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Q2 Holdings
(NYSE:QTWO)
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Rating:72Outperform
Price Target:
$53.00
▲(2.30% Upside)
Action:Reiterated
Date:06/27/26
QTWO scores well on improving fundamentals and cash generation, reinforced by a constructive earnings update with raised 2026 guidance and sustained margin uplift from the cloud migration. Offsetting this are mixed technicals (negative MACD and weaker longer-term trend versus the 200-day) and a relatively high valuation (P/E ~40) that leaves less room for execution slips, particularly around deal timing and non-subscription revenue softness.
Positive Factors
Strong free cash flow
Sustained high free cash flow (~$196M TTM) with FCF roughly 91% of net income indicates durable cash conversion. This strengthens financial flexibility for product investment, debt paydown, or buybacks and supports multi-quarter stability even if revenue growth lapses.
Negative Factors
Implementation / timing risk
Large enterprise wins can take many quarters to convert to billed revenue. This creates durable timing risk: strong bookings may not translate into near-term revenue, making growth lumpy and increasing reliance on backlog conversion execution across multiple quarters.
Read all positive and negative factors
Positive Factors
Negative Factors
Strong free cash flow
Sustained high free cash flow (~$196M TTM) with FCF roughly 91% of net income indicates durable cash conversion. This strengthens financial flexibility for product investment, debt paydown, or buybacks and supports multi-quarter stability even if revenue growth lapses.
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.
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The Fly
The FlyQ2 Holdings (QTWO) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$3.29B
Dividend YieldN/A
Average Volume (3M)748.85K
Price to Earnings (P/E)44.2
Beta (1Y)1.29
Revenue Growth14.00%
EPS GrowthN/A
CountryUS
Employees2,476
SectorTechnology
Sector Strength88
IndustrySoftware - Application
Share Statistics
EPS (TTM)1.19
Shares Outstanding62,600,420
10 Day Avg. Volume662,990
30 Day Avg. Volume748,846
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 Cap0.83
Enterprise Value/Revenue3.34
Enterprise Value/Gross Profit6.00
Enterprise Value/Ebitda20.77
Forecast
1Y Price Target
$70.42Price Target Upside35.91% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering14
EPS Forecast (FY)2.79
Revenue Forecast (FY)$879.85M
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:Apr 29, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Aug 05, 2026
Earnings Call Sentiment Positive
The call presented multiple material operating and financial positives: double-digit revenue and ARR growth, strong subscription mix (83% of revenue), record bookings including the largest fraud deal in company history, a completed cloud migration that materially increased gross margin, and sizable adjusted EBITDA expansion (47% YoY). Management also announced new AI products (Q2 Code and AI fraud capabilities) and raised full-year revenue and EBITDA guidance. Offsetting items are mostly timing and mix challenges: non-subscription/service revenue softness, uncertainty over when large deals will convert to revenue (some implementations extend beyond 2026), early-stage AI pricing/cost risk, and a lower cash balance following share repurchases. Overall, the positives—particularly revenue/margin expansion, strong bookings, and improved profitability—outweigh the near-term challenges and timing risks.Positive Updates
Revenue Growth and Mix Shift
Total revenue of $216.5M, up 14% year-over-year and 4% sequentially; subscription revenue grew 17% YoY and 5% sequentially and represented 83% of total revenue, indicating a continued shift toward higher-margin recurring revenue.
Negative Updates
Non-Subscription Revenue Pressures
Total non-subscription revenue grew only 3% YoY; while services and other revenue rose 12% YoY (helped by core conversions), discretionary professional services remain under pressure and management still expects negative mid-single-digit non-subscription revenue growth for the full year.
Read all updates
Q1-2026 Updates
Positive
Negative
Revenue Growth and Mix Shift
Total revenue of $216.5M, up 14% year-over-year and 4% sequentially; subscription revenue grew 17% YoY and 5% sequentially and represented 83% of total revenue, indicating a continued shift toward higher-margin recurring revenue.
Read all positive updates
Company Guidance
Q2 Holdings guided Q2 revenue of $214M–$218M and Q2 adjusted EBITDA of $57.5M–$60.5M; for full‑year 2026 it raised guidance to revenue of $875M–$882M (≈10%–11% YoY) and adjusted EBITDA of $237M–$242M (≈27% of revenue), while expecting subscription revenue growth of at least 14% for the year. Management noted Q1 results of revenue $216.5M (14% YoY), adjusted EBITDA $60M (27.7% margin), free cash flow ~$44.2M, operating cash flow $56M, cash & investments $379M, total ARR $945M (+12% YoY), subscription ARR $802M (+14% YoY), ending backlog $2.7B (+19% YoY), and gross margin of 62.1% after completing the cloud migration (management expects gross margins in the low‑60s for the remainder of 2026); the company also repurchased $97M in the quarter (total $102M to date) against a $150M authorization.Q2 Holdings Financial Statement Overview
Summary
Income Statement
72
Positive
Balance Sheet
66
Positive
Cash Flow
81
Very Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 821.58M | 794.81M | 696.46M | 624.62M | 565.67M | 498.72M |
| Gross Profit | 456.61M | 429.59M | 354.48M | 302.65M | 256.35M | 225.03M |
| EBITDA | 132.03M | 129.56M | 42.89M | 29.02M | -37.74M | -23.20M |
| Net Income | 73.89M | 52.01M | -38.54M | -65.38M | -108.98M | -112.75M |
Balance Sheet | ||||||
| Total Assets | 1.25B | 1.28B | 1.29B | 1.20B | 1.35B | 1.39B |
| Cash, Cash Equivalents and Short-Term Investments | 342.33M | 367.63M | 446.63M | 324.01M | 433.35M | 427.73M |
| Total Debt | 343.90M | 346.82M | 542.99M | 548.92M | 733.34M | 621.97M |
| Total Liabilities | 634.67M | 614.47M | 777.00M | 752.95M | 930.70M | 814.75M |
| Stockholders Equity | 611.68M | 661.81M | 517.80M | 448.48M | 419.02M | 570.30M |
Cash Flow | ||||||
| Free Cash Flow | 195.81M | 194.65M | 129.06M | 39.65M | 6.50M | 5.47M |
| Operating Cash Flow | 214.25M | 201.46M | 135.75M | 70.29M | 36.56M | 31.09M |
| Investing Cash Flow | 31.85M | -4.03M | -21.08M | 113.27M | -165.56M | -65.13M |
| Financing Cash Flow | -286.67M | -188.97M | 13.32M | -152.01M | 5.88M | -51.16M |
Q2 Holdings Technical Analysis
Positive
51.81
Price Trends
47.16
Positive
48.47
Positive
58.64
Negative
Market Momentum
0.74
Negative
66.55
Neutral
94.03
Negative
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 51.81 is above the 20-day moving average (MA) of 45.36, above the 50-day MA of 47.16, and below the 200-day MA of 58.64, indicating a neutral trend. The MACD of 0.74 indicates Negative momentum. The RSI at 66.55 is Neutral, neither overbought nor oversold. The STOCH value of 94.03 is Negative, 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 |
|---|---|---|---|---|---|---|---|
73 Outperform | $5.16B | -207.94 | -3.04% | ― | 33.60% | 63.13% | |
72 Outperform | $3.29B | 44.23 | 11.91% | ― | 14.00% | ― | |
67 Neutral | $1.94B | 136.54 | 1.29% | ― | 9.58% | ― | |
62 Neutral | $4.03B | -12,266.67 | <0.01% | ― | 12.47% | -98.50% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
60 Neutral | $2.91B | 216.38 | -46.74% | ― | 20.32% | ― |
* Technology Sector Average
QTWO
Q2 Holdings
52.63
-40.70
-43.61%
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Q2 Holdings Corporate Events
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.