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Q2 (QTWO) - 2024 Q4 - Annual Results
QTWOQ2 (QTWO)2025-02-12 21:17

Financial Performance - Fourth quarter revenue reached 183.0million,a13183.0 million, a 13% increase year-over-year, and full-year revenue totaled 696.5 million, up 12% year-over-year [7]. - GAAP net income for the fourth quarter was 0.2million,comparedtoanetlossof0.2 million, compared to a net loss of 18.1 million in the prior-year quarter, with a full-year net loss of 38.5million,improvedfromalossof38.5 million, improved from a loss of 65.4 million in 2023 [7]. - Adjusted EBITDA for the fourth quarter was 37.6million,upfrom37.6 million, up from 23.2 million in the prior-year quarter, with full-year adjusted EBITDA of 125.3million,anincreasefrom125.3 million, an increase from 76.9 million in 2023 [7]. - Q2 Holdings reported revenues of 183,045,000forthethreemonthsendedDecember31,2024,representinga12.0183,045,000 for the three months ended December 31, 2024, representing a 12.0% increase from 162,118,000 in the same period of 2023 [30]. - The company achieved a gross profit of 96,343,000forthethreemonthsendedDecember31,2024,comparedto96,343,000 for the three months ended December 31, 2024, compared to 81,393,000 in the prior year, indicating a gross margin improvement [30]. - Operating expenses totaled 97,918,000forthethreemonthsendedDecember31,2024,slightlydownfrom97,918,000 for the three months ended December 31, 2024, slightly down from 99,410,000 in the same quarter of 2023 [30]. - Q2 Holdings reported a net income of 164,000forthethreemonthsendedDecember31,2024,asignificantrecoveryfromanetlossof164,000 for the three months ended December 31, 2024, a significant recovery from a net loss of 18,079,000 in the same period of 2023 [30]. - Non-GAAP gross profit for the twelve months ended December 31, 2024, was 390,207thousand,comparedto390,207 thousand, compared to 340,860 thousand in 2023, reflecting a growth of 14.5% [34]. - Adjusted EBITDA for the twelve months ended December 31, 2024, reached 125,338thousand,significantlyhigherthan125,338 thousand, significantly higher than 76,940 thousand in 2023, marking an increase of 63.2% [34]. - Free cash flow for the twelve months ended December 31, 2024, was 106,720thousand,comparedto106,720 thousand, compared to 39,649 thousand in 2023, indicating a substantial increase of 169.5% [36]. - GAAP operating loss narrowed to 1,575thousandinQ42024fromalossof1,575 thousand in Q4 2024 from a loss of 18,017 thousand in Q4 2023, showing a significant improvement [34]. - Non-GAAP operating income for the twelve months ended December 31, 2024, was 95,464thousand,comparedto95,464 thousand, compared to 49,660 thousand in 2023, reflecting an increase of 92.2% [34]. - GAAP net income for Q4 2024 was 164thousand,arecoveryfromanetlossof164 thousand, a recovery from a net loss of 18,079 thousand in Q4 2023 [34]. Revenue Growth and Projections - Subscription Annualized Recurring Revenue increased to 682million,a15682 million, a 15% year-over-year growth from 594 million at the end of 2023 [16]. - Total committed Backlog reached approximately 2.2billion,representing92.2 billion, representing 9% sequential growth and 21% year-over-year growth [16]. - The company anticipates total revenue for Q1 2025 to be between 184.0 million and 188.0million,representingyear−over−yeargrowthof11188.0 million, representing year-over-year growth of 11% to 14% [20]. - Q2 updated its three-year financial framework, increasing the average annual subscription revenue growth target from 14% to 15% [13]. Cash Flow and Assets - Cash and cash equivalents rose to 358,560,000 as of December 31, 2024, compared to 229,655,000attheendof2023,indicatingimprovedliquidity[28].−Thecompanyreportedanetcashprovidedbyoperatingactivitiesof229,655,000 at the end of 2023, indicating improved liquidity [28]. - The company reported a net cash provided by operating activities of 135,751,000 for the twelve months ended December 31, 2024, compared to 70,292,000inthepreviousyear,showingenhancedoperationalefficiency[32].−NetcashprovidedbyoperatingactivitiesforthetwelvemonthsendedDecember31,2024,was70,292,000 in the previous year, showing enhanced operational efficiency [32]. - Net cash provided by operating activities for the twelve months ended December 31, 2024, was 135,751 thousand, up from 70,292thousandin2023,anincreaseof93.470,292 thousand in 2023, an increase of 93.4% [36]. - The total assets of Q2 Holdings increased to 1,294,795,000 as of December 31, 2024, up from 1,201,425,000ayearearlier,reflectinggrowthinthecompany′sfinancialposition[28].StrategicInitiativesandMarketOutlook−ThecompanysignedfiveTier1digitalbankingcontracts,includingfournewcustomersandanexpansionwithinanexistingcustomer[8].−Q2′smanagementexpressedconfidenceincapitalizingonmarketopportunitiesanddrivingcontinuedsuccessinthecomingyears[24].−Thecompanyraiseditsfull−year2026freecashflowconversiontargetfrom701,201,425,000 a year earlier, reflecting growth in the company's financial position [28]. Strategic Initiatives and Market Outlook - The company signed five Tier 1 digital banking contracts, including four new customers and an expansion within an existing customer [8]. - Q2's management expressed confidence in capitalizing on market opportunities and driving continued success in the coming years [24]. - The company raised its full-year 2026 free cash flow conversion target from 70% to 85% [13]. - Future outlook includes a focus on developing AI-based solutions and expanding international operations, despite potential geopolitical and market risks [26]. - The company has emphasized the risks associated with managing growth and global operations, particularly in the context of economic uncertainties and regulatory changes [26]. Profitability Challenges - Q2 Holdings' accumulated deficit increased to 664,230,000 as of December 31, 2024, from 625,694,000ayearearlier,highlightingongoingchallengesinprofitability[28].−Non−GAAPgrossmarginimprovedto57.4625,694,000 a year earlier, highlighting ongoing challenges in profitability [28]. - Non-GAAP gross margin improved to 57.4% in Q4 2024 from 56.0% in Q4 2023, and for the full year, it increased to 56.0% from 54.5% [34]. - The company reported a non-GAAP sales and marketing expense of 89,172 thousand for the twelve months ended December 31, 2024, down from $92,751 thousand in 2023, indicating a reduction of 3.1% [34].