On November 7, 2023, Marqeta Inc (MQ, Financial) released its financial results for the third quarter ended September 30, 2023. The company, a global modern card issuing platform, reported a significant 33% increase in TPV, reaching $57 billion. However, net revenue declined by 43% year-over-year to $109 million, primarily due to a 60 percentage point negative growth impact from the new Cash App contract, which altered revenue presentation.
Financial Performance Overview
Marqeta's gross profit for Q3 2023 stood at $73 million, translating to a gross margin of 67%. This represents a 9% decrease compared to the same period last year, mainly attributed to new pricing under the Cash App agreement. The GAAP operating expenses slightly increased by 2% to $142 million, while the net loss widened marginally by 3% to $55 million. On the positive side, Adjusted EBITDA loss showed a significant improvement, with an 85% year-over-year reduction to a loss of $2 million, and Adjusted EBITDA margin improved by 5 percentage points.
Strategic Developments and Management Commentary
Marqeta's CEO, Simon Khalaf, commented on the quarter's results, stating,
Our Q3 results represent the new baseline for Marqeta, post Block’s Cash App renewal. We've shown continued sales bookings momentum against a backdrop of operational discipline, continued scale, and new innovations through the launch of our credit platform,"and expressed confidence in the company's trajectory towards strong growth by Q3 2024.
The company also highlighted the launch of its new credit platform and the extension of its relationship with Block, including the Square Debit Card and Cash App programs. These strategic moves are expected to solidify Marqeta's customer base and drive growth in the coming years.
Income Statement and Balance Sheet Highlights
Marqeta's condensed consolidated statements of operations and balance sheets reflect the financial challenges and strategic efforts made during the quarter. The balance sheet as of September 30, 2023, shows a decrease in cash and cash equivalents to $947.7 million from $1.18 billion at the end of 2022. Total assets decreased by 10% year-over-year to $1.6 billion, while total liabilities saw an 18% increase to $308.2 million.
Outlook and Future Growth
Despite the current headwinds, Marqeta is focusing on scaling operations and launching new products, such as its credit platform, to meet the evolving needs of consumer and commercial cardholders. The company's contract renewals and strategic partnerships are pivotal to its future growth, especially as the market for embedded finance continues to develop.
For more detailed information and financial data, investors are encouraged to review the full earnings release and listen to the conference call held on November 7, 2023.
Marqeta's financial results underscore the complexities of contract renewals and the impact on revenue recognition. However, the company's ability to reduce its Adjusted EBITDA loss and maintain a strong TPV growth trajectory suggests resilience and potential for future growth, aligning with the interests of value investors seeking long-term opportunities.
For further insights and analysis on Marqeta Inc (MQ, Financial) and other financial news, visit GuruFocus.com.
Explore the complete 8-K earnings release (here) from Marqeta Inc for further details.
