Q2 Holdings, Inc. · NYSE:QTWO
Q2 — Investor Day (December 2021)
112 slides from Q2's investor day presentation, Dec 14, 2021
Slide 1: Investor Day 2021
Q2 Investor Day 2021
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 pr
Slide 3: Agenda
Agenda Q2 Our Vision Matt Flake, President & CEO Talent, Culture, and ESG Kim Rutledge, EVP Our Strategy Will Furrer, CSO Emerging Businesses Jonathan Price, EVP Our Technology Adam Blue, CTO Financial Model & Targets David Mehok, CFO Q&A
Slide 4: Matt Flake, President and Chief Executive Officer
Slide 5: Forces Shaping the Future of Financial Services
Forces Shaping the Future of Financial Services Digitizing the entire bank New entrants driving innovation —— Embedding banking everywhere ® Q2
Slide 6: The Convergence in Financial Services is Underway
| The Convergence in Financial Services is Underway Financial Institutions Q2
Slide 7: Q2 Sits at the Center of the New Frontier
| OQ? Sits at the Center of the New Frontier Q2
Slide 8: Source: Internal estimates and “Which Industries Present the Brightest Growth Opportunities for Technology Investments?”
8 Source: Internal estimates and “Which Industries Present the Brightest Growth Opportunities for Technology Investments?” International Data Corporation, August 2021.
Slide 9: Executing Our Long-Term Growth Strategy
Executing Our Long-Term Growth Strategy ~$1.2B Total Revenue ~$500M"' Total Revenue 2021 2026 Q2
Slide 10: Q2 is Digitizing The Entire Bank
Q2 is Digitizing The Entire Bank Q2 Broad and Deep Solution Portfolio Banking Consumer, SMB & Corporate Financial Wellness Data & Insights Security & Fraud Consumer & SMB Account Opening Lending & Profitability Marketing Treasury Onboarding & Pricing and more... 10
Slide 11: 150+ 35% 1,200+ 1Based on financial institution customers signed as of September 30, 2021.
11 150+ 2 35% 2 1,200+ 1 1Based on financial institution customers signed as of September 30, 2021. 2Based on total assets reported by FDIC and NCUA, respectively, for all financial institutions as of September 30, 2021.
Slide 12: ~4B ~$2.5T ~$4T 1Logins to our digital banking platform. Full year estimates for calendar
12 1 ~4B ~$2.5T 2 ~$4T 3 1Logins to our digital banking platform. Full year estimates for calendar year 2021, based on internal company data as of December 14, 2021 2Money transferred through our digital banking platform. Full year estimates for calendar year 2021, based on internal company data as
Slide 13: 1Based on merger and acquisiton announcements involving all FDIC and NCUA charted financial institutions
13 1 2 2 1Based on merger and acquisiton announcements involving all FDIC and NCUA charted financial institutions from January 1, 2021 to September 30, 2021. Calculated by taking all transactional announcements in which a customer of Q2, at the time of the announcement, was either the acquiror, acqu
Slide 14: Opening Our Platform Accelerates Innovation
Opening Our Platform Accelerates Innovation for Customers and Partners Fintechs ‘ Financial O2 Institutions Innovation Studio Q2 14
Slide 15: Q2 Innovation Studio Creates a Unique Financial Services Ecosystem
Q2 Innovation Studio Creates a Unique Financial Services Ecosystem 507 Available for rapid Technology partners? deployment 800+ Bullineaweluctatte cup calnitens Total developers? Innovation Creates new opportunities Studio PP for incremental, high-margin revenue to our business Q2 15
Slide 16: The Final Building Block: Enabling Banking in Everyday Experiences
| The Final Building Block: Enabling Banking in Everyday Experiences Q2
Slide 17: The Final Building Block: Enabling Banking in Everyday Experiences
The Final Building Block: Enabling Banking in Everyday Experiences Financial Institutions ° Q2 BaaS Q2
Slide 18: Leading Brands Create Personalized Banking Experiences with Q2 BaaS
Leading Brands Create Personalized Banking Experiences with O2 BaaS cy Ld Betterment 1Bt Monthly API Calls! 7 op , . a Fintechs & Embedding banking TOMS vec Brands into everyday life Q2 18
Slide 19: Q2 is Positioned for Long-Term Success
Q2 is Positioned for Long-Term Success New Frontier of Financial Services High Long- Term Growth Growing H Market Opportuni Building 6 pporcunity New Industry : Highly Ecosystem Broad & Deep Strategic Solution Customers Portfolio ° ° H Q2 19
Slide 20: 20
20
Slide 21: Retain and Attract Talent; Promote Diversity, Equity & Inclusion; Pursue ESG Initiatives
Q2 Retain and Attract Talent Promote Diversity, Equity & Inclusion Pursue ESG Initiatives a
Slide 22: Our Mission-Driven Culture
Our Mission-Driven Culture Grow Our Team Define Our Goals Reward Our Employees Q2 2
Slide 23: 1Recognized as one of Austin-American Statesman’s Greater Austin Top workplace in 2021, marking its
23 1Recognized as one of Austin-American Statesman’s Greater Austin Top workplace in 2021, marking its eleventh consecutive year on the list.
Slide 24: Enabling us to Attract Top Talent
Enabling us to Attract Top Talent + 2 0%... internally’ +20% Promotion Rate? +2528 Jobs filled internationally? Q2
Slide 25: Which Drives Ongoing Business Success
Which Drives Ongoing Business Success Business success Attract © ada talent Equity Grants Program Top &2) Wet Stock Purchase workplace as Ni culture Plan In 2022 Q2 25
Slide 26: Our People are Invested in Our Mission
Our People are Invested in Our Mission To Build Strong and cs age QS mE Ye Diverse Communities by Strengthening their BH edt «= JDRFS Financial Institutions CODE — e-------------------------------------------------------------------------- +4, 000hrs Fe nployee donations Q2
Slide 27: Diversity metrics from our ESG report published on May 6, 2021 1 Total spend
27 1 Diversity metrics from our ESG report published on May 6, 2021 1 Total spend committed to raises and promotions for the years 2020 and through the first three quarters of 2021.
Slide 28: Launched inaugural ESG report in 2021
28 Launched inaugural ESG report in 2021
Slide 29: Will Furrer
WILL FURRER Q2
Slide 30: Our Strategy is Consistent
Our Strategy is Consistent panding ationships Ex Re Winning New Business Relentless Innovation Q2
Slide 31: The Digital Bank is the Center of Our Strategy
The Digital Bank is the Center of Our Strategy Fintechs The Brands Digital Bank Solution Portfolio Strategic Customers Real-time Integrations Extensive Data Q2 31
Slide 32: Comprehensive Portfolio Powers the Digital Bank
Comprehensive Portfolio Powers the Digital Bank n £ The 3 o ee © = Digital & ic Ba n k Pay Save Borrow Spend Manage Lending Security Onboarding & Fraud Banking Consumer, SMB & Corporate Data & Insights Q2 2
Slide 33: End to End Digital Onboarding Drives Customer Account Profitability
End to End Digital Onboarding Drives Customer Account Profitability Outcomes Digital ONBOARDING ~1M 1 Account Direct Accounts Opening Deposit Switch ~5M Switches! Debit Card Credit Card Integrated Products Q2
Slide 34: Financial Wellness Delivers a Differentiated Consumer Banking Experience
Financial Wellness Delivers a Differentiated Consumer Banking Experience Outcomes Financial WELLNESS ~2M Total accounts aggregated! Financial Goals Planning Total value in aggregated Spending Budgeting accounts! Integrated Products Q2 34
Slide 35: Based on internal data, from January 1, 2021 to November 30, 2021.2 Based on
35 1 Based on internal data, from January 1, 2021 to November 30, 2021.2 Based on internal company estimates as compared to estimated industry average.
Slide 36: Integrated Products
36 Integrated Products 1 From January 1, 2021 to November 30, 2021.2 As of September 30, 2021 and provided from Standard & Poor.
Slide 37: Turning Comprehensive Data into Insights that Tailor Experiences
Turning Comprehensive Data into Insights that Tailor Experiences Insights Insights Digital Onboarding Financial Wellness Integrated Commercial Office Lending & Profitability Insights | | Insights Data | Analytics | Machine Learning Q2 ”
Slide 38: Our Solutions Give us Access to the Entire Market
Our Solutions Give us Access to the Entire Market Q2 Q2 Ge _e Global Regional and Mid-Tier Banks <> a@g Community Banks and Credit Unions 38
Slide 39: And Budgets Spanning the Entire C-Suite
And Budgets Spanning the Entire C-Suite Multiple Buyers Q2
Slide 40: Winning with Growth-Minded, Strategic Banks
| Winning with Growth-Minded, Strategic Banks Q2 4 SeacoastBank 2021 Signed New Contract = @rrssesenscnensasnevereeseseusesaeneeseesnsssussuassnesassesassaseaeenessesersesaesaneetereseeses Q2 ‘
Slide 41: End-to-End Solutions Differentiate Q2
End-to-End Solutions Differentiate O2 A Single Partner, Frictionless Experiences & Integrated Data Across Solutions 4 SeacoastBank Q2 end-to-end DIGITAL BANKING PLATFORM 2021 Signed New Contract @ a
Slide 42: Enabling us to Expand Bookings
Enabling us to Expand Bookings A Single Partner, Frictionless Experiences & Integrated Data Across Solutions 4 SeacoastBank Q2 end-to-end DIGITAL BANKING PLATFORM 2021 Signed New Contract @ ~2X Larger MRR
Slide 43: Comprehensive Portfolio also Enables Expansion
Comprehensive Portfolio also Enables Expansion AMercantile Bank of Michigan Consumer Account SMB Account Treasury Services Opening Opening Onboarding 2013) Init ContraeteN nan acnnniTNENRNNITNNCMRTTEEEINETER Q2 “
Slide 44: Driving Bookings Growth Over Time
Driving Bookings Growth Over Time end-to-end DIGITAL BANKING PLATFORM AMercanti le Bank of Michigan 202) REGIA "qinsvevecvasassaseaeeniesvveuceveasevssensussusasntseseutesey Q2 Long-Term Contract extension
Slide 45: Opening Our Platform Accelerates Innovation and Fintech Partnerships
Opening Our Platform Accelerates Innovation and Fintech Partnerships Embedded FINTECH Integration into the bank $ & The & Digital é Bank Brands oO Q2
Slide 46: Which Multiplies the Innovation Capacity
Which Multiplies the Innovation Capacity ——$<<> Financial Ecosystem Creators ° Fintechs ° 3 Party Partners e Self-Builders FROM Q2 Q2
Slide 47: Unlocks Revenue Opportunities for Customers and Q2
Unlocks Revenue Opportunities for Customers and O2 a > Financial Institutions $ Financial Ecosystem Creators Fintechs 3'4 Party Partners Self-Builders Q2 47
Slide 48: And Enables New Collaboration and Innovation
And Enables New Collaboration and Innovation 7wise Q2 SDK Developers Developers Soccs Stanford Innovation Stanford FCU 3rd Party FEDERAL CREDIT UNION Studio Developers Developers Q2 48
Slide 49: Driving Impactful Results for Our Customers
Driving Impactful Results for Our Customers INTERNATIONAL RETAIL WIRE 4 TRANSFERS Stanford FEDERAL CREDIT UNION Q2
Slide 50: Our Cloud-Based Core Enables BaaS
Our Cloud-Based Core Enables BaaS Digital Embedded Ba n k FINTECH oO g > 5 oO The w Mi wn Ni a) & x cc Oo fea) Q2 Embedded FINANCE Banking Embedded into everyday life 50
Slide 51: Our Strategy is Consistent
Our Strategy is Consistent Q2 Integrated End-to-End Solutions Opening Our Platforms Access to Budgets Across The nterprise New Frontier of Financial Services Creating Value with Existing Customers 51
Slide 52: Jonathan Price
Q2 JONATHAN PRICE EVP, Emerging Busi
Slide 53: The Convergence of Financial Services is Underway
The Convergence of Financial Services is Underway Financial Institutions Q2 53
Slide 54: But Significant Hurdles Exist
But Significant Hurdles Exist New entrants driving innovation & competitive pressure Resource Constraints Regulation hurdles I CHALLENGES | e | e Customer expectations higher than ever before ! CHALLENGES I e Closed, legacy technology in financial services Q2
Slide 55: Driving Alignment and Cooperation Instead of Competition
Driving Alignment and Cooperation Instead of Competition Q2
Slide 56: And Giving Rise to New Business Models
And Giving Rise to New Business Models Embedded FINTECH Q? Integration Into The Bank
Slide 57: Q2's Core Business Unlocks these New Opportunities
Q2's Core Business Unlocks these ~ New Opportunities 10. 37
Slide 58: And Giving Rise to New Business Models
And Giving Rise to New Business Models Embedded FINTECH Q? Integration Into The Bank Q2 Innovation Studio
Slide 59: Embedding Fintech Through Q2 Innovation Studio
Embedding Fintech Through Q2 Innovation Studio EINTECH Q2 Integration Into The Bank Q2 Innovation Studio
Slide 60: Drives More Innovation to Banks, Faster
Drives More Innovation to Banks, Faster Extend the digital banking environment Embedded Fast and easy for any FINTECH fintech to embed their offering Integration Into The Bank ; Curating a large ecosystem of partners Q2 a
Slide 61: Creating an App Store-Like Experience
Creating an App Store-Like Experience Incorporating @ {iil Fintech solutions Tanee) c= Background the banking a ees experience 6 rj Live Chat Support a2 Integrate Once, Distribute to Many
Slide 62: 1Based on internal industry estimates for the duration from an initial sales cycle discussions
62 1 1Based on internal industry estimates for the duration from an initial sales cycle discussions to deployment for a customer.
Slide 63: 1Based on internal estimates as compared the estimated duration from an initial product purchase
63 1Based on internal estimates as compared the estimated duration from an initial product purchase to deployment for a customer in the traditional timeline as described on the prior slide.
Slide 64: Creating New Revenue Opportunities for Q2 and our Customers
Creating New Revenue Opportunities for Q2 and our Customers Q2 Innovation Studio FINTECHS Q2
Slide 65: 1. Source: Experian Annual Report, June 2021. 2.Source: Goldman Sachs How the Next Payments
65 1. Source: Experian Annual Report, June 2021. 2.Source: Goldman Sachs How the Next Payments Frontier will Unleash Small Business, September 2018. 3. Source: Fortune Business Insights Identity Theft Protection Services Market Size, Share & COVID-19 Impact Analysis, April 2021. 4. Source: IBIS Worl
Slide 66: Positioning Q2 as THE Strategic Partner
Positioning Q2 as THE Strategic Partner Q2
Slide 67: Embedding Fintech Through Q2 Innovation Studio
Embedding Fintech Through Q2 Innovation Studio EINTECH Q2 Integration Into The Bank Q2 Innovation Studio
Slide 68: Embedding Finance Through Q2 BaaS
Embedding Finance Through Q2 BaaS Embedded Q? FINANCE Banking embedded into everyday life
Slide 69: Unlocks Banking Solutions for Brands
Unlocks Banking Solutions for Brands Financial institution partnerships Flexible technology Unlocks banking for brands Q2 Q2 Embedded FINANCE Banking embedded into everyday life 69
Slide 70: Bringing Finance into Everyday Life
Bringing Finance into Everyday Life Q2 Putting banking solutions into the brands’ ecosystem Debit Card = ‘ . a, Line of Credit -=-<=<= - -—-& / [s}HJ Wire Transfer =”
Slide 71: Significant Barriers to Entry in Financial Services
Significant Barriers to Entry in Financial Services . Highly Innovative Regulated Brands Legacy @:— Technology Infrastructure Q2
Slide 72: Q2 BaaS Unlocks Banking for Fintechs and Brands
Q2 BaaS Unlocks Banking for Fintechs and Brands - a ° Real-Time Ledgering + ° Issue Accounts & Cards ° API Based ° Hold & Insure Deposits ° Pre-Integrated 3° Party ° Move Money Functionality Q2 2
Slide 73: Acorns testimonial
Q2 S acorns “We were impressed with the technology, the flexibility, the API structure, the pricing model and the simplicity of it.” Manning Field, Chief Business Officer, Acorns
Slide 74: Usage Drives Revenue Expansion
Usage Drives Revenue Expansion Usage Based Revenue Q (? Excess User eS Fees a ef ee o Transaction OF Fees Interchange 0 Ly i & q _a fi Hl Increased Usage Q2
Slide 75: Focused on Large, Established Brands
Focused on Large, Established Brands a a { a a Large Distribution Leading Marketing Strong Brand Models Engines Loyalty OM eX a AY Q2
Slide 76: 76Reflects the revenue of three distinct customers. These examples are not necessarily indicative of
76Reflects the revenue of three distinct customers. These examples are not necessarily indicative of revenue expansion across all BaaS customers .
Slide 77: Positioning Q2 BaaS for Rapid Growth
| Positioning Q2 BaaS for Rapid Growth BY 400m: — G Differentiated Solution Focused GTM strategy a L stl 2021 2022 2023 2025 2026 Existing clients grow rapidly (sg) i) Q2 a
Slide 78: Emerging Businesses Create Long-Term Potential for Q2
Emerging Businesses Create — Long-Term Potential for Q2 Frontier ‘ of Financial Services Accelerating growth and margin expansion for O2 Openin e . new TAM Enablin Opportunities . — Embedded Differentiating Fintech & 2 Digital Finance i Banking e Accelerating t) i Innovation :
Slide 79: Q2
Q2
Slide 80: Q2's mission drives our innovation and informs our technology choices
Q2 Q2’'s mission drives our innovation and informs our technology choices
Slide 81: We Have Created Two Special Purpose Platforms
We Have Created Two Special Purpose Platforms The Digital Banking Platform Q2
Slide 82: Our Comprehensive Portfolio Demands Vast Integrations Operating At Scale
Our Comprehensive Portfolio Demands Vast Integrations Operating At Scale *1,000 | alae INTEGRATIONS' | i Integrations i i i i i i i i i i i i i | i | | i i Spanning across the financial services eco- aici \ i i | | I | | 82
Slide 83: Industry Experience Inspired a Novel Approach to Engineering our BaaS Platform
Industry Experience Inspired a Novel Approach to Engineering our Banking-as-a-Service Platform | 1 I | | | ] | Enabling Others to Build Financial Experiences | APls | Q2 83
Slide 84: As of December 14, 2021.
84 1 2 2 2 2 1 3 1 As of December 14, 2021. 2 3
Slide 85: Engagement Creates Data, Yielding Insights Used to Tailor Digital Experiences
Engagement Creates Data, Yielding Insights Used to Tailor Digital Experiences Q2
Slide 86: The Flywheel Creates Units of Insight
The Flywheel Creates Units of Insight - Fueling Innovation and Improved Outcomes Relationship 6 Pricing @ Target Marketing Dynamic Personalization Q2 86
Slide 87: $1.5B Generated from Q2 customers between December 1, 2021 to November 30, 2021. 3
87 $1.5B 1 3 1 2 1 2 Generated from Q2 customers between December 1, 2021 to November 30, 2021. 3 Based on internal estimates.
Slide 88: Opening Our Digital Banking Platform Multiplies Our Competitive Advantage
Opening Our Digital Banking Platform Multiplies Our Competitive Advantage... Embedded FINTECH The Digital Banking Q?2 Platform Innovation Studio It's easy. It's deep. It's fast. Robust in its capabilities
Slide 89: And Creates Benefits for Q2 and Our Customers
And Creates Benefits for O2 and Our Customers rs Q2 Innovation Studio Developers Become First- Class Citizens in Feature Development Q2
Slide 90: Our Technology Provides a Foundation for Long-Term Success
Our Technology Provides a Foundation New - Frontier for Long-Term Success ofa Sento Opening the Re-Usable Platform eed e Creating A psight Vast Sole a ensive Drive Value Purpose- Integrations ywnee : Built Unlock Value : Platforms i Power : Innovation i Relentless Winning Ex aoding Innovation New Bu
Slide 91: 2
2
Slide 92: $23B Expanding TAM $13B Existing TAM $0.5B Current Penetration Source: Internal estimates and “Which
$23B Expanding TAM $13B Existing TAM $0.5B Current Penetration Source: Internal estimates and “Which Industries Present the Brightest Growth Opportunities for Technology Investments?” International Data Corporation, August 2021.
Slide 93: For digital banking paltform customers as discussed in Form 10-K, filed on February 19,
1 For digital banking paltform customers as discussed in Form 10-K, filed on February 19, 2021. 2 Based on digital banking platform customers that went live from 2010-2019. Growth of contracted recurring revenue by Q2 platform customers 36 months after implementation. 3Average gross margin of Digita
Slide 94: Consistently High Revenue Retention
Consistently High Revenue Retention Net Revenue Retention Rate’ Revenue Retention Drivers 0, 119% 120% 122% 120% Average 114% 2018 2019 2020 1-30 2021 Q2 ition 7m 10-K, filed on February 19, 2021. Ave full years 2018, 2019 , 2020 and for the first 9 months of 2021
Slide 95: Digital Banking Platform Customers
Digital Banking Platform Customers
Slide 96: $3B Cross Sell Opportunity
$3B Cross Sell Opportunity Across all 1,200+ of our Current Customers CROSS SELL OPPORTUNITY — Digital Na Lending =| 250+ CUSTOMERS Digital Banking Platform 450+ CUSTOMERS" Off Platform Solution & 600+ CUSTOMERS Q2
Slide 97: Average selling price is derived from digital banking platform deals sold within each respective
1 Average selling price is derived from digital banking platform deals sold within each respective time period.2 Calculated by taking the number of average products sold to new digital banking platform customers signed in the first 9 months of 2021, as compared to the number of products sold to new
Slide 98: Increased Revenue Opportunity Beyond Initial Booking
Increased Revenue Opportunity Beyond Initial Booking nnovation Studio Digital Banking? 8
Slide 99: Contains Subscription, Services and Transactional Revenue
Contains Subscription, Services and Transactional Revenue
Slide 100: Net New Resurgence Driving Revenue Growth
Net New Resurgence Driving Revenue Growth Acceleration in 2023 % of Total Bookings Y/Y Revenue Growth! 2022 2023 2018 2019 2020 2021 "Estimated as of December 14, 2021 100
Slide 101: 101
101
Slide 102: Growth Acceleration in 2023, Long Runway to Sustain High Growth
Growth Acceleration in 2023, Long Runway to Sustain High Growth
Slide 103: Balanced and prudent approach
103 APRIL 2021 PA S T Y E A R Balanced and prudent approach
Slide 104: 2026
104 2 1 2026
Slide 105: 105
105
Slide 106: Q&A
Q&A
Slide 107: Appendix
Appendix
Slide 108: Digital Banking customers at the end of 2020 as discussed in form 10-K, filed
Digital Banking customers at the end of 2020 as discussed in form 10-K, filed on February 19, 2021. Average Net Revenue Retention for full years 2018, 2019 , 2020 and for the first 9 months of 2021. Based on digital banking platform customers that went live from 2010-2018. Growth of contracted recur
Slide 109: • • • •
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Slide 110: Definitions
Slide 111: Definitions
Slide 112: Reconciliation of GAAP to Non-GAAP Revenue Guidance