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01/11 11:29
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Marqeta's earnings call reveals strong financial performance with a 27% increase in TPV, 18% net revenue growth, and a new all-time high EBITDA margin. Despite some risks, such as customer concentration and renegotiated agreements, the company has a robust European pipeline and plans for bank partnerships. The Q&A section supports management's confidence in stable operations and growth. Share repurchases and strategic initiatives like the partnership with American Express further strengthen the outlook. Given the market cap, these factors suggest a positive stock price movement over the next two weeks.
Total Processing Volume (TPV) $84 billion, a 27% increase year-over-year, with a one-point growth headwind due to the lapping of leap year.
Net Revenue $139 million, growing 18% year-over-year, approximately three points higher than expected due to a favorable business mix, despite a three-point reduction from a renegotiated partner agreement.
Gross Profit $99 million, a 17% increase year-over-year, approximately five points higher than expected, driven by favorable business mix and efficient migrations.
Gross Margin 71%, reflecting the higher gross profit growth driven by favorable business mix.
Adjusted EBITDA $20 million, a margin of 14%, a new all-time high, driven by gross profit growth and operating expense discipline.
GAAP Net Loss $8 million, including $10 million of interest income.
Cash and Short-term Investments Approximately $1 billion at the end of the quarter.
Share Repurchase 26.2 million shares repurchased at an average price of $4.22.
Block Net Revenue Concentration 45%, decreasing one point from Q4 2024 and down four points from Q1 2024.
Net Revenue Take Rate 16 basis points, one bit lower than last quarter due to typical seasonality.
Adjusted Operating Expenses $79 million, growing 5% year-over-year, better than expected due to hiring focus and economies of scale.
UX Toolkit: Introduced a comprehensive library of pre-built UI components optimized for Marqeta's APIs, facilitating easier integration for customers.
White-label app: Expected to launch a standalone white-label app later this year, providing customers with a fully branded solution managed by Marqeta.
European Expansion: Significant growth in Europe with TPV growth over 100% in Q1, and the acquisition of TransactPay to enhance program management offerings.
Consumer Credit Migration: Started migrating the first consumer credit program with Perpay, showcasing capabilities in credit alongside debit.
Bitpanda Migration: Successfully migrated Bitpanda's program, launching simultaneously in 26 countries and 10 currencies.
Operational Efficiency: Achieved adjusted EBITDA of $20 million with a margin of 14%, reflecting improved operational efficiencies.
Cost Management: Adjusted operating expenses grew only 5% year-over-year, indicating effective cost management.
Platform Migration Strategy: Developed a product to facilitate migration for existing card programs, reducing perceived risks and complexities.
Focus on Technology Partnerships: Positioning as a flexible and responsive technology partner to meet customer needs in card issuing and money movement.
Migration Risks: Many prospects with existing card programs are reluctant to migrate due to perceived complexities and risks, which could hinder Marqeta's growth in acquiring new clients.
Regulatory Compliance: The introduction of the UX Toolkit and the standalone white-label app requires adherence to regulatory compliance, which poses a risk if not managed properly.
Economic Uncertainty: There is increasing macroeconomic uncertainty that could impact consumer spending behavior, although no notable shifts were observed in Q1.
Partner Agreement Risks: The renegotiation of the platform partner agreement with Cash App has resulted in reduced net revenue growth expectations, highlighting risks associated with dependency on key partners.
Customer Concentration: Block net revenue concentration remains high at 45%, indicating potential risks if major customers underperform or shift their business strategies.
Operational Challenges: The complexities involved in migrating existing programs and the potential for operational challenges during these migrations could impact service delivery and customer satisfaction.
Platform Migration Capabilities: Marqeta has deepened its platform depth by building a product to facilitate migration, reducing the burden and risk of moving existing programs to Marqeta. Successful migrations include Klarna and Perpay.
Acquisition of TransactPay: The acquisition of TransactPay is on track to close by the end of Q3 2025, enhancing Marqeta's program management offerings in Europe.
UX Toolkit and White-Label App: Marqeta introduced a UX Toolkit for easier customer integration and plans to launch a standalone white-label app later this year.
European Expansion: Significant growth in Europe with TPV growth over 100% in Q1, indicating strong demand for Marqeta's services.
Q2 2025 Net Revenue Growth: Expected to be between 11% and 13%, approximately four points lower than previous expectations due to a renegotiated platform partner agreement.
2025 Net Revenue Growth: Expected to be between 13% and 15%, three points lower than previous guidance due to the renegotiated platform partner agreement.
2025 Gross Profit Growth: Expected to be between 14% and 16%, consistent with previous guidance despite Q1 outperformance.
2025 Adjusted EBITDA Margin: Expected to be approximately 10% to 11%, one point higher than previous guidance due to lower expenses.
Share Repurchase Program: In Q1, Marqeta repurchased 26.2 million shares at an average price of $4.22. As of the quarter end, there remains $270 million on the buyback authorization.
The earnings call summary and Q&A session highlight several positive developments, including strong revenue and gross profit growth, strategic acquisitions like TransactPay, and expansion into new markets with partners like Klarna. While there are some uncertainties, such as macroeconomic challenges and contract renewals, the overall sentiment is bolstered by the company's optimistic guidance, new business pipeline, and strategic initiatives. The company's market cap suggests a moderate reaction, resulting in a positive stock price prediction of 2% to 8%.
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