PART I: FINANCIAL INFORMATION This section provides Q2 Holdings, Inc.'s unaudited condensed consolidated financial information, including financial statements, management's analysis, market risk disclosures, and internal controls [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements.) This section presents Q2 Holdings, Inc.'s unaudited condensed consolidated financial statements for Q1 2022, detailing financial position, comprehensive loss, and cash flows [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $225,544 | $322,848 | | Total current assets | $511,590 | $522,450 | | Goodwill | $512,869 | $512,869 | | **Total assets** | **$1,364,104** | **$1,385,045** | | **Liabilities & Stockholders' Equity** | | | | Total current liabilities | $171,847 | $168,358 | | Convertible notes, net | $655,809 | $551,598 | | **Total liabilities** | **$917,917** | **$814,749** | | **Total stockholders' equity** | **$446,187** | **$570,296** | | **Total liabilities and stockholders' equity** | **$1,364,104** | **$1,385,045** | [Condensed Consolidated Statements of Comprehensive Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) Condensed Consolidated Statements of Comprehensive Loss (in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Revenues | $134,071 | $116,520 | | Gross Profit | $60,399 | $53,201 | | Loss from operations | $(21,399) | $(17,513) | | Net loss | $(23,559) | $(25,655) | | Net loss per common share, basic and diluted | $(0.41) | $(0.46) | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(4,621) | $(5,478) | | Net cash used in investing activities | $(92,809) | $(33,498) | | Net cash provided by financing activities | $131 | $1,971 | | **Net decrease in cash, cash equivalents, and restricted cash** | **$(97,299)** | **$(37,005)** | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) - The company is a leading provider of secure, cloud-based digital solutions for financial services providers, delivered primarily via a SaaS model[18](index=18&type=chunk) - On January 1, 2022, the company adopted ASU 2020-06, which simplifies accounting for convertible instruments. This resulted in an **increase** to the convertible notes balance of **$114.4 million**, a **reduction to additional paid-in capital** of **$157.0 million**, and an **increase** to the accumulated deficit of **$42.6 million**[85](index=85&type=chunk) - As of March 31, 2022, the company had **$1.39 billion** of remaining performance obligations, representing contracted revenue minimums not yet recognized. Approximately **49%** is expected to be recognized as revenue in the next **24 months**[34](index=34&type=chunk) Revenue by Major Source (in thousands) | Source | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Subscription | $96,584 | $85,071 | | Transactional | $17,049 | $16,283 | | Services and Other | $20,438 | $15,166 | | **Total Revenues** | **$134,071** | **$116,520** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Management discusses Q1 2022 financial performance, business overview, and strategic direction, highlighting revenue growth, key operating metrics, and liquidity [Overview](index=33&type=section&id=Overview) - Q2 provides secure, cloud-based digital solutions to financial institutions, FinTechs, Alt-FIs, and other brands, enabling them to offer digital banking, lending, and BaaS services[149](index=149&type=chunk) - The company delivers most solutions via a SaaS model, with pricing generally based on the number of solutions purchased and the number of registered users or commercial account holders[153](index=153&type=chunk) - Q2 believes it is **well-positioned** to capitalize on the convergence of financial institutions, FinTechs, and Brands, driven by the **increasing demand** for digital financial services[152](index=152&type=chunk)[157](index=157&type=chunk) [Key Operating Measures](index=36&type=section&id=Key%20Operating%20Measures) Key Operating Metrics Comparison | Metric | March 31, 2022 | March 31, 2021 | | :--- | :--- | :--- | | Registered Users | 19.7 million | 18.3 million | | Annualized Recurring Revenue (ARR) | $594.2 million | $493.6 million | - **Net revenue retention rate** was **119%** for the year ended December 31, 2021, compared to **122%** for 2020[169](index=169&type=chunk) - **Annual revenue churn** was **5.4%** for the year ended December 31, 2021, down from **5.9%** in 2020[171](index=171&type=chunk) [Non-GAAP Financial Measures](index=39&type=section&id=Non-GAAP%20Financial%20Measures) Reconciliation of GAAP to Non-GAAP Revenue (in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | GAAP revenue | $134,071 | $116,520 | | Deferred revenue reduction from purchase accounting | $242 | $528 | | **Total Non-GAAP revenue** | **$134,313** | **$117,048** | Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net loss | $(23,559) | $(25,655) | | Adjustments (Stock-based comp, D&A, etc.) | $31,617 | $35,543 | | **Adjusted EBITDA** | **$8,058** | **$9,888** | [Results of Operations](index=45&type=section&id=Results%20of%20Operations) Results of Operations Comparison (in thousands) | Metric | Q1 2022 | Q1 2021 | Change (%) | | :--- | :--- | :--- | :--- | | **Revenues** | **$134,071** | **$116,520** | **15.1%** | | Cost of revenues | $73,672 | $63,319 | 16.4% | | Gross profit | $60,399 | $53,201 | 13.5% | | Sales and marketing | $25,266 | $19,816 | 27.5% | | Research and development | $31,131 | $26,795 | 16.2% | | General and administrative | $20,568 | $18,834 | 9.2% | | **Loss from operations** | **$(21,399)** | **$(17,513)** | **22.2%** | | **Net loss** | **$(23,559)** | **$(25,655)** | **-8.2%** | - The **$17.6 million** revenue **increase** was **primarily due to** a **$16.8 million increase** from sales of additional solutions to new and existing customers and growth in Registered Users[203](index=203&type=chunk) - Cost of revenues **increased by $10.4 million** (**16.4%**) due to higher third-party costs, infrastructure costs to support customer growth, and increased personnel expenses[204](index=204&type=chunk) - Total other income (expense), net, **improved significantly** from an **$8.0 million** expense in Q1 2021 to a **$0.8 million** expense in Q1 2022, mainly due to a **$6.5 million decrease in non-cash interest expense** from the adoption of ASU 2020-06[214](index=214&type=chunk) [Liquidity and Capital Resources](index=50&type=section&id=Liquidity%20and%20Capital%20Resources) - As of March 31, 2022, **principal sources of liquidity** were cash, cash equivalents, and investments **totaling $413.7 million**[220](index=220&type=chunk) - Management believes that cash flow from operations and other liquidity sources are **adequate to meet cash requirements** for the next **twelve months**[220](index=220&type=chunk) Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(4,621) | $(5,478) | | Net cash used in investing activities | $(92,809) | $(33,498) | | Net cash provided by financing activities | $131 | $1,971 | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=52&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) The company outlines its exposure to market risks, including interest rate, foreign currency, and inflation, concluding that these risks are not material - The company does not believe it has **material exposure** to changes in interest rates due to the short-term nature of its investments and fixed interest rates on its convertible notes[236](index=236&type=chunk) - Foreign currency exchange risk exists from operations in India, the United Kingdom, and Australia, but is **not considered significant**. The company does not currently use derivative instruments for hedging[237](index=237&type=chunk)[238](index=238&type=chunk) - Inflation is **not believed to have had a material effect** on the business, financial condition, or results of operations[239](index=239&type=chunk) [Item 4. Controls and Procedures](index=53&type=section&id=Item%204.%20Controls%20and%20Procedures.) Management evaluated disclosure controls and procedures, concluding they were effective with no material changes to internal control over financial reporting during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were **effective** as of March 31, 2022[241](index=241&type=chunk) - **No material changes** in internal control over financial reporting occurred during the first quarter of 2022[242](index=242&type=chunk) PART II: OTHER INFORMATION This section covers other information including legal proceedings, risk factors, equity sales, defaults, and exhibits [Item 1. Legal Proceedings](index=54&type=section&id=Item%201.%20Legal%20Proceedings.) The company reports no current legal proceedings that would materially adversely affect its business or financial condition - The company is **not presently a party** to any legal proceedings that would have a **material adverse effect** on the company[244](index=244&type=chunk) [Item 1A. Risk Factors](index=54&type=section&id=Item%201A.%20Risk%20Factors.) This section refers to previously disclosed risk factors from the Annual Report on Form 10-K, confirming no material changes - There have been **no material changes from the risk factors** disclosed in the Annual Report on Form 10-K for the fiscal year ended December 31, 2021[245](index=245&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=54&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) The company reports no unregistered sales of equity securities, use of proceeds, or repurchases during the reporting period - The company reported **no unregistered sales** of equity securities, **no use of proceeds**, or **no repurchases** for the period[246](index=246&type=chunk)[247](index=247&type=chunk) [Item 3. Defaults Upon Senior Securities](index=54&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities.) The company reports no defaults upon its senior securities during the period - **None**[248](index=248&type=chunk) [Item 4. Mine Safety Disclosures](index=54&type=section&id=Item%204.%20Mine%20Safety%20Disclosures.) This item is not applicable to the company - **Not applicable**[249](index=249&type=chunk) [Item 5. Other Information](index=54&type=section&id=Item%205.%20Other%20Information.) The company reports no information for this item - **None**[250](index=250&type=chunk) [Item 6. Exhibits](index=54&type=section&id=Item%206.%20Exhibits.) This section provides an index of exhibits filed with the Quarterly Report on Form 10-Q, including corporate governance documents and certifications - The exhibits filed with the report include **certifications from the CEO and CFO pursuant to Sarbanes-Oxley Act Sections 302 and 906**, and XBRL Interactive Data Files[253](index=253&type=chunk)

Customer Base and Market Position - As of December 31, 2021, the company had over 1,200 financial institution customers, including 40% of the top 100 U.S. banks by total assets[37] - The market for the company's digital banking platform is estimated to exceed $7.0 billion, while the digital lending solutions market is over $4.0 billion, and the Helix solutions market is greater than $2.0 billion, totaling a worldwide market of over $13.0 billion[39] - The company has seen a 40% increase in the average number of products included in new digital banking platform deals over the past five years[47] - The Helix platform supports over 11 million End Users, positioning the company favorably in the growing market of Brands incorporating banking into their offerings[45] Product and Service Offerings - The company has invested significantly in expanding its digital banking platform since its introduction in 2005, now offering an integrated collection of solutions including commercial banking, regulatory compliance, and digital lending[36] - The company's Q2 Innovation Studio allows financial institutions and technology partners to develop unique extensions and integrations to its digital banking platform, enhancing customer offerings[41] - The digital banking platform supports unified digital banking services across various segments, enabling financial institutions to optimize user acquisition, engagement, and retention[41] - The digital banking solutions are designed to support rapid addition of new services and scalability as customer needs evolve[43] - The Q2 Innovation Studio was introduced to allow financial institutions and FinTechs to develop and distribute innovative products and services through Q2's digital banking platform[59] - The PrecisionLender platform provides actionable insights for commercial bankers, enhancing the negotiation process for loans and deposits by analyzing the entire commercial portfolio[56] - Q2's digital lending platform automates and digitizes lending activities, supporting various loan types including consumer, commercial, and peer-to-peer[57] - Q2's Helix service enables FinTechs to incorporate banking services into their digital offerings, meeting regulatory requirements while providing personalized financial experiences[60] - The Q2 CardSwap feature allows users to automatically update payment information for subscriptions when receiving new debit or credit cards[1] Financial Performance and Stability - The company generated cash flow from operations in the most recent full year, indicating financial stability and maturity compared to competitors[47] - The average term of customer agreements for the digital banking platform is over five years, contributing to predictable revenue streams[47] - The company has outstanding principal amounts of $327.2 million of 2023 Notes and 2026 Notes with a fixed annual interest rate of 0.75%[379] - The company also has an outstanding principal amount of $350.0 million of 2025 Notes with a fixed annual interest rate of 0.125%[379] - The company does not believe it has significant exposure to foreign currency exchange risks due to the relatively low volume of payments made through foreign subsidiaries[380] - The company monitors inflation impacts and aims to reduce effects through pricing strategies and cost reductions[382] Security and Compliance - Security remains a critical concern in digital financial services, requiring continuous investment and vigilance to protect against evolving threats[31] - The company employs multi-layered security controls to protect customer and End User information, enhancing trust and compliance[43] - The company has a comprehensive security model that includes multiple layers of authentication for end users[71] - The Centrix Dispute Tracking System assists in managing electronic transaction disputes, ensuring compliance with regulatory requirements[55] Research, Development, and Innovation - The company emphasizes research and development to innovate and improve solutions, ensuring they meet evolving customer needs and market dynamics[66] - The company aims to continue investing in research and development, sales, and marketing to remain competitive in the financial services market[79] - The company has nine U.S. patent applications pending and eight issued U.S. patents, with expiration dates ranging from October 2027 to January 2038[72] Employee Engagement and Community Involvement - As of December 31, 2021, the company employed 2,028 individuals, with 2,024 being full-time employees[80] - The employee population as of December 31, 2021, included 35% women and 27% non-white individuals[82] - In 2021, the company reported over 4,000 hours of community service and more than $275,000 in donations to various causes[88] - The company has committed over $965,000 in corporate donations and sponsorships, including matching employee contributions[89] - The company offers a wide range of global benefits, including 401(k) retirement plans and various insurance options[98] - The company emphasizes employee well-being with innovative benefits such as virtual wellness clinics and Employee Assistance Programs[99] - The company has established relationships with world-class universities to attract diverse talent[97] - The company continues to invest in leadership development resources and programs for all experience levels[95] Operational Efficiency and Scalability - The digital banking platform has over 1,000 integrations with various financial services technology partners, enhancing operational efficiency and user engagement[43] - The company has implemented a multi-tiered architecture for its digital banking platform to enhance scalability and security[68] - The digital banking platform has maintained an average uptime exceeding 99.9% since January 2013, demonstrating high reliability[70] Marketing and Customer Expansion - Q2's marketing efforts focus on demand creation and customer expansion through targeted programs and industry partnerships[65] - Q2's implementation and customer support services aim to enhance customer retention and drive incremental sales opportunities through high-quality service delivery[61]

Q2 Holdings, Inc. (NYSE:QTWO) Q4 2021 Earnings Conference Call February 16, 2022 8:30 AM ET Company Participants Josh Yankovich - Investor Relations Matt Flake - Chief Executive Officer David Mehok - Chief Financial Officer Jonathan Price - EVP of Emerging Businesses, Corporate and Business Development Conference Call Participants Terry Tillman - Truist Securities Parker Lane - Stifel Financial Corp Pete Heckmann - D.A. Davidson Andrew Schmidt - Citi Alex Sklar - Raymond James Daniel Perlin - RBC Capital Ma ...

th Quarter and Full-Year 2021 Results 4 February 15, 2022 | --- | --- | |-------------------------------------------------------------|--------------------------------------------------------------- ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to ___________ Commission File Number 001-36350 Q2 Holdings, Inc. Exact Name of Registrant as Specified in its Charter Delaw ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to ___________ Commission File Number 001-36350 Q2 Holdings, Inc. Exact Name of Registrant as Specified in its Charter Delaware 2 ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) (512) 275-0072 Registrant's Telephone Number, Including Area Code ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to ___________ Commission File Number 001-36350 Q2 Holdings, I ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended December 31, 2020. or ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to Q2 Holdings, Inc. (Exact name of Registrant as Specified in Its Charter) Securities registered pursuant to Section 12(b) of the Act: Title of ...

Financial Data and Key Metrics Changes - In Q4 2020, the company generated non-GAAP revenue of $109.7 million, representing a 24% year-over-year increase and a 5% sequential increase [10][36] - For the full year 2020, non-GAAP revenue was $407.2 million, up 28% year-over-year [10][36] - The company ended the year with approximately 17.8 million registered users, a 22% increase year-over-year [10][37] - Gross margin for Q4 2020 was 48.3%, down from 56.8% in Q4 2019, and 51.9% for the full year, down from 54% in 2019 [45][46] - Adjusted EBITDA for Q4 2020 was $6.1 million, down from $10.6 million in Q4 2019, while for the full year it was $22.2 million, up from $19.6 million in 2019 [48] Business Line Data and Key Metrics Changes - Transactional revenue represented 13% of total revenue for Q4 2020, down from 14% in the previous quarter and prior year [38] - The company saw strong demand for products like CardSwap and Centrix, indicating a shift towards digital solutions [17][28] - The company experienced impressive cross-sell and renewal activity, particularly among digital banking and lending customers [15][16] Market Data and Key Metrics Changes - The company reported a total committed backlog of $1.3 billion, a 15% increase year-over-year [39] - The digital banking churn for the full year remained below 5%, despite macroeconomic impacts from COVID-19 [40] - The company ended the year with 450 installed customers, up from 414 at the end of 2019 [43] Company Strategy and Development Direction - The company aims to capitalize on the digital transformation trend among financial services providers, with a focus on enhancing user experience and expanding its product portfolio [55][57] - Diversity and inclusion efforts will remain a core focus in 2021, with expectations for more disclosures regarding ESG initiatives [26] - The company plans to continue leveraging its strong customer relationships and product offerings to drive growth [57][87] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to sustain strong revenue growth while improving profitability in 2021 [57] - The company anticipates a gradual resurgence in costs related to travel and marketing as the pandemic situation evolves [52] - Management noted that the Tier 1 pipeline is showing signs of recovery, with real deals and engagement expected to materialize in 2021 [64][72] Other Important Information - The company ended the year with cash, cash equivalents, and investments of $539.1 million, up from $396.1 million at the end of Q3 2020 [49] - The company implemented a new accounting approach for professional services revenue, which impacted revenue recognition in Q4 [32][34] Q&A Session Summary Question: Update on Texas weather conditions - Management acknowledged the severe weather conditions affecting employees in Texas, with 50% of employees without power, heat, or water [61] Question: Demand from new customers for solutions - Management indicated that Tier 1 deals are returning with budgets and project plans, suggesting improved demand for new solutions in 2021 [62][64] Question: Cadence of deals and guidance for 2021 - Management noted that while the cadence of deals was disrupted in 2020, there is optimism for a return to a more typical pattern in 2021, with a focus on Q2 and Q4 [71][72] Question: Accelerating implementations - Management stated that while some customers may seek to expedite implementations, the complexity of digital banking solutions typically prevents significant acceleration [78] Question: Potential for multi-year replatforming - Management confirmed that digital transformation discussions are ongoing, with opportunities for replatforming as customers seek to improve their digital banking experiences [85][87] Question: Expectations for organic user growth in 2021 - Management expressed confidence in maintaining elevated organic user growth, projecting a range of 10% to 11% for 2021 [92] Question: Circumstances around the impairment on the fintech contract - Management clarified that the impairment was related to an early-stage fintech partner facing financial instability, but overall exposure to such risks is low [96][97]

Q2 Holdings, Inc. (NYSE:QTWO) Q4 2019 Earnings Conference Call February 20, 2020 8:30 AM ET Company Participants Steve Calk – Director-Investor Relations Matt Flake – Chief Executive Officer Jennifer Harris – Chief Financial Officer Conference Call Participants Sterling Auty – JPMorgan Tom Roderick – Stifel Brian Peterson – Raymond James Terry Tillman – SunTrust Robinson Joseph Vafi – Canaccord Bob Napoli – William Blair Mayank Tandon – Needham Peter Heckmann – Davidson Andrew Schmidt – Citi Brett Huff – St ...