Marqeta had been caught up in this year's growth tech stock sell-off, which decimated just about every stock that wasn't producing current profits; however, Marqeta reminded investors why they liked it so much in the first place, after reporting another strong quarter of revenue growth. An analyst upgrade followed, and Marqeta continued to sign up new prominent customers to close out the month.
In the first quarter, Marqeta recorded 54% revenue growth to $166.1 million, ahead of analyst estimates. While its net loss per share of ($0.11) missed slightly on increased investments, the growth figure seemed to outweigh concern over increased costs as investors bid up the stock following the report.
Marqeta's card issuing technology helps all kinds of companies easily and quickly develop tailored card solutions. These include digital wallet and neobank credit cards, such as Block's (SQ 1.02%) Cash app and its new "buy now, pay later" Afterpay acquisition. Delivery companies use Marqeta to load specific order amounts onto delivery worker's cards, and even cryptocurrency companies use Marqeta for their cards, which allow customers to instantly convert crypto into cash to pay for goods and services.
One risk to Marqeta is its high customer concentration, with Block accounting for 66% of its revenue. Still that's down from 73% last year, when accounting for the Afterpay acquisition. Moreover, 14 of Marqeta's top 20 customers grew their total payment volumes (TPV) by triple digits last quarter. And newer customers brought on since 2019 now make up more than 20% of TPV, growing five times faster than older customers.
The growth from newer customers, as well as new services such as expense management, should help Marqeta sustain high growth rates into the future. That was the conclusion of Morgan Stanley analyst James Faucette, who upgraded Marqeta to "buy" following the strong report, boosting his full-year estimates for revenue and profits and raising his price target to $15.
Toward the end of May, Marqeta inked a new partnership with Alviere, a private European fintech company that offers brands a one-stop shop for full digital finance solutions. Marqeta will enable Alviere to issue branded credit cards for its clients. The partnership is another milestone for Marqeta, which has continued to recruit both upstart fintechs and large, legacy bank partners alike.
Even after a nice month of May, Marqeta still trades at less than half of its $27 IPO price exactly one year ago. Meanwhile, that opportune money raise gave Marqeta a large $1.65 billion cash cushion on its balance sheet and no debt. Marqeta doesn't burn much cash, even though it's printing net losses, so it's set up to advantageously acquire other technologies and invest in growth without much concern.
While money-losing growth stocks are out of fashion now amid high inflation, Marqeta seems like one of the better-executing and safer recent IPOs out there. Despite its rise in May, it still looks like an attractive stock for the long haul.