Fintechs, or financial technology stocks, have been pretty hit or miss in recent years. And many have been hit and miss, meaning they are extremely volatile, prone to big swings either way.

Two volatile fintechs, both of which show promise, are Marqeta (MQ 3.87%) and Bill.com (BILL 1.22%). It has pretty much been nothing but a miss for Marqeta investors since the company went public in June of 2021 with the stock getting crushed the past two years, while Bill.com has had its share of ups and downs since it went public in December of 2019.

But you have to look beyond the short-term returns -- in a bear market, no less -- to the long-term potential of these stocks. Which of the two is a better buy? Let's take a look.

Marqeta: A big Block of business

Marqeta resides in the payments segment of the fintech industry. It provides the technology platform that enables other businesses to issue cards and process transactions.

Its biggest client, by far, is Block, from which it generates roughly two-thirds of its revenue. Marqeta has contracts with Block for both its Cash App and its Square Card.

Those contracts expire in March 2024 and December 2024, respectively. Obviously, investors should be keeping a close eye on these contracts to see if they are renewed and extended.

Marqeta went public at $27 per share in June of 2021, and it has pretty much been all downhill from there. The stock price fell 36% in 2021 and 64% in 2022 and the stock now trades at about $6.30 per share.

It came on the market at a bad time as the oversold tech market came crashing down in the fourth quarter of 2021 and kept crashing in 2022, the worst bear market since the Great Recession.

While high expenses prevented it from turning a profit, the company has consistently grown revenue. In the most recent quarter, ended Sept. 30, it grew revenue year over year by 46% to $192 million, and gross profit by 36% to $80 million. Yet its net loss rose 16% to $53 million.

It is also making a push to expand, with new products specifically for banking customers to issue cards through its platform. In the first quarter of this year, it acquired Power Finance, a management platform for credit card programs that will enhance and expand its services. And it named a new CEO, Simon Khalaf, who will replace founder Jason Gardner. 

Bill.com: Revenue is booming

Bill.com provides the technology platform that allows small and mid-size businesses to automate their operations, handling accounts receivable and accounts payable, billing, expense management, and all the other back-office functions.

Like Marqeta, it has been trading for only a few years, having gone public in late 2019 at about $37 per share. It has been a wild ride since then as it surged to over $300 per share in October of 2021, only to come crashing back down. But it is still trading at about $100 per share, so even with all the volatility, it has a three-year annualized return of about 17% per year.

Also like Marqeta, it experienced rapid revenue growth, but it still operates at a net loss due to high expenses and investments that come with ramping up a business.

In its most recent quarter, which ended Dec. 31, Bill.com saw a 66% year-over-year increase in revenue to $260 million. Subscription fees were up 25% year over year, while transaction fees were up 59%. Gross profit was up 73% from the prior year's quarter to $212 million, but it had a net loss of $95 million, up from $78 million a year ago.

Overall, Bill.com serves 435,800 businesses, including 182,700 stand-alone customers for its Bill.com service, 24,700 for its Divvy expense management business, and 228,500 subscribers for its Invoice2go business.

Which is the better buy?

Both of these companies are young, growing companies, but neither has yet been able to turn a profit, which indicates they are still working to aggressively grow their businesses in a difficult market for growth stocks.

Of the two, I like Bill.com better, for a few reasons. It seems farther along in its development and has multiple revenue streams via its different products. It also has a much broader customer base and a huge addressable market of which it is just scratching the service.

Marqeta has too many question marks: It is in the midst of transitioning to a new CEO and leadership team, and is overly reliant on one company for its revenue. It is working to broaden its customer base through acquisitions and new offerings, but it remains to be seen how those efforts pan out. And with those Block contracts up next year, there is even more uncertainty until they are renewed.

Also, Bill.com should continue to see revenue growth if there is a recession since its services could be in demand as companies look to save money through outsourcing. One concern about the stock is its valuation, which is still extremely high with a price-to-sales (P/S) ratio of 11.

Of the two, Bill.com seems like the better long-term option, but keep an eye on its valuation and profitability.