Marketa’s C Suite Redesign Accompanies a Change to Add Major Banks | Payments Source
The pandemic-era boom for neobanks and fintechs is correcting itself, leading Marqeta to seek out different clients and new leaders.
Jason Gardner, the founder of Marqeta, is preparing to step down as CEO for a new role as executive chairman as the digital card processing company seeks to work with bigger banks after years of catering to fintechs and neo-banks.
Marqeta’s stock fell about 25% on Thursday after Gardner told analysts the day before, while discussing second-quarter results, that he was looking for a new CEO. Marketa’s chief operating officer, Vidya Peters, is also leaving.
Marqeta, 12, has relied heavily on a few industries and businesses, including Block, formerly Square, which generates nearly 70% of the company’s revenue through cash appthat Marqueta powers.
The growing pandemic-era growth of startups whose transactions are powered by Marqeta through its digital card issuance platform – including DoorDash, Instacart and buy now/pay later fintechs Afterpay and Klarna – have helped Marqueta achieve a Initial Public Offering last year, which pushed Marqeta’s market value to over $16 billion in June 2021.
But like fintech stocks crashed this year, the valuation of Marketa, based in Oakland, Calif., has fallen to less than $5 billion.
Marqeta’s second-quarter net revenue rose 53% from a year ago to $187 million, but a slowing economy is weighing on its growth outlook, Mike Milotich said, chief financial officer, to analysts during Thursday’s earnings call.
“A lot of customer [we] signed in the past 12+ months, as well as crypto clients, will grow their business more slowly than expected a few months ago,” he said.
Transaction volume from Marqeta’s customers in the retail, travel and entertainment sectors has also slowed, while volume is still high for payments in supermarkets, pharmacies and gas stations that pass through Marketa’s platform, according to Milotich.
Buy now/pay later remains one of the advantages of Marqueta fastest growing categories, where it powers numerous virtual cards enabling merchants to provide instant point-of-sale loans to consumers. But BNPL sector growth fell below 100% for the first time in the second quarter, Milotich said.
Block accounted for 69% of Marqueta’s revenue in the last quarter, compared to 66% in the first quarter of this year. Marqeta collects fees for opening accounts and handling transactions related to Block’s peer-to-peer payment app, Cash App, among other services.
In its quest for diversification, Marqeta added credit card issuance capabilities to its platform last year and recently rolled out 40 new credit application programming interfaces powering physical and credit card products. virtual machines it can white-label support, Gardner told analysts.
The company wants to convince major financial institutions to use Marqeta’s technology to modernize their existing credit card issuing, underwriting and processing capabilities.
“When it comes to the progress of big financial institutions, they want similar capabilities as disruptors,” Gardner said.
A serial entrepreneur who previously founded property payments platform PropertyBridge before selling it to MoneyGram in 2007, Gardner said he was stepping down to make way for a new CEO who could ‘scale’ a high-growth company. .
When a new CEO takes the reins, Gardner will become executive chairman.
CEO Vidya Peters is also leaving the company, Gardner said. Simon Khalaf, currently chief product officer, has taken on the role on an interim basis while the company searches for a replacement, Gardner said.
An analyst noted that Marqeta’s plans to expand into other sectors and work more closely with traditional financial institutions could solve some of the company’s growing pains.
“Marqeta’s growth is entirely driven by businesses using prepaid debit cards for banking services through digital account opening, and while this has been a fast track of expansion with fintechs and challenger banks, the business is starting to reach saturation in some sectors,” said Richard Crone, principal at Crone Consulting, noting that there are still many opportunities for expansion into broader economic sectors.