Marqeta's Fourth Quarter Results: Revenue Increase and Contract Challenges

Marqeta, a company that provides an innovative platform for credit and payment card issuing, reported its fourth-quarter results on February 26. The company demonstrated noteworthy performance with a revenue increase of 14%, reaching $136 million, which exceeded analyst expectations of $132 million. However, despite this positive quarterly growth, Marqeta experienced a 25% decline in annual revenue due to changes in a significant contract.

Key Financial Metrics:

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%

This quarter's highlights included a significant surge in Marqeta's total processing volume, which climbed 29% from the same period last year, bringing it to $80 billion. The net loss for the quarter was reduced to $0.05 per share, aligning with analysts' forecasts.

About Marqeta

Marqeta operates as a financial technology firm, providing a cloud-based open API platform that simplifies card issuing and payment processing for its clients. This platform includes features like just-in-time funding and dynamic spending controls, catering to a range of client needs. The company has recentally focused on expanding its market reach and diversifying its offerings, with strategic partnerships and advancements in technology being critical to its progress.

Achievements in Q4

During the fourth quarter, Marqeta's growth was underscored by its impressive processing volume, which reached $79.9 billion, a 28.9% increase year-over-year. This growth reflects strong customer retention. Gross profit also saw an 18% improvement, totaling $98 million, largely due to the growth in total processing volume.

While Marqeta's quarterly revenue exceeded estimates by approximately 3% at $136 million, the company's full-year revenue drop of 25% highlighted the impact of changes in a contract with Cash App, which modified pricing structures. This situation raised concerns about the company's pricing models and highlighted the risks associated with revenue concentration.

Moreover, Marqeta announced an agreement to acquire TransactPay, which aims to strengthen its presence in the U.K. and European markets. The introduction of the American Express network to its offerings is also expected to enhance its product ecosystem.

The board of directors has authorized a new share repurchase program worth $300 million, signaling their belief that the company’s stock is currently undervalued.

Future Outlook

Looking ahead, Marqeta's management is optimistic, forecasting a revenue growth of 14% to 16% for the first quarter of 2025, and an annual growth between 16% and 18%. Gross profit is projected to increase by 11% to 13% in the first quarter, and by 14% to 16% over the year. Additionally, the estimated adjusted EBITDA margin for Q1 is anticipated to be between 10% and 11%, with an annual margin of 9% to 10%.

Investors should pay close attention to Marqeta's innovations within the embedded finance sector and its strategies for mitigating pricing risks. The company's commitment to forming strategic partnerships and continuing to expand its market footprint is likely to drive sustained growth and revenue enhancement, while also optimizing operational efficiencies.

Marqeta, Quarterly, Revenue