QTWO Q2 Holdings Inc

Q2 Holdings, Inc. (NYSE: QTWO), a leading provider of digital transformation solutions for financial services, today announced results for its fourth quarter and full year ending December 31, 2024.

GAAP Results for the Fourth Quarter and Full-Year 2024

• Revenue for the fourth quarter of $183.0 million, up 13 percent year-over-year and up 5 percent from the third quarter of 2024. Full-year 2024 revenue of $696.5 million, up 12 percent year-over-year.
• GAAP gross margin for the fourth quarter of 52.6 percent, up from 50.2 percent for the prior-year quarter and up from 50.9 percent for the third quarter of 2024. GAAP gross margin for full-year 2024 of 50.9 percent, up from 48.5 percent for the full-year 2023.
• GAAP net income for the fourth quarter of $0.2 million, compared to GAAP net losses of $18.1 million for the prior-year quarter and $11.8 million for the third quarter of 2024. GAAP net loss for full-year 2024 of $38.5 million, compared to $65.4 million for full-year 2023.

Non-GAAP Results for the Fourth Quarter and Full-Year 2024

• Non-GAAP revenue for the fourth quarter of $183.0 million, up 13 percent year-over-year and up 5 percent from the third quarter of 2024. Full-year 2024 non-GAAP revenue of $696.5 million, up 11 percent year-over-year.
• Non-GAAP gross margin for the fourth quarter of 57.4 percent, up from the prior-year quarter of 56.0 percent and up from 56.0 percent for the third quarter of 2024. Non-GAAP gross margin for full-year 2024 of 56.0 percent, up from 54.5 percent for full-year 2023.
• Adjusted EBITDA for the fourth quarter of $37.6 million, up from $23.2 million for the prior-year quarter and $32.6 million for the third quarter of 2024. Full-year 2024 adjusted EBITDA of $125.3 million, up from $76.9 million for the full-year 2023.

For a reconciliation of our GAAP to non-GAAP results, please see the tables below.

“We delivered strong fourth-quarter results to cap off a great year,” said Matt Flake, chairman and CEO, Q2. “We continued our outstanding sales execution, posting our best bookings quarter of the year and second best in company history. Throughout 2024, we built on the themes and momentum from the prior year as we saw continued success in net new digital banking wins across institutions of all sizes, solid sales activity in relationship pricing, and a record year of renewal activity in which bookings from renewals were up 80 percent year-over-year. Given this success and our strong financial results, we believe we’re in a great position to deliver value to shareholders, customers, and employees in 2025 and beyond.”

Fourth Quarter and Full-Year Highlights

Seven Tier 1 and Enterprise Contracts Demonstrate Continued Broad-Based Sales Success

• Signed five Tier 1 digital banking contracts, including:
  • Four new customers and an expansion within an existing customer
  • A mix of customers selecting our platform for retail, commercial, or both solutions.
• Signed a relationship pricing contract with a new Tier 1 customer.
• Expanded a relationship pricing contract with an enterprise bank.
• Partnered with Wells Fargo to transform and enhance commercial client experience through actionable insights and coaching.
• Best bookings quarter of the year, and our largest ever bookings quarter for cross-sales and renewals during the fourth quarter.
• Subscription Annualized Recurring Revenue increased to $682 million, up 15 percent year-over-year from $594 million at the end of 2023.
• Remaining Performance Obligation total, or Backlog, increased by $189 million sequentially, resulting in total committed Backlog of approximately $2.2 billion at quarter-end, representing 9 percent sequential growth and 21 percent year-over-year growth.

Q2 Caps Off Record Year with Strong Q4 Performance and Raised Long-Term Targets

Q2 delivered its strongest bookings quarter of the year in 4Q, with a balanced mix of net new and expansion wins. The quarter saw seven total Tier 1 and Enterprise deals and was the best cross-sale and renewal quarter in company history.

The versatility of Q2's digital banking platform continued to be a differentiator, with five Tier 1 wins across retail and commercial solutions. Relationship pricing solutions also saw significant traction, highlighted by the successful launch with Wells Fargo.

For the full year 2024, Q2 delivered broad-based bookings activity across all lines of business, highlighted by a record 25 Enterprise and Tier 1 wins within digital banking and relationship pricing across both new and existing customers. Additionally, Q2 signed nearly twice the number of Tier 2 and Tier 3 digital banking customers versus the prior year, demonstrating the strength of the platform.

Q2's commercial segment success continued to grow in 2024, with over 60 Tier 1 financial institutions now utilizing Q2's commercial solutions on their digital banking platform - the result of decades of innovation and delivering for customers. With 50 of Q2's Tier 1 digital banking platform customers yet to adopt these solutions, the company believes it has a substantial expansion opportunity - just one example of Q2's growth prospects across its product portfolio.

Building on Q2's performance in 2024, the company has also updated its three-year financial framework, increasing its average annual subscription revenue growth target from 14% to 15%, updating its target for average annual adjusted EBITDA margin expansion to 360 basis points and raising its full-year 2026 free cash flow conversion target from 70% to 85%.

“We’re very pleased with our financial performance to end the year, surpassing the high end of our guidance for both revenue and adjusted EBITDA,” said Jonathan Price, CFO, Q2. “Our strong performance across key metrics demonstrates successful execution of our profitable growth strategy, and given these results, we've updated our three-year financial framework to reflect more ambitious targets. With our robust pipeline and increased visibility into future revenue streams, we believe we're well-positioned to capitalize on market opportunities and drive continued success in the coming years.”

Financial Outlook

As of February 12, 2025, Q2 Holdings is providing guidance for its first quarter of 2025 and full-year 2025, which represents Q2 Holdings’ current estimates on Q2 Holdings’ operations and financial results. The financial information below represents forward-looking, non-GAAP financial information, including estimates of non-GAAP revenue and adjusted EBITDA. GAAP net income (loss) is the most comparable GAAP measure to adjusted EBITDA. Adjusted EBITDA differs from GAAP net income (loss) in that it excludes items such as depreciation and amortization, stock-based compensation, transaction-related costs, interest and other (income) expense, income taxes, and lease and other restructuring charges, (gain) loss on extinguishment of debt and the impact to deferred revenue from purchase accounting. Q2 Holdings is unable to predict with reasonable certainty the ultimate outcome of these exclusions without unreasonable effort. Therefore, Q2 Holdings has not provided guidance for GAAP net income (loss) or a reconciliation of the forward-looking adjusted EBITDA guidance to GAAP net income (loss). However, it is important to note that these excluded items could be material to our results computed in accordance with GAAP in future periods.

Q2 Holdings is providing guidance for its first quarter of 2025 as follows:

• Total revenue of $184.0 million to $188.0 million, which would represent year-over-year growth of 11 to 14 percent.
• Adjusted EBITDA of $36.0 million to $39.0 million, representing 20 to 21 percent of GAAP revenue for the quarter.

Q2 Holdings is providing guidance for the full-year 2025 as follows:

• Total revenue of $772.0 million to $779.0 million, which would represent year-over-year growth of 11 to 12 percent.
• Adjusted EBITDA of $165.0 million to $170.0 million, representing 21 to 22 percent of GAAP revenue for the year.

Updated Three-Year Financial Framework

Q2 Holdings is providing an updated financial framework, for the years 2024 through 2026 as follows:

• Average annual subscription revenue growth of approximately 15 percent.
• Average annual adjusted EBITDA margin expansion of 360 basis points.
• Full-year 2026 Free Cash Flow conversion of greater than 85 percent of total Adjusted EBITDA.

Conference Call Details

Date:

Wednesday, February 12, 2025

Time:

5:00 p.m. EST

Hosts:

Matt Flake, Chairman & CEO / Jonathan Price, CFO / Kirk Coleman, President

Conference Call Registration:

https://registrations.events/direct/Q4I6081054173

Webcast Registration:

https://events.q4inc.com/attendee/403250364

 

 

All participants must register using the above links (either the webcast or conference call). A webcast of the conference call and financial results will be accessible from the investor relations section of the Q2 website at http://investors.Q2.com/. In addition, a live conference call dial-in will be available upon registration. Participants should dial in at least 10 minutes before the start of the conference call. An archived replay of the webcast will be available on this website for a limited time after the call. Q2 has used, and intends to continue to use, its investor relations website as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD.

About Q2 Holdings, Inc.

Q2 is a leading provider of digital transformation solutions for financial services, serving banks, credit unions, alternative finance companies, and fintechs in the U.S. and internationally. Q2 enables its financial institution and fintech companies to provide comprehensive, data-driven digital engagement solutions for consumers, small businesses and corporate clients. Headquartered in Austin, Texas, Q2 has offices worldwide and is publicly traded on the NYSE under the stock symbol QTWO. To learn more, please visit Q2.com. Follow us on LinkedIn and X to stay up to date.

Use of Non-GAAP Measures

Q2 uses the following non-GAAP financial measures: non-GAAP revenue; adjusted EBITDA; adjusted EBITDA margin; non-GAAP gross margin; non-GAAP gross profit; non-GAAP sales and marketing expense; non-GAAP research and development expense; non-GAAP general and administrative expense; non-GAAP operating expense; non-GAAP operating income (loss); and free cash flow. Management believes that these non-GAAP financial measures are useful measures of operating performance because they exclude items that Q2 does not consider indicative of its core performance.

In the case of non-GAAP revenue, Q2 adjusts revenue to exclude the impact to deferred revenue from purchase accounting adjustments. In the case of adjusted EBITDA, Q2 adjusts net income (loss) for such items as interest and other (income) expense, taxes, depreciation and amortization, stock-based compensation, transaction-related costs, lease and other restructuring charges, (gain) loss on extinguishment of debt and the impact to deferred revenue from purchase accounting. In the case of adjusted EBITDA margin, Q2 calculates adjusted EBITDA margin by dividing adjusted EBITDA by non-GAAP revenue. In the case of non-GAAP gross margin and non-GAAP gross profit, Q2 adjusts gross profit and gross margin for stock-based compensation, amortization of acquired technology, transaction-related costs, lease and other restructuring charges and the impact to deferred revenue from purchase accounting. In the case of non-GAAP sales and marketing expense, non-GAAP research and development expense, and non-GAAP general and administrative expense, Q2 adjusts the corresponding GAAP expense to exclude stock-based compensation. Non-GAAP operating expense is calculated by taking the sum of non-GAAP sales and marketing expenses, non-GAAP research and development expense, and non-GAAP general and administrative expense. In the case of non-GAAP operating income (loss), Q2 adjusts operating income (loss), for stock-based compensation, transaction-related costs, amortization of acquired technology, amortization of acquired intangibles, lease and other restructuring charges, and the impact to deferred revenue from purchase accounting. In the case of free cash flow, Q2 adjusts net cash provided by (used in) operating activities for purchases of property and equipment and capitalized software development costs.

There are limitations associated with the use of these non-GAAP financial measures. These non-GAAP financial measures are not prepared in accordance with GAAP, do not reflect a comprehensive system of accounting and may not be completely comparable to similarly titled measures of other companies due to potential differences in the exact method of calculation between companies. Certain items that are excluded from these non-GAAP financial measures can have a material impact on operating and net income (loss). As a result, these non-GAAP financial measures have limitations and should be considered in addition to, not as a substitute for or superior to, the closest GAAP measures, or other financial measures prepared in accordance with GAAP. A reconciliation to the closest GAAP measures of these non-GAAP measures is contained in tabular form on the attached unaudited condensed consolidated financial statements.

Q2’s management uses these non-GAAP measures as measures of operating performance; to prepare Q2’s annual operating budget; to allocate resources to enhance the financial performance of Q2’s business; to evaluate the effectiveness of Q2’s business strategies; to provide consistency and comparability with past financial performance; to facilitate a comparison of Q2’s results with those of other companies, many of which use similar non-GAAP financial measures to supplement their GAAP results; and in communication with our board of directors concerning Q2’s financial performance.

Forward-looking Statements

This press release contains forward-looking statements, including statements about: our ability to deliver value to shareholders, customers, and employees in 2025 and beyond; our continued broad-based sales success; our revised long range operating targets and three-year financial framework; the benefits of our platform; our expansion opportunity; our growth prospects across our product portfolio; our confidence in our business model; our strong performance across key metrics; our successful execution of our profitable growth strategy; our robust pipeline and increased visibility into future revenue streams; our ability to capitalize on market opportunities and drive continued success in the coming years.

The forward-looking statements contained in this press release are based upon Q2’s historical performance and its current plans, estimates, and expectations and are not a representation that such plans, estimates or expectations will be achieved. Factors that could cause actual results to differ materially from those described herein include risks related to: (a) the risks associated with cyberattacks, financial transaction fraud, data and privacy breaches and breaches of security measures within our products, systems and infrastructure or the products, systems and infrastructure of third parties upon which we rely and the resultant costs and liabilities and harm to our business and reputation and our ability to sell our solutions; (b) the impact of and our ability to respond to global economic uncertainties and challenges or changes in the financial services industry and credit markets, including as a result of mergers and acquisitions within the banking sector, inflationary pressures, elevated and fluctuating interest rates, instability in the financial services industry and any changes to or new financial regulations and their potential impacts on our prospects' and customers' operations, the timing of prospect and customer implementations and purchasing decisions, our business sales cycles and on account holder or end user, or End User, usage of our solutions; (c) the risk of increased or new competition in our existing markets and as we enter new markets or new segments of existing markets, or as we offer new solutions; (d) the risks associated with the development of our solutions, including artificial intelligence, or AI, based solutions, and changes to the market for our solutions compared to our expectations; (e) quarterly fluctuations in our operating results relative to our expectations and guidance and the accuracy of our forecasts; (f) the risks and increased costs associated with managing growth and global operations, including hiring, training, retaining and motivating employees to support such growth; (g) the risks associated with our transactional business which are typically driven by End-User behavior and can be influenced by external drivers outside of our control; (h) the risks associated with effectively managing our business and cost structure in an uncertain economic environment, including as a result of challenges in the financial services industry and the effects of seasonality and unexpected trends; (i) the risks associated with geopolitical uncertainties or discord, including the heightened risk of state-sponsored cyberattacks or cyber fraud on financial services and other critical infrastructure; (j) the risks associated with accurately forecasting and managing the impacts of any economic downturn or challenges in the financial services industry on our customers and their End Users, including in particular the impacts of any downturn on financial technology companies, or FinTechs, or alternative finance companies, or Alt-FIs, and our arrangements with them, which may provide more complex revenue arrangements for us and which may be more vulnerable to an economic downturn than our financial institution customers; (k) the challenges and costs associated with selling, implementing and supporting our solutions, particularly for larger customers with more complex requirements and longer implementation processes, including risks related to the timing and predictability of sales of our solutions and the impact that the timing of bookings may have on our revenue and financial performance in a period; (l) the risk that errors, interruptions or delays in our solutions or Web hosting negatively impacts our business and sales; (m) the risks associated with the migration of a significant portion of the computing, storage and processing of our digital banking platform solutions from our third-party data centers to third-party public cloud service providers; (n) the difficulties and risks associated with developing and selling complex new solutions and enhancements, including those using AI with the technical and regulatory specifications and functionality required by our customers and relevant governmental authorities; (o) the risks associated with operating within and selling into a regulated industry, including risks related to evolving regulation of AI and machine learning, the receipt, collection, storage, processing and transfer of data and increased regulatory scrutiny on financial technology and related services, including specifically on banking-as-a-service, or BaaS, services; (p) the risks associated with our sales and marketing capabilities, including partner relationships and the length, cost and unpredictability of our sales cycle; (q) the risks inherent in third-party technology and implementation partnerships, including defects, failures or interruptions in third-party services or solutions, that could cause harm to our business; (r) the risk that we will not be able to maintain historical contract terms such as pricing and duration; (s) the general risks associated with the complexity of our customer arrangements and our solutions; (t) the risks associated with integrating acquired companies and successfully selling and maintaining their solutions; (u) litigation related to intellectual property and other matters and any related claims, negotiations and settlements; (v) the risks associated with further consolidation in the financial services industry; (w) the risks associated with selling our solutions internationally and with the continued expansion of our international operations; and (x) the risk that our debt repayment obligations may adversely affect our financial condition and that we may not be able to obtain capital when desired or needed on favorable terms;

Additional information relating to the uncertainty affecting the Q2 business is contained in Q2’s filings with the Securities and Exchange Commission. These documents are available on the SEC Filings section of the Investor Relations section of Q2’s website at http://investors.Q2.com/. These forward-looking statements represent Q2’s expectations as of the date of this press release. Subsequent events may cause these expectations to change, and Q2 disclaims any obligations to update or alter these forward-looking statements in the future, whether as a result of new information, future events or otherwise.

Q2 Holdings, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

 

 

December 31,

2024

 

December 31,

2023

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

 

358,560

 

 

 

229,655

 

Restricted cash

 

 

2,233

 

 

 

3,977

 

Investments

 

 

88,066

 

 

 

94,353

 

Accounts receivable, net

 

 

42,084

 

 

 

42,899

 

Contract assets, current portion, net

 

 

7,888

 

 

 

9,193

 

Prepaid expenses and other current assets

 

 

23,512

 

 

 

11,625

 

Deferred solution and other costs, current portion

 

 

26,611

 

 

 

27,521

 

Deferred implementation costs, current portion

 

 

9,706

 

 

 

8,741

 

Total current assets

 

 

558,660

 

 

 

427,964

 

Property and equipment, net

 

 

31,528

 

 

 

41,178

 

Right of use assets

 

 

30,402

 

 

 

35,453

 

Deferred solution and other costs, net of current portion

 

 

28,116

 

 

 

26,090

 

Deferred implementation costs, net of current portion

 

 

26,408

 

 

 

21,480

 

Intangible assets, net

 

 

94,633

 

 

 

121,572

 

Goodwill

 

 

512,869

 

 

 

512,869

 

Contract assets, net of current portion and allowance

 

 

9,483

 

 

 

12,210

 

Other long-term assets

 

 

2,696

 

 

 

2,609

 

Total assets

 

$

1,294,795

 

 

$

1,201,425

 

 

 

 

 

 

Liabilities and stockholders' equity

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable and accrued liabilities

 

 

60,542

 

 

 

62,404

 

Convertible notes, current portion

 

 

190,331

 

 

 

—

 

Deferred revenues, current portion

 

 

137,700

 

 

 

118,723

 

Lease liabilities, current portion

 

 

10,327

 

 

 

10,436

 

Total current liabilities

 

 

398,900

 

 

 

191,563

 

Convertible notes, net of current portion

 

 

302,115

 

 

 

490,464

 

Deferred revenues, net of current portion

 

 

27,281

 

 

 

17,350

 

Lease liabilities, net of current portion

 

 

38,346

 

 

 

45,588

 

Other long-term liabilities

 

 

10,357

 

 

 

7,981

 

Total liabilities

 

 

776,999

 

 

 

752,946

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

Common stock

 

 

6

 

 

 

6

 

Additional paid-in capital

 

 

1,183,893

 

 

 

1,075,278

 

Accumulated other comprehensive loss

 

 

(1,873

)

 

 

(1,111

)

Accumulated deficit

 

 

(664,230

)

 

 

(625,694

)

Total stockholders' equity

 

 

517,796

 

 

 

448,479

 

Total liabilities and stockholders' equity

 

$

1,294,795

 

 

$

1,201,425

 

Q2 Holdings, Inc.

Condensed Consolidated Statements of Comprehensive Loss

(in thousands, except per share data)

(unaudited)

 

 

 

Three Months Ended

December 31,

 

Twelve Months

Ended December 31,

 

 

2024

 

2023

 

2024

 

2023

 

 

 

 

 

 

 

 

 

Revenues (1)

 

$

183,045

 

 

$

162,118

 

 

$

696,464

 

 

$

624,624

 

Cost of revenues (2)

 

 

86,702

 

 

 

80,725

 

 

 

341,983

 

 

 

321,973

 

Gross profit

 

 

96,343

 

 

 

81,393

 

 

 

354,481

 

 

 

302,651

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Sales and marketing

 

 

27,215

 

 

 

26,554

 

 

 

105,951

 

 

 

109,522

 

Research and development

 

 

35,722

 

 

 

34,271

 

 

 

143,244

 

 

 

137,334

 

General and administrative

 

 

29,988

 

 

 

30,283

 

 

 

122,942

 

 

 

110,186

 

Transaction-related costs

 

 

—

 

 

 

—

 

 

 

—

 

 

 

24

 

Amortization of acquired intangibles

 

 

2,587

 

 

 

4,903

 

 

 

16,979

 

 

 

20,667

 

Lease and other restructuring charges

 

 

2,406

 

 

 

3,399

 

 

 

7,628

 

 

 

10,975

 

Total operating expenses

 

 

97,918

 

 

 

99,410

 

 

 

396,744

 

 

 

388,708

 

Loss from operations

 

 

(1,575

)

 

 

(18,017

)

 

 

(42,263

)

 

 

(86,057

)

Total other income (expense), net (3)

 

 

3,511

 

 

 

1,997

 

 

 

11,403

 

 

 

24,235

 

Income (loss) before income taxes

 

 

1,936

 

 

 

(16,020

)

 

 

(30,860

)

 

 

(61,822

)

Provision for income taxes

 

 

(1,772

)

 

 

(2,059

)

 

 

(7,676

)

 

 

(3,562

)

Net income (loss)

 

$

164

 

 

$

(18,079

)

 

$

(38,536

)

 

$

(65,384

)

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

Unrealized gain (loss) on available-for-sale investments

 

 

(168

)

 

 

515

 

 

 

392

 

 

 

1,800

 

Foreign currency translation adjustment

 

 

(1,112

)

 

 

368

 

 

 

(1,154

)

 

 

61

 

Comprehensive loss

 

$

(1,116

)

 

$

(17,196

)

 

$

(39,298

)

 

$

(63,523

)

 

 

 

 

 

 

 

 

 

Net income (loss) per common share:

 

 

 

 

 

 

 

 

Net income (loss) per common share, basic

 

$

0.00

 

 

$

(0.31

)

 

$

(0.64

)

 

$

(1.12

)

Net income (loss) per common share, diluted

 

$

0.00

 

 

$

(0.31

)

 

$

(0.64

)

 

$

(1.12

)

Weighted average common shares outstanding, basic

 

 

60,497

 

 

 

58,742

 

 

 

60,105

 

 

 

58,354

 

Weighted average common shares outstanding, diluted

 

 

64,654

 

 

 

58,742

 

 

 

60,105

 

 

 

58,354

 

(1)

Includes deferred revenue reduction from purchase accounting of zero and $0.1 million for the three months ended December 31, 2024 and 2023, respectively, and zero and $0.3 million for the twelve months ended December 31, 2024 and 2023, respectively.

(2)

Includes amortization of acquired technology of $5.5 million and $5.8 million for the three months ended December 31, 2024 and 2023, respectively, and $22.0 million and $23.4 million for the twelve months ended December 31, 2024 and 2023, respectively.

(3)

Includes a gain of $19.9 million related to the early extinguishment of a portion of our convertible notes for the year ended December 31, 2023.

Q2 Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

 

 

Twelve Months Ended December 31,

 

 

2024

 

2023

Cash flows from operating activities:

 

 

 

 

Net loss

 

$

(38,536

)

 

$

(65,384

)

Adjustments to reconcile net loss to net cash from operating activities:

 

 

 

 

Amortization of deferred implementation, solution and other costs

 

 

27,038

 

 

 

25,848

 

Depreciation and amortization

 

 

68,809

 

 

 

71,707

 

Amortization of debt issuance costs

 

 

2,059

 

 

 

2,104

 

Amortization of premiums and discounts on investments

 

 

(1,273

)

 

 

(3,192

)

Stock-based compensation expense

 

 

89,215

 

 

 

79,188

 

Deferred income taxes

 

 

2,106

 

 

 

636

 

Gain on extinguishment of debt

 

 

—

 

 

 

(19,312

)

Other non-cash charges

 

 

1,179

 

 

 

4,386

 

Changes in operating assets and liabilities

 

 

(14,846

)

 

 

(25,689

)

Net cash provided by operating activities

 

 

135,751

 

 

 

70,292

 

Cash flows from investing activities:

 

 

 

 

Net maturities (purchases) of investments

 

 

7,951

 

 

 

143,911

 

Purchases of property and equipment

 

 

(6,692

)

 

 

(5,673

)

Capitalized software development costs

 

 

(22,339

)

 

 

(24,970

)

Net cash provided by (used in) investing activities

 

 

(21,080

)

 

 

113,268

 

Cash flows from financing activities:

 

 

 

 

Payment for maturity of 2023 convertible notes

 

 

—

 

 

 

(10,908

)

Payments for repurchases of convertible notes

 

 

—

 

 

 

(149,640

)

Proceeds from capped calls related to convertible notes

 

 

—

 

 

 

139

 

Debt issuance costs related to Revolving Credit Agreement

 

 

(942

)

 

 

—

 

Proceeds from exercise of stock options and ESPP

 

 

14,259

 

 

 

8,397

 

Net cash provided by (used in) financing activities

 

 

13,317

 

 

 

(152,012

)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

 

(827

)

 

 

182

 

Net increase in cash, cash equivalents, and restricted cash

 

 

127,161

 

 

 

31,730

 

Cash, cash equivalents, and restricted cash, beginning of period

 

 

233,632

 

 

 

201,902

 

Cash, cash equivalents, and restricted cash, end of period

 

$

360,793

 

 

$

233,632

 

Q2 Holdings, Inc.

Reconciliation of GAAP to Non-GAAP Measures

(in thousands, except per share data)

(Unaudited)

 

 

 

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

 

2024

 

2023

 

2024

 

2023

GAAP revenue

 

$

183,045

 

 

$

162,118

 

 

$

696,464

 

 

$

624,624

 

Deferred revenue reduction from purchase accounting

 

 

—

 

 

 

69

 

 

 

—

 

 

 

344

 

Non-GAAP revenue

 

$

183,045

 

 

$

162,187

 

 

$

696,464

 

 

$

624,968

 

 

 

 

 

 

 

 

 

 

GAAP gross profit

 

$

96,343

 

 

$

81,393

 

 

$

354,481

 

 

$

302,651

 

Stock-based compensation

 

 

2,246

 

 

 

3,023

 

 

 

11,821

 

 

 

13,346

 

Amortization of acquired technology

 

 

5,504

 

 

 

5,754

 

 

 

22,016

 

 

 

23,402

 

Lease and other restructuring charges

 

 

903

 

 

 

556

 

 

 

1,889

 

 

 

1,117

 

Deferred revenue reduction from purchase accounting

 

 

—

 

 

 

69

 

 

 

—

 

 

 

344

 

Non-GAAP gross profit

 

$

104,996

 

 

$

90,795

 

 

$

390,207

 

 

$

340,860

 

 

 

 

 

 

 

 

 

 

Non-GAAP gross margin:

 

 

 

 

 

 

 

 

Non-GAAP gross profit

 

$

104,996

 

 

$

90,795

 

 

$

390,207

 

 

$

340,860

 

Non-GAAP revenue

 

 

183,045

 

 

 

162,187

 

 

 

696,464

 

 

 

624,968

 

Non-GAAP gross margin

 

 

57.4

%

 

 

56.0

%

 

 

56.0

%

 

 

54.5

%

 

 

 

 

 

 

 

 

 

GAAP sales and marketing expense

 

$

27,215

 

 

$

26,554

 

 

$

105,951

 

 

$

109,522

 

Stock-based compensation

 

 

(3,996

)

 

 

(3,638

)

 

 

(16,779

)

 

 

(16,771

)

Non-GAAP sales and marketing expense

 

$

23,219

 

 

$

22,916

 

 

$

89,172

 

 

$

92,751

 

 

 

 

 

 

 

 

 

 

GAAP research and development expense

 

$

35,722

 

 

$

34,271

 

 

$

143,244

 

 

$

137,334

 

Stock-based compensation

 

 

(3,253

)

 

 

(3,466

)

 

 

(16,456

)

 

 

(15,157

)

Non-GAAP research and development expense

 

$

32,469

 

 

$

30,805

 

 

$

126,788

 

 

$

122,177

 

 

 

 

 

 

 

 

 

 

GAAP general and administrative expense

 

$

29,988

 

 

$

30,283

 

 

$

122,942

 

 

$

110,186

 

Stock-based compensation

 

 

(10,264

)

 

 

(9,242

)

 

 

(44,159

)

 

 

(33,914

)

Non-GAAP general and administrative expense

 

$

19,724

 

 

$

21,041

 

 

$

78,783

 

 

$

76,272

 

 

 

 

 

 

 

 

 

 

GAAP operating loss

 

$

(1,575

)

 

$

(18,017

)

 

$

(42,263

)

 

$

(86,057

)

Deferred revenue reduction from purchase accounting

 

 

—

 

 

 

69

 

 

 

—

 

 

 

344

 

Stock-based compensation

 

 

19,759

 

 

 

19,369

 

 

 

89,215

 

 

 

79,188

 

Transaction-related costs

 

 

—

 

 

 

—

 

 

 

—

 

 

 

24

 

Amortization of acquired technology

 

 

5,504

 

 

 

5,754

 

 

 

22,016

 

 

 

23,402

 

Amortization of acquired intangibles

 

 

2,587

 

 

 

4,903

 

 

 

16,979

 

 

 

20,667

 

Lease and other restructuring charges

 

 

3,309

 

 

 

3,955

 

 

 

9,517

 

 

 

12,092

 

Non-GAAP operating income

 

$

29,584

 

 

$

16,033

 

 

$

95,464

 

 

$

49,660

 

 

 

 

 

 

 

 

 

 

Reconciliation of GAAP net income (loss) to adjusted EBITDA:

 

 

 

 

 

 

 

 

GAAP net income (loss)

 

$

164

 

 

$

(18,079

)

 

$

(38,536

)

 

$

(65,384

)

Deferred revenue reduction from purchase accounting

 

 

—

 

 

 

69

 

 

 

—

 

 

 

344

 

Stock-based compensation

 

 

19,759

 

 

 

19,369

 

 

 

89,215

 

 

 

79,188

 

Transaction-related costs

 

 

—

 

 

 

—

 

 

 

—

 

 

 

24

 

Depreciation and amortization

 

 

15,990

 

 

 

17,943

 

 

 

68,809

 

 

 

71,707

 

Lease and other restructuring charges

 

 

3,309

 

 

 

3,955

 

 

 

9,517

 

 

 

12,092

 

Provision for income taxes

 

 

1,772

 

 

 

2,059

 

 

 

7,676

 

 

 

3,562

 

Gain (loss) on extinguishment of debt

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(19,869

)

Interest and other (income) expense, net

 

 

(3,370

)

 

 

(2,131

)

 

 

(11,343

)

 

 

(4,724

)

Adjusted EBITDA

 

$

37,624

 

 

$

23,185

 

 

$

125,338

 

 

$

76,940

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA margin

 

 

20.6

%

 

 

14.3

%

 

 

18.0

%

 

 

12.3

%

Q2 Holdings, Inc.

Reconciliation of Free Cash Flow

(in thousands)

(unaudited)

 

 

 

Twelve Months Ended December 31,

 

 

2024

 

2023

 

 

 

Net cash provided by operating activities

 

$

135,751

 

 

$

70,292

 

Purchases of property and equipment

 

 

(6,692

)

 

 

(5,673

)

Capitalized software development costs

 

 

(22,339

)

 

 

(24,970

)

Free cash flow

 

$

106,720

 

 

$

39,649

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20250212572997/en/

MEDIA CONTACT: Jean Kondo Q2 Holdings, Inc. M: +1-510-823-4728 jean.kondo@Q2.com

INVESTOR CONTACT: Josh Yankovich Q2 Holdings, Inc. O: +1-512-682-4463 josh.yankovich@Q2.com