Marqeta released second quarter results showing total processing volume (TPV) increased 32% to $71 billion.
During a conference call with analysts on Wednesday (August 7), CEO Simon Khalaf noted that, as in past quarters, “consumers continued to expand into the financial services sector and seek alternatives to traditional banks.”
Referring to the just announced five-year deal with Varo Bank and other partnerships, Khalaf said TPV’s growth and momentum “extend far beyond financial services.”
Use cases across the company’s platform continue to grow, with volume from 10 of the top 20 enterprise customers increasing more than 50% year over year during the quarter. Use cases include spend management, working capital for small and medium-sized businesses (SMBs), and buy now, pay later options.
Gross profit of $79 million was 6% lower year over year, largely due to new pricing for Cash App. Marqeta’s Q2 earnings represent the last quarter, Khalaf said, where that impact will be reflected in results.
“While we expected demand for consumer use cases, we are also pleased to see demand in the commercial space, particularly among SMBs,” Khalaf continued, noting that TPV for spend management has grown even faster than overall enterprise volume.
Where the growth lies
CFO Mike Milotich said on the conference call that off-block TPV grew 15 points faster than block growth. Block sales concentration was 47%, down 2% quarter-over-quarter.
“Financial services, loans, including buy now, pay later, and expense management all grew at about the same pace, slightly faster than the overall company,” Milotich said. Pay-Anywhere card solutions now account for 15% of BNPL volume, management said on the conference call. Growth in on-demand deliveries was also in the double digits, according to commentary on the conference call.
Looking ahead, management expects TPV growth to exceed 30% in H2 2024 based on current business performance and newer programs that are still in the ramp-up phase. Investors sent shares down about 3% in after-hours trading.
During the Q&A session, analysts asked about the company’s partnership with Affirm and VisaFlex credentials – and Marqeta’s role when Affirm is used in Apple Pay.
Khalaf responded that both partnerships will “provide phenomenal momentum to Marqeta.”
Visa credentials will allow consumers to switch between different payment options, including debit and BNPL, with a single card “without placing excessive burden on merchants to integrate.”
Meanwhile, Marqeta’s role in the Apple ecosystem “will be similar to what we’ve done, which is enabling BNPL everywhere… I would say that these two developments are a validation of the trend of bringing BNPL everywhere without the need for merchants, and it’s a trend that Marqeta has supported before,” Khalaf said.
As he explained later in the conversation, “Marqeta’s platform is unique… because it is real-time… and flexible. And that has enabled us to move quickly to support ‘just-in-time’ switching from one card to another.”
