Arq 2025 Q1 Earnings Strong Turnaround as Net Income Swings 105.9%

Arq (ARQ) reported its fiscal 2025 Q1 earnings on May 07th, 2025. The company demonstrated a noticeable improvement by swinging to a net income of $203,000, marking a 105.9% positive change from a loss of $3.42 million in the previous year’s comparable period. The company's revenue growth was robust, with a 25% increase, driven by a turnaround in its PAC business. Arq maintained its guidance for Q2 net revenue growth between 11% and 13%, with gross profit growth projected at 23% to 25%. Overall, the results aligned with expectations, reflecting strong operational improvements.

Revenue
Arq delivered a strong revenue performance in Q1 2025, reporting a total of $27.25 million, up 25.3% from $21.74 million in Q1 2024. The increase was primarily attributed to higher average selling prices (ASP), favorable product mix changes, and increased sales volumes, demonstrating the company's effective business strategies.

Earnings/Net Income
Arq returned to profitability in Q1 2025 with an EPS of $0.00, improving from a loss of $0.09 per share in Q1 2024. The net income of $203,000 in Q1 2025 marked a significant turnaround from the previous year's net loss of $3.42 million. This swing in financial performance indicates a positive trend in the company's earnings.

Post-Earnings Price Action Review
The strategy of buying ARQ shares after a revenue drop and holding for 30 days has shown varied results over the past five years. While some quarters, such as Q1 2020, yielded positive returns of 10%, others like Q4 2021 resulted in losses. The strategy's inconsistency highlights its dependence on specific quarters and market conditions. Additionally, the 30-day holding period often failed to capture long-term growth trends. Despite opportunities for gains, the strategy has proven to be unreliable overall, emphasizing the need for investors to consider longer-term growth potential and market conditions in their decisions.

CEO Commentary
Mike Milotich, Interim Chief Executive Officer and CFO, highlighted Marqeta's robust Q1 performance with a 27% increase in Total Processing Volume (TPV) to $84 billion and an 18% rise in net revenue to $139 million. He emphasized the successful migration of major programs, including those for Perpay and Bitpanda, showcasing Marqeta's ability to serve established brands seeking modern processing solutions. Milotich noted that the company's strategic focus remains on enhancing platform capabilities and expanding market reach, particularly in Europe, which saw over 100% TPV growth. He maintained an optimistic tone regarding future growth, underpinned by strong customer interest and ongoing investments in innovation.

Guidance
Marqeta expects Q2 net revenue growth between 11% and 13%, primarily impacted by a renegotiated platform partner agreement. Q2 gross profit growth is anticipated to range from 23% to 25%. For the full year 2025, net revenue growth is projected at 13% to 15%, with gross profit growth maintained at 14% to 16%. The adjusted EBITDA margin is expected to be approximately 10% to 11%, reflecting improved operating efficiencies and a stable macroeconomic environment.

Additional News
Arq recently appointed Jay Voncannon as Chief Financial Officer, bringing his 35 years of finance experience to oversee the company's transformation and growth phase. In April 2025, Arq signed a life-of-asset PAC contract with an existing customer, marking the second largest contract in its history. This contract underscores the sustainability and value of Arq's foundational business. Additionally, Arq updated its timeline for the first commercial production at the Red River facility to late Q2 or early Q3 2025, as it finalizes technical testing related to product binding and shaping processes.