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Q2 Holdings (QTWO)
NYSE:QTWO
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Q2 Holdings
(NYSE:QTWO)
Rating:62Neutral
Price Target:
$95.00
▲(10.88%Upside)
Positive Factors
Customer Renewals
Q2 renewed deals with three of its 10 largest customers in the March quarter, as it signed five tier-1 deals.
Subscription Revenue Growth
Management raised subscription growth guidance to 15.5% growth in 2025 and affirmed 13% growth in 2026.
Negative Factors
Macro-Driven Uncertainty
The central near-term debate centers around whether or not macro-driven deal slippage will cause management to take a more conservative stance on the full-year.
Revenue and Margin Expectations
The company metered FY26 expectations with lower implied revenue and margin expectations.
Q2 Holdings (QTWO) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$5.34B
Dividend YieldN/A
Average Volume (3M)539.59K
Price to Earnings (P/E)―
Beta (1Y)1.69
Revenue Growth13.12%
EPS Growth75.24%
CountryUS
Employees2,476
SectorTechnology
Sector Strength79
IndustrySoftware - Application
Share Statistics
EPS (TTM)0.54
Shares Outstanding62,303,844
10 Day Avg. Volume388,551
30 Day Avg. Volume539,591
Financial Highlights & Ratios
PEG Ratio2.83
Price to Book (P/B)3.67
Price to Sales (P/S)0.00
P/FCF Ratio236.72
Enterprise Value/Market Cap0.39
Enterprise Value/Revenue0.75
Enterprise Value/Gross Profit5.62
Enterprise Value/Ebitda15.90
Forecast
1Y Price Target
$99.75Price Target Upside16.42% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering13
Q2 Holdings Business Overview & Revenue Model
Company DescriptionQ2 Holdings, Inc. (QTWO) is a leading provider of digital banking solutions that cater to financial institutions. The company offers a comprehensive suite of cloud-based digital banking services designed to enhance the customer experience for banks and credit unions of all sizes. Q2’s platform facilitates seamless online banking, mobile banking, and digital lending solutions, enabling financial institutions to improve their operational efficiency and customer engagement.
How the Company Makes MoneyQ2 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 Earnings Call Summary
Earnings Call Date:May 07, 2025
(Q3-2024)
| % Change Since: 6.69%|
Next Earnings Date:Jul 30, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong financial growth, particularly in subscription revenue and profitability, alongside successful enterprise deals and robust performance from the Innovation Studio. However, there were notable declines in services revenue, which are expected to persist. Overall, the highlights significantly outweigh the lowlights, indicating a positive outlook.Q3-2024 Updates
Positive Updates
Record Revenue Growth
Non-GAAP revenue reached $175 million, marking a 13% year-over-year increase.
Strong Subscription Revenue
Subscription revenue increased by 18% year-over-year, constituting over 80% of total revenue.
Significant Profitability Improvement
Adjusted EBITDA rose to $32.6 million, representing 19% of revenue, with free cash flow at $35.1 million.
Successful Enterprise Deals
Secured 6 enterprise and Tier 1 deals, including three with top 50 U.S. banks.
Innovation Studio Momentum
Bookings from Innovation Studio more than doubled compared to 2023, highlighting its growing influence.
Negative Updates
Decline in Services Revenue
Services and other revenues declined by 11% year-over-year, primarily due to reduced professional service revenues.
Expectation of Continued Services Revenue Headwinds
Anticipated continued headwinds in Services revenue due to strategic focus on higher-margin growth.
Company Guidance
During the QTWO earnings call for Q3 2024, the company provided robust guidance, highlighting several key metrics. The non-GAAP revenue for the quarter reached $175 million, marking a 13% year-over-year increase, with subscription revenue contributing significantly by growing 18% year-over-year and accounting for over 80% of total revenue. QTWO achieved an adjusted EBITDA of $32.6 million, representing 19% of revenue, and free cash flow of $35.1 million. The company surpassed its Rule of 30 target on a total revenue basis. For Q4 2024, QTWO forecasts non-GAAP revenue between $178.1 million and $181.1 million, and adjusted EBITDA ranging from $34.3 million to $36.3 million. The full-year 2024 guidance anticipates non-GAAP revenue between $691.5 million to $694.5 million, with full-year subscription revenue growth projected at approximately 16% year-over-year, exceeding initial expectations. Looking ahead to 2025, QTWO expects full-year subscription revenue growth to be around 15%. These metrics underscored the company's strong business model and execution, with continued confidence in its long-term financial targets.Q2 Holdings Financial Statement Overview
Summary
Q2 Holdings exhibits strong revenue growth and improving cash flow metrics, indicative of future potential. However, ongoing profitability challenges and reliance on external financing pose risks.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.65
Positive
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.60
Neutral
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.70
Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 720.69M | 696.46M | 624.62M | 565.67M | 498.72M | 402.75M | Gross Profit |
| 368.43M | 354.48M | 302.65M | 256.35M | 225.03M | 174.60M | EBIT |
| -24.92M | -42.26M | -86.06M | -103.58M | -75.31M | -86.11M | EBITDA |
| 51.01M | 42.89M | 29.02M | -37.74M | -23.20M | -55.72M | Net Income Common Stockholders |
| -19.94M | -38.54M | -65.38M | -108.98M | -112.75M | -137.62M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 486.05M | 446.63M | 324.01M | 433.35M | 427.73M | 539.05M | Total Assets |
| 1.35B | 1.29B | 1.20B | 1.35B | 1.39B | 1.42B | Total Debt |
| 539.05M | 541.12M | 546.49M | 731.09M | 621.97M | 601.05M | Net Debt |
| 155.14M | 184.43M | 316.83M | 531.49M | 299.13M | 193.35M | Total Liabilities |
| 804.40M | 777.00M | 752.95M | 930.70M | 814.75M | 773.34M | Stockholders Equity |
| 545.46M | 517.80M | 448.48M | 419.02M | 570.30M | 643.36M |
| Cash Flow | Free Cash Flow | ||||
| 156.12M | 129.06M | 39.65M | 6.50M | 5.31M | -27.56M | Operating Cash Flow |
| 165.85M | 135.75M | 70.29M | 36.56M | 30.93M | -2.89M | Investing Cash Flow |
| -64.08M | -21.08M | 113.27M | -165.56M | -65.13M | -124.16M | Financing Cash Flow |
| 5.46M | 13.32M | -152.01M | 5.88M | -51.16M | 434.68M |
Q2 Holdings Technical Analysis
Neutral
85.68
Price Trends
83.05
Positive
84.59
Positive
87.49
Negative
Market Momentum
1.10
Positive
44.34
Neutral
35.90
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For QTWO, the sentiment is Neutral. The current price of 85.68 is below the 20-day moving average (MA) of 88.75, above the 50-day MA of 83.05, and below the 200-day MA of 87.49, indicating a neutral trend. The MACD of 1.10 indicates Positive momentum. The RSI at 44.34 is Neutral, neither overbought nor oversold. The STOCH value of 35.90 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for QTWO.
Q2 Holdings Risk Analysis
Q2 Holdings disclosed 55 risk factors in its most recent earnings report. Q2 Holdings reported the most risks in the "Finance & Corporate" 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
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $2.82B | 23.95 | 17.27% | ― | 6.72% | 43.44% | |
68 Neutral | $4.27B | 482.28 | 0.97% | ― | 14.52% | ― | |
66 Neutral | $4.33B | ― | -4.16% | ― | 17.70% | 61.98% | |
64 Neutral | $3.13B | ― | -2.75% | ― | 13.39% | 16.12% | |
62 Neutral | $11.80B | 10.10 | -7.47% | 2.99% | 7.37% | -8.16% | |
62 Neutral | $5.34B | ― | -3.95% | ― | 13.12% | 75.24% |
* Technology Sector Average
Performance Comparison
QTWO
Q2 Holdings
85.68
27.72
47.83%
ALRM
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56.64
-5.11
-8.28%
BILL
Bill.com Holdings
41.40
-7.23
-14.87%
NCNO
nCino
26.99
-4.35
-13.88%
INTA
Intapp
53.47
19.75
58.57%
Q2 Holdings Corporate Events
Shareholder Meetings
Q2 Holdings Concludes Annual Stockholders’ Meeting Successfully
Positive
Jun 5, 2025
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.
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.