Do GreenSky Earnings Reflect Trouble in Fintech Land?

Banking, finance, and taxes

Published: August 6, 2019 10:40 am

Last Updated: January 11, 2020 7:02 am

When GreenSky Inc. (NASDAQ: GSKY) reported its most recent quarterly results before the market opened on Tuesday, the financial technology company said that it had $0.19 in earnings per share (EPS) and $138.7 million in revenue. That compared with consensus estimates of $0.23 in EPS and $140.84 million in revenue, as well as the $0.18 per share and $105.7 million posted in the same period of last year.

During the latest quarter, transaction volume increased 20% over the prior year to $1.6 billion. The average transaction fee rate was 6.9% in the second quarter, up from 6.8% in the same quarter of 2018.

At the same time, Active Merchants increased 24% year over year to 16,603.

The company announced a new chief technology officer, Minaz Vastani, in the second quarter in an effort to advance the competitive differentiation for the firm’s point of sale platform.

GreenSky did not offer any guidance in the earnings report. However, consensus estimates are calling for $0.27 in EPS and $153.53 million in revenue.

David Zalik, GreenSky’s board chair and chief executive, commented:

I am excited about what GreenSky has accomplished and our opportunities for continued growth and innovation in all of our product segments and verticals. We have nearly 17,000 active merchants and providers on our platform and have facilitated over $19 billion in point of sale financing for over 2.6 million consumers since inception. Our bank partner network is robust with aggregate funding commitments of $11.9 billion, of which $4.0 billion were unused, at June 30, 2019. Moreover, even after deploying more than $146 million to repurchase shares over the past eight months, our liquidity position is strong with over $209 million of unrestricted cash on hand at June 30, 2019.

Shares of GreenSky traded down about 29% to $7.39 on Tuesday, in a 52-week range of $6.81 to $22.30. The consensus price target is $14.50.

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