What happened

Financial technology company Green Dot (NYSE:GDOT) reported its first-quarter earnings on Monday afternoon, and it's fair to say that Wall Street is happy with the results. As of 11:15 a.m. EDT Tuesday, the stock had soared by 15%.

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So what

The first quarter is historically Green Dot's strongest, and this set of results looked surprisingly strong, even with the emergence of the COVID-19 pandemic. Revenue actually increased by 6.3% year over year, and while earnings declined a bit, adjusted earnings per share of $1.13 significantly exceeded analysts' consensus expectation.  

Looking a little deeper, there were a few good reasons for this. Green Dot processed 9.7 million tax refunds during the quarter (the main reason why the first quarter is usually its strongest), about 310,000 more than it did in Q1 2019.

And, while Green Dot said that it saw its key business metrics slow in March and early April, the stimulus check payments disbursed throughout April propelled a surge in gross dollar volume (GDV) on its platform.

Now what

To be sure, the COVID-19 pandemic will certainly have some negative effects on Green Dot's business, as it will on most other fintech companies. For example, interest income on its cash and investment balances is a source of revenue for the company, and the record-low interest environment obviously hurts this. And as long as shutdowns last, dollar volume through Green Dot's products could suffer (excluding the stimulus check effects).

However, Green Dot has ample liquidity to make it through the tough times, and it remains quite profitable despite the pandemic. While the company certainly faces some uncertainty in the coming quarters, its business is actually looking quite strong.