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Marqeta's (NASDAQ:MQ) Posts Q4 Sales In Line With Estimates


Petr Huřťák /
2023/02/28 4:20 pm EST
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Leading edge card issuer Marqeta (NASDAQ: MQ) reported results in line with analyst expectations in Q4 FY2022 quarter, with revenue up 31.1% year on year to $203.8 million. Marqeta made a GAAP loss of $26.3 million, improving on its loss of $36.8 million, in the same quarter last year.

Is now the time to buy Marqeta? Access our full analysis of the earnings results here, it's free.

Marqeta (MQ) Q4 FY2022 Highlights:

  • Revenue: $203.8 million vs analyst estimates of $202.7 million (small beat)
  • EPS: -$0.05 vs analyst estimates of -$0.09 (47.1% beat)
  • Free cash flow of $14.3 million, up from negative free cash flow of $4.78 million in previous quarter
  • Gross Margin (GAAP): 42.7%, down from 48.8% same quarter last year

"I am very proud of the scale our business reached in 2022," said Simon Khalaf, CEO of Marqeta.

Founded by CEO Jason Gardner in 2009, Marqeta (NASDAQ: MQ) is an innovative card issuer that provides companies with the ability to issue and process virtual, physical, and tokenized credit and debit cards.

Consumers want the ability to make payments whenever and wherever they prefer – and to do so without having to worry about fraud or other security threats. However, building payments infrastructure from scratch is extremely resource-intensive for engineering teams. That drives demand for payments platforms that are easy to integrate into consumer applications and websites.

Sales Growth

As you can see below, Marqeta's revenue growth has been incredible over the last two years, growing from quarterly revenue of $88.2 million in Q4 FY2020, to $203.8 million.

Marqeta Total Revenue

And unsurprisingly, this was another great quarter for Marqeta with revenue up 31.1% year on year. On top of that, revenue increased $12.2 million quarter on quarter, a very strong improvement on the $4.94 million increase in Q3 2022, and a sign of acceleration of growth.

In volatile times like these we look for robust businesses with strong pricing power. Unknown to most investors, this company is one of the highest-quality software companies in the world, and their software products have been the default standard in critical industries for decades. The result is an impressive business that is up an incredible 18,152% since the IPO. You can find it on our platform for free.

Profitability

What makes the software as a service business so attractive is that once the software is developed, it typically shouldn't cost much to provide it as an ongoing service to customers. Marqeta's gross profit margin, an important metric measuring how much money there is left after paying for servers, licenses, technical support and other necessary running expenses was at 42.7% in Q4.

Marqeta Gross Margin (GAAP)

That means that for every $1 in revenue the company had $0.43 left to spend on developing new products, marketing & sales and the general administrative overhead. While it improved from the previous quarter this would still be considered a low gross margin for a SaaS company and we would like to see the improvements continue.

Key Takeaways from Marqeta's Q4 Results

With a market capitalization of $3.1 billion Marqeta is among smaller companies, but its more than $1.18 billion in cash and the fact it is operating close to free cash flow break-even put it in a robust financial position to invest in growth.

It was good to see Marqeta deliver strong revenue growth this quarter. And we were also glad to see the improvement in gross margin. Overall, this quarter's results seemed decent. But the market was likely expecting more and the company is down 1.98% on the results and currently trades at $5.7 per share.

Should you invest in Marqeta right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.

One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 70% year on year and best-in-class SaaS metrics it should definitely be on your radar.

The author has no position in any of the stocks mentioned.