# Marqeta, Inc.: Form 10-Q for the period ended Jun 30, 2024

- Company: [Marqeta, Inc.](/companies/mq.md) (CIK 1522540)
- Form: 10-Q
- Filed: 2024-08-07
- Accepted by EDGAR: Aug 7, 2024, 17:15 ET
- Period: 2024-06-30
- Accession: 0001628280-24-035709
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1522540/000162828024035709/mq-20240630.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1522540/000162828024035709/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-04-01 to 2024-06-30 | $125.3m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 6 months, 2024-01-01 to 2024-06-30 | $243.2m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2024-04-01 to 2024-06-30 | $45.9m | us-gaap:CostOfRevenue |
| Cost of revenue | 6 months, 2024-01-01 to 2024-06-30 | $79.7m | us-gaap:CostOfRevenue |
| Gross profit | 3 months, 2024-04-01 to 2024-06-30 | $79.4m | us-gaap:GrossProfit |
| Gross profit | 6 months, 2024-01-01 to 2024-06-30 | $163.5m | us-gaap:GrossProfit |
| Operating income | 3 months, 2024-04-01 to 2024-06-30 | $105.0m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2024-01-01 to 2024-06-30 | $55.2m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2024-04-01 to 2024-06-30 | $150.0k | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2024-01-01 to 2024-06-30 | $284.0k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-04-01 to 2024-06-30 | $119.1m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2024-01-01 to 2024-06-30 | $83.0m | us-gaap:NetIncomeLoss |
| Diluted shares (weighted) | 3 months, 2024-04-01 to 2024-06-30 | 524,401,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2024-01-01 to 2024-06-30 | 525,415,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2024-01-01 to 2024-06-30 | $26.1m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2024-01-01 to 2024-06-30 | $2.2m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Share repurchases | 6 months, 2024-01-01 to 2024-06-30 | $91.2m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2024-06-30 | $924.7m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-06-30 | $1.27bn | us-gaap:AssetsCurrent |
| Total assets | at 2024-06-30 | $1.49bn | us-gaap:Assets |
| Current liabilities | at 2024-06-30 | $337.8m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-06-30 | $345.9m | us-gaap:Liabilities |
| Shareholders' equity | at 2024-06-30 | $1.14bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 45,920 characters.

*You should read the following discussion and analysis of our financial condition and results of operations together with our Condensed Consolidated Financial Statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q and in our 2023 Annual Report. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. As discussed in the section titled “Note About Forward Looking Statements”, our actual results may differ materially from those discussed in these forward-looking statements as a result of various factors, including those set forth or incorporated by reference under the section titled “Risk Factors” in this Quarterly Report on Form 10-Q and in our 2023 Annual Report.*

### Overview

Marqeta’s mission is modernizing financial services by making the entire payment experience native and delightful. Marqeta’s modern platform empowers our customers to create customized and innovative payment card programs with configurability and flexibility. Marqeta’s open APIs provide instant access to highly scalable, cloud-based payment infrastructure that enables customers to embed the payments experience into apps or websites for a personalized user experience. Customers can launch and manage their own card programs, issue cards, and authorize and settle payment transactions quickly using our platform. We also deliver robust card program management, allowing our customers to embed Marqeta in their offering without having to build certain complex compliance elements or customer support services.

Marqeta’s innovative products are developed with deep domain expertise and a customer-first mindset to launch, scale, and manage card programs. Marqeta provides all of its customers with issuer processor services, and for most of its customers it also acts as a card program manager. Depending on a customer’s desired level of control and responsibility, Marqeta can work with companies in a range of different configurations:

- Managed By Marqeta: With Managed By Marqeta (“MxM”), Marqeta provides an Issuing Bank partner to act as the Bank Identification Number (“BIN”) sponsor for the customer’s card program, manages the customer’s card program on behalf of the Issuing Bank, and provides a full range of services including configuring many of the critical resources required by a customer’s production environment. In addition to providing the customer access to the Marqeta dashboard via our APIs, Marqeta also manages a number of the primary tasks related to launching a card program, such as defining and managing the program with the Card Networks and Issuing Bank, operating the program and managing certain profitability components, and managing compliance with applicable regulations, the Issuing Bank, and Card Network rules. Also available to our MxM customers are a variety of managed services, including dispute management, fraud scoring, card fulfillment, and cardholder support services.
- Powered By Marqeta: With Powered By Marqeta (“PxM”), Marqeta also provides customers access to the Marqeta dashboard via our APIs, provides payment processing, and assists with certain configuration elements that enable the customer to use the platform independently. Unlike under our MxM card programs, our PxM customers are responsible for other elements of the card program, including defining and managing the program with the Card Networks and Issuing Bank as well as managing compliance with applicable regulations, the Issuing Bank, and Card Network rules.

Given the modularity of the Marqeta platform, certain customers can also opt to incorporate elements of MxM into their PxM card program to create a custom Powered By Plus solution.

### Impact of Macroeconomic Factors

We are unable to predict the impact macroeconomic factors, including various geopolitical conflicts, uncertainty related to global elections, ongoing supply chain shortages, higher inflation and interest rates, and uncertainty in global economic conditions will have on our processing volumes, and on our future results of operations. A deterioration in macroeconomic conditions could increase the risk of lower consumer spending, consumer and merchant bankruptcy, insolvency, business failure, higher credit losses, foreign currency fluctuations, or other business interruption, which may adversely impact our business. We continue to monitor these situations and may take actions that alter our operations and business practices as may be required by federal, state, or local authorities or that we determine are in the best interests of our customers, vendors, and employees. See the section titled “Risk Factors” in this Quarterly Report on Form 10-Q and in our 2023 Annual Report for further discussion or incorporation by reference of the possible impact of these macroeconomic factors on our business.

### Key Operating Metric and Non-GAAP Financial Measures

We review a number of operating and financial metrics, including the key operating metric set forth below, to help us evaluate our business and growth trends, establish budgets, evaluate the effectiveness of our investments, and assess operational efficiencies. In addition to the results determined in accordance with GAAP, the following table sets forth a key operating metric and non-GAAP financial measures that we consider useful in evaluating our operating performance.

|  | Three Months Ended June 30, 2024 | 2023 | Six Months Ended June 30, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| Total Processing Volume (TPV) (in millions) | $70,627 | $53,615 | $137,294 | $103,635 |
| Net revenue (in thousands) | $125,270 | $231,115 | $243,237 | $448,456 |
| Gross profit (in thousands) | $79,353 | $84,609 | $163,512 | $173,771 |
| Gross margin | 63% | 37% | 67% | 39% |
| Net income (loss) (in thousands) | $119,108 | $(58,797) | $83,048 | $(127,598) |
| Net income (loss) margin | 95% | (25)% | 34% | (28)% |
| Total operating (benefit) expenses (in thousands) | $(25,689) | $154,030 | $108,323 | $330,624 |
| **Non-GAAP Measures:** |  |  |  |  |
| Adjusted EBITDA (in thousands) | $(1,817) | $824 | $7,409 | $(3,521) |
| Adjusted EBITDA margin | (1)% | 0.4% | 3% | (1)% |
| Non-GAAP operating expenses (in thousands) | $81,170 | $83,785 | $156,103 | $177,292 |

***Total Processing Volume (“TPV”) -*** TPV represents the total dollar amount of payments processed through our platform, net of returns and chargebacks. We believe that TPV is a key operating metric and a principal indicator of the market adoption of our platform, growth of our brand, growth of our customers' businesses and scale of our business.

***Adjusted EBITDA -*** Adjusted EBITDA is a non-GAAP financial measure that is calculated as Net income (loss) adjusted to exclude depreciation and amortization; share-based compensation expense; executive chairman long-term performance award; payroll tax related to share-based compensation; restructuring charges; acquisition related expenses which consist of due diligence costs, transaction costs and integration costs related to potential or successful acquisitions and cash and non-cash postcombination compensation expenses; income tax expense (benefit); and other income (expense) net, which consists of interest income from our short-term investments, realized foreign currency gains and losses, our share of equity method investments’ profit or loss, impairment of equity method investments or other financial instruments, and gain from sale of equity method investments. We believe that Adjusted EBITDA is an important measure of operating performance because it allows management and our board of directors to evaluate and compare our core operating results, including our operating efficiencies, from period to period. Additionally, we utilize Adjusted EBITDA as an input into our calculation of our annual employee bonus plans and performance-based restricted stock units. See the section below titled “Use of Non-GAAP Financial Measures” for a discussion of the use of non-GAAP measures, a change in presentation, and a reconciliation of Net income (loss) to Adjusted EBITDA.

***Adjusted EBITDA Margi*****n -** Adjusted EBITDA Margin is a non-GAAP financial measure that is calculated as Adjusted EBITDA divided by Net revenue. This measure is used by management and our board of directors to evaluate our operating efficiency. See the section below titled “Use of Non-GAAP Financial Measures” for a discussion of the use of non-GAAP measures and a reconciliation of Net income (loss) to Adjusted EBITDA Margin.

***Non-GAAP operating expenses -*** Non-GAAP operating expenses is a non-GAAP financial measure that is calculated as Total operating expenses adjusted to exclude depreciation and amortization; share-based compensation expense; executive chairman long-term performance award; payroll tax related to share-based compensation; restructuring charges; and acquisition-related expenses which consists of due diligence costs, transaction cost and integration costs related to potential or successful acquisitions, and cash and non-cash postcombination compensation expenses. We believe that non-GAAP operating expenses is an important measure of operating performance because it allows management and our board of directors to evaluate and compare our core operating results, including our operating efficiencies, from period to period. See the section below titled “Use of Non-GAAP Financial Measures” for a discussion of the use of non-GAAP measures, a change in presentation, and a reconciliation of total operating expenses to non-GAAP operating expenses.

### Components of Results of Operations

### Net Revenue

We have two components of net revenue: platform services revenue, net and other services revenue.

*Platform services revenue, net.* Platform services revenue includes Interchange Fees, net of Revenue Share and other service-level payments to customers, and Card Network and Issuing Bank costs for certain customer arrangements where the Company is an agent in the delivery of services to the customer. Platform services revenue also includes processing and other fees. “Interchange Fees” are transaction-based and volume-based fees set by a Card Network and paid by a merchant bank to the Issuing Bank that issued the payment card used to purchase goods or services from a merchant. The Company earns Interchange Fees on card transactions we process for our customers and are based on a percentage of the transaction amount plus a fixed amount per transaction. Interchange Fees are recognized when the associated transactions are settled.

“Revenue Share” payments are incentives to our customers to increase their processing volumes on our platform. Revenue Share is generally computed as a percentage of the Interchange Fees earned or processing volume and is paid to our MxM customers monthly. Revenue Share payments are recorded as a reduction to net revenue. Generally, as customers' processing volumes increase, the rates at which we share revenue increase.

Processing and other fees are priced as either a percentage of processing volume or on a fee per transaction basis and are earned when payment cards are used at automated teller machines or to make cross-border purchases. Minimum processing fees, where customers' processing volumes fall below certain thresholds, are also included in processing and other fees.

We recognize revenue when the promised services are complete, and our performance obligations are satisfied. Platform services are considered complete when we have authorized the transaction, validated that the transaction has no errors, and accepted and posted the data to our records.

*Other services revenue.* Other services revenue primarily consists of revenue earned for card fulfillment services. Card fulfillment fees are generally billed to customers upon ordering card inventory and recognized as revenue when the cards are shipped to the customers.

### Costs of Revenue

Costs of revenue consist of Card Network fees, Issuing Bank fees, 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 fees are equal to a specified percentage of processing volume or a fixed amount per transaction routed through the respective Card Network. Issuing Bank fees compensate our Issuing Banks for issuing cards to our customers and sponsoring our card programs with the Card Networks and are typically equal to a specified percentage of processing volume or a fixed amount per transaction. Card fulfillment costs include physical cards, packaging, and other fulfillment costs.

We have separate marketing and incentive arrangements with Card Networks that provide us with monetary incentives for establishing customer card programs with, and routing volume through, the respective Card Network. The amount of the incentives is generally determined based on a percentage of the processing volume or the number of transactions routed over the Card Network. We record these incentives as a reduction of Card Network fees in customer arrangements where the Company is the principal. Generally, as processing volumes increase, we earn a higher rate of monetary incentives from these arrangements, subject to attaining certain volume thresholds during an annual measurement period. For certain incentive arrangements with an annual measurement period, the one-year period may not align with our fiscal year. Additionally, uncertainty in the ultimate annual attainment of incentives can result in unusual fluctuations in Card Network fees and can occur in the quarter in which volume thresholds are attained as higher incentive rates are applied to volumes over the entire measurement periods, which can span six or twelve months. Generally, we earn a higher rate of monetary incentives during the first quarter as the annual measurement period is closest to completion and higher volume thresholds have been reached. In the second quarter, we generally earn the lowest rate of monetary incentives as the annual measurement period and volume thresholds have reset.

### Operating (Benefit) Expenses

*Compensation and Benefits* consists primarily of salaries, employee benefits, severance and other termination benefits, incentive compensation, contractors’ cost, and share-based compensation.

*Technology* consists primarily of third-party hosting fees, software licenses, and hardware purchases below our capitalization threshold, and support and maintenance costs.

*Professional Services* consists primarily of consulting, legal, audit, and recruiting fees.

*Occupancy* consists primarily of rent expense, repairs, maintenance, and other building related costs.

*Depreciation and Amortization* consists primarily of depreciation of our fixed assets and amortization of capitalized Internal-use software and developed technology intangible assets.

*Marketing and Advertising* consists primarily of costs of general marketing and promotional activities.

*Other Operating Expenses* consists primarily of insurance costs, indemnification costs, travel-related expenses, indirect state and local taxes, and other general office expenses.

*Executive Chairman Long-Term Performance Award* consists of share-based compensation related to the Executive Chairman Long-Term Performance Award including the impact of forfeiture.

### Other Income (Expense), net

Other income (expense), net consists primarily of interest income from our short-term investments and cash deposits, gain from sale of equity method investments, impairment of equity method investments or other financial instruments, equity method investment share of loss, and realized foreign currency gains and losses.

### Income Tax Expense (Benefit)

Income tax expense consists of U.S. federal and state income taxes, and income taxes related to certain foreign jurisdictions. We maintain a full valuation allowance against our U.S. federal and state net deferred tax assets as we have concluded that it is not more likely than not that we will realize our net deferred tax assets.

### Results of Operations

The following table sets forth our results of operations for the periods presented:

*(dollars in thousands)*

|  | Three Months Ended June 30, 2024 | 2023 | Six Months Ended June 30, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| Net revenue | $125,270 | $231,115 | $243,237 | $448,456 |
| Costs of revenue | 45,917 | 146,506 | 79,725 | 274,685 |
| Gross profit | 79,353 | 84,609 | 163,512 | 173,771 |
| Operating (benefit) expenses: |  |  |  |  |
| Compensation and benefits | 103,166 | 113,521 | 198,156 | 248,159 |
| Technology | 14,769 | 13,154 | 27,887 | 27,744 |
| Professional services | 4,808 | 4,873 | 8,678 | 10,310 |
| Occupancy | 1,204 | 1,057 | 2,298 | 2,211 |
| Depreciation and amortization | 3,956 | 2,494 | 7,493 | 4,474 |
| Marketing and advertising | 728 | 561 | 1,106 | 1,002 |
| Other operating expenses | 3,418 | 5,103 | 7,322 | 10,336 |
| Executive chairman long-term performance award | (157,738) | 13,267 | (144,617) | 26,388 |
| Total operating (benefit) expenses | (25,689) | 154,030 | 108,323 | 330,624 |
| Income (loss) from operations | 105,042 | (69,421) | 55,189 | (156,853) |
| Other income, net | 14,216 | 10,762 | 28,143 | 22,434 |
| Income (loss) before income tax expense | 119,258 | (58,659) | 83,332 | (134,419) |
| Income tax expense (benefit) | 150 | 138 | 284 | (6,821) |
| Net income (loss) | $119,108 | $(58,797) | $83,048 | $(127,598) |

27

### Comparison of the Three Months Ended June 30, 2024 and 2023

### Net Revenue

*(dollars in thousands)*

| Net revenue: | Three Months Ended June 30, 2024 | 2023 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Total platform services, net | $119,271 | $226,198 | $(106,927) | (47)% |
| Other services | 5,999 | 4,917 | 1,082 | 22% |
| Total net revenue | $125,270 | $231,115 | $(105,845) | (46)% |
| Total Processing Volume (TPV) (in millions) | $70,627 | $53,615 | $17,012 | 32% |

Total net revenue decreased by $105.8 million, or 46%, for the three months ended June 30, 2024 compared to the same period in 2023, of which a decrease of $121.2 million was attributable to our largest customer, Block, Inc. The decrease in net revenue was primarily driven by the amendment to the Block agreement in August 2023 (the “August 2023 Block Amendment”) which allowed for reduced pricing and impacted the revenue presentation for the Cash App Program as fees owed to Issuing Banks and Card Networks related to the Cash App primary Card Network volume are recorded as a reduction to the revenue earned from the Cash App program within Net revenue effective as of July 1, 2023. In prior periods, these costs were included within Costs of revenue. The impact of these fees for the three months ended June 30, 2024 was a $139.1 million reduction to Net revenue, negatively impacting the growth rate by 60 percentage points (“ppts”). These decreases in net revenue were partially offset by increased TPV from Block’s programs. Revenue from other customers increased $15.4 million, primarily driven by an increase in TPV partially offset by the impact of contract renewals and unfavorable changes in the mix of our card programs, particularly the growth of our PxM offering.

Other services revenue increased $1.1 million, or 22%, in the three months ended June 30, 2024 compared to the same period in 2023 due to one-time card replacement fulfillment orders that occurred during the current year.

The increase in TPV was driven by growth across all our major verticals, particularly financial services, with PxM customers outperforming MxM customers. The growth in TPV for our top five customers, as determined by their individual processing volume in each respective period, was 24% in the three months ended June 30, 2024 compared to the same period in 2023, while TPV from all other customers, as a group, grew by 75% in the three months ended June 30, 2024 compared to the same period in 2023. Note that the top five customers may differ between the two periods.

### Costs of Revenue and Gross Margin

*(dollars in thousands)*

| Costs of revenue: | Three Months Ended June 30, 2024 | 2023 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Card Network fees, net | $37,940 | $135,004 | $(97,064) | (72)% |
| Issuing Bank fees | 3,286 | 7,772 | (4,486) | (58)% |
| Other | 4,691 | 3,730 | 961 | 26% |
| Total costs of revenue | $45,917 | $146,506 | $(100,589) | (69)% |
| Gross profit | $79,353 | $84,609 | $(5,256) | (6)% |
| Gross margin | 63% | 37% |  |  |

Costs of revenue decreased by $100.6 million, or 69%, for the three months ended June 30, 2024 compared to the same period in 2023, of which a decrease of $100.7 million was attributable to Block, primarily due to the revenue presentation change for our fees owed to Issuing Banks and Card Networks related to the Cash App primary Card Network volume which are now reflected within Net revenue as a result of the August 2023 Block Amendment. Such decreases were partially offset by increased costs resulting from the 32% increase in TPV.

As a result of the decreases in net revenue and costs of revenue discussed above, our gross profit decreased by $5.3 million, or 6%, in the three months ended June 30, 2024 compared to the same period in 2023, and our gross margin increased by 26 percentage points in the three months ended June 30, 2024 compared to the same period in 2023.

### Operating (Benefit) Expenses

*(dollars in thousands)*

| Operating (benefit) expenses: | Three Months Ended June 30, 2024 | 2023 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Salaries, bonus, benefits and payroll taxes | $66,875 | $82,623 | $(15,748) | (19)% |
| Share-based compensation | 36,291 | 30,898 | 5,393 | 17% |
| Total compensation and benefits | 103,166 | 113,521 | (10,355) | (9)% |
| Percentage of net revenue | 82% | 49% |  |  |
| Technology | 14,769 | 13,154 | 1,615 | 12% |
| Percentage of net revenue | 12% | 6% |  |  |
| Professional services | 4,808 | 4,873 | (65) | (1)% |
| Percentage of net revenue | 4% | 2% |  |  |
| Occupancy | 1,204 | 1,057 | 147 | 14% |
| Percentage of net revenue | 1% | —% |  |  |
| Depreciation and amortization | 3,956 | 2,494 | 1,462 | 59% |
| Percentage of net revenue | 3% | 1% |  |  |
| Marketing and advertising | 728 | 561 | 167 | 30% |
| Percentage of net revenue | 1% | —% |  |  |
| Other operating expenses | 3,418 | 5,103 | (1,685) | (33)% |
| Percentage of net revenue | 3% | 2% |  |  |
| Executive chairman long-term performance award | (157,738) | 13,267 | (171,005) | (1289)% |
| Percentage of net revenue | (126)% | 6% |  |  |
| Total operating (benefit) expenses | $(25,689) | $154,030 | $(179,719) |  |
| Percentage of net revenue | (21)% | 67% |  |  |

Salaries, bonus, benefits, and payroll taxes decreased by $15.7 million, or 19%, for the three months ended June 30, 2024 compared to the same period in 2023. The decrease was primarily driven by lower headcount year over year and an increase in salaries, bonus, and benefits costs capitalized for internal-use software development in 2024. Further, due to the restructuring which occurred in 2023, severance costs were elevated in 2023 relative to 2024.

Share-based compensation increased by $5.4 million in the three months ended June 30, 2024 compared to the same period in 2023 mainly due to the forfeiture of awards in the prior year related to the restructuring which occurred in 2023.

Technology expenses increased by $1.6 million, or 12% for the three months ended June 30, 2024 compared to the same period in 2023. The increase was due to higher licensing and hosting costs to support our continued growth as we implement and support our systems and tools.

Professional services expenses remained relatively flat for the three months ended June 30, 2024 compared to the same period in 2023.

Occupancy expense remained relatively flat for the three months ended June 30, 2024 compared to the same period in 2023.

Depreciation and amortization expense increased by $1.5 million, or 59%, for the three months ended June 30, 2024 compared to the same period in 2023. The increase was primarily due an increase in the amortization of internally developed software.

Marketing and advertising expenses remained relatively flat for the three months ended June 30, 2024 compared to the same period in 2023.

Other operating expenses decreased by $1.7 million, or 33% for the three months ended June 30, 2024 compared to the same period in 2023. The decrease was primarily due to continued cost optimization initiatives impacting the current year.

Executive chairman long-term performance award decreased for the three months ended June 30, 2024 compared to the same period in 2023 primarily due to a one-time reversal of share-based compensation expense of $167.3 million, of which $157.7 million related to expenses recognized in prior periods, as the Executive Chairman Long-Term Performance Award was forfeited in the current year as a result of the Company’s Executive Chairman transitioning to a non-employee director role on the board of directors.

### Other Income, net

*(dollars in thousands)*

|  | Three Months Ended June 30, 2024 | 2023 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Other income, net | $14,216 | $10,762 | $3,454 | 32% |
| Percentage of net revenue | 11% | 5% |  |  |

Other income, net increased by $3.5 million, or 32%, for the three months ended June 30, 2024 compared to the same period in 2023. The increase was primarily due to an increase in interest income earned on our short-term investments portfolio in the second quarter of 2024.

### Income Tax Expense

Income tax expense remained relatively flat for the three months ended June 30, 2024 compared to the same period in 2023.

### Customer Concentration

We generated 47% and 78% of our net revenue from our largest customer, Block, during the three months ended June 30, 2024 and 2023, respectively.

### Comparison of the Six Months Ended June 30, 2024 and 2023

### Net Revenue

*(dollars in thousands)*

| Net revenue: | Six Months Ended June 30, 2024 | 2023 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Total platform services, net | $233,205 | $436,530 | (203,325) | (47)% |
| Other services | 10,032 | 11,926 | (1,894) | (16)% |
| Total net revenue | $243,237 | $448,456 | $(205,219) | (46)% |
| Total Processing Volume (TPV) (in millions) | $137,294 | $103,635 | $33,659 | 32% |

Total net revenue decreased by $205.2 million, or 46%, for the six months ended June 30, 2024 compared to the same period in 2023, of which $228.2 million of this decrease was attributable to Block. The decrease in net revenue was primarily driven by the August 2023 Block Amendment. The impact of these fees for the six months ended June 30, 2024 was a $264.7 million reduction to Net revenue, negatively impacting the growth rate by 59 ppts. These decreases in net revenue were partially offset by increased TPV from Block’s programs. Revenue from other customers increased $25.8 million, primarily driven by an increase in TPV partially offset by the impact of contract renewals and unfavorable changes in the mix of our card programs, particularly the growth of our PxM offering.

Other services revenue decreased $1.9 million, or 16% in the six months ended June 30, 2024 compared to the same period in 2023 due to a one-time card fulfillment order which occurred in the prior year.

The increase in TPV was mainly driven by growth across all our major verticals, particularly financial services and PxM customers. The growth in TPV for our top five customers, as determined by their individual processing volume in each respective period, was 26% in the six months ended June 30, 2024 compared to the same period in 2023, while TPV from all other customers, as a group, grew by 70% in the six months ended June 30, 2024 compared to the same period in 2023. Note that the top five customers may differ between the two periods.

### Costs of Revenue and Gross Margin

*(dollars in thousands)*

| Costs of revenue: | Six Months Ended June 30, 2024 | 2023 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Card Network fees, net | 65,184 | 251,637 | $(186,453) | (74)% |
| Issuing Bank fees | 6,296 | 15,052 | (8,756) | (58)% |
| Other | 8,245 | 7,996 | 249 | 3% |
| Total costs of revenue | $79,725 | $274,685 | $(194,960) | (71)% |
| Gross profit | $163,512 | $173,771 | $(10,259) | (6)% |
| Gross margin | 67% | 39% |  |  |

Costs of revenue decreased by $195.0 million for the six months ended June 30, 2024 compared to the same period in 2023. The decrease was primarily due to the revenue presentation change as a result of the August 2023 Amendment. These decreases were partially offset by increases in Issuing Bank and Network fees driven by the 32% increase in TPV.

As a result of the decreases in net revenue and costs of revenue discussed above, our gross profit decreased by $10.3 million, or 6%, for the six months ended June 30, 2024 compared to the same period in 2023. Our gross margin increased by 28 percentage points in the six months ended June 30, 2024 compared to the same period in 2023.

### Operating (Benefit) Expenses

*(dollars in thousands)*

| Operating expenses: | Six Months Ended June 30, 2024 | 2023 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Salaries, bonus, benefits and payroll taxes | $130,552 | $184,383 | $(53,831) | (29)% |
| Share-based compensation | 67,604 | 63,776 | 3,828 | 6% |
| Total compensation and benefits | 198,156 | 248,159 | (50,003) | (20)% |
| Percentage of net revenue | 81% | 55% |  |  |
| Technology | 27,887 | 27,744 | 143 | 1% |
| Percentage of net revenue | 11% | 6% |  |  |
| Professional services | 8,678 | 10,310 | (1,632) | (16)% |
| Percentage of net revenue | 4% | 2% |  |  |
| Occupancy | 2,298 | 2,211 | 87 | 4% |
| Percentage of net revenue | 1% | —% |  |  |
| Depreciation and amortization | 7,493 | 4,474 | 3,019 | 67% |
| Percentage of net revenue | 3% | 1% |  |  |
| Marketing and advertising | 1,106 | 1,002 | 104 | 10% |
| Percentage of net revenue | —% | —% |  |  |
| Other operating expenses | 7,322 | 10,336 | (3,014) | (29)% |
| Percentage of net revenue | 3% | 2% |  |  |
| Executive chairman long-term performance award | $(144,617) | $26,388 | (171,005) | (648)% |
| Percentage of net revenue | (59)% | 6% |  |  |
| Total operating (benefit) expenses | $108,323 | $330,624 | $(222,301) |  |
| Percentage of net revenue | 45% | 74% |  |  |

Salaries, bonus, benefits, and payroll taxes decreased by $53.8 million or 29%, for the six months ended June 30, 2024 compared to the same period in 2023. The decrease was driven by lower postcombination compensation costs to former employees of Power Finance, lower severance costs as a restructuring occurred in 2023, lower headcount year over year and an increase in salaries, bonus, and benefits costs capitalized for internal-use software development in 2024.

Share-based compensation increased by $3.8 million in the six months ended June 30, 2024 compared to the same period in 2023 mainly due to the forfeiture of awards in the prior year related to the restructuring which occurred in 2023.

Technology expenses remained relatively flat for the six months ended June 30, 2024 compared to the same period in 2023.

Professional services expenses decreased by $1.6 million, or 16%, for the six months ended June 30, 2024 compared to the same period in 2023. The decrease was primarily due to decreased consulting fees.

Occupancy expense remained relatively flat for the six months ended June 30, 2024 compared to the same period in 2023.

Depreciation and amortization increased by $3.0 million, or 67%, for the six months ended June 30, 2024 compared to the same period in 2023. The increase was primarily due to the amortization of internally developed software and to the amortization of developed technology intangible assets originating from the Power Finance acquisition.

Marketing and advertising expenses remained relatively flat for the six months ended June 30, 2024 compared to the same period in 2023.

Other operating expenses decreased by $3.0 million, or 29%, for the six months ended June 30, 2024 compared to the same period in 2023. The decrease was primarily due to cost optimization initiatives impacting the current year.

Executive chairman long-term performance award decreased for the six months ended June 30, 2024 compared to the prior year comparable period primarily due to a one-time reversal of share-based compensation expense of $167.3 million, of which $144.6 million related to prior year periods, as the Executive Chairman Long-Term Performance Award was forfeited in 2024 as a result of the Company’s Executive Chairman transitioning to a non-employee director role on the board of directors.

### Other Income, net

*(dollars in thousands)*

|  | Six Months Ended June 30, 2024 | 2023 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Other income, net | $28,143 | $22,434 | $5,709 | 25% |
| Percentage of net revenue | 12% | 5% |  |  |

Other income, net increased by $5.7 million, or 25%, for the six months ended June 30, 2024 compared to the same period in 2023. The increase was primarily attributable to an increase in interest income earned on our short-term investments portfolio in the six months ended June 30, 2024.

### Income Tax Expense (Benefit)

Income tax expense increased by $7.1 million for the six months ended June 30, 2024 compared to the same period in 2023 primarily due to a $7.2 million partial valuation allowance release in the prior year stemming from the acquisition of Power Finance Inc.

### Customer Concentration

We generated 48% and 77% of our net revenue from our largest customer, Block, during the six months ended June 30, 2024 and 2023, respectively.

### Use of Non-GAAP Financial Measures

Our non-GAAP measures have limitations as analytical tools and you should not consider them in isolation. These non-GAAP measures should not be viewed as a substitute for, or superior to, measures prepared in accordance with GAAP. In evaluating these non-GAAP measures, you should be aware that in the future we will incur expenses similar to the adjustments in the presentation of our non-GAAP measures set forth under “Key Operating Metric and Non-GAAP Financial Measures”. There are a number of limitations related to the use of these non-GAAP measures versus their most directly comparable GAAP measures, including the following:

- other companies, including companies in our industry, may calculate adjusted EBITDA and non-GAAP operating expenses differently than how we calculate this measure or not at all; this reduces its usefulness as a comparative measure;
- although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditures; and
- adjusted EBITDA does not reflect the effect of income taxes that may represent a reduction in cash available to us.

We encourage investors to review the related GAAP financial measures and the reconciliation of the non-GAAP financial measures to their most directly comparable GAAP financial measures.

A reconciliation of Net income (loss) to adjusted EBITDA and GAAP operating (benefit) expenses to non-GAAP operating expenses for the periods presented is as follows:

*(dollars in thousands)*

|  | Three Months Ended June 30, 2024 | 2023 | Six Months Ended June 30, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| Net revenue | $125,270 | $231,115 | $243,237 | $448,456 |
| Net income (loss) | $119,108 | $(58,797) | $83,048 | $(127,598) |
| Net income (loss) margin | 95% | (25)% | 34% | (28)% |
| Total operating (benefit) expenses | $(25,689) | $154,030 | $108,323 | $330,624 |
| Net income (loss) | $119,108 | $(58,797) | $83,048 | $(127,598) |
| Depreciation and amortization expense | 3,956 | 2,494 | 7,493 | 4,474 |
| Share-based compensation expense(1) | 36,291 | 33,789 | 67,604 | 66,667 |
| Executive chairman long-term performance award(1) | (157,738) | 13,267 | (144,617) | 26,388 |
| Payroll tax expense related to share-based compensation | 702 | 638 | 1,867 | 1,278 |
| Acquisition-related expenses (2) | 9,930 | 11,684 | 19,873 | 46,152 |
| Restructuring | — | 8,373 | — | 8,373 |
| Other income, net | (14,216) | (10,762) | (28,143) | (22,434) |
| Income tax expense (benefit) | 150 | 138 | 284 | (6,821) |
| Adjusted EBITDA | $(1,817) | $824 | $7,409 | $(3,521) |
| Adjusted EBITDA Margin | (1)% | 0.4% | 3% | (1)% |
| Total operating (benefit) expenses | $(25,689) | $154,030 | $108,323 | $330,624 |
| Depreciation and amortization expense | (3,956) | (2,494) | (7,493) | (4,474) |
| Share-based compensation expense | (36,291) | (33,789) | (67,604) | (66,667) |
| Executive chairman long-term performance award | 157,738 | (13,267) | 144,617 | (26,388) |
| Payroll tax expense related to share-based compensation | (702) | (638) | (1,867) | (1,278) |
| Restructuring | — | (8,373) | — | (8,373) |
| Acquisition-related expenses (2) | (9,930) | (11,684) | (19,873) | (46,152) |
| Non-GAAP operating expenses | $81,170 | $83,785 | $156,103 | $177,292 |

(1) Prior period amounts related to our Executive Chairman Long-Term Performance Award have been reclassified to conform to the current period presentation.

(2) Acquisition-related expenses, which include transaction costs, integration costs and cash and non-cash postcombination compensation expense, have been excluded from adjusted EBITDA as such expenses are not reflective of our ongoing core operations and are not representative of the ongoing costs necessary to operate our business; instead, these are costs specifically associated with a discrete transaction.

### Liquidity and Capital Resources

As of June 30, 2024, our principal sources of liquidity included cash, cash equivalents, and short-term investments totaling $1.2 billion, with such amounts held for working capital purposes. Our cash equivalents and short-term investments were comprised primarily of bank deposits, money market funds, U.S. treasury bills, U.S. treasury securities, U.S. agency securities, asset-backed securities, commercial paper, certificates of deposit, and corporate debt securities. We have generated significant operating losses as reflected in our accumulated deficit. We expect to continue to incur operating losses for the foreseeable future.

On May 6, 2024, the Company’s board of directors unanimously authorized the repurchase of up to $200 million of the Company’s Class A common stock (the "2024 Share Repurchase Program") as the prior program (the "2023 Share Repurchase Program," authorized for $200 million on May 8, 2023) had been exhausted during the first quarter of 2024. Both plans have the same repurchase conditions. Under the 2024 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 will be based on general business and market conditions, and other factors, including legal requirements. The 2024 Share Repurchase Program has no set expiration date and may be canceled or suspended at any time without notice.

On February 3, 2023, we acquired all outstanding stock of Power Finance Inc. (“Power Finance”). As part of the terms of the acquisition, we entered into postcombination cash compensation arrangements with certain key acquired employees whereby we shall pay them $85.1 million of cash over a weighted average 2.2 year service period following the acquisition date (subject to forfeiture upon termination). As of June 30, 2024, $34.2 million of the postcombination cash compensation arrangements remained outstanding.

We believe our existing cash and cash equivalents, and our short-term investments will be sufficient to meet our working capital and capital expenditure needs for more than the next 12 months. As of the date of filing this Quarterly Report on Form 10-Q, we have access to and control over all our cash, cash equivalents and short-term investments, except amounts held as restricted cash. Our future capital requirements will depend on many factors, including our planned continuing investment in product development, platform infrastructure, share repurchases, and global expansion. We will use our cash for a variety of needs, including for ongoing investments in our business, potential strategic acquisitions, capital expenditures and investment in our infrastructure, including our non-cancellable purchase commitments with cloud-computing service providers and certain Issuing Banks.

As of June 30, 2024, we had $8.5 million in restricted cash which included a deposit held at an Issuing Bank to provide the Issuing Bank collateral in the event that our customers' funds are not deposited at the Issuing Bank in time to settle our customers' transactions with the Card Networks. Restricted cash also includes cash held at a bank to secure our payments under a lease agreement for our office space.

### Cash Flows

The following table summarizes our cash flows for the periods indicated:

*(in thousands)*

|  | Six Months Ended June 30, 2024 | 2023 |
| --- | ---: | ---: |
| Net cash provided by (used in) operating activities | $26,134 | $(36,520) |
| Net cash provided by (used in) investing activities | 27,336 | (122,525) |
| Net cash used in financing activities | (109,712) | (73,069) |
| Net decrease in cash, cash equivalents, and restricted cash | $(56,242) | $(232,114) |

### Operating Activities

Our largest source of cash provided by our operating activities is our net revenue. Our primary uses of cash in our operating activities are for Card Network and Issuing Bank fees, and employee-related compensation. The timing of settlement of certain operating assets and liabilities, including Revenue Share payments, bonus payments, prepayments made to cloud-computing service providers, settlement receivables and network incentive receivables can affect the amounts reported as Net cash provided by and used in operating activities on the Condensed Consolidated Statement of Cash Flows.

Net cash provided by operating activities was $26.1 million in the six months ended June 30, 2024 compared to net cash used in the same period in 2023 of $36.5 million. The increase in net cash provided by operating activities is due mainly to generating net income in the current period and the timing of collections of network incentive receivables and payments of revenue share payables, partially offset by decreased non-cash expenses due to the forfeiture of the Executive Chairman Long-Term Performance Award.

### Investing Activities

Net cash provided by investing activities consists primarily of maturities and sales of our investments in short-term investments. Net cash used in investing activities consists primarily of purchases of short-term investments, purchases of property and equipment, capitalization of internal-use software and cash consideration for business combinations.

Net cash provided by investing activities in the six months ended June 30, 2024 was $27.3 million compared to net cash used in the same period in 2023 of $122.5 million. The increase in net cash provided by investing activities is primarily due to the Power Finance acquisition which occurred in 2023 and an increase of $23.5 million in cash inflows from purchases and maturities of short-term investments.

### Financing Activities

Net cash used in financing activities consists primarily of proceeds from the issuance of our equity securities. Net cash used in financing activities consists primarily of net payments related to share-based compensation activities and the share repurchase programs.

Net cash used in financing activities in the six months ended June 30, 2024 was $109.7 million compared to net cash used in the same period in 2023 of $73.1 million. The increase in net cash used in financing activities is primarily due to increased payments to repurchase our Class A common stock under the 2024 and 2023 Share Repurchase Programs and increased tax withholdings related to net share settlement of share-based compensation awards.

### Obligations and Other Commitments

There were no material changes in our obligations and other commitments from those disclosed in our 2023 Annual Report.

For additional information about our contractual obligations and other commitments, see Note 8 “Commitments and Contingencies” to our condensed consolidated financial statements.

### Critical Accounting Policies and Estimates

Our Condensed Consolidated Financial Statements are prepared in accordance with GAAP. The preparation of these Condensed Consolidated Financial Statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs, and expenses, and related disclosures. On an ongoing basis, we evaluate our estimates and assumptions. Our actual results may differ from these estimates under different assumptions or conditions.

There have been no material changes to our critical accounting estimates as compared to the critical accounting estimates described in “Management's Discussion and Analysis of Financial Condition and Results of Operations” set forth in our 2023 Annual Report.

## Market risk

As filed, 1,760 characters.

We have operations within the United States and globally, and we are exposed to market risks in the ordinary course of our business. Information relating to quantitative and qualitative disclosures about these market risks is described below.

### Interest Rate Risk

We had cash, cash equivalents, and short-term investments totaling $1.2 billion as of June 30, 2024. Such amounts included cash deposits, money market funds, U.S. treasury bills, U.S. treasury securities, U.S, agency securities, commercial paper, certificate of deposits, and corporate debt securities. The fair value of our cash, cash equivalents, and short-term investments would not be significantly affected by either an increase or decrease in interest rates due to the short-term maturities of the majority of these instruments. Because we classify our short-term investments as “available-for-sale”, no gains or losses are recognized in the Condensed Consolidated Statement of Operations and Comprehensive Loss due to changes in interest rates unless such securities are sold prior to maturity or declines in fair value are due to credit losses. We have the ability to hold all short-term investments until their maturities. A hypothetical 100 basis point increase or decrease in interest rates would not have a material effect on our financial results or financial condition.

### Foreign Currency Exchange Risk

Most of our sales and operating expenses are denominated in U.S. dollars, and therefore our results of operations are not currently subject to significant foreign currency risk. As of June 30, 2024, a hypothetical 10% change in foreign currency exchange rates applicable to our business would not have had a material impact on our Condensed Consolidated Financial Statements.

## Controls and procedures

As filed, 6,452 characters.

### Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, have evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of the end of the period covered by this Quarterly Report on Form 10-Q. Disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Based on such evaluation, our management has concluded our disclosure controls and procedures were not effective at a reasonable assurance level as of June 30, 2024, due to the material weaknesses in internal control over financial reporting described below.

### Material Weaknesses

A material weakness is a deficiency, or a 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.

In the period ended March 31, 2023, management identified a material weakness related to the accounting for our acquisition of Power Finance (the “Business Combination Material Weakness”), 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. The material weakness resulted in an error related to the allocation of merger consideration between purchase consideration and post-combination expense that was not detected on a timely basis. The error was corrected by management in the Condensed Consolidated Financial Statements as of and for the three months ended March 31, 2023.

For the period ended December 31, 2023, management identified a material weakness related to information technology general controls (“ITGCs”) (the “ITGC Material Weakness” and together with the Business Combination Material Weakness, the “2023 Material Weaknesses”) 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 for the period ended June 30, 2024.

The 2023 Material Weaknesses did not result in any material misstatements in our previously issued financial statements, nor in the financial statements included in this Quarterly Report on Form 10-Q.

### Management’s Plan to Remediate the Material Weaknesses

Our management is committed to maintaining a strong internal control environment. As it relates to the Business Combination Material Weakness, we have and will continue to take actions to enhance the design of our business combination controls with the level of precision required to operate them in an effective manner. We will continue to enhance our management review control activities, including the review of inputs, assumptions and reports produced by third-party specialists supporting the purchase price allocation accounting and the application of technical accounting principles.

To remediate the ITGC Material Weakness, we enhanced the design of our ITGCs over the IT systems that support the Company’s revenue and related financial reporting processes, including, (i) developed and implemented additional training and awareness which addressed ITGCs and policies, including educating control owners concerning the principles and requirements of each control, with a focus on user access; (ii) increased the extent of oversight and verification checks included in operation of user access controls and processes; (iii) deployed additional tools to support administration of user access; and (iv) enhanced quarterly management reporting on the remediation measures to the audit committee of the board of directors. Although we intend to complete the remediation process as promptly as possible, we will not be able to fully remediate the ITGC Material Weakness until the controls are operating effectively.

### Changes in Internal Control Over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the second quarter of fiscal 2024 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. We are continuing the remediation efforts described above.

### Limitations on Effectiveness of Controls and Procedures

The effectiveness of any internal control over financial reporting is subject to inherent limitations, including the exercise of judgment in designing, implementing, operating, and evaluating the controls and procedures, and the inability to eliminate misconduct completely. Accordingly, any system of internal control over financial reporting, no matter how well designed and operated, can only provide reasonable, not absolute assurance that its objectives will be met. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. We intend to continue to monitor and upgrade our internal controls as necessary or appropriate for our business, but cannot assure you that such improvements will be sufficient to provide us with effective internal control over financial reporting.

## Risk factors

As filed, 854 characters.

In addition to the other information set forth in this Quarterly Report on Form 10-Q, our business, financial condition, results of operations, cash flows, future prospects, and the trading price of our Class A common stock can be affected by a number of factors, whether currently known or unknown, including but not limited to those described in Part I, Item 1A of our 2023 Annual Report under the heading "Risk Factors," which are incorporated herein by reference, any one or more of which could, directly or indirectly, materially and adversely affect our business, financial condition, results of operations, cash flows, future prospects, and the trading price of our Class A common stock, or cause them to vary materially from past or anticipated future results. There have been no material changes to our risk factors since the 2023 Annual Report.

Filed Aug 7, 2024.
Source: SEC EDGAR, the filing index for accession 0001628280-24-035709. Last ingested by Listed: Oct 30, 2026, 12:02 ET. No prices; not investment advice.