Q2 Holdings (QTWO) AI Stock Analysis

• Market Cap: $3.89B
• Dividend Yield: N/A
• Average Volume (3M): 1.51M
• Price to Earnings (P/E): 1016.1
• Beta (1Y): 1.67
• Revenue Growth: 13.34%
• EPS Growth: N/A
• Country: US
• Employees: 2,476
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): 0.50
• Shares Outstanding: 62,442,410
• 10 Day Avg. Volume: 885,979
• 30 Day Avg. Volume: 1,506,047
• PEG Ratio: 3.66
• Price to Book (P/B): 11.68
• Price to Sales (P/S): 8.69
• P/FCF Ratio: 46.87
• Enterprise Value/Market Cap: 1.68
• Enterprise Value/Revenue: 8.78
• Enterprise Value/Gross Profit: 16.69
• Enterprise Value/Ebitda: 91.10
• 1Y Price Target: $105.00
• Price Target Upside: 68.57% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 11

• Rating: 65 Neutral
• Price Target: $67.00 ▲(7.56% Upside)

Q2 Holdings' overall stock score is driven by strong financial performance and positive earnings call results, indicating growth potential. However, technical indicators suggest a bearish trend, and the high P/E ratio raises concerns about overvaluation. The company's raised guidance and strong cash flow provide a positive outlook, but profitability challenges and high leverage remain risks.

Positive Factors

Revenue Growth

The consistent revenue growth, surpassing guidance, indicates strong market demand and effective sales strategies, supporting long-term business expansion.

Cash Flow Generation

Robust free cash flow generation enhances financial flexibility, enabling strategic investments and debt reduction, crucial for sustainable growth.

Subscription Revenue Growth

The shift towards subscription-based revenue provides a stable, recurring income stream, enhancing predictability and profitability over time.

Negative Factors

High Leverage

High leverage can increase financial risk, limiting flexibility in downturns and potentially impacting long-term financial health and investment capacity.

Negative EBIT Margins

Persistent negative EBIT margins highlight operational inefficiencies, which could hinder profitability and competitiveness if not addressed.

Decline in Professional Services Revenue

A decline in professional services revenue may indicate reduced demand or competitive pressures, impacting overall revenue diversification and growth potential.

Q2 Holdings Business Overview & Revenue Model

Company Description

Q2 Holdings, Inc. provides cloud-based digital banking solutions to regional and community financial institutions (RCFIs) in the United States. The company offers Q2 Consumer Banking, a browser-based digital banking solution and comprehensive financial institution branded digital banking capabilities; Q2 Small Business and Commercial, a mobile and tablet digital banking solution; Q2mobile Remote Deposit Capture, a partnered solution that allows remote check deposit capture. It also provides Q2 Sentinel, a security analytics solution; Q2 Patrol, an event-driven validation product; Q2 SMART, a targeting and messaging platform; and Q2 CardSwap that allows account holders receiving newly issued cards to automatically change their payment information. In addition, the company offers Q2 Gro, a digital account opening, and digital sales and marketing platform; Q2 Biller Direct, a bill payment solution; ClickSWITCH allows financial institutions to direct deposits to the end user. Centrix Dispute Tracking System, an electronic transaction dispute management solution; Centrix Payments I.Q. System, an ACH file monitoring and risk reporting solution; Centrix Exact/Transaction Management System, a fraud prevention tool; and Q2 Caliper Software Development Kit. Futher, it provides Q2 Contextual PFM, which allows end users to add external accounts and view them together with internal accounts on digital banking home page; Q2 Goals that enables end users to establish and save towards specific savings goals; Q2 Cloud Lending, a digital lending and leasing platform; PrecisionLender platform, a cloud-based, data-driven sales enablement, pricing, and portfolio management solution; and Q2 BaaS, a portfolio of open API financial services. The company was formerly known as CBG Holdings, Inc. and changed its name to Q2 Holdings, Inc. in March 2013. Q2 Holdings, Inc. was founded in 2004 and is headquartered in Austin, Texas.

How the Company Makes Money

Q2 Holdings generates revenue primarily through a subscription-based model, where financial institutions pay for access to its digital banking solutions. This includes ongoing fees for the use of its software platforms, as well as additional revenue from value-added services such as transaction processing and data analytics. Key revenue streams include monthly subscription fees, implementation fees for new clients, and transaction fees for various banking services. Additionally, Q2 has established partnerships with other technology providers and financial institutions, enhancing its service offerings and expanding its market reach, which contributes significantly to its earnings.

Q2 Holdings Financial Statement Overview

Summary

Q2 Holdings shows strong revenue and cash flow growth with improvements in net profit margins. However, challenges remain in achieving consistent profitability, especially with negative EBIT margins and a high debt-to-equity ratio.

Income Statement

Q2 Holdings has demonstrated robust revenue growth, with a steady increase from $402.8 million in 2020 to $742.9 million in TTM (Trailing-Twelve-Months) 2025, reflecting a solid growth trajectory. The gross profit margin improved, but EBIT and EBITDA margins show challenges in achieving operational profitability, as EBIT remains negative. Net profit margin turned positive in the TTM period, indicating potential improvements in cost management.

Balance Sheet

The balance sheet shows a strengthening equity position with stockholders' equity increasing over time, supporting an improved equity ratio. However, the debt-to-equity ratio remains high, indicating reliance on debt financing. Return on equity turned positive in the TTM period, showing potential for improved shareholder value.

Cash Flow

There is strong growth in operating cash flow and free cash flow, demonstrating improved cash generation capabilities. The free cash flow to net income ratio is positive, suggesting efficient cash management. The improvement in operating cash flow to net income ratio reflects enhanced operational efficiency.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	742.95M	696.46M	624.62M	565.67M	498.72M	402.75M
Gross Profit	390.96M	354.48M	302.65M	256.35M	225.03M	174.60M
EBITDA	71.61M	42.89M	29.02M	-37.74M	-23.20M	-55.72M
Net Income	4.88M	-38.54M	-65.38M	-108.98M	-112.75M	-137.62M
Balance Sheet
Total Assets	1.39B	1.29B	1.20B	1.35B	1.39B	1.42B
Cash, Cash Equivalents and Short-Term Investments	532.07M	446.63M	324.01M	433.35M	427.73M	539.05M
Total Debt	539.32M	541.12M	546.49M	731.09M	621.97M	601.05M
Total Liabilities	801.08M	777.00M	752.95M	930.70M	814.75M	773.34M
Stockholders Equity	584.34M	517.80M	448.48M	419.02M	570.30M	643.36M
Cash Flow
Free Cash Flow	179.61M	129.06M	39.65M	6.50M	5.31M	-27.56M
Operating Cash Flow	178.46M	135.75M	70.29M	36.56M	30.93M	-2.89M
Investing Cash Flow	-74.75M	-21.08M	113.27M	-165.56M	-65.13M	-124.16M
Financing Cash Flow	6.09M	13.32M	-152.01M	5.88M	-51.16M	434.68M

Q2 Holdings Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 62.29
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For QTWO, the sentiment is Negative. The current price of 62.29 is below the 20-day moving average (MA) of 63.44, below the 50-day MA of 72.54, and below the 200-day MA of 82.38, indicating a bearish trend. The MACD of -3.48 indicates Negative momentum. The RSI at 36.80 is Neutral, neither overbought nor oversold. The STOCH value of 72.37 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for QTWO.

Q2 Holdings Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CWAN	―	$5.56B	12.01	34.61%	―	36.68%	―
BILL	―	$5.20B	―	0.59%	―	13.36%	―
QTWO	―	$3.89B	1,016.15	0.92%	―	13.34%	―
WK	―	$5.00B	―	―	―	19.02%	27.64%
Sector *	―	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
NCNO	―	$3.02B	―	-3.15%	―	13.24%	-12.97%
ZETA	―	$4.47B	―	-8.21%	―	40.60%	79.56%

Q2 Holdings Corporate Events

Q2 Holdings Reports Strong Q2 2025 Financial Performance

Q2 Holdings, Inc. is a prominent provider of digital transformation solutions for financial services, catering to banks, credit unions, fintechs, and alternative finance companies globally, with headquarters in Austin, Texas.

Q2 Holdings Reports Strong Earnings and Growth

Q2 Holdings’ recent earnings call showcased a robust financial performance, with significant growth across key metrics. The company reported impressive revenue and subscription growth, improved profitability, and strong renewal and expansion activities. Despite a slight decline in professional services revenue, the overall sentiment was overwhelmingly positive, highlighting a strong financial outlook.