Marqeta Inc. shares inched up 4% in after-hours trading Wednesday after the card-issuing company topped expectations with its latest results and outlook. The company’s first-quarter net revenue climbed to $166.1 million from $108.0 million, while the FactSet consensus was for $161.3 million. The growth in revenue reflected a 53% increase in total processing volume, which reached $36.6 billion in the quarter.
“We believe that within today’s turbulent fintech environment, MQ’s uneventful yet very strong 1Q should be received as very refreshing,” Mizuho’s Dan Dolev wrote in a note to clients. Marqeta
pointed to strength across a number of business categories, calling out continued interest in neobanking services like Block Inc.’s
Cash App mobile wallet, which got a boost in the latest quarter from the introduction of a feature that let people file their taxes and get their refunds direct-deposited through the wallet. Additionally, Chief Executive Jason Gardner noted on Marqeta’s earnings call that the company saw “continued strength” among buy-now pay-later clients even though the first quarter is generally slower for e-commerce sales. The company is also making inroads into the expense-management vertical, which is benefiting from the return of corporate travel. “We’re pretty well-positioned in lots of different verticals,” Gardner told MarketWatch. The company generated a first-quarter net loss of $60.6 million, or 11 cents a share, compared with a loss of $12.8 million, or 10 cents a share, in the year-prior quarter. Analysts tracked by FactSet were expecting a 9-cent loss per share. Marqeta reported a loss on the basis of adjusted earnings before interest, taxes, depreciation and amortization (Ebitda) of $10.5 million, whereas it posted positive adjusted Ebitda of $1.6 million in the year-prior quarter. Analysts were modeling an adjusted Ebitda loss of $12.7 million for the latest quarter. “Despite challenges in the macro environment, MQ is not seeing changes in ticket sizes or spend behavior — though the company continues to monitor its portfolio,” Barclays analyst Ramsey El-Assal wrote following the report. “Should MQ need to reduce expenses going forward, management indicated that they could slow down hiring as staffing is their largest expense.” The company is in the “early innings” with its credit-card platform, CEO Gardner told MarketWatch, and it sees credit as “a great area to continue to invest in.” Marqeta is also working with financial-institution clients such as Citi and J.P. Morgan Chase on technology that allows cardholders to add their card information to mobile wallets like Apple Pay before receiving the physical cards, and Gardner sees opportunities for the company to prove its value to the big banks so that it could potentially win more business from them down the line. For the second quarter, Marqeta anticipates 46% to 48% net revenue growth, as well as a 40% to 41% gross profit margin. The company also expects a negative adjusted Ebitda margin of 10% to 11%. The FactSet consensus of $167.0 million in net revenue for the June quarter implied that analysts expected 36.5% growth. Analysts tracked by FactSet were also anticipating a 40.5% gross margin and a negative Ebitda margin of 9.9%. Marqeta shares dropped 5.7% in Wednesday’s regular session and have experienced a sharp slide thus far this year. The stock has lost 61% thus far in 2022, as the S&P 500
has lost 17%. “We note…that MQ is now trading at only ~2x the $1.6B of cash & equivalents on the balance sheet,” Barclays’ El-Assal wrote. “Given recent pullbacks in fin-techs shares, we believe this metric should make clear how heavily discounted MQ’s shares have become on a fundamental basis.”