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MQ

Marqeta NasdaqGS:MQ Stock Report

Last Price

US$7.79

Market Cap

US$4.3b

7D

-29.5%

1Y

-69.3%

Updated

17 Aug, 2022

Data

Company Financials +
MQ fundamental analysis
Snowflake Score
Valuation2/6
Future Growth2/6
Past Performance0/6
Financial Health6/6
Dividends0/6

MQ Stock Overview

Marqeta, Inc. operates a cloud-based open application programming interface platform that delivers card issuing and transaction processing services to developers, technical product managers, and visionary entrepreneurs.

Marqeta Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Marqeta
Historical stock prices
Current Share PriceUS$7.79
52 Week HighUS$37.90
52 Week LowUS$6.05
Beta0
1 Month Change-9.94%
3 Month Change-20.83%
1 Year Change-69.27%
3 Year Changen/a
5 Year Changen/a
Change since IPO-74.48%

Recent News & Updates

Aug 12

Marqeta: Too Many Question Marks To Remain Bullish

Marqeta reported Q2 revenue, TPV, and profitability that were all ahead of consensus expectations. Q3 revenue guidance shows quite a bit of deceleration as the company braces for a more challenging macro environment. Marqeta also disclosed that their CEO and COO will both be departing, leaving a large void to be filled within their C-suite. Valuation is currently ~6x forward revenue, which does not screen favorably as we potentially enter into a recession. Marqeta (MQ) recently reported a strong operational quarter, with revenue and TPV both growing 53% yoy and coming in ahead of expectations. In addition, the company's gross and operating margins expanded by ~400bps yoy as they continue to show improvement in profitability as they scale. While Q3 guidance came in around expectations, revenue growth is expected to decelerate to 36-38% yoy as the company called out a more challenging macro environment. Consumer spending trends have remained pretty healthy so far this year, but with fears around a potential recession, revenue growth may likely decelerate in 2023. In addition, the company announced that their CEO is departing and they will begin a new CEO search. Also, their COO is expected to leave in September, leaving a big void to be filled in the company's C-suite. The combination of these events has caused the stock to pull back around 25% since the company reported earnings a few days ago, as investors have become incrementally cautious around this name. MQ data by YCharts The stock remains down over 70% from all-time highs and is down 55% so far this year as investors have largely rotated out of high-valuation companies that currently do not generate profits as fears of a potential recession have risen. With a more challenging macro environment likely to persist in the second half of the year, revenue growth is also likely to decelerate and could cause the company to come in below the coveted Rule of 40 score. Profitability has become a higher priority for investors given the fear of a recession, and with Marqeta's adjusted EBITDA margins still in the negative, the company may not generate a full-year profit until 2024. Valuation is currently around 6x forward revenue, which is within their more recent historical trading range of 4-7x forward revenue. However, given the numerous macro and sentiment headwinds the company is facing, I believe the stock may remain in the penalty box for the time being. Earnings Review and Guidance During the quarter, the company reported revenue growth of 53% yoy to $186.7 million, which beat expectations for around $180 million, or around 47% yoy growth. In addition, they reported total processing volume growth of 53% yoy to $40.5 billion, up from $26.5 billion in the year-ago period. Given that revenue and TPV growth were the same, this seems to imply that the company's take-rate remained stable yoy. Marqeta Clearly, consumers are still spending at a healthy rate as the company's underlying trends remain strong. While it would have been nice to see an improved take-rate, TPV and revenue both came in nicely ahead of expectations. Also during the quarter, gross margin improved ~400bps to 42%, up from 38% in the year-ago period. Marqeta will likely continue to see gross margins expand over time as the business carries high incremental margins. From an expense standpoint, the company already has the technology infrastructure built out, so as they process more transactions, they will be able to better leverage their expense base. In addition, adjusted EBITDA margin improved from a -9% loss in the year-ago period to a -5% loss during Q2. From a dollar standpoint, adjusted EBITDA came in at -$10.2 million, which was better than estimates for -$19.1 million. While the adjusted EBITDA margin improvement was driven by gross margins, investors will continue to place emphasis on profitability going forward. Marqeta The company also provided guidance for Q3, which includes net revenue growth of 36-38% yoy, and while this is quite a bit of deceleration from the 53% yoy growth in Q2, this was around consensus expectations for 37% yoy growth. In addition, gross margin is expected to be 43-44% and adjusted EBITDA margin of negative 8-9%. While the company continues to invest in revenue growth drivers, I believe investors may soon shift their focus more towards profitability metrics, something Marqeta will need to improve on. Management did admit that the macro environment remains uncertain for the remainder of the year, and therefore their expectations for the full-year remain unchanged, despite the outperformance in the first half of the year. As we look ahead to the second half of the year, given the current macroeconomic uncertainty as well as fintech-specific challenges with significant declines in valuation and increasing difficulties in raising capital, we feel it is prudent to be cautious about the next several months. Many fintechs are being less aggressive about their investments in expansion. Therefore, our expectations for the second half of the year remain unchanged from when we last spoke in May. Many of the tailwinds that drove our first half upside should continue. However, we also believe that many of the customers signed in the last 12-plus months as well as crypto customers will ramp their businesses more slowly than we expected a few months ago. Because these are newer customers ramping up, the impact of less investment by our customers and their programs is more significant in Q3 and Q4 than it was in the first half. Not surprisingly, the more tempered approach to guidance seems plausible given the uncertainties in the market. But this was not the biggest concern during the quarter. Marqeta also announced that their CEO, Jason Gardner, will be stepping down. And while he will assume the position of Chairman of the Board once the company finds their new CEO, the timing is a bit concerning given the significant pullback in the stock. In addition, the company's Chief Operating Officer, Vidya Peters, will also be stepping down in September. The combination of two C-suite executives leaving on the same conference call usually does not read positively. Valuation With the stock down over 70% from all-time highs, including a 55% pullback so far this year, investors have clearly been hit hard. While much of this pullback has been caused by the broader rotation out of fast-growth, high-valuation names, Marqeta also has a few company-specific factors that have been weighing on the stock. First, the company experienced rapid growth in 2021 as consumers quickly transitioned to e-commerce. However, there is less visibility heading into 2023 and as the company faces difficult growth comps and fears around slowing consumer discretionary spending, revenue growth is likely to decelerate.

Shareholder Returns

MQUS ITUS Market
7D-29.5%-0.02%1.1%
1Y-69.3%-25.9%-9.0%

Return vs Industry: MQ underperformed the US IT industry which returned -25.3% over the past year.

Return vs Market: MQ underperformed the US Market which returned -8.9% over the past year.

Price Volatility

Is MQ's price volatile compared to industry and market?
MQ volatility
MQ Average Weekly Movement13.2%
IT Industry Average Movement8.9%
Market Average Movement7.6%
10% most volatile stocks in US Market17.0%
10% least volatile stocks in US Market3.1%

Stable Share Price: MQ is more volatile than 75% of US stocks over the past 3 months, typically moving +/- 13% a week.

Volatility Over Time: MQ's weekly volatility (13%) has been stable over the past year, but is still higher than 75% of US stocks.

About the Company

FoundedEmployeesCEOWebsite
2010841Jason Gardnerhttps://www.marqeta.com

Marqeta, Inc. operates a cloud-based open application programming interface platform that delivers card issuing and transaction processing services to developers, technical product managers, and visionary entrepreneurs. It offers its solutions in various verticals, including commerce disruptors, digital banks, tech giants, and financial institutions. As of December 31, 2021, the company had approximately 200 customers.

Marqeta Fundamentals Summary

How do Marqeta's earnings and revenue compare to its market cap?
MQ fundamental statistics
Market CapUS$4.28b
Earnings (TTM)-US$187.82m
Revenue (TTM)US$639.71m

6.7x

P/S Ratio

-22.8x

P/E Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
MQ income statement (TTM)
RevenueUS$639.71m
Cost of RevenueUS$352.06m
Gross ProfitUS$287.65m
Other ExpensesUS$475.47m
Earnings-US$187.82m

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)-0.34
Gross Margin44.97%
Net Profit Margin-29.36%
Debt/Equity Ratio0%

How did MQ perform over the long term?

See historical performance and comparison
We’ve recently updated our valuation analysis.

Valuation

Is MQ undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

2/6

Valuation Score 2/6

  • Price-To-Sales vs Peers

  • Price-To-Sales vs Industry

  • Price-To-Sales vs Fair Ratio

  • Below Fair Value

  • Significantly Below Fair Value

  • Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for MQ?

Other financial metrics that can be useful for relative valuation.

MQ key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue4.1x
Enterprise Value/EBITDA-14.9x
PEG Ration/a

Price to Sales Ratio vs Peers

How does MQ's PS Ratio compare to its peers?

MQ PS Ratio vs Peers
The above table shows the PS ratio for MQ vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyPSEstimated GrowthMarket Cap
Peer Average2.2x
PAGS PagSeguro Digital
2.1x17.8%US$4.8b
EEFT Euronet Worldwide
1.6x12.1%US$5.0b
WNS WNS (Holdings)
3.7x9.3%US$4.2b
FOUR Shift4 Payments
1.6x24.7%US$4.0b
MQ Marqeta
6.7x23.0%US$4.3b

Price-To-Sales vs Peers: MQ is expensive based on its Price-To-Sales Ratio (6.7x) compared to the peer average (2.2x).


Price to Earnings Ratio vs Industry

How does MQ's PE Ratio compare vs other companies in the US IT Industry?

Price-To-Sales vs Industry: MQ is expensive based on its Price-To-Sales Ratio (6.7x) compared to the US IT industry average (3.1x)


Price to Sales Ratio vs Fair Ratio

What is MQ's PS Ratio compared to its Fair PS Ratio? This is the expected PS Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

MQ PS Ratio vs Fair Ratio.
Fair Ratio
Current PS Ratio6.7x
Fair PS Ratio5.7x

Price-To-Sales vs Fair Ratio: MQ is expensive based on its Price-To-Sales Ratio (6.7x) compared to the estimated Fair Price-To-Sales Ratio (5.7x).


Share Price vs Fair Value

What is the Fair Price of MQ when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: MQ ($7.79) is trading below our estimate of fair value ($30.31)

Significantly Below Fair Value: MQ is trading below fair value by more than 20%.


Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is more than 20% higher than the current share price, but analysts are not within a statistically confident range of agreement.


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Future Growth

How is Marqeta forecast to perform in the next 1 to 3 years based on estimates from 17 analysts?

Future Growth Score

2/6

Future Growth Score 2/6

  • Earnings vs Savings Rate

  • Earnings vs Market

  • High Growth Earnings

  • Revenue vs Market

  • High Growth Revenue

  • Future ROE


-9.3%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: MQ is forecast to remain unprofitable over the next 3 years.

Earnings vs Market: MQ is forecast to remain unprofitable over the next 3 years.

High Growth Earnings: MQ is forecast to remain unprofitable over the next 3 years.

Revenue vs Market: MQ's revenue (23% per year) is forecast to grow faster than the US market (7.9% per year).

High Growth Revenue: MQ's revenue (23% per year) is forecast to grow faster than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: MQ is forecast to be unprofitable in 3 years.


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Past Performance

How has Marqeta performed over the past 5 years?

Past Performance Score

0/6

Past Performance Score 0/6

  • Quality Earnings

  • Growing Profit Margin

  • Earnings Trend

  • Accelerating Growth

  • Earnings vs Industry

  • High ROE


-74.8%

Last years earnings growth

Earnings and Revenue History

Quality Earnings: MQ is currently unprofitable.

Growing Profit Margin: MQ is currently unprofitable.


Past Earnings Growth Analysis

Earnings Trend: Insufficient data to determine if MQ's year-on-year earnings growth rate was positive over the past 5 years.

Accelerating Growth: Unable to compare MQ's earnings growth over the past year to its 5-year average as it is currently unprofitable

Earnings vs Industry: MQ is unprofitable, making it difficult to compare its past year earnings growth to the IT industry (20.5%).


Return on Equity

High ROE: MQ has a negative Return on Equity (-12.24%), as it is currently unprofitable.


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Financial Health

How is Marqeta's financial position?

Financial Health Score

6/6

Financial Health Score 6/6

  • Short Term Liabilities

  • Long Term Liabilities

  • Debt Level

  • Reducing Debt

  • Stable Cash Runway

  • Forecast Cash Runway

Financial Position Analysis

Short Term Liabilities: MQ's short term assets ($1.7B) exceed its short term liabilities ($228.5M).

Long Term Liabilities: MQ's short term assets ($1.7B) exceed its long term liabilities ($13.9M).


Debt to Equity History and Analysis

Debt Level: MQ is debt free.

Reducing Debt: MQ has not had any debt for past 5 years.


Balance Sheet


Cash Runway Analysis

For companies that have on average been loss making in the past we assess whether they have at least 1 year of cash runway.

Stable Cash Runway: Whilst unprofitable MQ has sufficient cash runway for more than 3 years if it maintains its current positive free cash flow level.

Forecast Cash Runway: MQ is unprofitable but has sufficient cash runway for more than 3 years, due to free cash flow being positive and growing by 18.6% per year.


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Dividend

What is Marqeta current dividend yield, its reliability and sustainability?

Dividend Score

0/6

Dividend Score 0/6

  • Notable Dividend

  • High Dividend

  • Stable Dividend

  • Growing Dividend

  • Earnings Coverage

  • Cash Flow Coverage

Dividend Yield vs Market

Notable Dividend: Unable to evaluate MQ's dividend yield against the bottom 25% of dividend payers, as the company has not reported any recent payouts.

High Dividend: Unable to evaluate MQ's dividend yield against the top 25% of dividend payers, as the company has not reported any recent payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if MQ's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if MQ's dividend payments have been increasing.


Earnings Payout to Shareholders

Earnings Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.


Cash Payout to Shareholders

Cash Flow Coverage: Unable to calculate sustainability of dividends as MQ has not reported any payouts.


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Management

How experienced are the management team and are they aligned to shareholders interests?

1.0yrs

Average management tenure


CEO

Jason Gardner (52 yo)

11.75yrs

Tenure

US$224,387,431

Compensation

Mr. Jason M. Gardner is the Founder and Chief Executive Officer of Marqeta, Inc since November 2010. Mr. Gardner serves as Chairperson of the Board at Marqeta, Inc. Mr. Gardner served as an Advising Founde...


CEO Compensation Analysis

Compensation vs Market: Jason's total compensation ($USD224.39M) is above average for companies of similar size in the US market ($USD6.57M).

Compensation vs Earnings: Jason's compensation has increased whilst the company is unprofitable.


Leadership Team

Experienced Management: MQ's management team is not considered experienced ( 1 years average tenure), which suggests a new team.


Board Members

Experienced Board: MQ's board of directors are not considered experienced ( 1.9 years average tenure), which suggests a new board.


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Marqeta, Inc.'s employee growth, exchange listings and data sources


Key Information

  • Name: Marqeta, Inc.
  • Ticker: MQ
  • Exchange: NasdaqGS
  • Founded: 2010
  • Industry: Data Processing and Outsourced Services
  • Sector: Software
  • Implied Market Cap: US$4.276b
  • Shares outstanding: 548.87m
  • Website: https://www.marqeta.com

Number of Employees


Location

  • Marqeta, Inc.
  • 180 Grand Avenue
  • 6th Floor
  • Oakland
  • California
  • 94612
  • United States

Listings


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2022/08/17 00:00
End of Day Share Price2022/08/17 00:00
Earnings2022/06/30
Annual Earnings2021/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.