On February 28, 2024, Marqeta Inc (MQ, Financial) released its 8-K filing, detailing its financial results for the fourth quarter and full year ended December 31, 2023. The company, a leading card-issuing platform headquartered in Oakland, California, reported a significant increase in its Total Processing Volume (TPV) yet faced a notable decline in net revenue and gross profit for the quarter, primarily due to changes in its contract with Cash App.
Company Overview
Founded in 2010, Marqeta provides a card-issuing platform that enables clients such as DoorDash, Klarna, and Block to create digital, physical, and tokenized payment solutions. The company's open APIs facilitate the rapid development and deployment of innovative card-based products and services. Marqeta generates revenue mainly through processing and ATM fees for cards issued on its platform.
Financial Performance and Challenges
Marqeta's fourth quarter saw a TPV of $62 billion, a 33% increase from the previous year, reflecting strong market adoption and growth. However, the company's net revenue for the quarter fell by 42% to $119 million, and gross profit decreased by 4% to $83 million. The decline in net revenue was largely attributed to a 59 percentage point negative growth impact from the new Cash App contract, which changed revenue presentation and reduced pricing. For the full year, net revenue decreased by 10% to $676 million, while gross profit increased by 3% to $330 million.
The company's net loss for the quarter expanded to $40 million, a 53% increase from the previous year, and the full-year net loss grew by 21% to $223 million. These losses were primarily driven by expenses related to the Power Finance acquisition. Despite these challenges, Marqeta's Adjusted EBITDA showed improvement, with a $3 million income for the quarter and a narrowed full-year loss of $2 million.
Strategic Updates and Future Outlook
CEO Simon Khalaf highlighted 2023 as a transformative year for Marqeta, with the company enhancing its platform, renewing major processing volume contracts, and improving operational efficiency. Marqeta is entering 2024 with a strong product set and growth opportunities in Fintech and embedded finance. The company also launched its revamped credit card platform and announced its first credit deals, signaling early traction for its new offerings.
Marqeta's performance reflects the dynamic nature of the payment processing industry, where contract renewals and pricing changes can significantly impact revenue streams. The company's ability to grow its TPV while navigating these changes demonstrates resilience and adaptability in a competitive market.
Investors and stakeholders will be watching closely to see how Marqeta's strategic initiatives and focus on operating efficiency will translate into financial performance in the coming quarters.
Explore the complete 8-K earnings release (here) from Marqeta Inc for further details.
