Payment tech company Marqeta files for IPO as value tops $16 billion on private markets

1 month ago

Marqeta Headquarters in Oakl, Calif.

Yalonda M. James | San Francisco Chronicle | Hearst Newspapers via Getty Images

Marqeta has become one of the hottest businesses in digital commerce, even though few consumers have ever heard of it.

Its name is about to become much more familiar. On Friday, the company filed to go public , in its prospectus to investors, disclosed annualized revenue growth in the first quarter of 123% to $108 million, while its net loss narrowed to $12.8 million from $14.5 million a year earlier.

In 2020, annual revenue more than doubled to $290.3 million, the company recorded a loss of $47.7 million.

Founded in 2010 based in Oakl, California, Marqeta sells payment technology that's designed to detect potential fraud ensure that money is properly routed. The company issues customized physical cards, which look like credit debit cards, which contractors from DoorDash or Instacart use to make point-of-sale purchases from restaurants or supermarkets.

Many of Marqeta's top customers are coming off record years as the pemic pushed commerce to mobile devices. In addition to meal-delivery companies, Marqeta powers Square's debit card for small business owners its popular Cash App for peer-to-peer payments. Affirm Klarna, which provide small-dollar lending to consumers for purchases like bikes TVs, use Marqeta's technology to move money with their installment loans.

Larry Albukerk, who brokers pre-IPO stocks at EB Exchange, said Marqeta shares have been trading on the secondary market for $33 to $35 a share. Based on a total of 484.4 million Class A Class B shares, as listed in the prospectus, that values the company at about $16 billion to $17 billion.

A year ago Marqeta raised capital at a valuation of about $4.3 billion.

"It's definitely one of the hottest companies in the private markets," said Albukerk, who also owns some Marqeta shares. "It's been a steady performer for the last two years recently has become one of the most sought-after stocks to buy pre-public."

Albukerk said Marqeta is up t with Stripe Plaid in terms of fin-tech stocks that investors are seeking, but Marqeta is the only one of the three that trades regularly because the other two companies are more restrictive with ownership transfers.

Marqeta competes on one end of the payment technology market with legacy vendors like Fiserv FIS, on the other end with modern vendors like Adyen Stripe. W Marqeta most differentiates itself is in its card-issuing service, which allows clients to create a very specialized physical or virtual card for heir business partners.

The company says in the risk factors sections of its prospectus that its expansion in 2020 mirrored that of its clients in e-commerce food grocery delivery. As the economy reopens, spending patterns could change.

"Our net revenue growth in recent periods has increased, as additional consumers have shifted to using these services," the company said. "If this trend in consumer dem spending patterns slows or reverses as shelter-in-place restrictions ease as the pemic subsides, our net revenue growth may be adversely affected."

Marqeta ranked 33rd on CNBC's Disruptor 50 list last year.

WATCH: Marqeta CEO Jason Gardner on partnership with Goldman

Article Source