Marqeta Earnings: Decent Results as Strong Volume Growth Partially Offsets Pricing Pressure

No-moat-rated Marqeta reported decent fourth-quarter results as the impact from its new contracts with Block was partially mitigated by strong processing volume growth and improved cost management. Net revenue decreased 42% from last year to $118.8 million. However, the intensity of this decline is exaggerated by Marqeta’s new revenue recognition methodology for its relationship with Block. Gross profit, which controls for this change, decreased 4% from last year to $83.2 million. The decrease was entirely due to weaker pricing from the agreements with Block, as processing volume growth had another strong quarter. As we incorporate these results, we do not plan to materially alter our $7 fair value estimate. We see the shares as roughly fairly valued at the current price.