Total first quarter revenue of $24.2 million,
up 44 percent year-over-year
Q2 Holdings, Inc. (NYSE:QTWO), a leading provider of secure
virtual banking solutions to regional and community financial
institutions, today announced results for its first quarter ending
March 31, 2015.
First Quarter 2015 Results
- Revenue for the first quarter of $24.2
million, up 44 percent year-over-year and up 9 percent
sequentially.
- Non-GAAP gross margin for the first
quarter of 45.8 percent, up from 40.1 percent one year ago. GAAP
gross margin for the first quarter of 45.1 percent, up from 39.3
percent one year ago.
- Adjusted EBITDA for the first quarter
of negative $2.1 million, an improvement from negative $3.4 million
one year ago and negative $2.2 million in the fourth quarter. GAAP
Net Loss of $4.6 million dollars for the period.
“The first quarter saw strong execution from our delivery teams,
which resulted in record user growth for the company. I’m proud to
say that we brought International Bank of Commerce, a more than $12
billion bank, live on the Q2platform,” said Matt Flake, president
and CEO of Q2 Holdings. “IBC Bank went live in the first quarter
and reported that a majority of their online account holders logged
in within the first two weeks of going live. The success of IBC
Bank is further evidence that Q2 is delivering industry leading
products which are helping Q2 customers win in the
marketplace.”
First Quarter 2015 Highlights
- Exited the first quarter with
approximately 5.2 million registered users, up 50 percent
year-over-year and 19 percent quarter-over-quarter.
- Ended the first quarter with nearly 50
percent of users on version 4.0 of the unified user experience.
This represents the most rapid adoption of a new platform version
in company history.
- A leading credit union in the Western
United States adopted a broad suite of Q2 products including
commercial banking, retail banking, and security.
Financial Outlook
Q2 Holdings is providing guidance for its second quarter 2015 as
follows:
- Total revenue of $25.4 million to $25.8
million, which would represent year-over-year growth of 33 percent
to 35 percent.
- Adjusted EBITDA of negative $3.0
million to negative $2.4 million.
Q2 Holdings is providing guidance for the full-year 2015 as
follows:
- Total revenue of $105 million to $107
million, which would represent year-over-year growth of 33 percent
to 35 percent.
- Adjusted EBITDA of negative $10 million
to negative $8.5 million.
Conference Call Details
Date:
May 7, 2015
Time:
5:00 p.m. EDT
Hosts:
Matt Flake, CEO / Jennifer Harris, CFO
Dial in:
US toll free: 1-877-201-0168 International: 1-647-788-4901
Conference ID:
27926453
Please join the conference call at least 10 minutes before start
time to ensure the line is connected. A live webcast of the
conference call will be accessible from the investor relations
section of the Q2 Holdings, Inc. website at
http://investors.q2ebanking.com/.
A replay of the webcast will also be available at this website
on a temporary basis shortly after the call.
About Q2 Holdings, Inc.
Q2 is a leading provider of secure, cloud-based virtual banking
solutions headquartered in Austin, Texas. Q2 enables regional and
community financial institutions, or RCFIs, to deliver a robust
suite of integrated virtual banking services and engage more
effectively with their retail and commercial account holders who
expect to bank anytime, anywhere and on any device. Q2 solutions
are often the most frequent point of interaction between its RCFI
customers and their account holders. As such, Q2 purpose-built its
solutions to deliver a compelling, consistent user experience
across digital channels and drive the success of its customers by
extending their local brands, enabling improved account holder
retention and creating incremental sales opportunities. To learn
more about Q2 visit q2ebanking.com.
Use of Non-GAAP Measures
Management believes that adjusted EBITDA and non-GAAP gross
margin are useful measures of operating performance because they
exclude items that Q2 does not consider indicative of its core
performance. In the case of adjusted EBITDA, Q2 adjusts net loss
for such things as interest, taxes, depreciation and amortization,
stock-based compensation, loss from discontinued operations and
unoccupied lease charges. In the case of non-GAAP gross margin, Q2
adjusts gross margin for stock-based compensation. However, these
non-GAAP measures should be considered in addition to, not as a
substitute for or superior to, net loss and GAAP gross margin, or
other financial measures prepared in accordance with GAAP. A
reconciliation to the closest GAAP measures of these non-GAAP
measures is contained in tabular form on the attached unaudited
condensed consolidated financial statements.
Q2’s management uses adjusted EBITDA and non-GAAP gross margin
as measures of operating performance; to prepare Q2’s annual
operating budget; to allocate resources to enhance the financial
performance of Q2’s business; to evaluate the effectiveness of Q2’s
business strategies; to provide consistency and comparability with
past financial performance; to facilitate a comparison of Q2’s
results with those of other companies, many of which use similar
non-GAAP financial measures to supplement their GAAP results; and
in communication with our board of directors concerning Q2’s
financial performance.
Forward-looking Statements
This press release contains forward-looking statements,
including statements about Q2’s ability to help its customers
succeed in the financial services industry and Q2’s quarterly and
annual financial guidance. The forward-looking statements contained
in this press release are based upon Q2’s historical performance
and its current plans, estimates and expectations and are not a
representation that such plans, estimates or expectations will be
achieved. Factors that could cause actual results to differ
materially from those described herein include risks related to:
(a) the risk that Q2 will face increased competition in its
existing markets and as it enters new sections of the market with
Tier 1 customers and new products and services; (b) the risk that
the market for Q2’s solutions does not grow as anticipated; (c)
Q2’s increased focus on selling to larger Tier 1 customers may
result in greater risk and variability in Q2’s business and sales
results (d) the challenges and costs associated with selling,
implementing and supporting Q2’s solutions, particularly for larger
customers with more complex requirements and longer implementation
processes; (e) errors, interruptions or delays in Q2’s service or
Web hosting; (f) risks associated with breaches of security
measures within Q2’s products, systems and infrastructure; (g)
technological and regulatory developments; (h) the impact that a
slowdown in the economy, financial markets, and credit markets has
on Q2’s business sales cycles, prospects and customers’ spending
decisions and timing of implementation decisions, particularly in
regions where a significant number of Q2’s customers are
concentrated; (i) the difficulties and risks associated with
developing and selling complex new solutions and enhancements with
the technical and regulatory specifications and functionality
desired by customers and governmental authorities; (j) the
difficulties and costs Q2 may encounter with complex
implementations of its solutions and the resulting impact on the
timing of its revenue from any delayed implementations; (k) the
risk that Q2 will not be able to maintain historical contract terms
such as pricing and duration; (l) the risks associated with
managing growth and the challenges associated with improving
operations and hiring, retaining and motivating employees to
support such growth; (m) the risk that modification or negotiation
of contractual arrangements will be necessary during Q2’s
implementations of its solutions or the general risks associated
with the complexity of Q2’s customer arrangements; and (n)
litigation related to intellectual property and other matters and
any related claims, negotiations and settlements.
Additional information relating to the uncertainty affecting the
Q2 business are contained in Q2’s filings with the Securities and
Exchange Commission. These documents are available on the SEC
Filings section of the Investor Relations section of Q2’s website
at http://investors.q2ebanking.com/. These forward-looking
statements represent Q2’s expectations as of the date of this press
release. Subsequent events may cause these expectations to change,
and Q2 disclaims any obligations to update or alter these
forward-looking statements in the future, whether as a result of
new information, future events or otherwise.
Q2 Holdings, Inc. Condensed Consolidated Balance
Sheets (in thousands)
March 31, December 31, 2015 2014
(unaudited) Assets Current assets: Cash and cash equivalents $
94,170 $ 67,979 Restricted cash 829 829 Investments 25,525 20,956
Accounts receivable, net 7,225 5,007 Prepaid expenses and other
current assets 3,282 2,695 Deferred solution and other costs,
current portion 4,070 5,060 Deferred implementation costs, current
portion 2,054 1,996 Total current
assets 137,155 104,522 Property and equipment, net 19,001 18,521
Deferred solution and other costs, net of current portion 8,192
7,159 Deferred implementation costs, net of current portion 5,554
5,378 Other long-term assets 1,141 1,226
Total assets $ 171,043 $ 136,806
Liabilities and stockholders' equity Current liabilities: Accounts
payable and accrued liabilities $ 16,563 $ 15,190 Deferred
revenues, current portion 18,576 17,289 Capital lease obligations,
current portion 338 408 Total current
liabilities 35,477 32,887 Deferred revenues, net of current portion
21,025 19,436 Capital lease obligations, net of current portion 105
167 Deferred rent, net of current portion 4,504 4,694 Other
long-term liabilities 709 682 Total
liabilities 61,820 57,866 Stockholders' equity: Common stock 4 3
Treasury stock (27 ) (20 ) Additional paid-in capital 178,262
143,337 Accumulated other comprehensive loss (5 ) (14 ) Accumulated
deficit (69,011 ) (64,366 ) Total stockholders'
equity 109,223 78,940 Total liabilities
and stockholders' equity $ 171,043 $ 136,806
Q2 Holdings, Inc. Condensed Consolidated
Statements of Comprehensive Loss (in thousands, except per
share data)
Three Months
Ended March 31, 2015 2014 (unaudited) (unaudited)
Revenues $ 24,157 $ 16,834
Cost of revenues (1)
13,272 10,212 Gross profit 10,885 6,622
Operating expenses: Sales and marketing (1) 6,194 5,509
Research and development (1) 4,151 2,736
General and administrative (1)
5,125 3,718 Total operating expenses
15,470 11,963 Loss from operations
(4,585 ) (5,341 ) Other income (expense), net (28 )
(207 ) Loss before income taxes (4,613 ) (5,548 ) Provision for
income taxes (32 ) (18 ) Net loss $ (4,645 ) $ (5,566
) Other comprehensive loss Unrealized gain on available for sale
securities 9 - Comprehensive loss $
(4,636 ) $ (5,566 ) Net loss per common share: Net loss per common
share, basic and diluted $ (0.13 ) $ (0.39 ) Weighted average
common shares outstanding, basic and diluted 35,633
14,107
(1)
Includes stock-based compensation expenses as follows:
Three
Months Ended March 31, 2015 2014 Cost of revenues
$ 178 $ 126 Sales and marketing 292 167 Research and development
162 107 General and administrative 690 518
Total stock-based compensation expenses $ 1,322 $ 918
Q2 Holdings, Inc. Condensed
Consolidated Statements of Cash Flows (in thousands)
Three Months Ended March
31, 2015 2014 (unaudited) (unaudited) Cash flows
from operating activities: Net loss $ (4,645 ) $ (5,566 )
Adjustments to reconcile net loss to net
cash used in operating activities:
Amortization of deferred implementation, solution and other costs
1,127 967 Depreciation and amortization 1,203 999 Amortization of
debt issuance costs 24 24 Amortization of premiums on investments
89 - Stock-based compensation expenses 1,322 918 Other non-cash
charges 15 15 Changes in operating assets and liabilities
(1,779 ) (1,855 ) Net cash used in operating activities
(2,644 ) (4,498 ) Cash flows from investing activities: Net
purchases of investments (4,650 ) - Purchases of property and
equipment (436 ) (1,830 ) Cash used in investing
activities (5,086 ) (1,830 ) Cash flows from financing activities:
Proceeds and payments on line of credit and capital leases, net
(136 ) (223 ) Proceeds from issuance of common stock 34,057
74,549 Net cash provided by financing
activities 33,921 74,326 Net increase
in cash and cash equivalents 26,191 67,998 Cash and cash
equivalents, beginning of period 67,979 18,675
Cash and cash equivalents, end of period $ 94,170 $
86,673
Q2 Holdings, Inc.
Reconciliation of GAAP to Non-GAAP Measures (in thousands,
except per share data)
Three
Months Ended March 31, 2015 2014 (unaudited)
(unaudited) GAAP gross profit $ 10,885 $ 6,622 Stock-based
compensation 178 126 Non-GAAP gross
profit $ 11,063 $ 6,748 Non-GAAP gross margin:
Non-GAAP gross profit $ 11,063 $ 6,748 GAAP revenue 24,157
16,834 Non-GAAP gross margin 45.8 %
40.1 % GAAP sales and marketing expense $ 6,194 $
5,509 Stock-based compensation (292 ) (167 ) Non-GAAP
sales and marketing expense $ 5,902 $ 5,342
GAAP research and development expense $ 4,151 $ 2,736 Stock-based
compensation (162 ) (107 ) Non-GAAP research and
development expense $ 3,989 $ 2,629 GAAP
general and administrative expense $ 5,125 $ 3,718 Stock-based
compensation (690 ) (518 ) Non-GAAP general and
administrative expense $ 4,435 $ 3,200 GAAP
operating loss $ (4,585 ) $ (5,341 ) Stock-based compensation
1,322 918 Non-GAAP operating loss $
(3,263 ) $ (4,423 ) GAAP net loss $ (4,645 ) $ (5,566 )
Stock-based compensation 1,322 918
Non-GAAP net loss $ (3,323 ) $ (4,648 ) Non-GAAP net loss
per share, basic and diluted Numerator: Non-GAAP net loss $ (3,323
) $ (4,648 ) Denominator: Weighted average common shares
outstanding, basic and diluted 35,633 14,107
Non-GAAP net loss per share, basic and diluted $ (0.09 ) $
(0.33 ) Pro forma non-GAAP net loss per share, basic and
diluted Numerator: Non-GAAP net loss $ (3,323 ) $ (4,648 )
Denominator: Weighted average common shares outstanding, basic and
diluted 35,633 14,107 Plus: assumed conversion of preferred stock
to common stock (1) - 12,526
Denominator for pro forma net loss per share, basic and diluted
35,633 26,633 Pro forma non-GAAP net
loss per share, basic and diluted $ (0.09 ) $ (0.17 )
Reconciliation of net loss to adjusted EBITDA: Net loss $ (4,645 )
$ (5,566 ) Interest (income) expense, net 28 207 Depreciation and
amortization 1,203 999 Stock-based compensation 1,322 918 Provision
for income taxes 32 18 Adjusted EBITDA
$ (2,060 ) $ (3,424 )
(1)
Assumes conversion of all outstanding
shares of preferred stock, on an as-if-converted basis, at the
later of January 1 of each year or the date of issuance of the
preferred stock.
Media Contact:Red Fan CommunicationsKathleen Lucente,
512-551-9253Cell:
512-217-6352kathleen@redfancommunications.comorInvestor
Contact:Q2 Holdings, Inc.Bob Gujavarty,
512-439-3447bobby.gujavarty@q2ebanking.com
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