All right, first of all, Mike, thank you again for being here.
Thank you for having me.
All right, guys, good to see everybody again. Again, I'm Darrin Peller. I cover payments and IT services at Wolfe Research. Really happy to have Marqeta with us today. We have Mike, who's the interim CEO and the CFO of the company, who, you know, Mike and I have gone back a long way, and I have such a huge regard for what you've done, both at Visa and now Marqeta for some years now.
Thank you.
Just remember Marqeta, even during their IPO, working on it, certainly had some of the better customer diligence calls we did with just customers that really appreciated and needed what you guys offered. Thank you for being here with us today.
Appreciate it.
Maybe just start off, I mean, obviously, you know, there's been an announcement of an interim CEO role now, and so if you could just give us a sense of the change in leadership, why now, what are you seeing differently regarding the strategy or path, Marqeta, maybe if there's any variance from the predecessor, and we'll go from there.
Sure. Simon and the Board mutually decided that this was the time, as we start off a new fiscal year, to do a transition in leadership. Mostly just we're going to have a renewed focus on execution in 2025 and going forward to make sure that we continue our path to profitability and the kind of growth that we want to achieve. You know, we have a sound strategy. I was a big part of kind of creating it, had a big voice in it, so I think, you know, I don't expect to make any major changes. The one area that I think I will have put a little more emphasis, maybe, than in the past, is on some of the more fundamental elements that are foundational to our success.
A little bit of a back-to-basics, focus on a few more of the little things that help us just deliver more value for our customers and partners, and ultimately that, you know, should drive shareholder value.
Okay, that's really helpful. Last year was undoubtedly a busy year for the company, and there was a lot of new growth initiatives, but also some speed bumps, obviously, along the way. Maybe just to level set things, what were some of the key takeaways from last year? If you could just catch us up, maybe from being current, from some of the impacts from third quarter and fourth quarter, whether that was the fintech banks having more friction in underwriting or some of the customers doing a little more in-house, especially on the ODD, on the on-demand side, delivery side. If you could just help catch us up to what's still impacting the business and what happened in the year from there.
Sure. I would say coming out of 2024 and into 2025, there are probably four highlights from 2024 that I would say are going to be impactful as we look ahead. One is we really laid the foundation for embedded finance. If you go back to 2023 and 2024, we said roughly about a third of the new sales that we were booking were embedded finance customers and use cases. Right now our pipeline is about two-thirds embedded finance. We see a lot of momentum going in that direction. You know, we are uniquely situated to help embedded finance customers because of our modern platform, pure API-based. It makes it easier for existing businesses to embed a card solution into their platform.
You know, we do both consumer and commercial credit and debit on a global basis, which is important in embedded finance because many of these are well-established businesses who are already multinational and are thinking about multiple use cases, not just a single use case. You know, the fintech space, at least when those companies start, you know, they're in sort of a narrow vertical. Versus embedded finance, these are bigger businesses thinking about multiple options, which makes us, you know, a unique partner in terms of the value we can add. The second area is we started to make some progress in credit. We are purposely going a little bit slow because anytime you rush in credit, you can make some pretty painful mistakes.
Sure.
Also, what we're doing is different. You know, not much has changed in the credit space in a couple of decades. What we're proposing is different, and so we're looking to find the right partners. We've launched our first commercial use case, so we have a customer up and running, and we just signed our first consumer use case, which is an airline co-brand. You know, we're excited about the progress we're making in credit. The third area I would mention is in Europe. Our Europe business is doing incredibly well. Our volume there is growing well over 100%. You know, that's just an area of the company, it's now over 10% of our TPV. It's growing really quickly, and, you know, we're investing in that area, which I'm sure we'll talk about with a recent acquisition we just announced.
You know, that's another area of strength that's going to really help us as we go forward into next year. Finally, you know, we are getting, we're starting to expand the number of services that we can offer our customers. In the past, we were expanding our platform more on a use case basis, and although we're still continuing to do that, I would say we're much more focused on providing additional services where we can add more value. I think you're going to hear us talking more about that in 2025 and hopefully have more contribution to the P&L. In terms of what you spoke about, which was in our call in November, we highlighted that we had a few long-term, highly sophisticated fintech customers that were taking on more things themselves and therefore buying fewer services from us.
There were six unique instances of it. Two of them were customers who were taking responsibility for the bank relationship. One of those is done and they have executed, and the other one we expect to happen in the coming months. There was one customer who took their risk services in-house, and that was executed at the start of Q4 of 2024, so that is done. We had three instances of customers connecting directly to their endpoint in on-demand delivery, which really does not then remove the need for a card in the transaction. Two of those three are done, and one is ongoing. For the most part, those impacts are in our P&L at this point, and there will be a little bit more coming in the first half of 2025.
Okay. When you think about the dynamics at the end of last year, I mean, again, the banks, there was some friction in really just onboarding customers. Where are you in, first of all, adding incremental? I know you talked about hopefully adding a couple of more bank partners.
Yes.
Maybe just as a side onto that, you know, when we talk about banks collaborating with you guys more and just having a more systematic approach, what does that mean, and what is that going to do for you onboarding customers going forward?
Yeah, so first, from a neobanking perspective, we are intending to add two new banks in the U.S. in 2025. One of them, we've already agreed to financial terms, and we are in the process of doing the technology work. That one is pretty well on its way. The second one, we're very close on the financial terms, which would then allow us to start doing the technology work that's required. We are making good progress there. When we are adding new banks, not only do we just want more supply, if you will, but the other thing that we are looking at are the banks' capabilities, right? What types of use cases are they comfortable with? Most banks are not going to do everything that we want to provide our customers. They are not comfortable with certain use cases.
Part of when we're choosing banks is also making sure we're choosing banks that are, you know, want to do what kind of business they want to do, what capabilities they have that we can utilize is an important part of our selection. We're excited to bring on those two new banks. In terms of what we're doing to improve the onboarding process with the banks, we're trying to have a much tighter relationship. I would say on the bank side, it's a little bit easier. You know, we've worked really hard with our bank partners to have sort of regular stand-up meetings so that we're communicating much more frequently and have clear escalation paths so that if there are any challenges arise, we quickly kind of swarm them and deal with them. That's how we're working really with our bank partners.
I would say more of the changes on the customer side. You know, we've prided ourselves on being very customer-centric in our history, and we tended to, you know, give customers a lot of freedom to make changes and make adjustments. I think now we're being a little heavier-handed, helping them understand that the environment has changed from a couple of years ago, and they really should spend a little bit more time planning so once they get going, they don't make a lot of changes. Because even small changes, like we've been spending a lot of time with them, helping them understand, like if you change your marketing message just a little bit because of the approval process that has to do with that, it could set you back like a month to a month and a half.
Just like a small change to how you want to position the program and marketing. Giving them more examples of that helps customers appreciate, wow, I just make a couple of these changes, I could easily lose several months.
Right, right.
Trying to educate them about that. We've started to introduce some fees as well to create some disincentive. You know, we also, because our customers are shifting more to embedded finance, they actually want more of our expertise. They're asking us, what would you recommend so that we can get up and running? We are utilizing more of our pre-configured solutions that the bank and the network have already pre-approved, which allows us to then move a little faster with our customers. Those are all the ways we're trying to streamline the process. You know, in November at our earnings, we talked about several programs that had been delayed. At this point, almost all of them have launched except for three programs that remain unlaunched.
In each of those three cases, our work and the bank's work is done, and we've really now handed the keys over to our customer, and it's up to them now to launch the program.
That's great to hear. All right, so hopefully that's mostly in a much better position now. When we think about your 2025 outlook, if you could just start by recapping what you just provided for us on your last point.
Sure.
Also maybe a little bit about the exit growth, you know, how you exited the year versus the guide.
Sure.
What your assumptions are in there.
Sure. What we just said a couple of weeks ago in late February at our earnings call is our expectations are that we'll grow revenue 16%-18%, our gross profit will grow 14%-16%, and our EBITDA margin will be 9%-10%. Pretty strong performance, but growth a little bit lower than we would have liked. Some of the key drivers of that are, you know, our existing customer volume growth continues to be quite strong. That's steady. We are getting increased contribution from new programs, so we're expecting about five points of revenue growth from new customers that we onboarded either in 2024 or we'll be onboarding in 2025. We have the pending acquisition of TransactPay that we, at least for financial planning purposes, are assuming will close around mid-year. It's pending regulatory approval.
That would add about one point of growth for the full year. One headwind that we've called out is we have a couple of significant renewals with customers this year that we expect to be about two points growth headwind on gross profit in 2025 on a full-year basis. Those are some of the key levers. I would say when you're looking at, you know, sort of the opportunities and risks, what could deviate from those numbers? I think on the positive side would be, you know, many of our existing customers are still growing at a good pace and are getting bigger and bigger and are interested in other ways we can add value for them. We do think our ability to offer more services. Another area would be flip business.
In fourth quarter, at the beginning of the fourth quarter, we executed a flip of some business for Klarna in Europe, and that went extremely well. We actually had two additional flips that we closed in Q4. What we see is just more interest in modern processing and the value. You know, flips were rare in the past because it was hard to say what the incremental value you were getting if you moved from one platform to another versus we think there is a much bigger difference in capability if you are on more of a legacy platform and moving to our platform, which is more modern. As we show our ability to execute that well, we do think that will be a growing part of our business.
I would say on the downside, you know, macro is probably the biggest factor and certainly the last couple of weeks have gotten a lot of people's attention.
Yeah, for sure.
You know, our model is based on spending like almost every payments company, and so, you know, we're always going to have some risk there. The second thing I would say is because we're relying on our customers to get moving as they launch new programs, right? We can do our part with the bank and get them ready to launch, but at that point, we really turn it over to our customer and they've got to get the program going, do the marketing, and get the momentum. There is always a little bit of risk for us that our customers don't move as quickly as we would like or don't execute as well as we would like.
When we think about what's still impacting your growth this year from the layover effect of some of those items at the end of last year, you called that even in the third quarter, what is that? I mean, is there a basis point, you know, percentage point impact?
Yeah, I mean, it's definitely a couple of points of growth. I would say the bigger factor is that, you know, when we have new business that's launching, it ramps at a very steep trajectory.
Sure.
As we, some of those programs got delayed and some programs did not ramp as quickly as we'd like, it sort of pushed out that curve. That is really the biggest factor why we are not growing quite as fast as we would like. You know, we are targeting to grow over 20% and we are really in the mid-teens from a gross profit growth perspective.
Yep.
Just to kind of reiterate what that ramp looks like, based on all our history, when we throw out the outliers of incredible successes and some, you know, companies that were maybe not quite as successful, what we typically see is in the first six months of a program, 90% of the volume happens in months four to six. From months seven to twelve, the volume is 6X what we saw in the first six months. In months 13-18 , the volume is 3 X what we saw in months seven to twelve.
Right.
It's a very steep curve. When you start shifting that out, it sort of delays the realization of that value, and that's still weighing on us, as well as some of the renewals. The other thing that's unique about Q1, we said our growth, we expect it to be 11%-13% in gross profit, whereas in Q4, our growth rate was 18%. It's roughly a six-point decline. There are really two reasons for that. One is in Q4, we benefited from two things that were about one point each, so two points total, which was we earned an incentive based on annual performance that we earned in the fourth quarter. Also, we had favorable mix during the holiday season. Both those things we do not think are going to translate to Q1.
The second factor has to do with the timing of incentives, which we'll probably also talk about because it impacts 2025. Particularly in Q1, in the previous year, we qualified for an incentive in Q1 of 2024 based on the contract year of the incentive. In the most recent contract year, we earned that incentive in Q4 of 2024.
Okay.
It essentially lifted Q4, and then we're going to have a tough comp in Q1.
Right.
That is about four percentage points. It is really an incentive timing change that we are going to actually be fixing in 2025 and should not be a problem anymore after that time.
I mean, on that note, you added some accounting changes, obviously, in the incentives and the way you approach or you have to account for incentives.
Correct.
Starting this year in Q2, I think, right?
Correct.
Which I know coincides with your partner's fiscal year as well. Just help us, can you explain that for folks here just to help us understand what that means for gross profit growth trajectory throughout the year?
Sure. Just as a reminder, our two largest incentive contracts run April- March. That is the contract year. Going leading up to the IPO, we did not have the history to show that we could accurately project incentives. Therefore, a determination was made that we would account for our incentives on a cash basis. Essentially, as we earned them, we would book the benefit, but that also meant we had lots of catch-ups as we moved through the tiers of our incentive contracts from April all the way through March. It created a lot of lumpiness in our gross profit, essentially, as we recognized that. The approach we are moving to in 2025 is really the accrual method, which is the proper way to account for the incentives if you show the ability to accurately project it.
With now sort of four years post-IPO, we have a lot of history, and we've shown, proven that we can accurately project it. I think the important thing is that this is not an election. This is a requirement that we make this change now that we've proven our ability to forecast the incentives accurately. Essentially what happens is now at the start of every contract year, we make a projection of to which tier we believe we will be in, and then we apply that rate to the volume in each quarter, which essentially smooths it out over the year. In 2025, there's going to be noise as we have an apples-to-oranges year.
Right, comps are going to be weird, but otherwise.
Exactly. In Q2, we expect, so no impact in Q1 of 2025. In Q2, we expect to get eight percentage points of lift to our gross profit because of the difference in the year-over-year comparison. Q3, we expect one to two percentage points of drag. Q4, 3 points-4 points of drag on gross profit. I mean, it's early right now, so, but based on everything we know at this point, we would expect the impact to be low single-digit growth drag on gross profit. Overall, this is neutral on an overall annual basis.
It's just a timing factor.
Right now, it's a timing factor.
You will show us the normalized, what it would have been, apples- to- apples.
We'll be very, very transparent. I've been joking with investors in Q2, don't expect us to, you know, bang the drum, yeah, we grew mid-20s because that's what we said we're going to grow. We're going to be very transparent. Yes, we're going to grow faster, but that's with eight percentage points of expected impact from the incentives.
It's an interesting dynamic because you guys have, the demand is there. I mean, you have a lot of customers asking for help, obviously, and yet we're seeing just nuances with banks or, you know, friction with onboarding or now the accounting change. There's just a lot of noise.
Yes.
When it comes, you know, when you think about the actual guide, correct me if I'm wrong, there's two points of, I guess, call it headwind from some of the layover effect of timing from last year of what you expect for new business this year versus what you would have expected to have. There is also, I guess, a couple of points from repricing, right?
Correct.
Maybe just quickly touch on, so that would have gotten you to almost 20%, right? Call it high teens, 20% without those two items. First of all, the two new programs you talked about, the top 10 that you're repricing, just quick update on that and how you're approaching those negotiations.
Sure.
I think you said two points is what we're saying.
Correct, two points. We expect them to happen mid-year. It is about four points of drag in Q3 and Q4 each.
Okay, so annualized.
Essentially the way we think about renewals is renewals and contract pricing, when you're working on the tiering, you know, it's an opportunity to align your interests and incentivize customers to grow on your platform. That's how we look at it. We also try to insert enough tiering and volumes that the next renewal is sort of a non-event. We're always trying to allow for much more growth than we anticipate in the five or seven-year period of the contract so that our pricing is already well established and the next renewal is a non-event. That's sort of what we look to do. From the middle of 2022 to the end of 2023, you know, we talked a lot about that time that we renewed over 80% of our TPV.
There was a lot of activity because there were a lot of our customers who were coming out of the pandemic and had experienced just a boom of business, and their business had grown many multiples, 10X, 15X in some cases. There was a pretty significant repricing. In 2024, we had some reprieve from that. In 2025, we sort of have the last two where we feel like this is the last time that we're going to have to sort of materially rebase the price for customers based on the way their business has grown in the last few years. After these two going forward, there will always be renewals in the business, and there's always a little bit of price compression, but you know, that's very manageable, and that's BAU from here on out.
Okay. If we take it a step back, Mike, I mean, the demand for your business, if we could just revisit the key verticals again, I know that you and I have talked about it quite a bit, and some of them are a little bit more mature in your business, like on-demand delivery. You know, BNPL still, you would think it's more mature. It still has a lot of room and what we're seeing in terms of the card offerings. Expense management is a key area. Just revisit for the folks in the room, if you don't mind, the areas you see the most demand for.
Sure. We really have four use cases kind of at a high level that we kind of try to group our business in to give people some color on what's happening. Three of them are growing at roughly the same rate, which is in the low to mid-30% from a volume perspective, which is neobanking.
Right.
Our biggest customer there is obviously Cash App, but you know, our non-Block kind of neobanking business is growing rough, in Q4 grew roughly 100%, so it's growing very fast. And that's from both U.S. and European customers. The second area is BNPL, as you mentioned. And BNPL growth is really being fueled by a few things. One is the continued adoption of pay anywhere cards, which a number of our customers are using for us, which essentially brings the BNPL capability into a card that can be used anywhere. You know, Visa or Mastercard is accepted. It essentially increases the places where BNPL could be executed. We're getting strong growth there. A second area is also that our customers are getting increased distribution through wallets.
Yeah.
That's another area of growth. It's something we're excited about that came at the end of 2024, but we expect in the next year or two to be much more impactful, is the introduction of flexible credentials. Visa announced their version last year, and we launched it with Affirm this year. It's the first program to go live in the U.S. with a flexible credential, which essentially allows you to have multiple funding options on one card credential. The early use cases are for BNPL, essentially to insert BNPL into any debit card that Marqeta may issue, for example. That's something that's also fueling growth in BNPL. The last area is expense management.
Yep.
This is, think of this as AP automation as well as more modern corporate card issuance. You know, what's really fueling the growth there is our customers are winning share in the market, right? There are several more modern companies that have, you know, come to market, say, in the last five to ten years, who offer AP automation and just more sophisticated corporate card spending tools, a lot of which is powered by the capabilities of our platform. They are absolutely growing their share in the market, and that's allowing, you know, our business to grow at a good clip.
I mean, I still think to this day, a lot of investors and certainly maybe even just the market broadly underappreciates the vertical differentiation you guys have and understanding what to do in those categories for an area that's complex, you know, an issue of processing at times. You know, one thing that I know we still get questions on is just the explanation of powered by versus, you know, when you talk about the business of the power and the powered by category versus managed by, you know, and how the growth in powered by will impact future growth. Can you just explain the difference first and how powered by can actually impact you guys?
Sure. When we say powered by Marqeta, typically what that means is we're only doing processing. We're purely an issuer processor, and we're not providing many of the program management capabilities. A full comprehensive solution that includes processing and program management is what we call managed by Marqeta. In the past, a couple of years ago, those were really like two ends of a spectrum, and it was fairly black and white. You were in one or the other. What started to happen in the last year or two, and we think is accelerating now, is there's a blurring of those. We have many more powered by customers who are beginning to take some of our additional services. Almost half of our powered by customers are using at least one of our kind of program management services.
More and more, even if they go that route, they do use some of our additional capabilities. With powered by, the key is that because we do not need to factor in network and bank costs into our price, as that business grows faster, it creates a pretty significant disconnect between TPV growth and revenue growth. Because essentially our revenue in our price, we do not need to factor bank and network costs.
Right.
The difference between revenue and gross profit growth is much smaller. What's been happening is the powered by business has just been really outperforming, largely due to Europe, because we've only operated really as a powered by capacity in Europe up until now. Also, we have a couple of programs in the U.S. that are growing really fast. Just to put it in perspective, in 2024, we had four customers whose, you know, volume is over $2 billion annually that grew over 100%. Pretty good scale and going really fast. We had two additional customers that are over $1 billion in volume that were growing at least 50%. That's a lot of growth of additional volume. That is changing the mix of our business a little bit and creates that bigger disconnect between TPV growth and revenue growth.
All right, that's helpful. You also highlighted quite a bit of traction in Europe recently. You even mentioned it before in terms of what you saw last year taking off. You know, I think it was over 100% TPV growth recently, right? You highlighted.
Correct.
Just maybe what's driving that success? If you could touch a little further on the deal you just did with TransactPay and the BIN sponsorship capabilities and just what that really does.
Sure.
That'd be helpful.
Yeah, I mean, our success in Europe, what I would say is Europe is the most advanced market that we operate in in terms of customers understanding how to use a card program to drive engagement, right? The economics are very different in Europe. They are more advanced in thinking about how is this card brand going to impact broadly my business and how am I going to drive value? Therefore, to do that, you need much more sophisticated capabilities. If you're going to drive engagement and you're not just going to offer sort of a basic debit or credit value proposition, then you're going to need sort of the flexibility and capabilities that we provide. The fact that we've done that at proven scale just makes our offering differentiated in Europe. We've had a lot of success there.
The reason for the acquisition of TransactPay is traditionally we've only offered processing in Europe, and we've just started to bring our program management capabilities to Europe.
Yep.
The Europe market works differently. Just to kind of dimension it for you, in the U.S., which most people are familiar with, the bank is the one who owns the BINs and is the member of the network. You need to have a very close partnership with that bank because what they're providing is critical to the value proposition. It is much more of a deep partnership. In Europe, they have something called an EMI license, which allows a non-bank to own the BINs and be members of the network. TransactPay is a business that's been around for over a decade, and they are a network member. They own the BINs.
You guys were leveraging them already for that, right?
Correct. They were already a partner of ours. We know them well. You still use banks to, of course, like store your funds somewhere, but they're more of a service provider as opposed to a deep partner that's critical to the value proposition.
Right.
It just gives us a lot more control and makes our solution a lot more seamless if we have a customer in the U.S. or Canada and wants to move, or even Australia and wants to move into Europe. You know, our offering is much more similar, will be much more similar going forward than it has been in the past. Again, pending regulatory approval because they have two licenses, one for the U.K., one for Europe. Those two regulators need to approve the transfer of the license before we can close the acquisition. The reason why we're buying them is because to apply for that license and then build the very specialized resources that you need would take us several years. Given the pipeline we have and the success we've been having.
In Europe, yeah.
In Europe, the consistent feedback we get from both customers and prospects is that they really want a bundled offering of someone who can offer processing, program management, and the license. They do not want to contract with multiple parties. To capitalize on that momentum, we decided to acquire TransactPay.
Makes sense. Putting that in perspective now with global offering, I mean, you know, what do you think you guys can offer or bring to the table for customers from a global standpoint that differentiates you from others out of APAC or Europe or others?
Yeah, I mean, I think the biggest differentiator for us is we believe we are the only platform that can say we do credit and debit, consumer and commercial, and we do them at scale. We are a fully modern platform that can support you in all these markets. If you are a multinational and you want to do different types of use cases, again, credit and debit, consumer and commercial, and you want a flexible platform, a modern platform, you know, we really are the only option that has proven that we can do that at significant scale. That is really what differentiates us kind of in every market because I think gone are the days of more localized, specialized. Like in the fintech boom, that was quite common, right?
There were many companies targeting certain use cases, and so you had lots of players, and so there was a little more localized. I think now what's happening is, you know, some of the winners have been crowned, they're getting bigger businesses, and then with embedded finance, these are already established multinational companies.
Sure.
Who want those kind of, they want to target multiple parts of the world and multiple use cases.
Just a quick topic that came up for a couple of investors also was Visa's flexible credential. I know you guys were one of the first, if not the first, to be certified for it. How does that impact and maybe how does that shape Marqeta's role in the market more broadly, especially as these programs start launching more next year?
Yeah, so we are the many, I guess, processors have been announced, but we're the only one who have a live program out there. In the U.S., which was with Affirm, we partnered with Affirm and Visa to get it off the ground. Again, the power of a flexible credential is that you can have multiple funding sources for one card.
Yep.
Mastercard has now announced their, you know, something similar called Mastercard One, which again is a similar concept that we're going to partner with them as well.
Okay.
What it really allows you to do is a couple of things. The biggest thing for us is that it would allow us to embed BNPL in any card, any debit card that we issue. Think of it, we become more of a platform business where a customer comes to us to issue their debit card. We can offer them BNPL capabilities that they can embed in that value proposition, which would be unique in the marketplace.
Yep.
We're bringing distribution for our BNPL customers who are also on our platform. We think, and that can all be done with any debit credential. The second area that we see a lot of growth here is, you know, if you look at decline rates on co-brand credit applications, they tend to be very high. They can be as high as 70% get declined when they submit an application. As part of our credit strategy, one of the things we're talking to a lot of prospects about is you really should launch a credit card as well as a debit proposition that has, you know, similar rewards, maybe not quite the same because you want to encourage people to sort of move up, but essentially a fallback position. If they don't get approved for credit, you could offer them a debit card.
The beauty of a flexible credential is you would not have to re-card later. You could start someone on a debit card and be, so it is one card and it is a debit credential behind the scenes. You could start to embed buy now, pay later. They get some transactional credit history. Maybe you get them into some credit building capabilities with more of a secured credit. Eventually they move up to unsecured, full revolving credit. That could all be done on one credential.
That's pretty cool.
Right? For a business like ours where, again, we target multiple use cases and we have a lot of those partners already use our platform, we're in a unique position to leverage the power of these flexible credentials. We think it's going to be pretty impactful if you look out a couple of years.
Okay. Just in interest of time, I want to hit on profitability. We only have about a minute left. GAAP profitability, I know you've talked about getting there by the end of 2026.
Yep.
On a quarterly basis. Just help us remind us of your conviction around that and the path.
Yeah, we feel good about it. The goal is to exit 2026, so that last quarter with GAAP profitability. And a lot of that has to do with maintaining a spread. You know, we're targeting to grow our gross profit at least 10 points faster than our expense growth. And we're very confident we can do that because we're a platform business. We naturally get economies of scale. We feel like we can still invest a lot in innovation because of the investment capacity we already have without having to grow our expenses, you know, at a similar rate to our gross profit. That is really the primary way that we will drive that capability. We've done a really good job at getting more efficient inside the business as well. We've, you know, we've optimized how we use, you know, cloud and data providers.
We're using resources outside the U.S. We've been hiring a lot in Canada and in Poland.
Right.
We're finding great talent there. You know, we're becoming more efficient, but also as we accelerate growth, we believe that, you know, in seven, eight quarters' time that we can get to GAAP Profitability.
Got it. Got it. Any questions real quick? Yeah.
Just with the flexible credentials, does that mean debit cards are redundant now? Can all banks essentially replace all their debit cards, credit cards tied to real-time tied to their bank balance, and then you add a credit interchange, right? I mean, is that something you could deliver? It could be very powerful.
Yeah, so that would be the concept. If the bank was willing to extend credit to that customer, then they wouldn't have to change the, they could give them one card. Instead of opening your wallet now and you have to choose, oh, do I want to pay with debit this time or credit? You would have one. Through your app, you're actually electing, if I'm going to pay in full or do I want to pay in installments or do I want to pay on a revolving basis?
Any of the remittance companies, remittance, Remitly and Wise, are they customers of yours?
Not at this time.
Okay, guys. We're about out of time. I want to ask one last one and then we'll wrap it up. I mean, and just, you know, your stock's still trading at a level that in our view underappreciates your growth potential. If we're at the end of 2025 or even 2026, I mean, what do you hope to see and the investors to see to recognize what you guys have to offer and really appreciate valuation a little more?
Yeah, I think success in embedded finance. Showing that the market for us goes beyond fintech. We do think we'll eventually penetrate the bank business, but that's many years away. You know, embedded finance is sort of the next big growth wave for us. You know, that path to profitability, showing that we're on our way to GAAP Profitability. We think those two things combined should help us get a more, you know, I guess reasonable valuation for what we think the business should be.
Agreed. Agreed. All right, guys. Thank you very much.
Yeah, thank you, John.
Appreciate it. Thanks for being here. Fiserv in the Holmes room starting in about 10 minutes, 10 minutes-15 minutes.