Q2 (QTWO)2025-02-12 22:03Customer Metrics - As of December 31, 2024, the company had 460 Installed Customers on its digital banking platform, an increase from 450 in 2023 and 444 in 2022[257] - The number of Registered Users reached approximately 24.7 million as of December 31, 2024, up from 22.0 million in 2023 and 21.1 million in 2022[258] - Subscription revenue growth was 16% year over year as of December 31, 2024, driven by increased demand for digital banking solutions[279] Financial Performance - GAAP revenue for the year ended December 31, 2024, was $696,464,000, an increase from $624,624,000 in 2023 and $565,673,000 in 2022[266] - Non-GAAP total revenue for 2024 was $696,464,000, which is equivalent to GAAP total revenue, with no impact from purchase accounting[265] - Non-GAAP operating income for 2024 was $95,464,000, compared to $49,660,000 in 2023 and $16,397,000 in 2022[270] - Adjusted EBITDA for 2024 was $125,338,000, up from $76,940,000 in 2023 and $36,891,000 in 2022[274] - The net loss for 2024 was $38.536 million, compared to a net loss of $65.384 million in 2023, indicating an improvement in financial performance[323] - The company recorded a loss from operations of $42.263 million in 2024, a reduction from a loss of $86.057 million in 2023[323] Revenue Composition - Total ARR reached $824.2 million for the year ended December 31, 2024, compared to $734.8 million in 2023 and $655.2 million in 2022[261] - Subscription Annual Recurring Revenue (ARR) was $681.9 million for the year ended December 31, 2024, an increase from $593.9 million in 2023 and $500.9 million in 2022[261] - Revenues increased by $71.8 million, or 11.5%, from $624.6 million in 2023 to $696.5 million in 2024, primarily driven by a $77.7 million increase in subscription revenue[329] Cost and Expenses - Cost of revenues primarily includes salaries and personnel-related costs, which are essential for providing services to customers[280] - Cost of revenues rose by $20.0 million, or 6.2%, from $321.973 million in 2023 to $341.983 million in 2024, mainly due to a $9.2 million increase in personnel costs and an $8.8 million increase in infrastructure-related costs[330] - Total operating expenses increased to $396.744 million in 2024, with a decrease in sales and marketing expenses by $3.6 million, or 3.3%[323][333] - Research and development expenses increased by $5.9 million, or 4.3%, from $137.334 million in 2023 to $143.244 million in 2024, reflecting growth in the R&D organization[335] - General and administrative expenses increased by $12.8 million, or 11.6%, from $110.2 million in 2023 to $122.9 million in 2024, primarily due to a $16.1 million increase in personnel costs[337] Investments and Future Plans - The company continues to invest in expanding its digital banking platform and enhancing its service offerings to support customer needs and digital transformation[255] - The company plans to continue investing in technology innovation and software development to enhance existing solutions and expand its product portfolio[254] - The company plans to increase investments in implementation and customer support teams and technology infrastructure to support growth and migration to public cloud service providers[283] Cash Flow and Liquidity - Net cash provided by operating activities was $135.8 million in 2024, influenced by non-cash adjustments of $189.1 million and a net loss of $38.5 million[349] - As of December 31, 2024, the company had cash, cash equivalents, and investments totaling $446.6 million, indicating strong liquidity to meet cash requirements for the next twelve months[346] Debt and Financial Instruments - As of December 31, 2024, the company had an outstanding principal amount of $304.0 million of 2026 Notes with a fixed annual interest rate of 0.75% and $191.0 million of 2025 Notes with a fixed annual interest rate of 0.125%[358] - The company has no amounts drawn on the Revolving Credit Agreement as of December 31, 2024, indicating no current exposure to variable interest rates[359] Market and Economic Conditions - The financial services industry is undergoing significant transformation, with increasing demand for digital solutions from financial institutions and the rise of FinTechs and Alt-FIs[249] - The company does not believe inflation has had a direct material effect on its business, but significant inflationary pressures could harm its financial condition and results of operations[362]