Q1 2026 Q2 Holdings Inc Earnings Call Transcript
Key Points
- Q2 Holdings Inc (QTWO) reported a strong start to 2026 with a 14% year-over-year revenue growth, reaching $216.5 million.
- The company achieved a record adjusted EBITDA of $60 million, representing 27.7% of revenue, and generated free cash flow of $44.2 million.
- Q2 Holdings Inc (QTWO) saw significant success in its Digital Banking and Risk and Fraud solutions, including the largest fraud deal in the company's history.
- The company is making meaningful progress in its AI journey, launching new products like Q2 Code and AI-driven fraud capabilities.
- Subscription revenue, which grew 17% year-over-year, now constitutes 83% of total revenue, highlighting a shift towards higher-margin revenue streams.
- Despite strong bookings, the total annualized recurring revenue (ARR) growth of 12% was slightly below the subscription ARR growth of 14%, indicating slower growth in non-subscription revenues.
- The company's cash, cash equivalents, and investments decreased to $379 million from $433 million due to stock repurchases.
- There is a noted ongoing decline in discretionary professional services offerings, which remain under pressure.
- The implementation process for digital banking remains lengthy and intensive, with no immediate plans to significantly speed up the delivery process.
- While Q2 Holdings Inc (QTWO) is making strides in AI, the monetization and profitability of new AI products like Q2 Code are still in early stages and may not match traditional SaaS margins initially.
Good afternoon. My name is Kevin, and I will be your conference operator today. At this time, I would like to welcome everyone to the Q2 Holdings first-quarter 2026 financial results conference call. (Operator Instructions)
I will now hand the conference over to Josh Yankovich, Investor Relations. Sir, please begin.
Thank you, operator. Good afternoon, everyone, and thank you for joining us today. With me on the call are Matt Flake, our CEO; and Jonathan Price, our CFO. This call contains forward-looking statements that are subject to significant risks and uncertainties, including among other things, with respect to our expectations for the future operating and financial performance of Q2 Holdings and for the financial services industry.
Actual results may differ materially from those contemplated by these forward-looking statements, and we can give no assurance that such expectations or any of our forward-looking statements will prove to be correct. Important factors that could cause
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