Press Release Details

Q2 Holdings, Inc. Announces Third Quarter 2022 Financial Results

November 7, 2022

AUSTIN, Texas--(BUSINESS WIRE)-- Q2 Holdings, Inc. (NYSE:QTWO), a leading provider of digital transformation solutions for banking and lending, today announced results for its third quarter ending September 30, 2022.

GAAP Results for the Third Quarter 2022

  • Revenue for the third quarter of $144.8 million, up 14 percent year-over-year and up 3 percent from the second quarter of 2022.
  • GAAP gross margin for the third quarter of 46.2 percent, up from 45.0 percent in the prior-year quarter and 44.8 percent in the second quarter of 2022.
  • GAAP net loss for the third quarter of $27.8 million, compared to GAAP net losses of $31.6 million for the prior-year quarter and $25.2 million for the second quarter of 2022.

Non-GAAP Results for the Third Quarter 2022

  • Non-GAAP revenue for the third quarter of $144.9 million, up 14 percent year-over-year and up 3 percent from the second quarter of 2022.
  • Non-GAAP gross margin for the third quarter of 52.1 percent, up from 51.9 percent for the prior-year quarter and 51.3 percent for the second quarter of 2022.
  • Adjusted EBITDA for the third quarter of $10.8 million, up from $7.3 million for the prior-year quarter and $9.7 million for the second quarter of 2022.

For a reconciliation of our GAAP to non-GAAP results, please see the tables below.

“The third quarter represented our strongest bookings performance of the year,” said Q2 CEO Matt Flake. “Our sales success came from a mix of key wins across digital banking, lending and Helix, with one Enterprise and five Tier 1 deals in total. I am encouraged by the quarter; and believe that our sales results indicate that the demand environment remains positive. Given the economic backdrop, we will manage the business with an increased focus on profitability, and we believe our continued sales execution will drive acceleration in our subscription revenue growth for the remainder of this year and in 2023.”

Third Quarter Highlights

Continued Sales Success, Leading the Industry in Delivering “The Digital Bank”

  • Signed one Enterprise and three Tier 1 digital banking contracts including a(n):
    • Enterprise, Top 50 U.S. bank to utilize our commercial and small business digital banking solutions;
    • Tier 1, Top 50 U.S. credit union to utilize our commercial digital banking solutions;
    • Tier 1 bank to utilize our retail and commercial digital banking solutions;
    • Tier 1 credit union to utilize our retail digital banking solutions.
  • Signed two Tier 1 digital lending contracts including a:
    • Tier 1 Agricultural Lender to utilize our loan pricing solutions;
    • Tier 1, Top 100 U.S. Bank to expand the use of our loan pricing solutions.
  • Exited the third quarter with more than 20.9 million registered users on the Q2 digital banking platform, representing 9 percent year-over-year growth and 4 percent sequential growth.

Facilitating the Convergence of Financial Services

  • Signed a contract with a digital-first insurance company to offer a unique savings account product utilizing our Helix platform.
  • Launched a strategic program with Mana, an online gaming company looking to offer personalized debit cards and checking accounts utilizing our Helix Platform.

“We delivered strong adjusted EBITDA results driven by an acceleration in higher margin subscription revenue growth and proactive cost management,” said David Mehok, Q2 CFO. “Our total revenue results for the quarter came in below our guidance predominately due to lower-than-expected discretionary services and transactional revenue which we believe were partially impacted by macroeconomic conditions. Our revised full-year outlook reflects our expectation to see continued pressure on our lower margin revenue streams and our focus on driving profitable growth.”

Financial Outlook

As of November 7, 2022, Q2 Holdings is providing guidance for its fourth quarter of 2022 and updated guidance for its full-year 2022, which represents Q2 Holdings’ current estimates on Q2 Holdings’ operations and financial results. The financial information below represents forward-looking, non-GAAP financial information, including estimates of non-GAAP revenue and adjusted EBITDA. GAAP net loss is the most comparable GAAP measure to adjusted EBITDA. Adjusted EBITDA differs from GAAP net loss in that it excludes items such as depreciation and amortization, stock-based compensation, acquisition related costs, interest and other (income) expense, income taxes, lease and other restructuring charges, loss on extinguishment of debt and the impact to deferred revenue from purchase accounting. 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. However, it is important to note that these excluded items could be material to our results computed in accordance with GAAP in future periods.

Q2 Holdings is providing guidance for its fourth quarter of 2022 as follows:

  • Total non-GAAP revenue of $148.4 million to $150.4 million, which would represent year-over-year growth of 12 percent to 14 percent.
  • Adjusted EBITDA of $10.5 million to $12.5 million, representing 7 to 8 percent of non-GAAP revenue for the year.

Q2 Holdings is providing updated guidance for the full-year 2022 as follows:

  • Total non-GAAP revenue of $568.0 million to $570.0 million, which would represent year-over-year growth of 13 percent to 14 percent.
  • Adjusted EBITDA of $39.0 million to $41.0 million, representing 7 percent of non-GAAP revenue for the year.

Conference Call Details

Date:

 

Monday, November 7, 2022

Time:

 

5:00 p.m. ET

Hosts:

 

Matt Flake, CEO / David Mehok, CFO / Jonathan Price, EVP Emerging Businesses, Corporate & Business Development

Conference Call Registration:

 

https://conferencingportals.com/event/ZwJrtqJb

Webcast Registration:

 

https://events.q4inc.com/attendee/920160905

All participants must register using the above links (either the webcast or conference call). A webcast of the conference call and financial results will be accessible from the investor relations section of the Q2 website at http://investors.Q2.com/. In addition, a live conference call dial-in will be available upon registration. Participants should dial in at least 10 minutes before the start of the conference call. An archived replay of the webcast will be available on this website for a limited time after the call.

About Q2 Holdings, Inc.

Q2 is a financial experience company dedicated to providing digital banking and lending solutions to banks, credit unions, alternative finance, and fintech companies in the U.S. and internationally. With comprehensive end-to-end solution sets, Q2 enables its partners to provide cohesive, secure, data-driven experiences to every account holder – from consumer to small business and corporate. Headquartered in Austin, Texas, Q2 has offices throughout the world and is publicly traded on the NYSE under the stock symbol QTWO. To learn more, please visit Q2.com.

Use of Non-GAAP Measures

Q2 uses the following non-GAAP financial measures: non-GAAP revenue; 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 expense; non-GAAP operating income (loss); non-GAAP net income; non-GAAP net income per share; and non-GAAP diluted weighted-average number of common shares outstanding. 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 non-GAAP revenue, Q2 adjusts revenue to exclude the impact to deferred revenue from purchase accounting adjustments. In the case of adjusted EBITDA, Q2 adjusts net loss for such items as interest and other (income) expense, taxes, depreciation and amortization, stock-based compensation, acquisition related costs, lease and other restructuring charges, loss on extinguishment of debt and the impact to deferred revenue from purchase accounting. In the case of non-GAAP gross margin and non-GAAP gross profit, Q2 adjusts gross profit and gross margin for stock-based compensation, amortization of acquired technology, acquisition related costs, and the impact to deferred revenue from purchase accounting. 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. Non-GAAP Operating Expense is calculated by taking the sum of non-GAAP sales and marketing expenses, non-GAAP research and development expense, and non-GAAP general and administrative expense. In the case of non-GAAP operating income (loss), non-GAAP net income (loss), and non-GAAP net income (loss) per share, Q2 adjusts operating loss and net loss, respectively, for stock-based compensation, acquisition related costs, amortization of acquired technology, amortization of acquired intangibles, lease and other restructuring charges, loss on extinguishment of debt and the impact to deferred revenue from purchase accounting, and with respect to non-GAAP net income, amortization of debt discount and issuance costs and loss on extinguishment of debt. In the case of non-GAAP diluted weighted-average number of common shares outstanding, Q2 adjusts diluted weighted-average number of common shares outstanding by the weighted-average effect of potentially dilutive shares which include (i) employee equity incentive plans, excluding the impact of unrecognized stock-based compensation expense and (ii) convertible senior notes outstanding and related warrants including the anti-dilutive impact of note hedge and capped call agreements on convertible senior notes outstanding.

There are limitations associated with the use of these non-GAAP financial measures. These non-GAAP financial measures are not prepared in accordance with GAAP, do not reflect a comprehensive system of accounting and may not be completely comparable to similarly titled measures of other companies due to potential differences in the exact method of calculation between companies. Certain items that are excluded from these non-GAAP financial measures can have a material impact on operating and net income (loss). As a result, these non-GAAP financial measures have limitations and 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: Q2’s sales execution and the demand environment for its solutions; declines in discretionary spending from some customers; increased focus on profitability; continued sales execution and acceleration in our subscription revenue growth going forward; the current uncertain and challenging economic conditions and the impact such conditions may have on our revenue streams and our focus on driving profitable growth; 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 or new competition in our existing markets and as we enter new markets or new sections of existing markets, or as we offer new solutions; (b) risks associated with the development of and changes to the market for our solutions compared to our expectations; (c) quarterly fluctuations in our operating results relative to our expectations and guidance and the accuracy of our forecasts; (d) the risks associated with anticipated higher operating expenses in 2022 and beyond; (e) the impact that inflation, rising interest rates or a slowdown in the economy, financial markets and credit markets have and may continue to have on account holder or end user usage of our solutions and on our customers’, prospects and our business sales cycles, our prospects’ and customers’ purchasing, spending decisions, including for some of our non-implementation services, which are more discretionary in nature, and the timing of customer implementation and purchasing decisions; (f) the risks and increased costs associated with managing growth and the challenges associated with improving operations and hiring, retaining and motivating employees to support such growth, particularly in light of the macroeconomic impacts of the novel coronavirus disease, or COVID-19, including increased employee turnover, labor shortages, wage inflation and extreme competition for talent; (g) the risk that the COVID-19 pandemic and the associated efforts to limit its spread continue to negatively impact or disrupt the markets for our solutions and that the markets for our solutions do not return to normal or grow as anticipated; (h) the risks associated with Q2’s transactional business which are typically driven by end-user behavior which can be influenced by external drivers outside of our control; (i) risks associated with effectively managing costs in light of the challenging macroeconomic environment, including the impacts of wage inflation on our operating costs; (j) risks associated with the general economic and geopolitical impacts of Russia’s invasion of Ukraine, including the heightened risk of cyberattacks on financial services and other critical infrastructure, and continued or increased inflation partially driven by increased energy costs or other unpredictable economic impacts that have and may continue to negatively affect demand for our solutions; (k) risks associated with managing Q2’s business in response to continued challenging macroeconomic conditions and any anticipated or resulting recession; (l) risks associated with accurately forecasting and managing the impacts of any macroeconomic downturn on Q2 customers and their end users, including in particular the impacts of any downturn on FinTechs and Q2’s arrangements with them, which represent a newer market opportunity for Q2, a more complex revenue model for Q2 and which may be more vulnerable to an economic downturn than Q2’s financial institution customers; (m) the challenges and costs associated with selling, implementing and supporting our solutions, particularly for larger customers with more complex requirements and longer implementation processes, including risks related to the timing and predictability of sales of our solutions and the impact that the timing of bookings may have on our revenue and financial performance in a period; (n) the risk that errors, interruptions or delays in our solutions or Web hosting negatively impacts our business and sales; (o) risks associated with cyberattacks, data and privacy breaches and breaches of security measures within our products, systems and infrastructure or the products, systems and infrastructure of third parties upon which we rely and the resultant costs and liabilities and harm to our business and reputation and our ability to sell our solutions; (p) regulatory risks, including risks related to evolving regulation of artificial intelligence, machine learning and the receipt, collection, storage, processing and transfer of data; (q) the difficulties and risks associated with developing and selling complex new solutions and enhancements with the technical and regulatory specifications and functionality required by our customers and relevant governmental authorities; (r) risks associated with our sales and marketing capabilities, including partner relationships and the length, cost and unpredictability of our sales cycle; (s) the risks inherent in third-party technology and implementation partnerships that could cause harm to our business; (t) the risk that we will not be able to maintain historical contract terms such as pricing and duration; (u) the general risks associated with the complexity of our customer arrangements and our solutions; (v) the risks associated with integrating acquired companies and successfully selling and maintaining their solutions; (w) litigation related to intellectual property and other matters and any related claims, negotiations and settlements; (x) the risks associated with further consolidation in the financial services industry; (y) risks associated with selling our solutions internationally and with our international operations; and (z) the risk that our debt repayment obligations may adversely affect our financial condition and cash flows from operations in the future and that we may not be able to obtain capital when desired or needed on favorable terms.

Additional information relating to the uncertainty affecting the Q2 business is 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.Q2.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)
(unaudited)

September 30,

 

December 31,

2022

 

2021

Assets
Current assets:
Cash and cash equivalents

$

192,574

 

$

322,848

 

Restricted cash

 

2,732

 

 

2,973

 

Investments

 

203,116

 

 

104,878

 

Accounts receivable, net

 

52,598

 

 

46,979

 

Contract assets, current portion, net

 

3,298

 

 

1,845

 

Prepaid expenses and other current assets

 

13,503

 

 

10,531

 

Deferred solution and other costs, current portion

 

23,827

 

 

25,076

 

Deferred implementation costs, current portion

 

7,646

 

 

7,320

 

Total current assets

 

499,294

 

 

522,450

 

Property and equipment, net

 

59,130

 

 

66,608

 

Right of use assets

 

43,451

 

 

52,278

 

Deferred solution and other costs, net of current portion

 

26,571

 

 

26,930

 

Deferred implementation costs, net of current portion

 

18,686

 

 

17,039

 

Intangible assets, net

 

146,197

 

 

162,461

 

Goodwill

 

512,869

 

 

512,869

 

Contract assets, net of current portion and allowance

 

25,272

 

 

22,103

 

Other long-term assets

 

1,928

 

 

2,307

 

Total assets

$

1,333,398

 

$

1,385,045

 

 
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued liabilities

$

44,841

 

$

60,665

 

Convertible notes, current portion

 

10,887

 

 

-

 

Deferred revenues, current portion

 

101,057

 

 

98,692

 

Lease liabilities, current portion

 

9,443

 

 

9,001

 

Total current liabilities

 

166,228

 

 

168,358

 

Convertible notes, net of current portion

 

657,129

 

 

551,598

 

Deferred revenues, net of current portion

 

20,831

 

 

29,168

 

Lease liabilities, net of current portion

 

55,292

 

 

61,374

 

Other long-term liabilities

 

3,573

 

 

4,251

 

Total liabilities

 

903,053

 

 

814,749

 

 
Stockholders' equity:
Common stock

 

6

 

 

6

 

Additional paid-in capital

 

961,841

 

 

1,064,358

 

Accumulated other comprehensive loss

 

(3,603

)

 

(135

)

Accumulated deficit

 

(527,899

)

 

(493,933

)

Total stockholders' equity

 

430,345

 

 

570,296

 

Total liabilities and stockholders' equity

$

1,333,398

 

$

1,385,045

 

 
Q2 Holdings, Inc.
Condensed Consolidated Statements of Comprehensive Loss
(in thousands, except per share data)

(unaudited)

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

2022

 

2021

 

2022

 

2021

 
Revenues (1)

$

144,751

 

$

126,736

 

$

419,131

 

$

366,829

 

Cost of revenues (2)

 

77,895

 

 

69,726

 

 

228,988

 

 

201,278

 

Gross profit

 

66,856

 

 

57,010

 

 

190,143

 

 

165,551

 

 
Operating expenses:
Sales and marketing

 

27,966

 

 

22,664

 

 

79,709

 

 

63,067

 

Research and development

 

33,099

 

 

30,763

 

 

96,062

 

 

86,987

 

General and administrative

 

22,614

 

 

20,352

 

 

66,467

 

 

57,890

 

Acquisition related costs

 

352

 

 

476

 

 

882

 

 

2,514

 

Amortization of acquired intangibles

 

4,422

 

 

4,483

 

 

13,266

 

 

13,465

 

Lease and other restructuring charges (3)

 

5,494

 

 

1,244

 

 

6,031

 

 

2,056

 

Total operating expenses

 

93,947

 

 

79,982

 

 

262,417

 

 

225,979

 

Loss from operations

 

(27,091

)

 

(22,972

)

 

(72,274

)

 

(60,428

)

Total other income (expense), net

 

(231

)

 

(8,015

)

 

(2,125

)

 

(26,028

)

Loss before income taxes

 

(27,322

)

 

(30,987

)

 

(74,399

)

 

(86,456

)

Provision for income taxes

 

(469

)

 

(596

)

 

(2,173

)

 

(909

)

Net loss

$

(27,791

)

$

(31,583

)

$

(76,572

)

$

(87,365

)

Other comprehensive gain (loss):
Unrealized loss on available-for-sale investments

 

(746

)

 

(8

)

 

(2,363

)

 

(3

)

Foreign currency translation adjustment

 

(291

)

 

163

 

 

(1,105

)

 

128

 

Comprehensive loss

$

(28,828

)

$

(31,428

)

$

(80,040

)

$

(87,240

)

Net loss per common share:
Net loss per common share, basic and diluted

$

(0.48

)

$

(0.56

)

$

(1.34

)

$

(1.55

)

Weighted average common shares outstanding, basic and diluted

 

57,362

 

 

56,559

 

 

57,205

 

 

56,242

 

(1)

 

Includes deferred revenue reduction from purchase accounting of $0.1 million and $0.6 million for the three months ended September 30, 2022 and 2021, respectively, and $0.5 million and $1.7 million for the nine months ended September 30, 2022 and 2021, respectively.

 

 

 

(2)

 

Includes amortization of acquired technology of $5.6 million for each of the three months ended September 30, 2022 and 2021, and $16.8 million and $16.4 million for the nine months ended September 30, 2022 and 2021, respectively.

 

 

 

(3)

 

Lease and other restructuring charges include costs related to the early vacating of various facilities and any related impairment of the right of use assets, partially offset by anticipated sublease income from these facilities and severance and other related compensation charges.

 
Q2 Holdings, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)

Nine Months Ended September 30,

2022

 

2021

Cash flows from operating activities:
Net loss

$

(76,572

)

$

(87,365

)

Adjustments to reconcile net loss to net cash from operating activities:
Amortization of deferred implementation, solution and other costs

 

17,227

 

 

17,394

 

Depreciation and amortization

 

45,237

 

 

40,580

 

Amortization of debt issuance costs

 

2,043

 

 

1,550

 

Amortization of debt discount

 

-

 

 

19,398

 

Amortization of premiums on investments

 

311

 

 

751

 

Stock-based compensation expense

 

51,208

 

 

41,796

 

Deferred income taxes

 

943

 

 

52

 

Loss on extinguishment of debt

 

-

 

 

1,513

 

Other non-cash charges

 

6,178

 

 

2,517

 

Changes in operating assets and liabilities

 

(54,821

)

 

(46,572

)

Net cash used in operating activities

 

(8,246

)

 

(8,386

)

Cash flows from investing activities:
Net maturities (purchases) of investments

 

(100,928

)

 

30,793

 

Purchases of property and equipment

 

(8,933

)

 

(16,059

)

Business combinations, net of cash acquired

 

-

 

 

(64,652

)

Capitalized software development costs

 

(15,662

)

 

(3,908

)

Net cash used in investing activities

 

(125,523

)

 

(53,826

)

Cash flows from financing activities:
Payments for repurchases of convertible notes

 

-

 

 

(63,692

)

Proceeds from bond hedges related to convertible notes

 

-

 

 

26,295

 

Payments for warrants related to convertible notes

 

-

 

 

(19,655

)

Proceeds from exercise of stock options and ESPP

 

3,254

 

 

5,822

 

Net cash provided by (used in) financing activities

 

3,254

 

 

(51,230

)

Net decrease in cash, cash equivalents, and restricted cash

 

(130,515

)

 

(113,442

)

Cash, cash equivalents, and restricted cash, beginning of period

 

325,821

 

 

411,185

 

Cash, cash equivalents, and restricted cash, end of period

$

195,306

 

$

297,743

 

Q2 Holdings, Inc.
Reconciliation of GAAP to Non-GAAP Measures
(in thousands, except per share data)
(unaudited)
 

Three Months Ended September 30,

 

Nine Months Ended September 30,

2022

 

2021

 

2022

 

2021

 
GAAP revenue

$

144,751

 

$

126,736

 

$

419,131

 

$

366,829

Deferred revenue reduction from purchase accounting

 

104

 

 

554

 

 

515

 

 

1,677

 

Non-GAAP revenue

$

144,855

 

$

127,290

 

$

419,646

 

$

368,506

 

 
GAAP gross profit

$

66,856

 

$

57,010

 

$

190,143

 

$

165,551

 

Stock-based compensation

 

2,898

 

 

2,728

 

 

8,972

 

 

8,026

 

Amortization of acquired technology

 

5,603

 

 

5,604

 

 

16,810

 

 

16,365

 

Acquisition related costs

 

-

 

 

105

 

 

-

 

 

327

 

Deferred revenue reduction from purchase accounting

 

104

 

 

554

 

 

515

 

 

1,677

 

Non-GAAP gross profit

$

75,461

 

$

66,001

 

$

216,440

 

$

191,946

 

 
Non-GAAP gross margin:
Non-GAAP gross profit

$

75,461

 

$

66,001

 

$

216,440

 

$

191,946

 

Non-GAAP revenue

 

144,855

 

 

127,290

 

 

419,646

 

 

368,506

 

Non-GAAP gross margin

 

52.1

%

 

51.9

%

 

51.6

%

 

52.1

%

 
GAAP sales and marketing expense

$

27,966

 

$

22,664

 

$

79,709

 

$

63,067

 

Stock-based compensation

 

(4,286

)

 

(2,885

)

 

(11,624

)

 

(8,352

)

Non-GAAP sales and marketing expense

$

23,680

 

$

19,779

 

$

68,085

 

$

54,715

 

 
GAAP research and development expense

$

33,099

 

$

30,763

 

$

96,062

 

$

86,987

 

Stock-based compensation

 

(3,661

)

 

(3,388

)

 

(10,363

)

 

(10,039

)

Non-GAAP research and development expense

$

29,438

 

$

27,375

 

$

85,699

 

$

76,948

 

 
GAAP general and administrative expense

$

22,614

 

$

20,352

 

$

66,467

 

$

57,890

 

Stock-based compensation

 

(5,919

)

 

(5,068

)

 

(17,341

)

 

(14,374

)

Non-GAAP general and administrative expense

$

16,695

 

$

15,284

 

$

49,126

 

$

43,516

 

 
GAAP operating loss

$

(27,091

)

$

(22,972

)

$

(72,274

)

$

(60,428

)

Deferred revenue reduction from purchase accounting

 

104

 

 

554

 

 

515

 

 

1,677

 

Stock-based compensation

 

16,764

 

 

14,069

 

 

48,300

 

 

40,791

 

Acquisition related costs

 

352

 

 

581

 

 

882

 

 

2,841

 

Amortization of acquired technology

 

5,603

 

 

5,604

 

 

16,810

 

 

16,365

 

Amortization of acquired intangibles

 

4,422

 

 

4,483

 

 

13,266

 

 

13,465

 

Lease and other restructuring charges

 

5,494

 

 

1,244

 

 

6,031

 

 

2,056

 

Non-GAAP operating income

$

5,648

 

$

3,563

 

$

13,530

 

$

16,767

 

 
GAAP net loss

$

(27,791

)

$

(31,583

)

$

(76,572

)

$

(87,365

)

Deferred revenue reduction from purchase accounting

 

104

 

 

554

 

 

515

 

 

1,677

 

Loss on extinguishment of debt

 

-

 

 

-

 

 

-

 

 

1,513

 

Stock-based compensation

 

16,764

 

 

14,069

 

 

48,300

 

 

40,791

 

Acquisition related costs

 

352

 

 

581

 

 

882

 

 

2,841

 

Amortization of acquired technology

 

5,603

 

 

5,604

 

 

16,810

 

 

16,365

 

Amortization of acquired intangibles

 

4,422

 

 

4,483

 

 

13,266

 

 

13,465

 

Lease and other restructuring charges

 

5,494

 

 

1,244

 

 

6,031

 

 

2,056

 

Amortization of debt discount and issuance costs

 

676

 

 

6,849

 

 

2,043

 

 

20,948

 

Non-GAAP net income

$

5,624

 

$

1,801

 

$

11,275

 

$

12,291

 

 
Reconciliation from diluted weighted-average number of common shares as reported to Non-GAAP diluted weighted-average number of common shares
Diluted weighted-average number of common shares, as reported

 

57,362

 

 

56,559

 

 

57,205

 

 

56,242

 

Non-GAAP weighted-average effect of potentially dilutive shares

 

238

 

 

802

 

 

335

 

 

1,148

 

Non-GAAP diluted weighted-average number of common shares

 

57,600

 

 

57,361

 

 

57,540

 

 

57,390

 

 
Calculation of non-GAAP income per share:
Non-GAAP net income

$

5,624

 

$

1,801

 

$

11,275

 

$

12,291

 

Non-GAAP diluted weighted-average number of common shares

 

57,600

 

 

57,361

 

 

57,540

 

 

57,390

 

Non-GAAP net income per share

$

0.10

 

$

0.03

 

$

0.20

 

$

0.21

 

 
Reconciliation of GAAP net loss to adjusted EBITDA:
GAAP net loss

$

(27,791

)

$

(31,583

)

$

(76,572

)

$

(87,365

)

Depreciation and amortization

 

15,291

 

 

14,082

 

 

45,237

 

 

40,580

 

Stock-based compensation

 

16,764

 

 

14,069

 

 

48,300

 

 

40,791

 

Provision for income taxes

 

469

 

 

596

 

 

2,173

 

 

909

 

Interest and other (income) expense, net

 

137

 

 

7,761

 

 

1,975

 

 

24,056

 

Acquisition related costs

 

352

 

 

581

 

 

882

 

 

2,841

 

Lease and other restructuring charges

 

5,494

 

 

1,244

 

 

6,031

 

 

2,056

 

Loss on extinguishment of debt

 

-

 

 

-

 

 

-

 

 

1,513

 

Deferred revenue reduction from purchase accounting

 

104

 

 

554

 

 

515

 

 

1,677

 

Adjusted EBITDA

$

10,820

 

$

7,304

 

$

28,541

 

$

27,058

 

 
Q2 Holdings, Inc.
Reconciliation of GAAP to Non-GAAP Revenue Outlook
(in thousands)
 

Q4 2022 Outlook

 

Full Year 2022 Outlook

Low

 

High

 

Low

 

High

 
GAAP revenue

$

148,271

$

150,271

$

567,356

$

569,356

Deferred revenue reduction from purchase accounting

 

129

 

129

 

644

 

644

Non-GAAP revenue

$

148,400

$

150,400

$

568,000

$

570,000

 

 

MEDIA CONTACT:
Jean Kondo
Q2 Holdings, Inc.
M: +1-510-823-4728
jean.kondo@Q2.com

INVESTOR CONTACT:
Josh Yankovich
Q2 Holdings, Inc.
O: +1-512-682-4463
josh.yankovich@Q2.com

Source: Q2 Holdings, Inc.