Marqeta (MQ -6.65%), a financial services company known for its innovative credit and payment card issuing platform, reported solid fourth-quarter results on Feb. 26. Revenue increased 14% to $136 million, surpassing analyst predictions of $132 million. However, its annual revenue dropped 25% due to contract changes. The quarter was notable for the company's strong total processing volume, which rose 29% from the prior-year period to $80 billion. Its net loss contracted to $0.05 per share, in line with analysts' estimates.
| Metric | Q4 2024 | Q4 2024 Analysts' Estimate | Q4 2023 | % Change |
|---|---|---|---|---|
| EPS | ($0.05) | ($0.05) | ($0.08) | N/A |
| Revenue | $136 million | $132 million | $119 million | 14.3% |
| Gross profit | $98 million | N/A | $83 million | 18% |
| Total processing volume | $79.9 billion | N/A | $62.0 billion | 28.9% |
Source: Analysts' estimates for the quarter provided by FactSet.
Marqeta is a financial technology company offering a global, cloud-based, open API platform for card issuing and payment processing. This platform provides clients with the capabilities to develop, grow, and control card programs efficiently. The platform's key features, such as just-in-time funding and dynamic spending controls, ensure it remains a competitive choice for diverse client needs.
In recent times, Marqeta's focus has been on expanding its market presence and diversifying its offerings. Strategic partnerships and technological advancements have been critical to its success.
In the fourth quarter, Marqeta delivered significant growth in processing volumes. Its total processing volume registered at $79.9 billion, up 28.9% from the previous year, underscoring strong customer retention. Additionally, gross profit improved by 18% to $98 million, attributed to robust TPV growth.
Marqeta's Q4 revenue beat estimates by about 3%, reaching $136 million. However, full-year revenue contracted by 25%, primarily due to changes in its contract with Cash App that affected pricing structures. The annual impact of these changes spotlighted vulnerabilities in pricing models and shined a spotlight on the company's revenue concentration risks.
The company also entered into a deal to acquire TransactPay, a move aimed at boosting its foothold in the U.K. and European Union markets. Furthermore, introducing the American Express network to its customers broadened its product ecosystem.
In addition, the board issued a new $300 million share repurchase authorization, reflecting confidence that the stock is not overvalued.
Marqeta's management has projected a positive outlook, with expectations for 14% to 16% revenue growth in the first quarter of 2025, and annual growth of 16% to 18%. Gross profit is anticipated to rise by 11% to 13% in the first quarter, and by 14% to 16% for the year. The forecast for adjusted EBITDA margin is 10% to 11% for Q1 and 9% to 10% for the year.
Investors' attention should focus on Marqeta's innovation in the embedded finance space and its ability to mitigate pricing risks. Management's commitment to strategic partnerships and market extensions signifies continuing advancements, with a priority on boosting revenue streams while managing operating efficiencies.
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