Marqeta jumps following results and Cash App deal that removes ‘significant overhang’

Marqeta Inc’s shares (NASDAQ: MQ) surged by 19% during pre-market trading on Wednesday following the release of strong second-quarter results and the announcement of a four-year contract extension with Square’s Cash App (NYSE: SQ).

The card issuing platform reported a remarkable 24% increase in revenue, reaching $231 million for the quarter. Additionally, the total processing volume surged by 33% to reach $54 billion. These revenue figures surpassed the consensus estimate of $219 million.

The company reported a net loss per share of ($0.11) for the quarter, slightly below the consensus forecast of ($0.10).

In an impressive move, Marqeta disclosed its latest agreement – a four-year extension with Square. This extension secures the continued provision of its widely-utilized Cash App card product. The extended arrangement, supporting the Cash Card, is scheduled to be in operation from July 1, 2023, through June 2027.

Marqeta emphasized, “We believe this renewal demonstrates the value Block sees in the Marqeta platform and this partnership, exemplified by Marqeta’s flexibility, innovation and breadth of service.”

Market analysts at Berenberg reacted positively to the Cash App extension news, noting that it alleviates a significant uncertainty related to the stock. As a result, they upgraded their stance on the stock.

While the concentration of revenue with Square remains notably high, the analysts pointed out that the uncertainty surrounding this matter has now been effectively addressed. They highlighted the fact that “the importance of MQ’s extension of its agreement to serve as the issuer of the Cash App card is underlined by the fact that the company derived 78% of its net revenue from Block in Q223, up from 76% in Q123.”

In light of these developments, Berenberg upgraded the stock from Hold to Buy, assigning it a price target of $8. This projection indicates a potential upside of 61% from the closing price on Tuesday.