Total first quarter revenue of $54.8 million,
up 23 percent year-over-year, and up 6 percent from the previous
quarter
In Balance Sheets, "Total current liabilities"
for March 31, 2018 (unaudited) should read: 61,795 (instead of
63,305).
The corrected release reads:
Q2 HOLDINGS, INC. ANNOUNCES FIRST QUARTER
2018 FINANCIAL RESULTS
Total first quarter revenue of $54.8 million,
up 23 percent year-over-year, and up 6 percent from the previous
quarter
Q2 Holdings, Inc. (NYSE:QTWO), a leading provider of secure,
experience-driven digital banking solutions, today announced
results for its first quarter ending March 31, 2018.
First Quarter 2018 Results
Please note these results reflect the impact from the adoption
of ASC 606, Contracts with Customers, effective Jan. 1, 2018.
- Revenue for the first quarter of $54.8
million, up 23 percent year-over-year and up 6 percent from the
previous quarter.
- GAAP gross margin for the first quarter
of 50.8 percent, up from 48.9 percent one year ago. Non-GAAP gross
margin for the first quarter of 54.3 percent, up from 52.5 percent
one year ago.
- GAAP net loss for the first quarter of
$6.0 million, which compares to a GAAP net loss of $7.0 million for
the first quarter of 2017, and $5.5 million for the fourth quarter
of 2017. Adjusted EBITDA for the first quarter of positive $5.0
million, an improvement from positive $1.1 million one year ago and
positive $4.1 million for the fourth quarter of 2017.
“We had a strong start to 2018, sustaining our bookings momentum
in what is typically a seasonally slower quarter,” said Matt Flake,
CEO of Q2. “Having just wrapped up our annual client conference, I
believe our customers are generally optimistic about their
improving operating environments. When you combine this with three
consecutive quarters of positive bookings momentum, I believe we
are well positioned for solid growth in 2018.”
First Quarter 2018 Highlights.
- Signed a Top 50 credit union and two
Tier 1 banks in the first quarter, including a $10 billion bank in
the Southeast and a $7 billion bank in the West.
- Exited the first quarter with
approximately 10.9 million registered users on the Q2 platform,
representing 22 percent year-over-year growth and up 5 percent
sequentially.
- Continued Q2 Open momentum, signing
MoneyLion, a savings and investment platform with two million
customers.
Financial Outlook
Q2 Holdings is providing guidance for its second quarter 2018 as
follows:
- Total revenue of $57.9 million to $58.5
million, which would represent year-over-year growth of 22 percent
to 23 percent.
- Adjusted EBITDA of $4.7 million to $5.3
million. GAAP net loss is the most comparable GAAP measure to
adjusted EBITDA. Adjusted EBITDA differs from GAAP net loss in that
it excludes things such as depreciation and amortization,
stock-based compensation, acquisition-related costs, interest,
income taxes and unoccupied lease charges. Q2 Holdings is unable to
predict with reasonable certainty the ultimate outcome of these
exclusions without unreasonable effort. Therefore, Q2 Holdings has
not provided guidance for GAAP net loss or a reconciliation of the
foregoing forward-looking adjusted EBITDA guidance to GAAP net
loss.
Q2 Holdings is providing guidance for the full-year 2018 as
follows:
- Total revenue of $236.5 million to
$238.5 million, which would represent year-over-year growth of 22
percent to 23 percent.
- Adjusted EBITDA of $21 million to $23
million. Adjusted EBITDA differs from GAAP net loss in that it
excludes things such as depreciation and amortization, stock-based
compensation, acquisition-related costs, interest, income taxes and
unoccupied lease charges. Q2 Holdings is unable to predict with
reasonable certainty the ultimate outcome of these exclusions
without unreasonable effort. Therefore, Q2 Holdings has not
provided guidance for GAAP net loss or a reconciliation of the
foregoing forward-looking adjusted EBITDA guidance to GAAP net
loss.
Conference Call Details
Date:
May 3, 2018
Time:
8:30 a.m. EDT
Hosts:
Matt Flake, CEO / Jennifer Harris, CFO
Dial in:
US toll free: 1-833-241-4254
International: 1-647-689-4205
Conference ID:
2697347
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 services
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, experience-driven digital
banking solutions headquartered in Austin, Texas. We are
driven by a mission to build stronger communities by strengthening
their financial institutions. Q2 provides the industry’s
most comprehensive digital banking platform, enriched through
actionable data insights, open development tools and an evolving
fintech ecosystem. We help clients elevate the experience,
drive efficiency and grow faster. To learn more about Q2,
visit www.q2ebanking.com.
Use of Non-GAAP Measures
Q2 uses the following non-GAAP financial measures: adjusted
EBITDA; non-GAAP gross margin; non-GAAP gross profit; non-GAAP
sales and marketing expense; non-GAAP research and development
expense; non-GAAP general and administrative expense; non-GAAP
operating loss; and, non-GAAP net loss. Management believes that
these non-GAAP financial measures 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, acquisition-related costs, amortization
of technology and intangibles, and unoccupied lease charges. In the
case of non-GAAP gross margin and non-GAAP gross profit, Q2 adjusts
gross profit and gross margin for stock-based compensation and
amortization of acquired technology. In the case of non-GAAP sales
and marketing expense, non-GAAP research and development expense,
and non-GAAP general and administrative expense, Q2 adjusts the
corresponding GAAP expense to exclude stock-based compensation. In
the case of non-GAAP operating loss and non-GAAP net loss, Q2
adjusts operating loss and net loss, respectively, for stock-based
compensation, acquisition related-costs, amortization of acquired
technology, amortization of acquired intangibles, and unoccupied
lease charges.
These non-GAAP measures should be considered in addition to, not
as a substitute for or superior to, the closest GAAP measures, 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 these non-GAAP measures 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 positive sales and bookings momentum,
increased activity in the bank market and the effects of the
improved economic environment on banks’ decision-making, optimism
about our pipeline and Q2’s performance in 2018, 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 of 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, in particular with respect
to Tier 1 customers; (c) the risk that Q2’s increased focus on
selling to larger Tier 1 customers may result in greater
uncertainty and variability in Q2’s business and sales results; (d)
the risk that changes in Q2’s market, business or sales
organization negatively impacts its ability to sell its products
and services; (e) 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; (f) the risk that errors, interruptions or delays in
Q2’s products or services or Web hosting negatively impacts Q2’s
business and sales; (g) risks associated with data breaches and
breaches of security measures within Q2’s products, systems and
infrastructure and the resultant harm to Q2’s business and its
ability to sell its products and services; (h) the impact that a
slowdown in the economy, financial markets, and credit markets has
on Q2’s customers and 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 required by customers and governmental authorities;
(j) the risks inherent in technology and implementation
partnerships that could cause harm to Q2’s business; (k) the
difficulties and costs Q2 may encounter with complex
implementations of its solutions and the resulting impact on
reputation and the timing of its revenue from any delayed
implementations; (l) the risk that Q2 will not be able to maintain
historical contract terms such as pricing and duration; (m) the
risks associated with managing growth and the challenges associated
with improving operations and hiring, retaining and motivating
employees to support such growth; (n) the risk that modifications
or negotiations 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; (o)
the risks associated with integrating acquired companies and
successfully selling and maintaining their solutions; (p)
litigation related to intellectual property and other matters and
any related claims, negotiations and settlements; and (q) the risks
associated with further consolidation in the financial services
industry.
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 Services 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, 2018 2017 (unaudited)
(unaudited) Assets Current assets: Cash and cash equivalents $
255,411 $ 57,961 Restricted cash 2,315 2,315 Investments 38,704
41,685 Accounts receivable, net 16,897 13,203 Contract assets,
current portion 336 - Prepaid expenses and other current assets
4,699 3,115 Deferred solution and other costs, current portion
8,392 9,246 Deferred implementation costs, current portion
3,740 3,562 Total current assets 330,494
131,087 Property and equipment, net 36,592 34,544 Deferred solution
and other costs, net of current portion 16,333 12,973 Deferred
implementation costs, net of current portion 8,374 8,295 Intangible
assets, net 10,556 12,034 Goodwill 12,876 12,876 Contract assets,
net of current portion 5,539 - Other long-term assets 1,090
1,006 Total assets $ 421,854 $ 212,815
Liabilities and stockholders' equity Current
liabilities:
Accounts payable and accrued
liabilities
$
23,451
$ 29,694 Deferred revenues, current portion 38,344
38,379 Total current liabilities
61,795
68,073 Convertible notes, net of current portion
175,170
- Deferred revenues, net of current portion 20,599 28,289 Deferred
rent, net of current portion 9,075 9,393 Other long-term
liabilities
360
438 Total liabilities 266,999 106,193
Stockholders' equity: Common stock 4 4 Treasury stock - (855 )
Additional paid-in capital 298,087 259,726 Accumulated other
comprehensive loss (163 ) (139 ) Accumulated deficit
(143,073 ) (152,114 ) Total stockholders' equity
154,855 106,622 Total liabilities and
stockholders' equity $ 421,854 $ 212,815
Q2 Holdings, Inc. Condensed
Consolidated Statements of Comprehensive Loss (in thousands,
except per share data)
Three Months Ended March 31,
2018 2017 (unaudited) (unaudited) Revenues $
54,808 $ 44,534
Cost of revenues (1) (2)
26,977 22,772 Gross profit 27,831
21,762 Operating expenses: Sales and marketing (1) 10,966
9,878 Research and development (1) 11,157 9,651 General and
administrative (1) 10,296 8,452 Acquisition related costs 256 348
Amortization of acquired intangibles 368 371
Total operating expenses 33,043 28,700
Loss from operations (5,212 ) (6,938 ) Other income
(expense), net (1,023 ) 34 Loss before income
taxes (6,235 ) (6,904 ) Benefit from (provision for) income taxes
187 (136 ) Net loss $ (6,048 ) $ (7,040 )
Other comprehensive loss Unrealized loss on available-for-sale
investments (24 ) (1 ) Comprehensive loss $ (6,072 )
$ (7,041 ) Net loss per common share: Net loss per common share,
basic and diluted $ (0.14 ) $ (0.17 ) Weighted average common
shares outstanding, basic and diluted 42,170
40,630 (1) Includes stock-based compensation
expenses as follows:
Three Months Ended March 31,
2018 2017 Cost of revenues $
1,015 $ 724 Sales and marketing 1,226 631 Research and development
1,356 945 General and administrative 2,498
1,897 Total stock-based compensation expenses $ 6,095
$ 4,197 (2) Includes amortization of acquired
technology of $0.9 million for each of the three months ended March
31, 2018 and 2017.
Q2 Holdings, Inc.
Condensed Consolidated Statements of Cash Flows (in
thousands)
Three Months Ended March
31, 2018 2017 (unaudited) (unaudited) Cash flows
from operating activities: Net loss $ (6,048 ) $ (7,040 )
Adjustments to reconcile net loss to net
cash used in operating activities:
Amortization of deferred implementation, solution and other costs
2,218 1,719 Depreciation and amortization 3,878 3,525 Amortization
of debt issuance costs 123 24 Amortization of premiums on
investments 56 69
Amortization of debt discount
1,099 - Stock-based compensation expenses 6,095 4,197 Deferred
income taxes 36 117 Other non-cash charges 22 (6 ) Changes in
operating assets and liabilities (14,582 ) (13,273 )
Cash used in operating activities (7,103 ) (10,668 ) Cash flows
from investing activities: Net redemptions of investments 2,901
2,770 Purchases of property and equipment (5,396 ) (5,361 )
Business combinations and asset acquisitions, net of cash acquired
(150 ) (1,316 ) Capitalization of software development costs
- (532 ) Cash used in investing activities (2,645 )
(4,439 ) Cash flows from financing activities: Proceeds from
issuance of convertible notes, net of issuance costs 223,675 -
Purchase of convertible notes bond hedge (41,699 ) - Proceeds from
issuance of warrants 22,379 - Proceeds from issuance of common
stock 2,843 2,990 Net cash provided by
financing activities 207,198 2,990 Net
increase (decrease) in cash and cash equivalents 197,450 (12,117 )
Cash, cash equivalents, and restricted cash beginning of period
60,276 56,188 Cash, cash equivalents,
and restricted cash end of period $ 257,726 $ 44,071
Reconciliation of cash, cash equivalents,
and restricted cash as shown in the statements of cash flows:
Cash and cash equivalents $ 255,411 $ 42,756 Restricted cash
2,315 1,315 Total cash, cash equivalents, and
restricted cash $ 257,726 $ 44,071
Q2 Holdings, Inc. Reconciliation of
GAAP to Non-GAAP Measures (in thousands, except per share data)
Three Months Ended March 31, 2018 2017
(unaudited) (unaudited) GAAP gross profit $ 27,831 $ 21,762
Stock-based compensation 1,015 724 Amortization of acquired
technology 912 885 Non-GAAP gross
profit $ 29,758 $ 23,371 Non-GAAP gross
margin: Non-GAAP gross profit $ 29,758 $ 23,371 GAAP revenue
54,808 44,534 Non-GAAP gross margin
54.3 % 52.5 % GAAP sales and marketing expense $
10,966 $ 9,878 Stock-based compensation (1,226 ) (631
) Non-GAAP sales and marketing expense $ 9,740 $ 9,247
GAAP research and development expense $ 11,157 $
9,651 Stock-based compensation (1,356 ) (945 )
Non-GAAP research and development expense $ 9,801 $ 8,706
GAAP general and administrative expense $ 10,296 $
8,452 Stock-based compensation (2,498 ) (1,897 )
Non-GAAP general and administrative expense $ 7,798 $ 6,555
GAAP operating loss $ (5,212 ) $ (6,938 ) Stock-based
compensation 6,095 4,197 Acquisition related costs 256 348
Amortization of acquired technology 912 885 Amortization of
acquired intangibles 368 371 Non-GAAP
operating income (loss) $ 2,419 $ (1,137 ) GAAP net
loss $ (6,048 ) $ (7,040 ) Stock-based compensation 6,095 4,197
Acquisition related costs 256 348 Amortization of acquired
technology 912 885 Amortization of acquired intangibles 368
371 Non-GAAP net income (loss) $ 1,583
$ (1,239 )
Reconciliation from diluted
weighted-average number of common shares as reported to pro forma
diluted weighted average number of common shares
Diluted weighted-average number of common shares, as reported
42,170 40,630 Weighted-average effect of potentially dilutive
shares 1,970 - Pro forma diluted
weighted-average number of common shares 44,140 40,630
Calculation of non-GAAP income (loss) per share: Non-GAAP net
income (loss) $ 1,583 $ (1,239 )
Diluted weighted-average number of common
shares (pro forma for three months ended March 31, 2018)
44,140 40,630 Non-GAAP net income
(loss) per share $ 0.04 $ (0.03 ) Reconciliation of
GAAP net loss to adjusted EBITDA: GAAP net loss $ (6,048 ) $ (7,040
) Depreciation and amortization 3,878 3,525 Stock-based
compensation 6,095 4,197 (Benefit from) provision for income taxes
(187 ) 136 Interest (income) expense, net 1,023 (34 ) Acquisition
related costs 256 348 Adjusted EBITDA $
5,017 $ 1,132
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version on businesswire.com: https://www.businesswire.com/news/home/20180502006462/en/
MEDIA CONTACT:Red Fan CommunicationsEmma ChaseO: (512)
551-9253 / C: (512)
917-4319emma@redfancommunications.comorINVESTOR CONTACT:Q2
Holdings, Inc.Bob GujavartyO: (512)
439-3447bobby.gujavarty@q2ebanking.com
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