Dive Brief:
- Marqeta appointed its chief financial officer, Mike Milotich, to the additional post of interim chief executive officer on Wednesday, effective immediately, according to a press release that day. Simon Khalaf has stepped down as CEO and a board director, the company said.
- Also on Wednesday, the provider of digital card and embedded finance services, said it had agreed to buy the European electronic money transfer company TransactPay to build up its card services on that continent. The price tag for the purchase was €45 million, or about $47 million, according to analysts for the investment firm William Blair. Another $5 million is contingent on performance.
- The announcements came on the same day Marqeta released its fourth-quarter earnings report, which showed its net loss for the fourth-quarter narrowed to $27.1 million from $40.4 million a year earlier, though the company turned a profit of $27.3 million across 2024.
Dive Insight:
Oakland, California-based Marqeta, which offers all types of card programs and other payments services, has struggled in recent years to find the best leadership. Khalaf took over as CEO from the company’s founder, Jason Gardner, in January 2023. Gardner remained executive chair for a while, but exited that role last June.
The company is undertaking a search to find a permanent CEO successor, it said in the Wednesday release.
“As we embark on a new fiscal year and look to position Marqeta for a new chapter of growth and value creation, Simon and the Board have agreed that now is the right time to transition leadership,” Marqeta Chair Judson C. Linville said in the release.
Milotich, 48, joined Marqeta the year before Khalaf, signing on as CFO in February 2022. He previously served at credit card giant Visa for a decade as senior vice president of corporate finance and investor relations, among other roles. Before joining Visa, he also worked for digital payments pioneer PayPal and card company American Express.
“Milotich’s key priorities include developing the Marqeta platform, expanding its solutions, and improving profitability,” William Blair analysts said Thursday in the note to clients.
After he took the CEO top post, Khalaf immediately began to turn the company’s focus toward providing embedded finance options for its corporate clients, allowing them to use software that tucked electronic payments and other finance functions into other commercial digital functions.
The acquisition of Gibraltar-based TransactPay, expected to be completed by September, should strengthen Marqeta’s presence in Europe.
“Management expects that the acquisition will drive increased adoption of Marqeta’s program management services by European customers, will attract additional customers looking for a single end-to-end provider, and will enable more seamless geographic expansion for existing customers,” the William Blair analysts wrote.
The company had built a name for itself after its founding in 2010 as a provider of virtual commercial credit cards for corporate clients. Among its early big clients was the digital payments company Block, which relied on Marqeta’s software to power its Cash App and Square cards. That customer accounted for about half of Marqeta’s revenue last year.
Nonetheless, Marqeta has faced significant competition in the arena, including from legacy companies such as Fidelity National Information Services and Global Payments, as well as upstarts including Adyen and Stripe.
Marqeta delivered a disappointing earnings report for the third-quarter last year because it generally fell short of analysts’ expectations.
“After reducing growth expectations in November, Marqeta’s December-quarter results exceeded top- and bottom-line expectations with upside partly due to better ramp-up of new clients and an incentive benefit,” the William Blair analysts wrote.
Marqeta’s fourth-quarter revenue rose 14% to $135.8 million, but its revenue for all of 2024 fell 25% to $507 million, according to the earnings report.
