Fintech companies have been benefiting from the COVID-19 pandemic as more business moves online and more people take advantage of digital banking. Q2 Holdings (NYSE:QTWO), which develops cloud-based solutions for community banks, continued to see high revenue growth in the first quarter.

Double-digit growth

Revenue grew 30% to $92.4 million, but gross margin was down to 42.5% from 47.8% in the prior year. Much of that was attributable to employee-related expenses. Net loss widened to $34.1 million from $19.3 million the prior year and $15.7 million in the previous quarter. Most of the came from the acquisition of PrecisionLender in October 2019, and the other portion came from new hires.

Couple working with a bank employee.

Image source: Getty images.

Q2 signed several lucrative contacts during the quarter that included new clients as well as new, large-scale products for existing clients. The company ended the quarter with 15.4 million registered users, an 18% increase year over year. Part of the growth came from the PrecisionLender acquisition.

Keeping it up

Q2 expects similar results in the second quarter, with $94 million to $96 million in adjusted revenue (which includes the deferred revenue reduction from acquisitions normally held out when using generally accepted accounting principles), or a 21% to 24% increase year over year. The full year outlook is non-GAAP revenue of $393 million to $400 million, or a 24% to 26% increase year over year.

CEO Matt Flake said "I believe our subscription model, long-term contracts and strong balance sheet equip us to endure the immediate situation and emerge in a great position to partner more deeply with new and existing customers."

Shares of the fintech company are about flat year to date.