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Q2 Holdings
(NYSE:QTWO)
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Rating:77Outperform
Price Target:
$69.00
▲(26.35% Upside)
Action:Reiterated
Date:07/30/26
QTWO scores well primarily on improving financial performance (return to profitability and strong free cash flow with improved balance sheet) and a constructive earnings update (Q2 beat and raised guidance supported by subscription/ARR momentum). The technical setup is positive with price above major moving averages, but valuation is a notable constraint given the high P/E and no dividend yield.
Positive Factors
Strong Free Cash Flow
Sustained free cash flow (~$203M TTM, Q2 FCF $51M) provides durable internal funding for product investment, buybacks and debt reduction. Reliable cash generation reduces refinancing risk, supports capital returns and funds AI/R&D without immediate reliance on external capital.
Negative Factors
AI Cost and Monetization Uncertainty
AI initiatives introduce uncertain infrastructure and token expenses and unclear time-to-revenue. If model and routing decisions raise costs, AI offerings could dilute gross margins or require sustained investment before positive economics, pressuring near- to mid-term profitability.
Read all positive and negative factors
Positive Factors
Negative Factors
Strong Free Cash Flow
Sustained free cash flow (~$203M TTM, Q2 FCF $51M) provides durable internal funding for product investment, buybacks and debt reduction. Reliable cash generation reduces refinancing risk, supports capital returns and funds AI/R&D without immediate reliance on external capital.
Read all positive factors
Q2 Holdings Key Performance Indicators (KPIs)
Any
Remaining Performance Obligations
Represents contracted revenue that has not yet been recognized as GAAP revenue, including future subscription commitments and deferred fees, and therefore indicates near-term revenue visibility. A larger RPO signals more booked business ahead, while a decline or heavy weighting toward one‑time professional services can warn that future recognized revenue may be less predictable.
Represents contracted revenue that has not yet been recognized as GAAP revenue, including future subscription commitments and deferred fees, and therefore indicates near-term revenue visibility. A larger RPO signals more booked business ahead, while a decline or heavy weighting toward one‑time professional services can warn that future recognized revenue may be less predictable.
Data provided by:
The Fly
The FlyQ2 Holdings (QTWO) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$3.92B
Dividend YieldN/A
Average Volume (3M)782.40K
Price to Earnings (P/E)43.3
Beta (1Y)1.28
Revenue Growth13.90%
EPS Growth1906.95%
CountryUS
Employees2,549
SectorTechnology
Sector Strength88
IndustrySoftware - Application
Share Statistics
EPS (TTM)1.48
Shares Outstanding62,354,694
10 Day Avg. Volume827,248
30 Day Avg. Volume782,400
Financial Highlights & Ratios
PEG Ratio-0.37
Price to Book (P/B)6.78
Price to Sales (P/S)5.64
P/FCF Ratio23.04
Enterprise Value/Market Cap<0.01
Enterprise Value/Revenue<0.01
Enterprise Value/Gross Profit<0.01
Enterprise Value/Ebitda<0.01
Forecast
1Y Price Target
$73.67Price Target Upside34.90% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering10
EPS Forecast (FY)2.91
Revenue Forecast (FY)$884.82M
Q2 Holdings Business Overview & Revenue Model
Company Description
Q2 Holdings, Inc. provides a comprehensive array of cloud-based digital banking platforms, primarily serving regional and community financial institutions (RCFIs) across the United States. Its extensive product lineup covers various facets of digi...
How the Company Makes Money
Q2 primarily makes money by selling subscription access to its cloud-based software platforms and charging associated recurring fees for use of its digital banking and related solutions. Revenue is typically generated from (1) recurring platform/s...
Q2 Holdings Earnings Call Summary
Earnings Call Date:Jul 29, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Nov 11, 2026
Earnings Call Sentiment Positive
The call highlighted strong execution: double-digit year-over-year revenue and ARR growth, record adjusted EBITDA and margin expansion, solid free cash flow and the retirement of convertible debt. Bookings momentum (including 8 Tier 1 wins), record customer engagement at CONNECT 26, and early AI product traction (Q2 Assistant, Q2 Code, account takeover) are notable positives. Headwinds include a large quarter-to-quarter cash decline driven by debt repayment and buybacks (though cash generation remained healthy), continued pressure in discretionary professional services/non-subscription revenue, higher R&D-driven operating expenses, and uncertainty around AI infrastructure/token costs and time-to-revenue. Overall, the positives (financial records, ARR/subscription strength, product momentum, and upgraded guidance) outweigh the risks, though execution on AI commercialization and continued control of costs will be important going forward.Positive Updates
Revenue Growth
Total revenue of $219.8 million in Q2 2026, up 13% year-over-year and up 2% sequentially.
Negative Updates
Quarterly Cash Decline (Timing Effect)
Cash, cash equivalents and investments declined from $379 million at the end of the prior quarter to $106 million, a drop of roughly $273 million driven primarily by the $304 million convertible note repayment and $23 million in share repurchases (offset in part by operating cash generation).
Read all updates
Q2-2026 Updates
Positive
Negative
Revenue Growth
Total revenue of $219.8 million in Q2 2026, up 13% year-over-year and up 2% sequentially.
Read all positive updates
Company Guidance
Management raised its outlook, guiding Q3 revenue of $218.5–$222.5 million and full‑year 2026 revenue of $881–$886 million (≈11% Y/Y), and increasing the FY26 subscription revenue growth target to ~14.5% (from 14%). They forecast Q3 adjusted EBITDA of $58.5–$61.5 million and full‑year adjusted EBITDA of $244–$248 million (about 28% of revenue). The update follows a Q2 beat (Q2 revenue $219.8M, +13% Y/Y; adjusted EBITDA $62.8M, 28.6% margin; non‑GAAP gross margin 62.3%; free cash flow $51M) and with subscription revenue representing ~83% of Q2 revenue, management cited that performance as the basis for raising full‑year guidance.Q2 Holdings Financial Statement Overview
Summary
Income Statement
78
Positive
Balance Sheet
73
Positive
Cash Flow
86
Very Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 846.20M | 794.81M | 696.46M | 624.62M | 565.67M | 498.72M |
| Gross Profit | 482.24M | 429.59M | 354.48M | 302.65M | 256.35M | 225.03M |
| EBITDA | 145.03M | 129.56M | 42.89M | 29.02M | -37.74M | -23.20M |
| Net Income | 91.99M | 52.01M | -38.54M | -65.38M | -108.98M | -112.75M |
Balance Sheet | ||||||
| Total Assets | 968.42M | 1.28B | 1.29B | 1.20B | 1.35B | 1.39B |
| Cash, Cash Equivalents and Short-Term Investments | 106.42M | 367.63M | 446.63M | 324.01M | 433.35M | 427.73M |
| Total Debt | 40.93M | 346.82M | 542.99M | 548.92M | 733.34M | 621.97M |
| Total Liabilities | 324.96M | 614.47M | 777.00M | 752.95M | 930.70M | 814.75M |
| Stockholders Equity | 643.45M | 661.81M | 517.80M | 448.48M | 419.02M | 570.30M |
Cash Flow | ||||||
| Free Cash Flow | 202.51M | 194.65M | 129.06M | 39.65M | 6.50M | 5.47M |
| Operating Cash Flow | 226.26M | 201.46M | 135.75M | 70.29M | 36.56M | 31.09M |
| Investing Cash Flow | 74.44M | -4.03M | -21.08M | 113.27M | -165.56M | -65.13M |
| Financing Cash Flow | -613.65M | -188.97M | 13.32M | -152.01M | 5.88M | -51.16M |
Q2 Holdings Technical Analysis
Positive
54.61
Price Trends
53.98
Positive
51.13
Positive
57.12
Positive
Market Momentum
2.88
Positive
62.81
Neutral
45.85
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For QTWO, the sentiment is Positive. The current price of 54.61 is below the 20-day moving average (MA) of 61.66, above the 50-day MA of 53.98, and below the 200-day MA of 57.12, indicating a bullish trend. The MACD of 2.88 indicates Positive momentum. The RSI at 62.81 is Neutral, neither overbought nor oversold. The STOCH value of 45.85 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for QTWO.
Q2 Holdings Risk Analysis
Q2 Holdings disclosed 1 risk factors in its most recent earnings report. Q2 Holdings reported the most risks in the "Legal & Regulatory" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Q2 Holdings Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $3.92B | 43.30 | 14.49% | ― | 13.90% | 1906.95% | |
77 Outperform | $7.09B | -3,271.59 | -0.26% | ― | 35.91% | 94.31% | |
71 Outperform | $2.21B | 159.15 | 1.29% | ― | 9.58% | ― | |
64 Neutral | $3.81B | 91.22 | -123.75% | ― | 19.67% | ― | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
61 Neutral | $4.90B | -382.29 | -0.30% | ― | 12.47% | -98.50% |
* Technology Sector Average
QTWO
Q2 Holdings
64.08
-11.56
-15.28%
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57.41%
Q2 Holdings Corporate Events
Business Operations and StrategyStock BuybackFinancial Disclosures
Q2 Holdings Delivers Record Q2 Results, Raises Guidance
Positive
Jul 29, 2026
On July 29, 2026, Q2 Holdings reported strong second-quarter 2026 results marked by record revenue of $219.8 million, a significant improvement in GAAP and non-GAAP margins, and GAAP net income more than doubling from the prior-year quarter. The c...
Executive/Board ChangesShareholder Meetings
Q2 Holdings Shareholders Back Board, Auditor and Pay
Positive
Jun 12, 2026
Q2 Holdings reported the results of its 2026 annual meeting of stockholders, held on June 10, 2026, where 92.5% of eligible shares were represented in person or by proxy. Shareholders elected all nominated directors to one-year terms, reflecting b...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.