Weekly 10-Q: Could lowering the FY guidance hurt Affirm? And, has Marqeta underperformed this year?

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Last week we covered: Did Robinhood deliver a “confetti-worthy” financial performance?

Could lowering the FY guidance hurt Affirm? And, has Marqeta underperformed this year?

AFFIRM

Affirm Holdings posted its first quarter 2023 results last week:

• Revenue increased to $361.6 million, up 34% from Q1 2022.
• The number of active consumers surged to 14.7 million from 8.7 million at the same time last year.
• Net loss was $251.3 million, narrowed by 18% from Q1 2022.
• $0.86 loss per share, improved from a $1.13 loss in Q1 2022.

The revenue was in line with analyst estimates; however, the Earnings per share (EPS) missed analyst estimates by 10%.

"While results were solid, primarily marked by better-than-expected net revenue, lowering the FY guidance is the stain on the shirt, which will likely be poorly received -- given the ~20bps downward revision in the FY23 implied RLTC margin guide," predicted analysts at Mizuho Group.

MARQETA

Marqeta reported its latest quarterly earnings on Wednesday:

• Revenue hiked $191.62 million from $131.51 million in Q3 2021.
• The gross margin was 42% in the third quarter of 2022.
• Total Processing Volume increased by 54% year-over-year, rising to $42 billion from $28 billion in the third quarter of 2021.
• Net loss increased to $53.16 million from $45.73 million in the same quarter last year.

Analysts at Mizuho Group believe Q3 was strong for Marqeta but they worry that the stock may not receive its well-deserved cheer amid "a more competitive landscape (e.g. from companies like Stripe), which has driven at least one customer to migrate a portion of their volume elsewhere by offering similar services at attractive prices."

PAYPAL

PayPal announced its financial results for the third quarter of 2022:

• Revenues rose 11% year-over-year to $6.85 billion.
• GAAP EPS of $1.15 compared to $0.92 in Q3'21, and non-GAAP EPS of $1.08 compared to $1.11 in Q3'21.
• Total Payment Volume reached $337.0 billion for Q3’22, up by 9% (14% FXN) whereas Venmo TPV reached $63.6 billion, up by 6%.
• Net income (loss) increased to $1.33 billion from $1 billion same time last year.
• The number of active user accounts rose 3.8% year-on-year from 416 million in Q3 2021 to 432 million accounts at the end of September 2022.

"Weaker than expected TPV will likely weigh on results. PYPL reported $337bn, which is somewhat below cons. $343bn. Venmo TPV increased 6% to $64bn. This too fell below expectations ($70bn), which were arguably overly ambitious, to begin with," said analysts at Mizuho Group.

PayPal shares fell more than 5% in after-hours trading after the company posted its earnings. The company had beaten earnings and revenue expectations for the third quarter; however, its Q4 revenue estimate came in behind analysts’ expectations -- $6.85 billion, vs. $6.82 billion expected, according to Refinitiv.

Top stories of the week

AMAZON
AWS and Deloitte team up to provide cloud-based digital banking services
Amazon Web Services and Deloitte will jointly develop cloud-based banking services to help financial organizations introduce digital banking tools and modernize fintech solutions. As part of the partnership, Deloitte is bringing its ConvergePROSPERITY BankingSuite platform to AWS’ public cloud, while AWS contributes a range of fintech solutions, including contact center product Amazon Connect, customer interaction environment Amazon Pinpoint, and security service Amazon Cognito. (Insider Intelligence)

CITI
With Citi and Barclays' ongoing job cuts, Wall Street layoffs don't seem to be easing off
Last week, Citi slashed nearly 50 trading employees and dozens of investment-banking employees. Additionally, Barclays reduced around 200 staff members, making up less than 3% of the bank’s global headcount. The job cuts come as each bank reported sharp declines in investment-banking fees. Citi last month saw a 64% dip in that department in its latest third-quarter earnings, compared with Q3 last year -- whereas Barclays saw a 45% slump in investment-banking fees y-o-y. (CNBC)

JPMORGAN CHASE
JPMorgan, Mastercard team up to bring 'Pay-by-Bank' to US merchants
JPMorgan Payments and Mastercard have teamed to develop Pay-by-Bank, an open banking ACH payment platform that enables billers and consumers to allow their financial data to be shared between trusted parties to let them pay bills directly from their bank account for payment. The partnership also aims at the ease of user experience and the security of data sharing. Both companies have agreed to start rolling out the offering with a small number of U.S.-based billers and merchants this year and expand the platform further in 2023. (Finextra)

JPMorgan, Citi to bank some Russian firms
The country’s largest banks are caught in the push-pull between the Biden administration and Congress on sanctions to do work in Russia. Behind the scenes, the Treasury and State Departments have urged Wall Street big banks including JPMorgan and Citigroup to keep doing business with certain strategic Russian firms. The quiet effort is part of the administration’s push to minimize the adverse impacts of the sanctions regime designed to punish Russia. (Bloomberg)

MORGAN STANLEY
Morgan Stanley is set to slash headcounts worldwide in the next few weeks
Amid slow growth in its dealmaking business in the light of increasing inflation and an economic slump, Morgan Stanley is planning to reduce its workforce. Most of those employees are part of teams that look after business related to the bank’s capital markets units in Hong Kong and mainland China. In addition, the layoffs will impact Morgan Stanley’s technology investment banking arm, which employs more than 30 people in Asia Pacific. Morgan Stanley will also carry out layoffs across the globe during the same time. However, the bank is yet to take a final call on the extent of the job cuts. (Seeking Alpha)

PAYPAL
PayPal is adding support for Apple’s Tap to Pay technology 
PayPal in its latest earnings report shared that the PayPal and Venmo iOS apps will soon offer Apple's Tap to Pay on iPhone functionality, allowing merchants that use PayPal or Venmo to accept contactless debit or credit cards and mobile wallet payments, including Apple Pay. (TechCrunch)

SQUARE
Square has provided $1.14 billion in loans to businesses in Q3
Square beat revenue and earnings estimates in the third quarter, despite economic challenges with the support of its two growth ecosystems -- Cash App and Square merchant products. Square Loans, a subsidiary of Block, originated 126,000 loans for a total of $1.14 billion in Q3. Overall, originations grew by more than 10% over the previous quarter. (Seeking Alpha)

TWITTER
Elon Musk plans to add more financial features to Twitter
Elon Musk has unveiled a vision for Twitter to process payments, in cohesion with connected debit cards and bank accounts. In the future, users would be able to send money to others on the platform, extract their funds to authenticated bank accounts, and might be offered a high-yield money market account to encourage them to move their cash to Twitter. A week ago, Twitter filed registration paperwork with the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) that would allow it to process payments. (The New York Times)

Tweet of the week

Chart of the week

Wise saw its total cross-border volumes rise 50% in Q3 2022

What's trending

• JPMorgan and Goldman Sachs battle for British customer deposits (FT)
• Why neobank Dave expects to be a profitable fintech survivor (The Financial Brand)
• Mastercard announces access to McAfee protection for US cardholders (Crowdfund Insider)
• Q3 M&A highlights: deal volume down, number trending up (Finovate)