Q2 Holdings, Inc. · NYSE:QTWO
Q2 — Q3 2023 Earnings Presentation
20 slides from Q2's earnings presentation, Nov 1, 2023
Slide 1: 3rd Quarter 2023 Results
rd 3 Quarter 2023 Results November 1, 2023 The information in the following presentation is confidential and proprietary.
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 2023 Review
3rd Quarter 2023 Review $ 290.8M End of Quarter balance of cash, cash equivalents & investments3 $ 693.6M $ 19.7M 155.0M Adjusted EBITDA4 Total Annualized 4 Recurring Revenue1 $ $1.57B ending backlog as of September 30, 2023 NON-GAAP REVENUE 13% 5 Adjusted EBITDA margin4 Enterprise and Tier One Digi
Slide 4: 3rd Quarter 2023 Results
3rd Quarter 2023 Results In the third quarter, we saw financial institutions' focus on deposit growth drive 3Q’23 3Q’22 strong demand for our solutions. Totals Y/Y Change Totals Our track record of innovation and our focus on customer experience helped us Revenue $154,967 7% $144,751 capitalize on t
Slide 5: 3rd Quarter 2023 Highlights
3rd Quarter 2023 Highlights Continued Success Across the Business 1 1Enterprise & Tier 1 Digital Banking Platform • Top 20 U.S. bank to utilize our commercial and small business banking solutions. • Tier 1 U.S. bank to utilize our retail, small business and commercial banking solutions. 2 1Enterpris
Slide 6: Annualized Recurring Revenue
Annualized Recurring Revenue Year-over-year Subscription ARR growth of 14% was partially offset by continued pressure on non-Subscription ARR streams 9% Y/Y Growth $700 14% Y/Y Growth $700 $ in Millions $600 $600 $ in Millions $500 $500 $400 $400 $693.6 $633.7 $300 $300 $547.0 $477.9 $200 $200 $100
Slide 7: Remaining Performance Obligations (RPO, Backlog)
Remaining Performance Obligations (RPO, Backlog) Year-over-year growth driven from net new and renewal bookings; Increased average selling price and contract duration associated with net new wins $ 1.57B 13% 2% Y/Y Growth Q/Q Growth RPO Balance as of September 30, 2023 $ in Billions $ in Billions RP
Slide 8: Digital Banking Registered User Growth
Digital Banking Registered User Growth User growth driven from new customers and organic contribution 5% Y/Y Growth 9% Y/Y Growth In Millions 22.0 20.9 19.2 Added over 1.1M Users Year-over-year Q3'21 Q3'22 Q3'23 Registered Users as defined in the appendix of this presentation. 8
Slide 9: Financial Outlook
Financial Outlook Would represent 10% full year Non-GAAP revenue growth and full year adjusted EBITDA margin of 12% Q4 2023 Full Year 2023 Low High Low High Non-GAAP Revenue $160.3 $163.3 $622.5 $625.5 Adj EBITDA $21.2 $23.2 $75.0 $77.0 $ In Millions $ In Millions As of November 1, 2023, Q2 Holdings
Slide 10: Appendix
Appendix The information in the following presentation is confidential and proprietary.
Slide 11: Strong Visibility, Increasing Profitability, Expanding Opportunity
Strong Visibility, Increasing Profitability, Expanding Opportunity Long Runway to sustain High Growth and Margin Expansion Late 2024 Target +1,400 14% +5 Years ~77% Total Customers1 YoY Growth in Avg. Contract Length3 Subscription revenue Rule of ~30 as a % of Total4 % Subscription ARR2 444 +80% ~22
Slide 12: Condensed Consolidated Balance Sheets
Condensed Q2 Holdings, Inc. Condensed Consolidated Balance Sheets (in thousands) (unaudited) Consolidated September 30, December 31, 2023 2022 Assets Current assets: Cash and cash equivalents $ 155,993 $ 199,600 Balance Sheets Restricted cash Investments Accounts receivable, net Contract assets, cur
Slide 13: Condensed Consolidated Statements of Comprehensive Loss
Condensed Q2 Holdings, Inc. Condensed Consolidated Statements of Comprehensive Loss (in thousands, except per share data) Consolidated (unaudited) Three Months Ended September 30, 2023 2022 Nine Months Ended September 30, 2023 2022 Statements of Revenues (1) Cost of revenues (2) Gross profit $ 154,9
Slide 14: Condensed Consolidated Statements of Cash Flows
Condensed Consolidated Q2 Holdings, Inc. Condensed Consolidated Statements of Cash Flows (in thousands) Statements of Cash flows from operating activities: (unaudited) Nine Months Ended September 30, 2023 2022 Cash Flows Net loss Adjustments to reconcile net loss to net cash from operating activitie
Slide 15: Reconciliation of GAAP to Non-GAAP Measures
Reconciliation of GAAP to Non-GAAP Measures Q2 Holdings, Inc. Reconciliation of GAAP to Non-GAAP Measures (in thousands) (unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 GAAP revenue $ 154,967 $ 144,751 $ 462,506 $ 419,131 Deferred revenue reduction fr
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, 2023 2022 Net cash provided by (used in) operating $ 33,715 $ (7,307) activities Purchases of property and equipment (4,568) (8,933) Capitalized software dev
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) (unaudited) Q4 2023 Outlook Full Year 2023 Outlook Low High Low High GAAP revenue $ 160,230 $ 163,230 $ 622,155 $ 625,155 Deferred revenue reduction from purchase a
Slide 18: Definitions
Definitions Adjusted EBITDA: We define adjusted EBITDA as net loss before depreciation, amortization, stock-based compensation, transaction-related costs, (benefit from) provision for income taxes, interest and other (income) expense, net, deferred revenue reduction from purchase accounting, (gain)
Slide 19: Definitions
Definitions Customer Tiering: For our financial institution customers, we may refer to their designated tiering, which we use to group customers based upon the total assets they report. We define “Enterprise” customers as having total assets equal to or greater than $50 billion. We define “Tier 1” c
Slide 20: Definitions
Definitions Registered Users: We define a registered user as an individual related to an account holder of an Installed Customer on our consumer Digital Banking Platform who has registered to use one or more of our digital banking solutions and has current access to use those solutions as of the las