Q4 2023 Marqeta Inc Earnings Call

Participants

Stacey Finerman; VP, IR; Marqeta Inc

Simon Khalaf; Chief Executive Officer, Director; Marqeta Inc

Michael Milotich; Chief Financial Officer; Marqeta Inc

Timothy Chiodo; Analyst; UBS Equities

Ramsey El-Assal; Analyst; Barclays Bank PLC

Tien-Tsin Huang; Analyst; JPMorgan Chase & Co

Darrin Peller; Analyst; Wolfe Research, LLC

Bryan Keane; Analyst; Deutsche Bank AG

James Faucette; Analyst; Morgan Stanley & Co LLC

Andrew Bauch Bauch; Analyst; Wells Fargo & Company

Dan Dolev; Analyst; Mizuho Securities USA

Craig Maurer; Analyst; Financial Technology Partners LLC

Cris Kennedy; Analyst; William Blair & Company L.L.C.

Christine Chang Chang; Analyst; BofA Securities, Inc.

Andrew Jeffrey Jeffrey; Analyst; Truist Securities, Inc.

Moshe Katri Katri; Analyst; Wedbush Securities Inc.

Jamie Friedman Friedman; Analyst; Susquehanna International Group, LLP

Presentation

Operator

Good afternoon, and welcome to the market. Our fourth quarter 2023 earnings conference call. (Operator Instructions) As a reminder, this conference call is being recorded. I would now like to turn the call to the conference over to Stacey Finerman. You begin.

Stacey Finerman

Thanks, operator. Before we begin, I would like to remind everyone that today's call may contain forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including those set forth in our filings with the SEC, which are available on our Investor Relations website, including our annual report or on Form 10-K for the period ended December 31, 2022, and our subsequent periodic filings with the SEC. Actual results may differ materially from any forward-looking statements we make today.
These forward looking statements speak only as of the time of this call, and the company does not assume any obligation or intent to update them except as required by law. In addition, today's call includes non-GAAP financial measures. These measures should be considered as a supplement to and not a substitute for GAAP financial measures. Reconciliations to the most directly comparable GAAP measures can be found in today's earnings press release for our earnings release, supplemental materials, which are are available on our Investor Relations website.
Hosting today's call are Simon Khalaf, Marqeta's CEO; Michael Milotich, Marqeta's Chief Financial Officer. With that, I'd like to turn over the call to Simon to begin.

Simon Khalaf

Thank you, Stacy, and everyone, for joining us for market our fourth quarter 2023 earnings call. Last fiscal year was a transformative year for Marqeta, and I'm excited about the foundation laid for the future of our company.
I'll briefly touch on our results for the fourth quarter and full year '23 before sharing exciting developments at Marqeta. The last time we spoke with you after we release our Investor Day materials, which detailed the changes we made throughout 2023 and the opportunity ahead of us in 2024 and beyond. This most recent quarter demonstrates the focused effort made during 2023 is starting to pay off and asset Marketo on a new trajectory. This path would lead to sustainable growth, profitability innovation and a great ability to capitalize on the fast growing embedded finance market.
Total processing volume or TPV in the quarter was $62 billion, an increase of 33% compared to the same quarter of 2022. Our net revenue of $119 million in the quarter, contracted 42% year over year, which included a decrease of 59 percentage points from the revenue presentation change related to our Cash App contract renewal. Our gross profit of $83 million contracted by 4% versus Q4 2022, primarily due to the Cash App and renewal pricing.
Our gross margin for the fourth quarter was 70%. Our non-GAAP adjusted operating expenses were $80 million, a 16% decrease versus Q4 2022 due to our restructuring operational efficiencies and delayed investment, but EBITDA of $3 million in the quarter. On a full-year basis, TPV was $222 billion, an increase of 34% compared to the previous year. The full year net revenue was $676 million, representing a 10% contraction from the previous year. This includes at 31 percentage point decline related to the revenue presentation change resulting from the Cash App r enewable.
Gross profit for the full year was $330 million, a 3% increase compared to 2022. Gross profit was negatively impacted primarily by several renewals, particularly Cash App. It raises in our Visa incentives at th e start of the year. I'm thrilled with these financial results and thankful to all mark captains who have made this possible outside our future financial performance. We've delivered on product innovation, sales growth and operational efficiencies.
In 2023, we greatly enhanced our credit platform. We added credit program management capabilities with the acquisition of power and quickly executed the integration to launch a unified modern credit offering. The two commercial deals we recently sign are characterized by their ability to bring an embedded experience to their end customers made possible by market US flexible platform.
The first deal we signed was with International Travel Solutions or ITS. ITS is a successful travel management company with a substantial customer base. ITS plans to use them architect flat credit platform to build an unsecured credit card for its end users. ITS chose us because of our established reputation in modern card issuing not to mention our ability to offer solutions with a significant amount of customization and control, which is critical to travel management with our partnership, I guess, given launch and innovate faster to meet the ever changing demands of its travel partners.
Additionally, ITS can personalize its offering to its partners, allowing them to run their business more effectively by providing more robust controls over that of travel expenses. For example, I guess I expected to enable carbon impact tracking to help partners make conscious decisions to provide dynamic rewards to enable more customized incentives. We also signed another commercial credit deal, albeit for different use case Felipe, a leader in online payment and software solutions for professionals when partnering with Takeda to launch its plans to launch a Visa credit card em bedded within the MyCase platform, the first comprehensive solution in the industry that helps law firms, they drag and manage firm and client expenses affinity.
They selected us because of our trusted platform for building card program management at scale that our dynamic, flexible and tailored to customer needs by partnering with Marketo MyCase to March venues. Others will have a comprehensive, easy-to-use platform that gives them access to real-time card issuing transaction data and spend controls to their credit card offering. This help cardholders stay on top of business expenses and access to capital easily. All from a single is that export smart spe nd will be Caser and low pay in the end of 2024 and beginning 2025.
Let me talk about the progress we made in our go-to-market approach. As we've previously discussed, we have overhauled our go-to-market operations to better capitalize on the embedded finance opportunities. These changes included reorganizing the sales force, aligning our compensation structure and shifting the focus of the sales organization more towards full solution, selling such as accelerated wage access, SMB credit as well as co-brands .
These changes resulted in bookings growth over 50% in 2023 compared to 2022. Specifically in the fourth quarter, we capture another solid slate of bookings, generally in line with the makeup of coal we saw during the year. Expansion deals with existing customers came in at a profit of approximately 60% of total bookings. Although most bookings came from North America, 20% of the deals came from Europe and predominantly from net new customers, which bodes well for the future of that geography for Marqeta.
Like previous fourth quarters, we also on multiple deals through flipping volumes from our competitors as customers sought out market as proven scale, flexible city and expertise in modern card issuing, which was lacking through their current provider. In addition to growing our bookings, we also made great strides in accelerating the time to launch [four] new programs signed to convert these bookings into revenue and gross profits faster on average.
The time between close and launch in Q4 of this year was about 100 days better than the previous year. This was achieved without adding significant resources by focusing on solutions architecture and using preconfigured preconfigured card construct. In other words, while we designed innovative solutions for our customers, we also rely on our expertise to create a plan that will be approved by other members of the payments ecosystem such as banks and networks.
Moving back to product. Another area where we invested in 2023 was our reliability and continued ability to scale. The results from this investment can be seen in our transactions success rate metrics for the 2023 holiday season, which increased by [three] basis points. This is remarkable when one considers that on our peak day in 2023, our platform saw over 40 million authorizations, up 66% compared to the peak day in 2 022.
The improvement occurred simultaneously with efficiency initiatives that right-size our technology spending, but also authorization demonstrating that we are focusing on right efforts when considering when considering the reliability of our platform.
In summary, in 2023, we focus on building a solid foundation for growing and profitable business. In the long run, we went abroad, building out our platform and reorienting our sales teams to our proven and winning solutions.
In 2024, we plan to accelerate what we started and the return to strong revenue and gross profit growth as we bring to life new and exciting solutions with our fintech customers and prospective embedded finance customers. Our ability to offer credit, debit banking and the risk solutions at scale positions us well to unlock the massive embedded finance opportunity that's ahead of us. We've only just begun to execute over the strong foundation we have built.
With that, I'll turn it over to Mike for a more detailed look at our results for the quarter, the full year and financial outlook for 2024.

Michael Milotich

Thank you, Simon, and good afternoon, everyone. As expected and consistent with last quarter, net revenue and gross profit contracted due to the catch-up renewal with the majority of the renewal impact on revenue resulting from the revenue presentation change. Q4 was a strong finish to the year with TPV growth of 33% and better than expected results for net revenue, gross profit and expense driving positive adjusted EBITDA.
Net revenue and gross profit outperformed due to stronger than expected to be the growth, particularly in BNPL on-demand delivery and accelerated wage access as well as higher network incentives, continued execution of efficiency initiatives such as streamlining technology spend as well as delays in planned investment. It's coupled with higher gross profit led to $3 million of adjusted EBITDA in the quarter.
I will share the Q4 highlights before spending more time detailing our expectations for 2024. Q4 TPV was $62 billion, growing 33% for the third straight quarter. Non-blocked TPV grew approximately 10 points faster than block growth. The financial services vertical continues to grow a little faster than the overall company, helped by the rapid ramping of accelerated wage access TPV, which now contributes about up 3% of total Company TPV lending, including Buy Now Pay Later, grew several points faster than the overall company due to a strong holiday season and the continued adoption of our BNPL customers pay anywhere card solutions.
On-demand delivery continues to grow in the double digits due to consumer adoption of new services and merchant segments, as well as geographic expansion expense management growth reaccelerated this quarter, but is growing a little slower than the overall company as this vertical matures. Q4 net revenue was $119 million, a contraction of 42% year over year. The key drivers of our net revenue growth are as follows. The most significant impact was the 59 point growth headwind related solely to the revenue presentation change resulting from the cash up renewal.
As we've described previously. This change in revenue presentation is related to the costs associated with catch-ups primary payment network volume. Previously, the bank and networks fees associated with the cost of revenue starting in Q3 2023. These costs are netted against revenue. There's an additional 10 percentage points decline in net revenue growth due to the cash up renewal pricing. Non-voice revenue growth accelerated by more than five points as we begin to lap prior year renewals and newer, faster growing solutions such as BNPL pay anywhere cards and accelerated wage access increase and their contribution.
Net revenue concentration was 51% in Q4, increasing one point from Q3 due to seasonality. Our net revenue take rate remains unchanged from last quarter at 19 bps, excluding cash up, the net revenue take rate has remained consistent over the last three quarters, despite the lower take rate powered by market TPV growing faster than managed by as we continue to move beyond the period of heavy renewal activity.
Q4 gross profit was $83 million, contracting 4%, similar to net revenue growth, but growth excluding block also accelerated by more than five points. Three factors continue to weigh on gross profit growth. First, the cassette renewable lower growth by mid-20 percentage points. As a reminder, the catch-up revenue presentation change does not impact gross profit.
Second, non-blocked renewals between Q2 2022 in Q1 2023, lower growth by low to mid-single digits. These customers represented approximately 50% of our non-block TPV. and the effects of these renewals we fully lapped in Q2 2024.
Lastly, we lost full these incentives for two of our customers at the start of 2023, lowering growth by low to mid-single digits each quarter until we lap this impact in Q1 of '24. Our gross profit take rate was 13 bps. That's consistent with last quarter. The gross profit take rate outside of cash up increased one point from last quarter due to higher network incentives. As expected, the gross profit margin was 70%.
Q4 adjusted operating expenses were $80 million, a decrease of 16% year over year due to realize savings from our restructuring in late May, as well as efficiency initiatives in our technology and precedent professional service expenses. These savings were achieved without sacrificing innovation, compliance or platform resiliency.
On a sequential basis, expenses grew [7%] quarter over quarter, largely due to an increase in professional services, which tend to increase in Q4 due to the timing of audit fees as well as product and security assessments. Q4 adjusted operating expenses were over $3 million lower than we expected, mostly due to investment timing delays, particularly hiring, as we just recently established an office location in Poland, which we intend to utilize for a significant portion of our headcount growth.
Q4 adjusted EBITDA was positive $3 million, a margin of 3%. Interest income was $15 million, driven by elevated interest rates. Q4 GAAP net loss was $40 million, including a $10 million noncash post-combination expense related to the Power acquisition. During Q2, we announced the buyback of $200 million as of the Q4 quarter end, we purchased 31.3 million shares for an average price of $5.36 for $168 million.
We ended the quarter with $1.25 billion of cash and short-term investments. The full year 2023 net revenue decrease of 10% and gross profit growth of 3% to not necessarily reflect the strength of our underlying business due to the change in the catch-up revenue presentation and heavy renewal activity, 2023 was a transformative year for market, putting the growth on putting the company and on a path to sustainable growth, profitability and innovation.
TPV grew 34%, and our adjusted EBITDA was negative $2 million as we restructured our cost base and focus on efficiency, while securing over 80% of our TPV in renewals over the past seven quarters, we were free free cash flow positive for the year. Now let's transition to our expectations for 2024. Let me quickly provide full year 2024 expectations before diving into more details on the first and second halves. I will also call out any changes to the 2024 financial targets we shared at Investor Day a few months ago.
Full year 2024 net revenue is expected to contract 20% to 24% as the change in cash up revenue presentation weighs on growth in the first half. 2024 gross profit growth is expected to grow 6% to 9%, which equates to gross profit margin in the high 60s. Adjusted operating expenses are expected to grow in the mill mid to high single digits as we continue to operate with a strong investment discipline and focus on achieving economies of scale.
Therefore, we expect full year 2024 adjusted EBITDA to be around breakeven or said differently, and adjusted EBITDA margin of around 0%. Because at the details I'll describe in a minute, we expect to be adjusted EBITDA positive in three out of the four quarters in 2020. For this expectation there better than what we shared at our Investor Day in November as a result of efficiency initiatives. Before I get into the more granular detail, let me first start by providing important context for 2024.
We have assumed the overall macroeconomic environment remains consistent with recent trends. We have yet to see meaningful changes in the spend patterns on our consumer and commercial cards in the past several months. Therefore, we assume, given current trajectory process, our financial performance will be meaningfully different in the first and second half of 2024 primarily for two reasons. First, the lapping of the effects of the cash up renewal of dissipate at the start of Q3.
Second, the revitalization and strength of our sales bookings since Q4 of 2022 should lead to a fair amount of new business launching and ramping on our platform throughout the year. The contribution of these bookings to net revenue and gross profit will increase each quarter. Further accentuated the difference in our first and second half growth rates.
Adjusted expense growth will also be meaningfully different in the first and second halves of 2024 due to our restructuring executed at the end of May 2023 (technical difficulty) expense base was meaning as in the last seven months. The difference was further exacerbated by the fact that we did not reinvest some of the savings in new initiatives and focus areas as quickly as we intended a s I referred to in my queue for 2023 comments. Therefore, our second half 2023 adjusted expenses are unusually low.
Now let's turn to the first half of 2024. For Q1 2024, we expect net revenue to contract between 45% and 48%, including a 65 to 70 percentage point negative impact of the cash up renewal, mostly due to the revenue presentation change. Consistent of what we have seen in the last two quarters. We expect Q2 net revenue to contract in the same range as expected, a few points lower in the second half of 2023 due to the unfavorable business mix and slower growth from a few of our customers without much contribution from new program launches.
At this point, Q1 gross profit is expected to contract between 8% and 10% with a gross profit margin in the high 60s. We expect gross profit to contract in the same rate, same range in Q2. However, the Q2 gross margin will be approximately seven points lower than Q1 as our network in the center tiers reset in April with our two largest network of partners.
The first half growth for gross profit contraction is now expected to be a little worse than what we shared at our November Investor Day due to unfavorable business mix and revised expectations for the timing of when some key customers will achieve certain price tiers based on their TPV trajectory.
Q1 adjusted operating expenses are expected to shrink in the mid teens similar to Q4 '23, but with some ramp in hiring results from the delays I discussed earlier. In contrast, we expect Q2 adjusted operating expenses to grow in the mid-single digits in Q2 will begin to lap our restructuring from last May, and we will incur additional costs from our reinvestment in hiring as well as investments in platform resiliency to support our scaled customers, therefore, Q1 adjusted operating site.
Therefore, our Q1 adjusted EBITDA margin is expected to be in the 0% to positive 2% range. This is better than what we shared at Investor Day due to our investment delays and increased efficiencies we realized in Q4 '23. We expect Q2 to be our only negative adjusted EBITDA quarter with a margin in the negative [79%] range due to a combination of the resetting of our network incentives, weighing on gross profit and additional invest we needed to support our growth.
In the second half of '24, our business performance metrics are expected to improve significantly after lapping almost all of the major renewal activity, particularly Cassia. We expect net revenue growth in the second half of 2024 to reaccelerate to 23% to 26%, primarily driven by three factors. First, lapping the catch-up revenue presentation change, second, realizing existing customers' growth as we lap all the elevated renewal activity, and third, benefiting from the ramping new programs as we progress through the year.
Second half 2024 gross profit growth is also expected to be in the 23% to 26% range. The second half profit growth expected to be a little higher than what we shared with you at Investor Day due to positive business mix and expected shifts and a couple of existing program contracts where we currently incur excessive network fees.
Second half 2024 adjusted operating expenses are expected to grow in the high teens as we continue to invest in growth initiatives and resiliency, combined with the fact that we grow over the unusually low expenses in 2022 as our post-restructuring reinvestment was delayed. Therefore, we expect second half 2024 adjusted EBITDA to be positive 1% to 3% margin, a little higher than what we shared at Investor Day due to higher gross profit.
In conclusion, we're exiting 2023 with great business momentum and solid foundation to deliver sustainable growth profitability. And in addition, in 2024 and beyond, our excitement and confidence is primarily driven by three factors. First, by renewing over 80% of our TPV in the last seven quarters, most of which are in contracts of at least four years. We have secured our attractive customer base and opened up potential cross-selling opportunities as we continue to expand our platform capabilities. This was short-term pain for long-term gain.
Second, we are starting to get contributions from ramping new use cases such as BNPL pay anywhere cards and accelerated wage access as we move through 2024 this will be combined with ramping new cohorts that result from our improved sales performance for delivered over 50% bookings growth in 2023.
Third, we are getting early customer traction with our new credit capabilities, signing our first two customers to leverage our fully modern scaled assure credit credit platform for innovators. T his won't meaningfully contribute much to the 2024 P&L credit will be a meaningful driver of future growth.
Fourth marketed differentiated platform in terms of both breadth and depth of our capabilities gives us an outsized market opportunity as many fintechs continue to thrive, combined with the continued emergence of embedded finance use cases. Lastly, we have achieved and more efficient cost structure while maintaining compliance, security and innovation that will power profitable growth for years to come.
The second half of 2020 for our business and financial metrics are expected to reflect this momentum as we return to growth. We are excited to share our progress with you in the coming quarters. I'll now turn it back over to the operator for questions.

Question and Answer Session

Operator

(Operator Instructions) Timothy Chiodo, UBS.

Timothy Chiodo

I wanted to touch on accelerated wage asks us a little bit. So you have the two large customers to start with the Inver and also the one app one app. Was it becoming the default for all Denmark employees as new employees have come on and others have rolled off for unless the company. Can you just talk a little bit about the traction that you're seeing with the offering with that one large customer? And related, you had mentioned that there were others coming down the pike in terms of your pipeline for accelerated weightage access. Could you just give a brief update on what that looks like now a few months later?

Simon Khalaf

Hey, Tim. Simon here. Thanks for the question. We are indeed extremely excited about accelerated wage access. So of the trends is extremely healthy. And our accelerated wage access is now up about 3% of our processing volume up from an insignificant number in 2022. So to put that in perspective, you're looking at about an annualized $7 billion of pay that is running through the market up. I guess that's a massive achievement.
We can't comment specifically on on individual customers, but the trend is extremely healthy. And it's always our pipeline. I mean at the end of the date, look, I mean, our solution is gone up, a win win win, win with our approach, which actually benefit the actual employer that has a contingent workforce because they can retain the working capital, but at the same time, give accelerated wage access to their contingent. And up course, Bob, the associates or the contingent workforce gets paid instantaneously and we saved the employer money.
So they actually make money. So you're taking effectivity and expense line and moving it into a revenue potential that could be returned to the contingencies in terms of rewards and discounts. (technical difficulty) So I mean that ironically, an accelerator, and we're extremely excited about it.

Operator

Ramsey El-Assal, Barclays.

Ramsey El-Assal

Hi, thanks for taking my question. Is happening. It was great to hear you signing some credit deals. Can you comment on the credit pipeline and just signals you're picking up in the marketplace in general about the demand environment for for credit and maybe even to put a little nuance on it in the context of sort of embedded finance use case that it's seems like you're winning?

Simon Khalaf

Yeah. Thanks, Ramsey for the for the question. The pipeline is extremely healthy. As we stated many times, we'd actually did expect that while we are positively surprised by, is the SMB, our credit demand and especially from I'd say, aggregators or platforms that have established relationship with SMBs. And I have great purview and visibility into the performance of these SMBs and can help with us getting them credits because they they know what their revenues are going to be so they can diminish the risk. So I would say across the board, our credit pipeline is extremely, namely healthy.
And I would say that the vast majority is in the embedded finance, whether it is commercial or consumer. I mean that's that's the space we're playing in it so that there could be biased because that's what we are actually chasing. But also from a demand perspective, I would say between SMB credit and a new modern day co-brand, I think there's plenty of innovations to simply drive user engagement and change online commerce and not just payments. So we're very excited about that.

Operator

Tien-Tsin Huang, JP Morgan.

Tien-Tsin Huang

A really good strong bookings with the was up 50%. I believe that I'm just curious, does that include any wins with the potential for clients to become maybe top 10 them down the road? Just a little bit more context on the type of stuff that you're adding? And and also just your confidence in your ability to replenish that the pipeline and backlog other large deals out there to win versus 90 days ago? Thanks.

Simon Khalaf

Hey, Tien. It's Simon here. Thanks for the question. I mean, let let me start with your last. Our ability to replenish the pipeline is actually very strong. We have in drained the pipeline or accelerated R&D or artificially accelerated any deals have quite the contrary. Our pipeline is actually growing and very efficiently in terms of our customers, we have closed, absolutely. I mean, all of them could be big. It takes time. I mean, you understand this industry, it takes time to ramp up. But but all of them have great potential and transformative potential.
So I mean not at each one of them, but there's definitely quite a few that we're very excited about and an ability to capitalize on the pipeline. We do have an aggressive plan, but we feel comfortable about it.

Operator

Darrin Peller, Wolfe Research.

Darrin Peller

Guys. Hey, thanks. A couple of things. I just number one, it looks like when we see the all the adjustments that would sort of normalized for gross profit of rich normalized gross profit growth coming out to the well into the high 20s percent growth. And I know there's obviously some element of cadence as the year progresses as your second quarter starts off with incentive rebuild, et cetera. But maybe just talk about that nuance to make sure we're in the right ballpark first.
And second of all, you talked about the second half being a little bit better, Mike. So any more color on what's gone well there would be great.

Michael Milotich

Yes. So on so the first quarter, I would say it's probably it's probably more closer to mid 20s and we were negative 4% on an adjusted basis. (technical difficulty) As you mentioned, we were negative 4% of the Cash App is mid 20s. And then Visa incentives and renewals are both kind of load the low to mid. So it kind of put too low to mid-single digits. That is. So it's a it's a total impact of, say, around 30% plus or minus, which puts you kind of on an adjusted basis in the mid 20s percent growth, which is now what we're sort of saying we expect the second half to be in that 23% to 26% gross profit growth range in the second half of 2024.
Once we've lapped most of these things that the biggest on, I guess, benefit we're getting compared to what we knew a few months ago. We had Investor Day is out some of it is a little bit of business mix, as you know, in our in our business between all the different use cases and it is a physical or virtual card as a powered by managed by like we have lots of different gross profit, take rates on our volume. And there's a little bit of positive mix there.
But I would say the bigger factor is that we have a couple of programs right now where we feel we incur sort of excessive network costs, and we're always working with our customers are trying to optimize how their program is operating, both of their benefit and of course, ours as well. And this can take the form of how they're looking at declines. And are they really optimized based on the way their program is set up? Are they incurring sort of unnecessary costs or the same thing can happen in cross border? How exactly is their programs setup for cross border?
And as you know, those come with much higher fees associated with them and are there changes that can be made? And we've identified some changes for a couple of our programs that are in flight right now that we expect to be fully in place for our benefit in the second half. These guys have things are always opportunities you're hunting for, but you don't really count on. Then there are a lot like how flips I would say how we think about flips. We're always, of course, going after flip volume, but you don't count on flip volume when you're projecting business into the future.
So on, that's really what's driving the upside in the second half. And and that's a great win because it's really a structural benefit for our for those programs and therefore our P&L.

Operator

Bryan Keane, Deutsche Bank.

Bryan Keane

Hey, guys. I just wanted to ask about the bookings ramp. It sounds like, Simon, you closed some of the time to ramp up. Can you talk about that as the bookings that 50% growth in bookings kind of unfold in 2024? And do we still expect kind of the $20 million in revenue in '24, and $50 million in '25? And $150 million in '26 from these bookings? Just trying to get the cadence down correctly in the ramp times?

Simon Khalaf

Thanks. Yes, hi, Brian, and thanks for the question. Yes, you're about right. I'd say we are on track to deliver as of the number that we can affect us at Investor Day. So the $20 million, $50 million and $50 million. So I mean, we're always working to accelerate dose, but I think that's the right range. So we're very comfortable with these numbers.

Operator

James Faucette, Morgan Stanley.

James Faucette

I'll just wanted to ask quickly on on the long term FI opportunity moving such there's Windsor Knutsen, Novo it from the top 10 banks. How long you think you will pay for those tech stacks and sets up such that adoption of Marqeta of the companies? You're just trying to think about ongoing penetration and talk more about that broader market.

Simon Khalaf

James, yeah , thanks for the question, Simon here. So we're still on the same time line. There is definitely a lot of conversations with large FIs. But I do believe we're still on the same trajectory. The majority of that, the growth we will witness over there next two years will be from fintechs and embedded finance customers.
But as as I say, though, those players take share either denovo or take that spending share is going to be extremely hard for the financial institutions, not to look and say, hey, why what's going on here? And we expect that trend to start materializing exactly what we've guided in that the '25, '26 timeframe.

Michael Milotich

And then I guess just to add one thing, James, so that I think the we fully expect that the initial opportunities are likely to come on the commercial side as well. Because if you look at what's happening with some of the more modern kind of expense management and corporate card issuing platforms with several of those companies have gotten to be quite big and starting to capture a larger and larger accounts.
And so we believe that there's a little more activity within large banks on the commercial side two's sort of counteract the impact that might be seeing from those those companies. There's less of that so far on the consumer side, we hope to, I guess, propagate that in the future with people coming onboard and doing some modern co-brands with our new credit capabilities.
But we would expect the initial traction is much more likely to be in commercial and consumer with a large FIs.

Operator

Andrew Bauch, Wells Fargo.

Andrew Bauch Bauch

I know you don't guide to it per se, but we want to give us a sense on how we should be thinking about TPV growth and how to take rate dynamics here than the '24. I know you've mentioned in the past because your enhanced data capabilities that your ability to forecast the Ruby significantly better than had been in the past. So any thoughts around there would be helpful.

Michael Milotich

Sure, Andrew. So our TV growth, we expected to be about 30% throughout 2024, and it will be relatively consistent from each quarter. So just to give you a little sense of we grew in Q4 33%. It was relatively consistent each month in October. A little lighter November, a little stronger on, but some in January, our TPV growth was very similar to the December growth rate. It was only one point lower and February through the first three weeks is looking very similar to January. And of course, we'll get the benefit of leap year at the end of the month.
So I'd say the the trajectory of TPV growth is sort of in that low (technical difficulty) about 30s range so far and that and we expect over. So it will all be kind of in that, that same area of around 30% plus or minus. From a take rate perspective, I think we're starting to see stability, right? We -- as we've said, we have 80% of our are -- over 80% of our TBD. We've renewed recently.
And so as I sort of called out, you know, if you exclude Cash App, which, of course, we're still lapping in our take rate on revenue has been consistent excluding cash out for three straight quarters. On the gross profit side, it's actually ticked up in Q4 compared to Q3 when you exclude. Yes, which just has to do with a lot more incentives happening in the fourth quarter compared to Q3. So we expect to be great stability for the most part has to always be some a little bit of renewal activity, but we'll also have new customers ramping who aren't nearly as deep into their pricing tiers as our existing cash customers. So we expect relative stability on that 30% TTV growth.

Operator

Dan Dolev, Mizuho Securities USA.

Dan Dolev

Hey, guys, great results. Thank you for taking my question. I think, Simon, you mentioned that you flip to volumes from your competitors in your prepared remarks. Like without naming specific names, can you give us a flavor of some of the types of competitors that you're winning share from? Thank you.

Simon Khalaf

Sure, Tom, thanks for the question. Yes. I mean, I think there's two flavors of one one flavor is taking share from legacy. The others is, I'd say, the flight to quality. There's folks who have probably chosen an alternate processor because up they were cheaper than market up. But then as they scaled up and they realize our stability are multiple [nines]. And as the business scale, they are looking for a partner that can take them to the next stage. So I think it's a mix of the mix of like taking incumbents out and also taking cash out less stable the processors.

Michael Milotich

And just add a little bit so that, Dan, I would say the in Q4 of our bookings, about 10% were flips, and that's actually on the low side for each quarter of the year. So each quarter in 2023, at least 10% of our bookings we're flip. So I think there's a good amount of activity of a Simon was saying people who, maybe a couple of years ago made a different choice. We are a contender for the business and we didn't get it. And and now they're sort of realizing some of the benefits of in terms of our expertise to help them scale and grow their platform. Also the reliability we provide. And so I think that's really what's helping us.

Operator

Craig Maurer, FT Partners.

Craig Maurer

Yes, hi. Thanks for taking the question. Um, wanted to come back to buy now pay later on for a second. Do you expect from that blocks, new Cash App strategy to drive more adoption using Buy Now Pay Later will cause an inflection in volume?

Simon Khalaf

We do expect -- I mean, there's no question that dot Buy Now Pay Later market is here to stay and are we seeing do type of distribution for buy now pay later solutions? one is integration with as with merchants and the call. And we are seeing, I would say, higher engagement, consumer engagement with integrating Buy Now Pay Later into a payment vehicle on our part. So across the market up platform, and that's where market has a higher mode.
So in terms of Cash App, specifically, of course, first, I mean, Cash App is widely distributed. It's a highly engaging product. So having Buy Now Pay Later in it that which is also powered by market with is definitely a solution. We're excited about. It makes sense for the consumers. It makes sense for the distribution of buy now pay later. And yes, it's a segment of that Cash App is well-penetrated in.

Michael Milotich

Yes. I mean, if you think about Craig, that there's over 23 million active cash up card users every month. So although Afterpay has been successful for them and for our business, that's an incredible installed base. So what they talked about on their call last week makes makes a lot of sense to us.

Operator

Cris Kennedy, William Blair.

Cris Kennedy

Good afternoon. Thanks for taking the question. Can you provide an update on your on the regulatory environment for banking as a service and embedded finance and kind of how you view that operating environment? Thank you.

Simon Khalaf

Thanks, Chris. I would say there's no changes of which there's not much that we can talk about either positive or negative. I'd say that the environment is remains healthy. I mean, the great news about a lot of what's going on in embedded finance up is up solutions that are catering to the unbanked and underbanked. There's no question that buy now pay later has opened the credit box and provided of what is effective lending without the 29% APR.
So that's definitely helping the community and same thing with SMBs that kind of like the forgotten entity. So I do the there's a lot of goodness that is happening with with these solutions. So I do direct, we're comfortable with the regulatory environment.
The second thing I'd say is as a company, we have invested in program management and we've invested in compliance with invested in a lot of these services because number one, we take it very seriously. And the second thing is that when we target of the brands, specialty and embedded finance, the last thing we want is bring them regulatory travel. So I think we have taken this very seriously as a platform.

Michael Milotich

And I think as you may be referred to, Chris, I mean, some of the announcements out there about fast platforms and some of the banks to do business with the more of those announcements. There's definitely a combined key are the beneficiaries of just given our scale and the level of investment. And we were one of the first movers in this space. So, um, we think that some, although it's on its It's unfortunate that there's some disruption in the marketplace like that. I think generally speaking, we're we're definitely more of a beneficiary than something that hurts us.

Operator

Christine Chang, Bank of America.

Christine Chang Chang

I just had two quick questions. I mean, so first, I wanted to ask about the competitive landscape has obviously been some headlines around the corner on block with audience. Are you seeing the competitive landscape evolving are intensifying among existing clients? And then just a quick clarifying question. Maybe you guys is going to impact or was there any from FII in the quarter and if there's anything assumed in the one quarter and the first quarter of 2024 guide? Thank you.

Simon Khalaf

Thank you for the question. I'll take the first one and I'll toss the second one to Mike. In terms of the competitive landscape, I'd say it is more favorable than it used to be because the majority of the growth we are seeing is in the areas that market has them much higher mode. So up into a one-time, I'd say, the one-time hub, virtual commercial card space, yes, there is competition, but most of our customers at buying from us or partner with us on more than that.
So the growth is coming from areas where our mouth is higher so up. So I think we're comfortable there in terms of content in terms of the competitive landscape. Now, that doesn't mean we're not unmindful of competition on the country would aspire, but it keeps everybody honest, and it keeps us innovating.

Michael Milotich

And on your second question on RIG-I, nothing really to on nothing really of note to point out. I think last quarter we did have something because we were a little surprised by the changes that went into effect on and the degree to which the mix of volume changed, which is very relevant for us in cash up now based on the way the accounting change in the renewals. So that was on something where we just didn't expect much shift as we saw that impacted our economics a little bit in Q3. But but with that knowledge now, Q4 was largely as expected, and there's nothing we see or have assumed in' 24 t hat's noteworthy.

Operator

Andrew Jeffrey, Truist Securities.

Andrew Jeffrey Jeffrey

Hi, good evening. Thank you for taking the questions. I wanted to ask about expansion deals. It sounds like or expansion of existing relationships sounds like that was of call out for our drivers. Well, last year, can you talk a little bit, I guess said perhaps 60% of total bookings for expansion deals. Can you talk a little bit about additional capabilities and how you're monetizing existing customers the way in an improving rate that w e were?

Simon Khalaf

Yes, absolutely, Andrew, thanks for the question. There's many angles to this. I mean, other than what we've done over the last year is focus on solution selling like to look at the up the trajectory of market data that I would say there is Neo Banking than buy now pay later than expense management and on-demand delivery fee. And I we started working on accelerated wage access, SMB credit and co-brands.
So and all of them processing is kind of the least common denominator, M&A, everybody uses it. And then as we started rolling out like banking as a service product program management as such as this beauty and chargebacks Risk Solutions, those are kind of like good add-ons. But I'd say what are also has to happen is a lot of our customers started launching multiple programs with us like as an example, the Buy Now Pay Later community.
Most of them started with a solution that integrates with merchants and all of them are now moving. I statements good majority of them actually either integrating into a payment card or having a payment card look at SuperCard up. So they launched more programs with us. So I see it is either more growth Graham's launch with us for value added services that we are we are adding.
The third angle is international expansion. So we've taken the strategy that would have gone up. We're going to basically go at our customers go up, I mean, with good reason and efficiency. So a lot of them, a lot of the multinationals are they want to code one center to deploy everywhere and mark at our gave them that ability. So that's the third dimension of expansion. So in summary, I'd say first one is launching more programs. The second on more value added services. Third one is international.
Now looking forward, credit is a phenomenal opportunity to a lot of the debit partners we have. So we are in deep conversations with a lot of our customers that use us for debit, and they want to they want to use us for for credit as well.

Michael Milotich

And another example that I would just add to what Simon just said is that they might look at credit or maybe they have something that's customer facing. And now maybe we're engaged on something that's more employee facing on accelerated wage access. So as we add to the use cases and the breadth of our platform, there's there's lots of different opportunities that we can discuss with our customers.
And that's one of the as we go into embedded finance, that's one of the really compelling things about our platform is most of these customers are going to or prospects are going to start somewhere, but many of them are already big companies, their own right in our thinking a little bit bigger, and they have that opportunity to do that with one partner on the market, a platform that might be difficult to achieve with some of our competitors.

Operator

Moshe Katri, Wedbush Securities.

Moshe Katri Katri

Can we talk a bit about the center that you're opening in Poland and how that could potentially bring down some of your technology or development costs on the work?

Simon Khalaf

Absolutely. Thanks, associates. Yes, I mean, we are we all come from a backgrounds in which we scaled organizations. And of that, there's multiple reasons to do this. one is the talent in Poland is really good and especially as some folks in our industry, whether it's up networks or is done in Poland.
The second one is strong, our back-end engineering risk operations, AI, machine learning, so on and so forth. The labor market is still favorable compared to the United States in terms of availability and in terms of cost.
So the areas where we are investing and in Poland will help us on the risk operations program management as well as engineering services. And we (technical difficulty) expect also so to office sales organization as well. I mean, it throughout my career, I've had tremendous success in in Poland. So I think where we're looking good there.

Operator

Jamie Friedman, Susquehanna.

Jamie Friedman Friedman

Hi, thank you. Mike, I think you said in your prepared remarks that the non block renewals lower gross profit growth low to mid single digits. If I heard you wrong, I apologize if so that's the case. I was wondering how we might if you could unpack that a little about the inputs and how we might be thinking about that in 2024 w e hope for? Thank you.

Michael Milotich

Yes, you got it. Exactly right, Jamie. This is and it was low to mid-single digits from deals that we did between Q2 of '22 and Q1 of 2023. So in that four quarter period, we renewed about 50% of our non-bulk TPV. And so the last couple of quarters have been calling calling this out. So this will lap in Q2 of '24.
Now, what's not in there, it's not all all renewals that are non block is just within that window of time when there was a lot of activity. And so we really just have one more quarter of Q1 of '24 before we start lapping. But you got it right. It was low to mid-single digit of gross profit growth drag in Q4 as a result of those.

Operator

Thank you very much. Ladies and gentlemen, that does conclude today's event. Thank you for attending, and you may now disconnect your lines.