Marqeta Boosts Non-Square Revenue with Varo Deal

Card issuing platform Marqeta (NASDAQ: MQ) reported a -46% year-over-year decline in net revenue in its 2Q earnings. This drop was attributed to reduced pricing from its contract renewal with Block (NYSE: SQ), Marqeta’s largest revenue-generating customer. Last year, Block, formerly Square, renewed its agreement with Marqeta in a four-year contract that included a 40% lower take rate, which has adversely affected Marqeta’s growth, given the company’s heavy reliance on Block.

In a move largely seen as a positive step towards reducing customer concentration on Block, Marqeta has announced a new five-year deal with online bank Varo, where it will serve as the issuer processor for more than 5 million cards. As Marqeta works to diversify its revenue beyond Block, analysts anticipate a rebound in Marqeta’s net revenues in the upcoming quarter. Visible Alpha consensus estimates show net revenue growth of +18% year-over-year in 3Q 2024, reaching $128 million. Additionally, Block’s share in Marqeta’s overall revenue is expected to decline to 48% in 2024, down from 68% last year.