Q2 Holdings (QTWO, Financial) posted a revenue of $189.7 million for the first quarter, surpassing the anticipated $186.5 million. The company showcased an impressive start to the year, with its performance bolstered by notable renewals and expansion activities. The leadership highlighted the sustained demand for their solutions, underscoring the importance of their technology and the extensive reach of their customer network. Q2's resilient business model, coupled with a promising pipeline and strong renewal prospects, positions it well to thrive in the current market landscape.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 15 analysts, the average target price for Q2 Holdings Inc (QTWO, Financial) is $99.27 with a high estimate of $126.00 and a low estimate of $60.00. The average target implies an upside of 23.61% from the current price of $80.31. More detailed estimate data can be found on the Q2 Holdings Inc (QTWO) Forecast page.
Based on the consensus recommendation from 16 brokerage firms, Q2 Holdings Inc's (QTWO, Financial) average brokerage recommendation is currently 2.3, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Q2 Holdings Inc (QTWO, Financial) in one year is $57.77, suggesting a downside of 28.07% from the current price of $80.31. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Q2 Holdings Inc (QTWO) Summary page.
QTWO Key Business Developments
Release Date: February 12, 2025
- Non-GAAP Revenue (Q4 2024): $183 million, up 13% year over year and 5% sequentially.
- Full-Year Non-GAAP Revenue (2024): $696.5 million, up 11% from the prior year.
- Adjusted EBITDA (Q4 2024): $37.6 million, representing 20.6% of non-GAAP revenue.
- Full-Year Adjusted EBITDA (2024): $125.3 million, up 63% from the prior year.
- Gross Margin (Q4 2024): 57.4%, up from 56% in the prior year period.
- Total ARR (End of 2024): $824 million, up 12% year over year.
- Subscription ARR (End of 2024): $682 million, up 15% year over year.
- Revenue Churn (2024): 4.4%, improving from 6.1% in 2023.
- Free Cash Flow (2024): $107 million, with an 85% conversion rate as a percentage of adjusted EBITDA.
- Cash, Cash Equivalents, and Investments (End of Q4 2024): $447 million.
- Employee Count (End of 2024): 2,483, up from 2,315 at the end of 2023.
- First Quarter 2025 Revenue Guidance: $184 million to $188 million.
- Full-Year 2025 Revenue Guidance: $772 million to $779 million, representing 11% to 12% growth.
- First Quarter 2025 Adjusted EBITDA Guidance: $36 million to $39 million.
- Full-Year 2025 Adjusted EBITDA Guidance: $165 million to $170 million, representing 21% to 22% of revenue.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Q2 Holdings Inc (QTWO, Financial) delivered non-GAAP revenue of $183 million in the fourth quarter, up 13% year over year and 5% sequentially, exceeding the high end of their guidance.
- The company achieved a record-breaking year for renewals, with bookings from renewals up 80% year over year, indicating strong customer satisfaction and platform value.
- Q2 Holdings Inc (QTWO) reported a significant increase in adjusted EBITDA, reaching $37.6 million, up 62% from the prior year period, demonstrating improved profitability.
- The Innovation Studio was a key differentiator, contributing to more than 90% of wins in 2024, with bookings more than doubling year over year.
- The company ended the year with a strong cash position, with cash, cash equivalents, and investments totaling $447 million, up from $408 million in the previous quarter.
Negative Points
- Professional services revenue declined by 11% year over year, reflecting a decrease in discretionary spending by customers.
- Despite strong performance, Q2 Holdings Inc (QTWO) faces competitive pressures, particularly in the retail segment, affecting pricing dynamics.
- The company anticipates continued pressure on total ARR growth relative to subscription ARR growth due to the decline in professional services-based revenue.
- Q2 Holdings Inc (QTWO) acknowledges the challenges in executing large enterprise deals, which require significant effort and resources.
- The company faces ongoing challenges in cross-selling commercial digital banking solutions to existing customers, with 60% of their digital banking customers using only one of their solutions.
