Q2 Holdings, Inc. · NYSE:QTWO
Q2 — Q3 2024 Earnings Presentation
20 slides from Q2's earnings presentation, Nov 6, 2024
Slide 1: 3rd Quarter 2024 Results
. 3rd Quarter 2024 Results November 6, 2024
Slide 2: Safe Harbor Statement
Safe Harbor Statement This presentation and the accompanying oral presentation contain forward-looking statements and information that are based on our management's beliefs and assumptions and on information currently available to our management. The statements and information contained in this pres
Slide 3: 3rd Quarter 2024 Review
32rdndQuarter Quarter2024 Review 024 Review $408M End of quarter balance of cash, cash equivalents & investments3 $ 655M $ 32.6M 175.0M Adjusted EBITDA4 Subscription Annualized Recurring Revenue1 $ $ 2.0B NON-GAAP REVENUE4 19% Ending backlog as of September 30, 2024 Adjusted EBITDA margin4 6 Enterpr
Slide 4: 3rd Quarter 2024 Results
3rd Quarter 2024 Results We achieved solid bookings success across our business lines in the third quarter, highlighted 3Q24 3Q23 by six Enterprise and Tier 1 deals, including Totals Y/Y Change Totals three with Top 50 U.S. banks. Additionally, our strong financial performance Revenue $175,021 13% $
Slide 5: 3rd Quarter 2024 Highlights
3rd Quarter 2024 Highlights New Customer Wins & Expansion Opportunities SUBSCRIPTION REVENUE BACKLOG 3 Tier 1 & Enterprise Digital Banking Platform 3 Tier 1 & Enterprise Relationship Pricing $ 655 million Subscription Annualized $2.0 billion Total Committed Backlog Platform Recurring Revenue Digital
Slide 6: Annualized Recurring Revenue
Annualized Recurring Revenue Year-over-year Subscription ARR growth of 20%; Total ARR growth impacted by continued pressure in non-Subscription ARR 20% Y/Y Growth $900 15% Y/Y Growth $700 $800 $600 $700 $500 $600 $ in millions $ in millions $400 $500 $655 $400 $796 $300 $547 $694 $300 $200 $200 $100
Slide 7: Remaining Performance Obligations (RPO, Backlog)
Remaining Performance Obligations (RPO, Backlog) Record year-over-year dollar growth driven by net new and expansion-based bookings 30% Y/Y Growth 4% Seq. Growth $ 2.03B RPO Balance as of September 30, 2024 $ in billions $ in billions RPO Expected to be % of Total RPO Amount $2.03 $2.03 Recognized i
Slide 8: Financial Outlook
Financial Outlook Represents 11% full year Non-GAAP revenue growth; full year adjusted EBITDA margin of 18% 4Q 2024 Full Year 2024 Low High Low High Non-GAAP Revenue $178.1 $181.1 $691.5 $694.5 Adj EBITDA $34.3 $36.3 $122.0 $124.0 $ in millions $ in millions 8
Slide 9: Financial Targets 2024 - 2026
Financial Targets 2024 - 2026 Average Annual Subscription Average Annual Adjusted Free Cash Flow Conversion in Revenue Growth EBITDA Margin Expansion Full Year 2026 ~14% ~300-400bps >70% Strong demand driving an increasing mix of Driven by revenue mix and scaling both cost Flexibility to service deb
Slide 10: Appendix
Appendix Q2
Slide 11: Strong Visibility, Increasing Profitability, Expanding Opportunity
Strong Visibility, Increasing Profitability, Expanding Opportunity Long Runway to sustain High Growth and Margin Expansion 1,400+ 20% 5+ Years 80% Rule of Subscription revenue ~30 % Total Customers1 Y/Y Growth in Subscription Avg. Contract Length3 as a % of Total4 ARR2 450 >110% 24.4M 64% Y/Y Non-GA
Slide 12: Consolidated Balance Sheets
Consolidated Q2 Holdings, Inc. Condensed Consolidated Balance Sheets (in thousands) (unaudited) September 30, December 31, Balance Sheets Assets Current assets: 2024 2023 Cash and cash equivalents $ 320,294 $ 229,655 Restricted cash 1,854 3,977 Investments 87,558 94,353 Accounts receivable, net 57,9
Slide 13: Consolidated Statements of Comprehensive Loss
Consolidated Q2 Holdings, Inc. Condensed Consolidated Statements of Comprehensive Loss (in thousands, except per share data) (unaudited) Statements of Three Months Ended September 30, 2024 2023 Nine Months Ended September 30, 2024 2023 Comprehensive Revenues (1) Cost of revenues (2) Gross profit $ 1
Slide 14: Consolidated Statements of Cash Flows
Consolidated Q2 Holdings, Inc. Condensed Consolidated Statements of Cash Flows Statements of (in thousands) (unaudited) Nine Months Ended September 30, Cash Flows 2024 2023 Cash flows from operating activities: Net loss $ (38,700) $ (47,305) Adjustments to reconcile net loss to net cash from operati
Slide 15: Reconciliation of GAAP to Non-GAAP Measures
Q2 Holdings, Inc. Reconciliation of Reconciliation of GAAP to Non-GAAP Measures (in thousands) (unaudited) Three Months Ended September 30, Nine Months Ended September 30, GAAP to Non-GAAP 2024 2023 2024 2023 GAAP revenue $ 175,021 $ 154,967 $ 513,419 $ 462,506 Deferred revenue reduction from purcha
Slide 16: Reconciliation of Free Cash Flow
Reconciliation of Free Cash Flow Q2 Holdings, Inc. Reconciliation of Free Cash Flow (in thousands) (unaudited) Nine Months Ended September 30, 2024 2023 Net cash provided by operating activities $ 92,716 $ 33,715 Purchases of property and equipment (5,253) (4,568) Capitalized software development co
Slide 17: Reconciliation of GAAP to Non-GAAP Revenue Guidance
Reconciliation of GAAP to Non-GAAP Revenue Guidance Q2 Holdings, Inc. Reconciliation of GAAP to Non-GAAP Revenue Outlook (in thousands) Q4 2024 Outlook Full Year 2024 Outlook Low High Low High GAAP revenue $ 178,100 181,100 $ 691,500 694,500 Deferred revenue reduction from purchase accounting - — -
Slide 18: Definitions
Definitions Adjusted EBITDA: We define adjusted EBITDA as net loss before depreciation, amortization, stock-based compensation, transaction-related costs, provision for income taxes, interest and other (income) expense, net, deferred revenue reduction from purchase accounting, gain on extinguishment
Slide 19: Definitions
Definitions Digital Banking Platform: Our digital banking platform allows financial institutions to offer a comprehensive and unified suite of digital banking services to their End Users. Our open platform architecture, deep integration with other systems and the multi-tenant aspects of our infrastr
Slide 20: Definitions
Definitions Subscription Annualized Recurring Revenue: We calculate Subscription ARR as the annualized value of all recurring subscription revenue recognized in the last month of the reporting period, with the exception of variable revenue in excess of contracted amounts for which we instead take th