Yahoo Finance

• Revenue: $189.7 million, up 15% year over year.

• Adjusted EBITDA: $40.7 million, representing 21.5% of revenue.

• Free Cash Flow: $37.8 million.

• Subscription Revenue: Grew 18% year over year, making up 81% of total revenue.

• Total ARR: $847 million, up 11% year over year.

• Gross Margin: 57.9%, up from 54.9% in the prior-year period.

• Operating Expenses: $77 million, 40.7% of revenue.

• Cash and Investments: $486 million at the end of the quarter.

• Guidance for Q2 Revenue: $191 million to $195 million.

• Full-Year Revenue Guidance: Raised to $776 million to $783 million.

• Full-Year Adjusted EBITDA Guidance: Raised to $170 million to $175 million.

• Warning! GuruFocus has detected 1 Warning Sign with Z.

Release Date: May 07, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Q2 Holdings Inc (NYSE:QTWO) delivered first-quarter revenue of $189.7 million, up 15% year over year, exceeding the high end of their guidance.

• The company achieved a record adjusted EBITDA of $40.7 million, representing 21.5% of revenue, and generated free cash flow of $37.8 million.

• Q2 Holdings Inc (NYSE:QTWO) signed significant enterprise and Tier 1 deals, including a Tier 1 relationship pricing deal with a major bank.

• The company experienced strong renewal activity, signing renewals with three of their top 10 largest customers, indicating confidence in their solutions.

• Q2 Innovation Studio continues to drive momentum, enhancing customer relationships and increasing digital engagement, as demonstrated by United Federal Credit Union's success.

Negative Points

• Services and other revenues declined by 7% year over year, primarily due to a reduction in professional service revenues, which are more discretionary.

• The company anticipates ongoing pressure on discretionary services demand, which may impact future revenue streams.

• Despite strong performance, Q2 Holdings Inc (NYSE:QTWO) acknowledges macroeconomic uncertainties that could pose challenges.

• The company expects second-quarter free cash flow to be lower than the first quarter, indicating potential variability in cash flow performance.

• Q2 Holdings Inc (NYSE:QTWO) faces competition and market dynamics that require continuous innovation and adaptation to maintain their market position.

Q & A Highlights

Q: Can you provide insights into the traction you're seeing in fraud management and its role in digital banking evaluations? A: Matthew Flake, CEO: Fraud management is a significant part of both new deals and expansions, especially in commercial opportunities. We have a lot of green space to capture with our fraud products, and we're innovating in this area with partners like Alloy. Unfortunately, fraud has increased with digital product usage, making our solutions more critical.