Q2 Holdings (QTWO)
NYSE:QTWO
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Q2 Holdings
(NYSE:QTWO)
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Rating:72Outperform
Price Target:
$50.00
▼(-3.49% Downside)
Action:Upgraded
Date:04/30/26
The score is driven primarily by improving fundamentals (profitability inflection and strong free cash flow) and a constructive earnings call with raised guidance and strong subscription/ARR/backlog trends. Offsetting these are a demanding valuation (high P/E, no dividend yield provided) and mixed technicals, with the stock still below longer-term moving averages.
Positive Factors
Recurring revenue / ARR growth
A growing subscription ARR base increases revenue visibility and predictability, improving customer lifetime value and reducing churn sensitivity. Durable ARR expansion supports steady top-line underpinned by recurring fees, enabling multi-year planning, upsell paths and higher-margin revenue mix.
Negative Factors
Absolute debt level
Although leverage has declined, a material absolute debt stock limits financial flexibility if revenue weakens. Interest and principal obligations could constrain capital allocation, increase refinancing risk in tighter credit markets, and reduce headroom for opportunistic investments.
Read all positive and negative factors
Positive Factors
Negative Factors
Recurring revenue / ARR growth
A growing subscription ARR base increases revenue visibility and predictability, improving customer lifetime value and reducing churn sensitivity. Durable ARR expansion supports steady top-line underpinned by recurring fees, enabling multi-year planning, upsell paths and higher-margin revenue mix.
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
$2.90B
Dividend YieldN/A
Average Volume (3M)939.00K
Price to Earnings (P/E)27.7
Beta (1Y)1.32
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. Volume823,095
30 Day Avg. Volume939,000
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 Cap1.00
Enterprise Value/Revenue3.52
Enterprise Value/Gross Profit6.33
Enterprise Value/Ebitda23.02
Forecast
1Y Price Target
$72.08Price Target Upside39.13% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering14
EPS Forecast (FY)2.79
Revenue Forecast (FY)$879.74M
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 fina...
How the Company Makes Money
Q2 primarily makes money by selling access to its software platform and related services to financial institutions under recurring, contract-based arrangements. A significant portion of revenue is generated from subscriptions and ongoing platform ...
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 | 125.48M | 115.06M | 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 | 346.12M | 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
Negative
51.81
Price Trends
48.59
Negative
53.92
Negative
62.97
Negative
Market Momentum
-1.01
Positive
42.57
Neutral
38.21
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 51.81 is above the 20-day moving average (MA) of 48.60, above the 50-day MA of 48.59, and below the 200-day MA of 62.97, indicating a bearish trend. The MACD of -1.01 indicates Positive momentum. The RSI at 42.57 is Neutral, neither overbought nor oversold. The STOCH value of 38.21 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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 |
|---|---|---|---|---|---|---|---|
74 Outperform | $4.50B | -66.83 | -3.04% | ― | 33.60% | 63.13% | |
72 Outperform | $2.90B | 27.67 | 11.91% | ― | 14.00% | ― | |
68 Neutral | $3.63B | 75.33 | <0.01% | ― | 12.47% | -98.50% | |
68 Neutral | $1.72B | 72.83 | 0.49% | ― | 10.01% | ― | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
61 Neutral | $7.27B | -628.29 | -2.40% | ― | 73.49% | -109.13% | |
58 Neutral | $2.81B | 44.64 | -46.74% | ― | 20.32% | ― |
* Technology Sector Average
QTWO
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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.