loss before income tax expense $ ( 230,575 ) $ ( 184,882 ) $ ( 164,569 )

The components of income tax expense (benefit) were as follows:

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Foreign ( 139 ) 18 —

( 56 ) 371 38

Federal ( 6,347 ) — —

State ( 2,025 ) — —

Foreign 815 ( 473 ) ( 678 )

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Foreign 676 ( 455 ) ( 678 )

Income tax expense (benefit) $ ( 102 ) $ ( 640 ) $ 87

Income tax benefit $ ( 7,613 ) $ ( 102 ) $ ( 640 )

The reconciliation of the Company's effective tax rate to the statutory federal rate is as follows:

4 unchanged sentences

Share-based compensation ( 3.1 ) % 3.9 % 4.5 %

Section 162(m) limitation ( 13.8 ) % ( 8.3 ) % — %

Executive compensation

( 11.0 ) % ( 13.8 ) % ( 8.3 ) %

Research and development credits

17.0 % — % — %

Change in uncertain tax positions

( 4.2 ) % — % — %

Mergers and acquisitions

3.5 % — % — %

Nondeductible compensation

( 7.4 ) % — % — %

Other ( 1.6 ) % 1.4 % ( 0.3 ) %

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Share-based compensation 10,484 14,490

R&D capitalization expenditures 23,404 —

Research and development capitalization expenditures

36,743 23,404

Reserve for contract contingencies and processing errors

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As of December 31, 2023 and 2022, 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.

The Tax Cuts and Jobs Act of 2017 (TCJA) requires research and development (R&D) expenditures incurred under Section 174 for tax years beginning after December 31, 2021, to be capitalized and amortized ratably over 5 years for domestic research and 15 years for international research.

The mandatory capitalization requirement had no material impact to the Company’s 2023 income tax provision due to the Company’s tax attributes carryover and full valuation allowance position.

As of December 31, 2023, the Company had net operating loss carryforwards of approximately $ 194.8 million and $ 153.1 million for federal and state tax purposes, respectively.

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If not utilized, the federal and state net operating carryforwards will begin to expire in 2033 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.

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

In addition, the Company had research and development tax credit carryforwards of approximately $ 27.9 million for federal income tax purposes and $ 11.3 million for California 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.

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.

As of December 31, 2022, the Company has concluded that it has experienced ownership changes since inception and that its utilization of net operating loss carryforwards will be subject to annual limitations.

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 and Australia.

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

As of December 31, 2023, the Company has concluded that it has experienced ownership changes since inception and that its utilization of net operating loss carryforwards and other tax attributes will be subject to annual limitations.

The Company files federal, state, and foreign income tax returns in jurisdictions with varying statutes of limitations.

To the extent the Company has tax attributes carryforwards, the tax years in which the attribute was generated may still be adjusted upon examination by the federal, state, or foreign tax authorities to the extent utilized in a future period.

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.

The Company recognizes tax benefits from uncertain tax positions only if the Company believes that it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position.

The Company makes adjustments to the reserves in accordance with the income tax accounting guidance when facts and circumstances change, such as the closing of a tax audit or the refinement of an estimate.

A reconciliation of the total amounts of unrecognized tax benefits was as follows:

Year Ended December 31,

2023 2022 2021

Beginning balance

Reductions of tax positions taken during previous years

Additions based on uncertain tax positions related to the current period

Additions based on uncertain tax positions related to the prior periods

Ending balance

$ 9,800 $ — $ —

The Company’s policy is to include interest and penalties related to unrecognized tax benefits within our tax provision for income taxes.

The Company did no t accrue any interest or penalties during the year ended December 31, 2023.

The Company had $ 9.8 million of gross unrecognized tax benefits as of December 31, 2023, which would not affect its effective tax rate if recognized due to the Company’s valuation allowance.

The Company expects no significant increases or decreases to its unrecognized benefits within the next twelve months.

Concentration Risks and Significant Customers

Financial instruments that potentially expose the Company to concentration of credit risk consist of cash and cash equivalents, marketable securities, accounts receivable and unbilled customers' receivable, or collectively, customers' receivables, and settlements receivable.

Cash on deposit with financial institutions may, at times, exceed federally insured limits.

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

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.

Financial instruments that potentially expose the Company to concentration of credit risk consist of cash and cash equivalents, short-term investments, and accounts receivable.

Cash on deposit with financial institutions may exceed federally insured limits.

Cash and cash equivalents as of December 31, 2023 and December 31, 2022 included $ 628.0 million and $ 462.5 million, respectively, of investments managed by two financial institutions, which invest primarily in securities issued by the U.S.

Government or U.S.

Government agencies.

Marqeta, Inc.

Notes to Consolidated Financial Statements

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

As of December 31, 2023, short-term investments were $ 268.7 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 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.

As of December 31, 2021, marketable securities were $ 452.9 million, and there was no concentration of securities of the same issuer with an aggregate fair value greater than 5% of the total balance, except for U.S.

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

agency securities, which amounted to $ 255.2 million, or 95 % of the short-term investments.

As of December 31, 2023, all debt securities within the Company's portfolio are investment grade.

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

Treasuries, which amounted to $ 407.1 million, or 92 % of the short-term investments.

As of December 31, 2022, all debt securities within the Company's portfolio are investment grade.

A significant portion of the Company's payment transactions is settled through one Issuing Bank, Sutton Bank.

For the years ended December 31, 2022, 2021 and 2020, 82 %, 90 % and 96 % of Total Processing Volume, which is the total dollar amount of payments processed through the Company’s platform, net of returns and chargebacks, was settled through Sutton Bank, respectively.

For the years ended December 31, 2023, 2022 and 2021, 76 %, 82 % and 90 % of Total Processing Volume was settled through Sutton Bank, respectively.

A significant portion of the Company's revenue and accounts receivable is derived from a single customer.

For each significant customer, net revenue as a percentage of total net revenue and customers' receivables as a percentage of total customers' receivables are as follows:

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Customer A 68 % 71 % 69 %

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 11 % 18 %

Customer C * 20 %

Customer D * 13 %

* Less than 10%

Related Party Transactions

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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.

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 .

During the year ended December 31, 2021, the Company incurred $ 30.4 million in Card Network fees, net, recorded within Costs of revenue in the Consolidated Statements of Operations and Comprehensive Loss, to PULSE Network LLC, an entity affiliated with DFS Services LLC.

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