On August 7, 2024, Marqeta Inc (MQ, Financial) released its 8-K filing for the second quarter of 2024. Headquartered in Oakland, California, and founded in 2010, Marqeta provides its clients with a card-issuing platform that offers the infrastructure and tools necessary to offer digital, physical, and tokenized payment options without the need for a traditional bank. The company's open APIs are designed to allow third parties like DoorDash, Klarna, and Block to rapidly develop and deploy innovative card-based products and payment services without the need to develop the underlying technology. The company generates revenue primarily through processing and ATM fees for cards issued on its platform.
Performance Overview
Marqeta Inc (MQ, Financial) reported a Total Processing Volume (TPV) of $71 billion for Q2 2024, marking a 32% year-over-year increase. However, the company faced a significant revenue decline, reporting $125 million in net revenue, a 46% decrease from the same period last year. This decline was primarily due to a change in revenue presentation resulting from a new contract with Cash App, which negatively impacted growth by 60 percentage points.
Financial Achievements and Challenges
Despite the revenue drop, Marqeta Inc (MQ, Financial) achieved a GAAP net income of $119 million, which includes a one-time benefit of $158 million from the reversal of share-based compensation. This resulted in a net income margin of 95%, a significant improvement from the negative margin of 25% in the previous year. However, the company's adjusted EBITDA was negative $2 million, indicating operational challenges.
Key Financial Metrics
| Metric | Q2 2024 | Q2 2023 | % Change |
|---|---|---|---|
| Net Revenue | $125 million | $231 million | -46% |
| Gross Profit | $79 million | $85 million | -7% |
| Net Income | $119 million | -$59 million | 302% |
| Adjusted EBITDA | -$2 million | $0.8 million | -350% |
| TPV | $71 billion | $54 billion | 32% |
Commentary and Analysis
The second quarter demonstrates the great returns on our reinvigorated go-to-market approach combined with our ability to deliver innovation at scale. We signed a pioneering techbank, launched a new payment innovation that reimagines what a card can be, and deepened the array of services we can offer globally, all while continuing to grow our TPV and operate with focused efficiency,” said Simon Khalaf, CEO at Marqeta.
Marqeta Inc (MQ, Financial) highlighted several recent business updates, including a five-year deal with Varo Bank and becoming the first U.S. issuer-processor certified by Visa to support Visa Flexible Credential. These achievements underscore the company's commitment to innovation and its ability to adapt to market demands.
Income Statement Highlights
Marqeta Inc (MQ, Financial) reported a gross profit of $79 million, down 7% year-over-year, primarily due to reduced pricing from the Cash App renewal. The gross margin stood at 63%, a significant improvement from 37% in the previous year. The company's total operating expenses saw a 117% decrease, primarily due to the reversal of share-based compensation.
Balance Sheet and Cash Flow
As of June 30, 2024, Marqeta Inc (MQ, Financial) had total assets of $1.49 billion and total liabilities of $346 million. The company reported $924 million in cash and cash equivalents, indicating strong liquidity. Net cash provided by operating activities was $26 million, a significant improvement from the negative cash flow in the previous year.
Conclusion
Marqeta Inc (MQ, Financial) demonstrated strong operational performance with a significant increase in TPV and net income. However, the company faces challenges in revenue growth due to changes in contract terms and pricing. The company's focus on innovation and strategic partnerships positions it well for future growth, but investors should monitor its ability to convert these initiatives into sustainable revenue streams.
Explore the complete 8-K earnings release (here) from Marqeta Inc for further details.
