Shares of GreenSky (GSKY) have plummeted today, closing down 18% after the company reported first-quarter earnings. The financial tech specialist missed expectations for both the top and bottom lines.
Revenue in the first quarter came in at $121.2 million, shy of the $123.5 million that analysts were modeling for. That led to a net loss of $10.9 million, or $0.05 per share. Wall Street was looking for EPS of $0.05. GreenSky adopted the new current expected credit loss (CECL) methodology during the quarter, which led to the recognition of a noncash increase in reserves of $18.4 million and a liability of $118 million.
Transaction volumes increased 10% to $1.4 billion in the first quarter. Volumes were up a stronger 16% in January and February before COVID-19 started to impact the business, the company said. GreenSky's transaction fee rate was 6.6%, down slightly due to promotional activity.
"Notwithstanding the impact of COVID-19 commencing in mid-March, GreenSky produced strong first quarter operating results, exceeding our seasonal expectations," CEO David Zalik said in a statement. The company's loan servicing portfolio grew to $9.3 billion, and GreenSky had over 17,700 active merchants at the end of the first quarter. The fintech has now migrated its workforce to a remote work model due to the coronavirus outbreak.
GreenSky has also closed a new $500 million asset-backed revolver to diversify its funding and bolster liquidity. Total unused bank partner funding capacity is now $1.6 billion, and GreenSky says it has enough funding capacity through 2021.