Marqeta’s Total Processing Volume Surges 33% as Firm Eyes Embedded Finance Opportunities

Marqeta’s latest results spotlight continued traction in card issuance, and the company is targeting embedded finance opportunities in the year ahead.

The company noted that total processing volume was up 33% year over year in the fourth quarter to $62 billion.

CEO Simon Khalaf said that on the call with analysts that the past year marked a period of adding credit program management capabilities, through the acquisition of Power Finance.

Embedded finance, he said, beckons as a significant market opportunity, and is underpinning a reorganization of the Marqeta salesforce and a renewed focus on small and mid-sized business (SMB) credit and other areas.

Bookings Driven by Existing Customers

He added that expansion deals with existing customers came in at about 60% of total bookings. Although most bookings came from North America, he said, 20% of the deals came from Europe and predominantly from net new customers.

CFO Mike Milotich said that strength was seen in buy now, pay later (BNPL), in on-demand delivery and accelerated wage access.

On-demand delivery in particular, he said, grew in double-digit percentages. Block’s net revenue concentration was 51% in the fourth quarter, up 1% from the third quarter.

Looking ahead, Milotich said, the company expects to be adjusted EBITDA-positive in three of the four quarters of the current year, which is better than had been previously expected. He said, too, that in the current quarter there remains slower growth from a few customers and margins may be pressured in the near term.

Business metrics should improve in the second half of the year. TPV growth is expected to be “about” 30% in 2024, according to discussions on the conference call.

Investors sent the shares 3% lower in after-hours trading.

Asked on the call about accelerated wage access, CEO Khalaf said that the feature accounts for about 3% of processing volume, up from “an insignificant number in 2022.” This volume accounts for about $7 billion of pay that is running through the company’s channels. BNPL is gaining ground as a feature that is integrated with merchants, and also as a feature that is integrated with a payments vehicle.

Management also noted on the conference call that consumer credit demand is high, as is the demand from SMBs.

Said the CEO on the call, “There are a lot of conversations with large FIs. … The majority of the growth we will witness over the next two years will be from FinTechs and embedded finance customers.”