Q2 Holdings (QTWO) AI Stock Analysis

• Market Cap: $5.07B
• Dividend Yield: N/A
• Average Volume (3M): 528.17K
• Price to Earnings (P/E): 1324.6
• Beta (1Y): 1.65
• Revenue Growth: 13.34%
• EPS Growth: N/A
• Country: US
• Employees: 2,476
• Sector: Technology
• Sector Strength: 98
• Industry: Software - Application
• EPS (TTM): 0.50
• Shares Outstanding: 62,442,410
• 10 Day Avg. Volume: 472,016
• 30 Day Avg. Volume: 528,166
• PEG Ratio: 7.08
• Price to Book (P/B): 8.66
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 28.17
• Enterprise Value/Market Cap: 1.02
• Enterprise Value/Revenue: 1.83
• Enterprise Value/Gross Profit: 13.26
• Enterprise Value/Ebitda: 30.82
• 1Y Price Target: $103.86
• Price Target Upside: 27.91% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 15

• Rating: 65 Neutral
• Price Target: $87.00 ▲(7.14%Upside)

Q2 Holdings' overall score is driven largely by strong financial performance and positive earnings call sentiment. However, this is offset by technical analysis indicating bearish trends and a high P/E ratio suggesting overvaluation. The company's positive trajectory in revenue and subscription growth is a promising sign, but high leverage and challenges in achieving consistent profitability present ongoing risks.

Positive Factors

Financial Performance

June-quarter revenue was at the high end of guidance, while adjusted EBITDA exceeded the high end by 4%, and management raised 2025 guidance.

Market Position

QTWO signed 6 Tier-1/Enterprise customers and grew backlog by 21%, reinforcing the view that QTWO remains a market leader and continues to gain share in the digital banking software space.

Revenue Growth

High-margin subscription revenue now represents 81% of the business and grew 16% in the June quarter.

Negative Factors

Market Competition

QTWO has an addressable opportunity to displace legacy competition, with an estimated 60% of the market as an opportunity.

Valuation Concerns

Trimming the price target to $110 to reflect lower valuations for financial SaaS stocks.

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 subscription fees and usage-based fees for its digital banking solutions. The company operates using a Software-as-a-Service (SaaS) model, where financial institutions pay recurring fees to access Q2’s platform and services. Additionally, Q2 earns money from professional services fees, which include implementation, training, and consulting services to help customers integrate and optimize the use of their digital platforms. Key partnerships with technology providers and financial institutions further enhance Q2’s product offerings and contribute to its revenue growth by expanding its market reach and customer base.

Q2 Holdings Financial Statement Overview

Summary

Q2 Holdings displays strong revenue growth and improving cash flow metrics, but faces ongoing profitability challenges and a reliance on external financing.

Income Statement

Q2 Holdings has shown consistent revenue growth over the years with a TTM (Trailing-Twelve-Months) revenue of $720.7M, up from $402.8M in 2020, indicating a strong expansion trajectory. However, the company faces challenges in profitability, with negative net income and EBIT margins in the TTM period, although EBITDA margins have improved. The gross profit margin remains healthy at 51.1%, suggesting effective cost management at the gross level.

Balance Sheet

The balance sheet reflects a moderate debt-to-equity ratio, with total debt at $539.0M and stockholders' equity at $545.5M in the TTM period. The equity ratio is 40.4%, indicating a balanced capital structure. The return on equity remains negative due to ongoing net losses, which is a concern for investors looking for profitability.

Cash Flow

Q2 Holdings has demonstrated significant improvement in operating cash flow, with TTM operating cash flow of $165.8M, indicating enhanced operational efficiency. Free cash flow to net income ratio is robust, supported by positive free cash flow growth. However, the reliance on external financing in the past could pose risks if cash flows do not sustain their growth trajectory.

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	53.05M	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	414.27M	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: 81.20
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Positive
• STOCH: Positive

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 81.2 is below the 20-day moving average (MA) of 89.71, below the 50-day MA of 89.84, and below the 200-day MA of 89.81, indicating a bearish trend. The MACD of -1.81 indicates Positive momentum. The RSI at 24.50 is Positive, neither overbought nor oversold. The STOCH value of 12.56 is Positive, 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
ALRM	77 Outperform	$2.72B	23.10	17.27%	―	6.72%	43.44%
BILL	74 Outperform	$4.41B	482.28	0.97%	―	14.52%	―
QTWO	65 Neutral	$5.07B	1,324.63	0.92%	―	13.34%	―
NCNO	63 Neutral	$3.45B	―	-2.75%	―	13.39%	16.12%
Sector *	50 Neutral	AU$1.67B	2.51	-31.66%	3.50%	16.55%	-7.79%
INTA	50 Neutral	$3.24B	―	-4.16%	―	17.70%	61.98%

Q2 Holdings Corporate Events

Q2 Holdings Concludes Annual Stockholders’ Meeting Successfully

On June 3, 2025, Q2 Holdings held its annual stockholders’ meeting where 94.35% of eligible shares were represented. During the meeting, all director nominees were elected, Ernst & Young LLP was ratified as the independent registered public accounting firm for 2025, and the compensation for the company’s named executive officers was approved on an advisory basis.

The most recent analyst rating on (QTWO) stock is a Hold with a $90.00 price target. To see the full list of analyst forecasts on Q2 Holdings stock, see the QTWO Stock Forecast page.