One of the hottest fintech startups in the US just newly filed with the SEC for an initial public offering. That startup is Marqeta, one that provides backend payments infrastructure for many of the services people use ranging from food delivery apps like DoorDash to ‘buy now, pay later’ lenders like Affirm.

• Marqeta has unveiled an S-1 filing for an IPO, with the S-1 document, as usual, giving a delve into the company’s business with information not publicly known before.

Revenue stats:

• Marqeta’s S-1 shows that of a fast-growing company that more than doubled its revenue from 2019 to 2020 and Q1′ 2020 to Q1′ 2021. The company reported respective annual sales of $143mn and $290mn in 2019 and 2020, and $48mn and $108mn in Q1 2020 and Q1 2021.

• Marqeta isn’t profitable on a net basis, reporting respective net losses of $58m and $48mn in 2019 and 2020. In Q1 2021, the company reported a small net loss of $13mn.

Emphasized risks:

• From its S-1, it’s shown that Marqeta is overly reliant on one client for sales, being Square, the popular payments company led by Jack Dorsey. Square accounted for an astounding 70% of its net revenue in 2020, making it a high risk in a conceivable case where Square stops using its products.

• Underneath Square, Marqeta is also overtly reliant on one issuing bank to settle its payment transactions. It’s Sutton Bank in Ohio, the issuing bank for the Square Business Card and also Square’s Cash App card. 

• Sutton Bank settled 97% of Marqeta’s transactions in 2020. Such overt reliance poses a major risk in a conceivable case where Sutton seeks to stop doing business with the company.

• Currently, Marqeta has binding contracts with Square and Sutton Bank running through 2024 and 2027 respectively.

Business Overview:

• Marqeta provides a backend payment infrastructure that allows companies to offer Visa or Mastercard payment products to their customers without having to work directly with traditional banks.

• Marqeta handles the relationships with traditional banks by itself, making it easier for companies to offer Visa or Mastercard payment products without the hassle of dealing directly with banks. It’s a middleman making things easier in the quite cumbersome relationship between banks and digital service providers.

• Marqeta offers APIs for the use of its customers to process card payments. It issues both virtual and physical cards for customers, virtual ones for customers like Klarna and Affirm in the ‘buy now, pay later’ space, and physical ones for on-demand delivery apps like DoorDash and Instacart to be used by their couriers.

Highlights:

• Marqeta was founded in 2010. It’s raised over $500mn in venture funding, last valued at $4.3bn from a funding round in May 2020. Now, CNBC reports that Marqeta has traded on the private secondary markets at a valuation between $16bn to $17bn.

• Marqeta will list on the Nasdaq Global Select Market under the symbol “MQ.”

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