Q2 Holdings, Inc. · NYSE:QTWO
Q2 — Q4 2023 Earnings Presentation
21 slides from Q2's earnings presentation, Feb 21, 2024
Slide 1: 4th Quarter and Full Year 2023 Results
th 4 Quarter and Full Year 2023 Results February 21, 2024 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: 4th Quarter 2023 Review
4th Quarter 2023 Review $ 324.0M End of Quarter balance of cash, cash equivalents & investments3 $ 593.9M $ 23.2M 162.2M Adjusted EBITDA4 Subscription Annualized 4 Recurring Revenue1 $ $1.84B ending backlog as of December 31, 2023 NON-GAAP REVENUE 14% 6 Adjusted EBITDA margin4 Enterprise and Tier On
Slide 4: 4th Quarter & Full-Year 2023 Review
4th Quarter & Full-Year 2023 Review We closed out 2023 with our best 4Q’23 FY’23 bookings performance in company history, which included our two Totals Y/Y Change Totals Y/Y Change largest deals ever. Our customers' focus on deposit Revenue $162,118 11% $624,624 10% growth drove heightened demand fo
Slide 5: 4th Quarter 2023 Highlights
4th Quarter 2023 Highlights 4 Tier 1 Digital Banking Platform • • Top 10 U.S. Credit Union to utilize our retail solutions. Three banks to utilize our commercial and small business solutions. 2 Enterprise • Signed a Top 4 U.S. bank to a relationship pricing solution contract. • Signed an expansion w
Slide 6: Annualized Recurring Revenue
Annualized Recurring Revenue Contribution from Subscription ARR growth of 19% was partially offset by continued pressure on non-Subscription based ARR 19% 12% Y/Y Growth Y/Y Growth $700 $800 $600 $700 $ in Millions $ in Millions $600 $500 $500 $400 $400 $734.8 $300 $593.9 $655.2 $500.9 $300 $200 $20
Slide 7: Remaining Performance Obligations (RPO, Backlog)
Remaining Performance Obligations (RPO, Backlog) Growth driven by record performance across net new, cross sale, and renewal bookings $1.84B 23% 17% Q/Q Growth Y/Y Growth RPO Balance as of December 31, 2023 $ in Billions $ in Billions RPO Expected to % of Total RPO be Recognized in Amount the Next:
Slide 8: Revenue Breakout
Revenue Breakout Diverse base of customers across asset size and customer type Largest Customer 3% Next 10 Customers Enterprise 13% 13% Credit Union Tier 1 25% Next 50 32% Customers Non-FI's 25% 13% ASSET Bank 62% CUSTOMER TOP SIZE TYPE CUSTOMERS Tier 3 10% Other 13% Remaining Tier 2 Customers 59% 3
Slide 9: Financial Outlook
Financial Outlook Would represent 9% to 10% full year Non-GAAP revenue growth and full year adjusted EBITDA margin of 16% Q1 2024 Full Year 2024 Low High Low High Non-GAAP Revenue $161.7 $164.7 $683.0 $689.0 Adj EBITDA $22.0 $24.0 $107.0 $111.0 $ In Millions $ In Millions 9
Slide 10: Financial Targets: 2024 - 2026
Financial Targets: 2024 - 2026 Average Annual Subscription Average Annual Adjusted Free Cash Flow Conversion Revenue Growth EBITDA Margin Expansion in Full Year 2026 ~14% ~300-400bps >70% Strong demand driving an increasing Driven by revenue mix and scaling both Flexibility to service debt and have
Slide 11: Appendix
Appendix The information in the following presentation is confidential and proprietary.
Slide 12: 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 19% +5 Years 78 % Total Customers1 YoY Growth in Avg. Contract Length3 Subscription revenue Rule of ~30 as a % of Total4 % Subscription ARR2 450 +110% +2
Slide 13: Condensed Consolidated Balance Sheets
Condensed Q2 Holdings, Inc. Condensed Consolidated Balance Sheets (in thousands) (unaudited) Consolidated Assets Current assets: December 31, 2023 December 31, 2022 Cash and cash equivalents $ 229,655 $ 199,600 Balance Sheets Restricted cash Investments Accounts receivable, net Contract assets, curr
Slide 14: 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 December 31, Twelve Months Ended December 31, 2023 2022 2023 2022 Statements of Revenues (1) Cost of revenues (2) Gross profit $ 162,1
Slide 15: Condensed Consolidated Statements of Cash Flows
Condensed Q2 Holdings, Inc. Consolidated Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited) Twelve Months Ended December 31 Statements of 2023 2022 Cash flows from operating activities: Net loss $ (65,384) $ (108,983) Adjustments to reconcile net loss to net cash from operati
Slide 16: 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 December 31 Twelve Months Ended December 31 2023 2022 2023 2022 GAAP revenue $ 162,118 $ 146,542 $ 624,624 $ 565,673 Deferred revenue reduction from
Slide 17: Reconciliation of Free Cash Flow
Reconciliation of Free Cash Flow Q2 Holdings, Inc. Reconciliation of Free Cash Flow (in thousands) (unaudited) Twelve Months Ended December 31, 2023 2022 Net cash provided by operating activities $ 70,292 $ 36,556 Purchases of property and equipment (5,673) (11,142) Capitalized software development
Slide 18: 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) Q1 2024 Outlook Full Year 2024 Outlook Low High Low High GAAP revenue $ 161,700 $ 164,700 $ 683,000 $ 689,000 Deferred revenue reduction from purchase accounting -
Slide 19: 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) loss on extingu
Slide 20: 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 21: 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