Block is Marqeta’s biggest customer, and with the Cash App contract set to expire in March 2024, analysts covering the company had become increasingly concerned about the future of that contract.
In the second quarter, 78% of Marqeta’s net revenue came from Block, compared to 69% in the second quarter of last year, according to Marqeta’s quarterly filing with the Securities and Exchange Commission.
Although Marqeta’s “near-term operating performance will reflect the economics of the Cash App renewal, which were (predictably) much reduced from what they had been in the prior deal given Block’s strong bargaining position, the company will now be able to establish a new baseline from which to grow during the next few years,” Berenberg Capital Markets analyst Mark Palmer wrote in a Wednesday note to investor clients.
Marqeta CFO Mike Milotich on Tuesday highlighted the importance of the Cash App business. The financial services vertical continues to be the card issuing fintech’s biggest contributor to growth, “growing several points faster than the company as a whole. This was fueled by Cash App’s continued growth in transacting active cardholders, and higher spend per active user,” he said Tuesday.
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