Cash App’s firmly in place — and will be a significant contributor to Marqeta’s top line for years to come.
And with that bit of news, investors took stock of the card issuer and payment processor’s latest results, liked what they saw and bid the stock 14% higher in after-market trading.
Simon Khalaf, CEO, said in a post-earnings interview with Karen Webster that the revenues gleaned from Block (Marqeta’s largest customer for years, with more than three quarters of net revenues as measured through the first half of the year) will help underpin diversification.
And in his estimation, for Marqeta, where Tuesday’s quarterly report showed total processing volume growth of 32% to $53.6 billion, there’s ample opportunity to shake things up.
“The existing financial systems, the existing payment networks … they need to operate at internet and mobile speed,” Khalaf said.
Khalaf assumed the helm of Marqeta earlier this year after serving as chief product officer, and as he told Webster, even though he’s been at the company for roughly a year and a half, “I may be new to Marqeta, but I’m not new to hypergrowth.”
Growth opportunities lie ahead, and are ripe to be captured, Khalaf said, with ample opportunity to introduce card issuance and power earned wage access (EWA) — all part of embedded finance — across a variety of business models.
“We’re going to see a lot of traction in marketplaces,” he said, noting that Marqeta is and will continue to see opportunity in speeding payments and EWA across labor marketplaces, creator platforms and retail platforms.
EWA, he said, has taken on a special urgency in the wake of bank runs and the spectacular Silicon Valley Bank collapse earlier this year. Technology, virtual cards and pushing funds to those cards in a just-in-time manner can solve for the issues of trust inherent in the banking sector, through the creation of virtual ledgers, Khalaf said, enabling platform clients to expand their own offerings. Uber, a Marqeta customer, is a prime example of how extensible platforms can be, as drivers are able to tap into wages as they end shifts.
Another avenue to growth lies with seller financing, Khalaf said, adding “No bank really understands how fluid the marketplace business is.” The traditional lending conduits, he said, ask a hypothetical Amazon or Etsy seller to offer up years of profit and loss statements — data that may not be available given a limited operating history — and then offer up a slew of restrictive lending covenants.
Across the Marqeta model, Khalaf said, virtual cards allow lenders to fund borrowers in a much more streamlined fashion, across traditional rails.
“Marqeta’s approach,” he said, “is that you’ve got a freeway — so drive a faster car.”
As he noted to Webster, “Embedded finance is poised for growth because it’s a product that consumers love.”
The platforms themselves, he said, are likely to realize that the consumer experience has to improve, and the platform operators will also realize their technical limitations in making sure that consumers don’t have to grapple with the stutter steps of juggling browsers and apps — so they’ll enlist the aid of Marqeta to get things done (and manage chargebacks and satisfy the regulators too).
Looking ahead, he said, Marqeta’s plans for the current quarter and beyond are to continue to convert bookings to revenue. The company, he said, “overshot” bookings by a significant amount, as commentary on the conference call revealed that bookings through the last three quarters were up 150% from a year ago.
Management also noted on the call that one-third of the deals signed in the quarter were “flipped” deals, where Marqeta replaced an incumbent provider. International expansion also represents a key initiative, as 40% of net new bookings came from outside the U.S.
“We have programs going everywhere, and you have to be able to support them across the globe,” said Khalaf, who noted that for Marqeta’s clients, “The more they decide to do it [embedded finance] … the more that brings business to us.”
Here at PYMNTS we cover the Connected Economy as well as banking and payments. You can call it the smart economy or the digital economy. However, as Karen Webster wrote when she introduced the concept and our research methodology for defining it, “that connected economy will be the result of the full force of the Internet of Things (IoT) in action. Just about every device will be connected to the internet and capable of enabling a transaction – between every possible permutation of machines, people and businesses. In this new connected economy, we will find ourselves living in a world where new networks, intermediaries and enablers will change what is today considered the payments and commerce status quo.”
We bet Amazon was listening with Alexa. It presaged the popularity of digital wallets. You could even say it predicted the rise of artificial intelligence (AI).
The connective tissue for the connected economy comes in the form of devices with the phone at the center. And it’s shaping consumer’s day-to-day interactions. A new PYMNTS report, “How People Pay: Consumer Preference for Connected Technology,” uncovers how device ownership is shaping payment behavior and what it means for financial services professionals.
“This isn’t just about smartphones anymore,” states an article about the report. “Consumers are accumulating an array of connected devices, from smartwatches and tablets to voice-activated speakers and even cars with built-in capabilities. The report dives into how this increasing connectivity influences payment preferences, revealing that those with more devices are likelier to embrace digital wallets and online shopping. It segments consumers into distinct personas — Basic Tech, Mainstream Tech and Connected Tech — based on their affinity for and ownership of connected devices. Understanding these personas is crucial for businesses looking to stay ahead of the curve in the rapidly evolving payments landscape.”
There’s some brilliant stuff out there in the smart or connected device world. Check out LG’s smart mirror refrigerator that connects to Instacart. But there’s a lot of other “connected” or “smart” products that have us shaking our heads. Remember “there’s an app for that” a few years ago? Get ready for “my app is cooking my pizza.” Here’s a decidedly incomplete list of somewhat bizarre, connected devices because well, you might need one.
Tired of the arduous task of controlling your toilet manually? The Kohler PureWash E930 Bidet Seat transforms your humble porcelain throne into a voice-activated command center. Compatible with both Google Assistant and Amazon Alexa, this connected commode responds ponds to verbal instructions to clean itself, activate bidet spray functions or turn on the dryer.
Narcissism reaches new heights with the Selfie Toaster, a $70 smart appliance that burns your facial likeness onto bread. Using laser technology similar to a printer, this culinary curiosity transforms ordinary toast into a vaguely recognizable version of your face. While the results might not capture your best features (and often lean toward the unsettling), there’s something uniquely post-modern about literally consuming your own image for breakfast.
For those who find manually sprinkling sodium chloride too taxing, the connected salt shaker brings app-controlled seasoning to your dining table. This battery-powered salt dispenser connects to your smartphone, allowing you to adjust the quantity of salt dispensed with precision, track your sodium intake, and presumably impress dinner guests with your commitment to tech-enhanced condiments. At several times the price of a traditional salt shaker, this gadget proves that even the simplest kitchen implements aren’t safe from the compulsion to add Bluetooth.
The HAPIfork takes dining discipline to new digital heights by vibrating whenever you eat too quickly. Programmed to ensure you extend your meal to at least 20 minutes, this connected utensil monitors the speed of fork-to-mouth movements and provides haptic feedback when you’re shoveling food too rapidly.
WordPad’s MouthPad transforms your tongue into a computer mouse through a dental-grade resin mouthpiece that sits on the roof of your mouth. This 3D-printed oral intrusion allows users to navigate iOS, Android, PC, and Mac interfaces through tongue movements. While ostensibly designed as an accessibility tool, the concept of turning your mouth into an input device raises questions about both hygiene and social acceptability. Imagine the conversation starter at your next business meeting: “Sorry for the mumbling, I’m just scrolling through my presentation with my tongue.”
Looking suspiciously like a character from “Among Us,” Samsung’s Ballie is a mobile spherical robot equipped with a projector that follows you around your home. This AI-powered companion can project YouTube videos onto any surface, including your ceiling, and uses its cameras to detect your position, monitor your sleep, and presumably watch you when you least expect it. While the technology is undeniably impressive, there’s something slightly unsettling about an autonomous ball rolling through your home, projecting content and collecting data while you sleep.
For those plagued by egg-related anxiety, the Egg Minder connects your refrigerator’s egg tray to WiFi, allowing an app to track how many eggs remain and when they’re approaching expiration. This solution handily replaces such complex egg freshness detection methods as “looking at the date on the carton” or “the float test.” With built-in LED lights that indicate which egg has been in the tray longest, this smart egg babysitter ensures you’ll never again face the existential crisis of egg uncertainty—provided you remember to place each egg precisely in its designated sensor-equipped slot and regularly check the companion app.
While the Internet of Things has genuinely transformed industries and improved efficiency in meaningful ways, these particular innovations remind us that connectivity doesn’t automatically equal utility. As we continue advancing into an ever-more connected future, perhaps the most valuable skill will be discerning which smart devices actually make life better and which will end up in a tongue-in-cheek roundup on PYMNTS.