Marqeta, Inc. (MQ) is a global leader in the modern card issuing platform industry, enabling embedded finance solutions for some of the world's most innovative companies. Founded in 2010 and headquartered in Oakland, California, Marqeta has steadily established itself as a trusted partner for businesses seeking to create customized and flexible payment experiences for their customers.
Business Overview and Financial Performance
Marqeta's platform provides its customers with the ability to issue debit, prepaid, and credit cards, as well as access to various banking and money movement services, risk management tools, and rewards programs. The company's innovative approach has attracted a diverse customer base, ranging from leading fintech companies to enterprises across various industries, including financial services, on-demand services, buy-now-pay-later (BNPL) providers, expense management solutions, and e-commerce enablement platforms.
Marqeta primarily earns revenue from processing card transactions for its customers. The company offers a range of services, including Managed By Marqeta (MxM), where it connects customers to an Issuing Bank partner and manages the card program, and Powered By Marqeta (PxM), which provides access to its platform and assists with certain configuration elements. For most customers, Marqeta acts as both an issuer processor and a card program manager.
In its early years, Marqeta financed its operations primarily through sales of equity securities and payments received from customers. A significant milestone in the company's history was its initial public offering in June 2021, which raised aggregate net proceeds of $1.3 billion after deducting underwriting discounts, commissions, and offering costs.
Throughout its history, Marqeta has faced various challenges, including incurring significant net losses from its inception through 2023. However, the company reported its first net income of $27.3 million in 2024, marking a turning point in its financial performance. Marqeta has also had to navigate an evolving regulatory environment, manage relationships with Issuing Banks and Card Networks, and ensure the reliability and security of its platform while adapting to changes in the payments industry and competing against both legacy and new market entrants.
Financials
In the fiscal year ended December 31, 2024, Marqeta reported total processing volume (TPV) of $291 billion, representing a 31% year-over-year increase. This strong growth in TPV was driven by the company's expanding customer base and increased adoption of its platform across multiple verticals, including financial services, lending (including BNPL), and expense management. However, net revenue decreased by 25% to $507 million, primarily due to the impact of the amended agreement with the company's largest customer, Block, Inc. (formerly Square, Inc.), which resulted in a change in the revenue presentation for the Cash App program.
Despite the decline in net revenue, Marqeta was able to improve its profitability, with gross profit increasing by 7% to $351.85 million and adjusted EBITDA reaching $29.09 million, representing a 6% margin on revenue or an 8% margin on gross profit. This marked a significant milestone for the company as it continues its journey towards sustainable profitability, a key focus for management.
For the full year 2024, Marqeta reported: - Revenue: $507.00 million - Net Income: $27.29 million - Operating Cash Flow: $58.17 million - Free Cash Flow: $36.96 million
In the most recent quarter (Q4 2024), Marqeta's results were: - Revenue: $135.79 million, up 14% year-over-year - Net Income: -$27.10 million
The company's financial performance is closely tied to its two main product segments: Platform Services and Other Services. Platform Services, which includes Interchange Fees and processing fees, is the core of Marqeta's business and generates the majority of its net revenue. In 2024, Platform Services revenue decreased by 26% year-over-year to $481.67 million, primarily due to the impact of the August 2023 contract amendment with Block.
Other Services, which primarily consists of revenue earned from card fulfillment services, saw an increase of 17% year-over-year to $25.33 million in 2024. This growth was driven by higher card-related fulfillments and an overall increase in customer card shipments.
Marqeta's gross margin improved significantly from 49% in 2023 to 69% in 2024, mainly due to the reduced Issuing Bank and Card Network fees as a result of the Block contract amendment.
Operational Achievements and Strategic Initiatives
Marqeta has consistently demonstrated its ability to innovate and adapt to the evolving needs of its customers. In 2024, the company made significant strides in streamlining its program launch timelines by enhancing its bank partnerships and customer experience. This included the implementation of a more structured approach for customers, emphasizing pre-approved frameworks that align with bank standards and compliance guidelines.
The company also secured several strategic wins during the year, including a consumer co-brand credit partnership with a well-established airline located outside the U.S. and two notable deals in Europe. The first European win was a deal to provide both commercial card processing and program management to one of Europe's fastest-growing technology companies, while the second was a global solution sale with a U.S.-based B2B payments company, which chose to entrust Marqeta with a portion of their U.S. volume and their European operations in a highly coordinated effort.
Looking ahead, Marqeta is focused on establishing itself as the preferred partner for embedded finance and fintech innovations through three key strategic pillars: deepening its platform breadth, expanding the solutions it offers, and strengthening its leadership in payments innovation.
Platform Breadth and Expansion
To further enhance its platform breadth, Marqeta announced that it will be adding the American Express network as a new option for credit and debit card programs for its customers, starting later in 2025. This will provide Marqeta's customers with an even wider range of differentiated options to serve their unique needs.
Additionally, Marqeta has agreed to acquire TransactPay, a Gibraltar-based company that is licensed as an E-Money Institution (EMI) and authorized to issue e-money and undertake payment services in the U.K. and European Economic Area. This acquisition, expected to close in Q3 2025 subject to regulatory approvals, will significantly strengthen Marqeta's card program management capabilities in Europe, enabling the company to offer a more comprehensive solution to its customers looking to expand their operations in the region.
Expanding Solutions and Payments Innovation
Marqeta is also focused on expanding the solutions it offers, with a particular emphasis on risk, compliance, and business insights. The company's real-time decisioning risk product exemplifies this approach, as it has more than doubled its revenue from 2023 to 2024 and now serves over 20 global customers. Marqeta plans to further develop this and other services that will enable its customers to gain deeper insights into their program performance and compliance activities.
Furthermore, Marqeta continues to be a leader in payments innovation, particularly in the buy-now-pay-later (BNPL) space. The company was the first to help BNPL providers deliver their value proposition via cards that they issue, making BNPL available anywhere a card is accepted. More recently, Marqeta was the first processor to work on Visa's flexible credentials in the U.S., which have already shown traction for multiple customers across various wallet solutions. The company is also making progress on its Marqeta Flex solution, which aims to enhance how BNPL payment options can be delivered inside payment apps and wallets.
Leadership Transition and Outlook
In February 2025, Marqeta announced a leadership transition, with Mike Milotich, the company's Chief Financial Officer, being appointed as Interim Chief Executive Officer. The company's Board of Directors has initiated a comprehensive search process to identify Marqeta's next permanent CEO.
For the full year 2025, Marqeta expects net revenue growth to be in the range of 16% to 18%, driven by TPV growth in the mid- to high-20% range. Gross profit is expected to grow between 14% and 16%, with a gross profit margin in the high 60s. Adjusted operating expenses are expected to grow in the mid-to-high single digits, resulting in an adjusted EBITDA margin in the range of 9% to 10%, equating to adjusted EBITDA of well over $50 million.
The company also provided quarterly guidance for 2025: - Q1 2025 net revenue growth is expected to be between 14% and 16%, with gross profit growth of 11% to 13%. - Q2 2025 gross profit growth is expected to accelerate into the mid-20s, including an 8-point lift from a change in incentive accounting. - Q3 2025 gross profit growth is expected to be in the mid-teens, including the impact of the TransactPay acquisition. - Q4 2025 gross profit growth is expected to slow to the low double digits due to the impact of the incentive accounting change.
Risks and Challenges
As with any business, Marqeta faces a number of risks and challenges that investors should be aware of. These include macroeconomic conditions that could impact consumer spending and transaction volumes, regulatory changes that could affect the company's operations, increased competition from both established players and new market entrants, and the company's ability to continue innovating and meeting the evolving needs of its customers.
Additionally, Marqeta's reliance on a small number of large customers, such as Block, Inc., exposes the company to the risk of losing or renegotiating these significant relationships, which could have a material adverse effect on its financial performance.
In December 2024, Marqeta was named as a defendant in two putative securities class action lawsuits alleging violations of federal securities laws related to the company's performance and financial reporting. While these lawsuits are in early stages and the outcomes are uncertain, they represent a potential risk to the company's reputation and financial resources.
Liquidity
Marqeta maintains a strong balance sheet, which provides the company with financial flexibility to pursue growth opportunities and navigate potential challenges. As of December 31, 2024, the company reported: - Cash & Investments: $1.10 billion - Debt/Equity Ratio: 0.0008 - Current Ratio: 3.37 - Quick Ratio: 3.36
This solid financial position, with no long-term debt, positions Marqeta well to continue investing in its platform and strategic initiatives.
Industry Trends
Marqeta operates in the fast-growing embedded finance and fintech innovation space, which has seen a compound annual growth rate (CAGR) of over 30% in recent years. This growth is driven by an increasing number of traditional businesses integrating financial services into their offerings. However, the regulatory environment for this industry has become more complex, requiring companies like Marqeta to remain vigilant and adaptable to changing compliance requirements.
Conclusion
Marqeta has established itself as a leading provider of modern card issuing and embedded finance solutions, serving a diverse range of innovative customers across multiple industries. The company's focus on platform breadth, solution expansion, and payments innovation has positioned it well for continued growth and value creation.
Despite the challenges faced in 2024, including the impact of the amended agreement with its largest customer, Marqeta has demonstrated its ability to navigate these obstacles and maintain a path towards sustainable profitability. With a strong balance sheet, a growing customer base, and a clear strategic vision, Marqeta appears well-positioned to capitalize on the significant opportunities in the embedded finance and fintech markets.
As Marqeta navigates a leadership transition and continues to execute on its strategic priorities, investors will be closely watching the company's ability to drive consistent financial performance, expand its global footprint, and solidify its position as a preferred partner for the world's most innovative companies. The upcoming acquisition of TransactPay and the addition of American Express to its network options are expected to further enhance Marqeta's competitive position and drive growth in the coming years.