Welcome!

Machine Learning Authors: Yeshim Deniz, Pat Romanski, Liz McMillan, Elizabeth White, Shelly Palmer

News Feed Item

Q2 Holdings, Inc. Announces Second Quarter 2014 Financial Results

Q2 Holdings, Inc. (NYSE:QTWO), a leading provider of secure virtual banking solutions to regional and community financial institutions, today announced results for its second quarter ended June 30, 2014.

Second Quarter 2014 Results

  • Revenue for the second quarter of $19.2 million, up 36 percent year-over-year and 14 percent from the prior quarter.
  • Non-GAAP gross margin of 44.2 percent, up 410 basis points from the prior quarter and up 360 basis points from one year ago. GAAP gross margin for the period was 43.5 percent.
  • Adjusted EBITDA of negative $2.5 million, an improvement of $1 million from the prior quarter and compares to $2.4 million one year ago. GAAP Net loss of $4.7 million for the period.

“I am pleased to report strong results in Q2’s second quarter as a publicly traded company,” said Matt Flake, president and CEO of Q2 Holdings, Inc. “Our performance demonstrates strong execution across the organization. We’re seeing our single platform architecture win with banks and credit unions of all sizes and we continue to deliver new and innovative products to the market. We’re excited about our success and look forward to continuing to capitalize on the digital transformation occurring in the financial services industry.”

Second Quarter 2014 Highlights

  • Significantly increased new customer wins quarter-over-quarter, demonstrating the success of our single platform and differentiated technology, and a positive return on Q2’s investments in salesforce capacity and productivity.
  • Continued bookings momentum, signing two Top 100 financial institutions1 in the quarter and continued traction with these larger customers.
  • Exited the second quarter with approximately 3.9 million registered users on the Q2 platform, representing 36 percent year-over-year growth and 13 percent quarter-over-quarter growth.
  • Announced availability of version 4.0 of the Q2 Virtual Banking platform which offers improved commercial functionality and greater ease of use.

Financial Outlook

Q2 Holdings is providing guidance for its third quarter 2014 as follows:

  • Total revenues of $19.5 million to $19.8 million.
  • Adjusted EBITDA of negative $3.4 million to negative $3.1 million.

Q2 Holdings is providing guidance for the full-year 2014 as follows:

  • Total revenues of $76.2 million to $76.8 million, which would represent year-over-year growth of 34 percent to 35 percent.
  • Adjusted EBITDA of negative $12.4 million to negative $12 million.
 

Conference Call Details

   

Date:

Aug. 7, 2014

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:

73893430
 

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. Reconciliation to the closest GAAP measures of these non-GAAP measures is contained in the 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: the benefits from investments in and increased productivity of Q2’s salesforce; momentum in the market for Q2’s solutions; Q2’s opportunities and ability to deliver innovative products and capitalize on the transformation occurring in financial services; 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 as part of entering new markets, (b) the risk that the market for Q2’s solutions does not grow as anticipated, (c) the challenges associated with selling, installing, and delivering Q2’s solutions, (d) errors, interruptions or delays in Q2’s service or Web hosting, (e) breaches of Q2’s security measures, (f) technological and regulatory developments, (g) 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, (h) 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, (i) the difficulties Q2 may encounter with complex implementations of its solutions and the resulting impact on the timing of its revenue from any delayed implementations, (j) the risk that Q2 will not be able to maintain historical contract terms, (k) Q2’s ability to hire, retain and motivate employees and manage its growth, (l) the risk that modification or negotiation of contractual arrangements will be necessary during Q2’s implementations of its solutions, and (m) 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.

1 Top 100 based on asset size as reported by United States Federal Reserve and Credit Union National Association.

       
 

Q2 Holdings, Inc.

Condensed Consolidated Balance Sheets
(in thousands)
 
June 30, December 31,
2014 2013
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 94,906 $ 18,675
Restricted cash 116 116
Accounts receivable, net 5,468 9,063
Prepaid expenses and other current assets 1,971 1,079
Deferred solution and other costs, current portion 3,127 3,124
Deferred implementation costs, current portion   1,945     1,814  
Total current assets 107,533 33,871
Property and equipment, net 14,026 14,831
Deferred solution and other costs, net of current portion 6,291 5,358
Deferred implementation costs, net of current portion 4,932 4,560
Other long-term assets   740     2,488  
Total assets $ 133,522   $ 61,108  
 
Liabilities and stockholders' equity (deficit)
Current liabilities:
Accounts payable and accrued liabilities $ 8,642 $ 15,749
Deferred revenues, current portion 14,351 12,728
Capital lease obligations, current portion   513     714  
Total current liabilities 23,506 29,191
Deferred revenue, net of current portion 17,947 14,773
Capital lease obligations, net of current portion 351 575
Long-term debt, net of current portion 2,054 6,288
Deferred rent, net of current portion 4,892 4,444
Other long-term liabilities   7     101  
Total liabilities 48,757 55,372
Redeemable convertible preferred stock and redeemable common stock - 42,052
Stockholders' equity (deficit):
Junior convertible preferred stock - 1,740
Common stock 3 1
Additional paid-in capital 139,743 6,675
Accumulated deficit   (54,981 )   (44,732 )
Total stockholders' equity (deficit)   84,765     (36,316 )
Total liabilities and stockholders' equity (deficit) $ 133,522   $ 61,108  
               
 
Q2 Holdings, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
 
Three Months Ended June 30, Six Months Ended June 30,
2014 2013 2014 2013
(unaudited) (unaudited) (unaudited) (unaudited)
 
Revenues $ 19,158 $ 14,044 $ 35,992 $ 26,878
Cost of revenues (1)   10,830     8,408     21,042     16,215  
Gross profit 8,328 5,636 14,950 10,663
 
Operating expenses:
Sales and marketing (1) 6,032 4,138 11,541 7,198
Research and development (1) 2,787 2,152 5,523 4,018
General and administrative (1) 4,058 2,776 7,776 5,111
Unoccupied lease charges   -     148     -     148  
Total operating expenses   12,877     9,214     24,840     16,475  
Loss from operations (4,549 ) (3,578 ) (9,890 ) (5,812 )
Other income (expense), net   (119 )   (116 )   (326 )   (167 )
Loss before income taxes (4,668 ) (3,694 ) (10,216 ) (5,979 )
Provision for income taxes   (15 )   (14 )   (33 )   (19 )
Loss from continuing operations (4,683 ) (3,708 ) (10,249 ) (5,998 )
Loss from discontinued operations, net of tax   -     -     -     (199 )
Net Loss $ (4,683 ) $ (3,708 ) $ (10,249 ) $ (6,197 )
Net loss per common share:
Loss from continuing operations per common share, basic and diluted $ (0.14 ) $ (0.31 ) $ (0.42 ) $ (0.51 )
Loss from discontinued operations per common share, basic and diluted $ -   $ -   $ -   $ (0.02 )
Net loss per common share, basic and diluted $ (0.14 ) $ (0.31 ) $ (0.42 ) $ (0.53 )
Weighted average common shares outstanding, basic and diluted   34,068     11,901     24,143     11,666  
 
 

(1) Includes stock-based compensation expenses as follows:

Three Months Ended June 30, Six Months Ended June 30,
2014 2013 2014 2013
Cost of revenues $ 147 $ 61 $ 273 $ 122
Sales and marketing 187 60 354 99
Research and development 122 66 229 125
General and administrative   612     189     1,130     364  
Total stock-based compensation expenses $ 1,068   $ 376   $ 1,986   $ 710  
       
 
Q2 Holdings, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
 
Six Months Ended June 30,
2014 2013
(unaudited) (unaudited)
Cash flows from operating activities:
Net loss $ (10,249 ) $ (6,197 )

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

Amortization of deferred implementation, solution and other costs

2,030 1,311
Depreciation and amortization 2,030 1,262
Amortization of debt issuance costs 48 20
Stock-based compensation expenses 1,986 710
Loss from discontinued operations - 199
Other non-cash charges 51 61
Unoccupied lease charge - 148
Changes in operating assets and liabilities   (10 )   3,916  
Net cash (used in) provided by continuing operations (4,114 ) 1,430
Net cash used in discontinued operating activities   -     (236 )
Net cash (used in) provided by operating activities (4,114 ) 1,194
Cash flows from investing activities:
Purchases of property and equipment (2,468 ) (7,468 )
Acquisitions and purchase of intangible assets - (125 )
Cash included in distribution of spin-off   -     (46 )
Cash used in investing activities (2,468 ) (7,639 )
Cash flows from financing activities:
Proceeds from issuance of preferred stock - 18,995
Payments on line of credit and capital leases, net (4,656 ) 3,546
Proceeds from issuance of common stock   87,469     338  
Net cash provided by financing activities   82,813     22,879  
Net increase in cash and cash equivalents 76,231 16,434
Cash and cash equivalents, beginning of period   18,675     9,111  
Cash and cash equivalents, end of period $ 94,906   $ 25,545  
               
 
Q2 Holdings, Inc.
Reconciliation of GAAP to Non-GAAP Measures
(in thousands, except per share data)
 
Three Months Ended June 30, Six Months Ended June 30,
2014 2013 2014 2013
(unaudited) (unaudited) (unaudited) (unaudited)
GAAP gross profit $ 8,328 $ 5,636 $ 14,950 $ 10,663
Stock-based compensation   147     61     273     122  
Non-GAAP gross profit $ 8,475   $ 5,697   $ 15,223   $ 10,785  
 
Non-GAAP gross margin:
Non-GAAP gross profit $ 8,475 $ 5,697 $ 15,223 $ 10,785
GAAP revenue   19,158     14,044     35,992     26,878  
Non-GAAP gross margin   44.2 %   40.6 %   42.3 %   40.1 %
 
GAAP sales and marketing expense $ 6,032 $ 4,138 $ 11,541 $ 7,198
Stock-based compensation   (187 )   (60 )   (354 )   (99 )
Non-GAAP sales and marketing expense $ 5,845   $ 4,078   $ 11,187   $ 7,099  
 
GAAP research and development expense $ 2,787 $ 2,152 $ 5,523 $ 4,018
Stock-based compensation   (122 )   (66 )   (229 )   (125 )
Non-GAAP research and development expense $ 2,665   $ 2,086   $ 5,294   $ 3,893  
 
GAAP general and administrative expense $ 4,058 $ 2,776 $ 7,776 $ 5,111
Stock-based compensation   (612 )   (189 )   (1,130 )   (364 )
Non-GAAP general and administrative expense $ 3,446   $ 2,587   $ 6,646   $ 4,747  
 
GAAP operating loss $ (4,549 ) $ (3,578 ) $ (9,890 ) $ (5,812 )
Stock-based compensation   1,068     376     1,986     710  
Non-GAAP operating loss $ (3,481 ) $ (3,202 ) $ (7,904 ) $ (5,102 )
 
GAAP net loss $ (4,683 ) $ (3,708 ) $ (10,249 ) $ (6,197 )
Stock-based compensation   1,068     376     1,986     710  
Non-GAAP net loss $ (3,615 ) $ (3,332 ) $ (8,263 ) $ (5,487 )
 
Non-GAAP net loss per share, basic and diluted
Numerator:
Non-GAAP net loss $ (3,615 ) $ (3,332 ) $ (8,263 ) $ (5,487 )
Denominator:
Weighted average common shares outstanding, basic and diluted   34,068     11,901     24,143     11,666  
Non-GAAP net loss per share, basic and diluted $ (0.11 ) $ (0.28 ) $ (0.34 ) $ (0.47 )
 
Pro forma non-GAAP net loss per share, basic and diluted
Numerator:
Non-GAAP net loss $ (3,615 ) $ (3,332 ) $ (8,263 ) $ (5,487 )
Denominator:
Weighted average common shares outstanding, basic and diluted 34,068 11,901 24,143 11,666
Plus: assumed conversion of preferred stock to common stock (1)   -     13,583     6,228     12,734  
Denominator for pro forma net loss per share, basic and diluted   34,068     25,484     30,371     24,400  
Pro forma non-GAAP net loss per share, basic and diluted $ (0.11 ) $ (0.13 ) $ (0.27 ) $ (0.22 )
 
Reconciliation of net loss to adjusted EBITDA:
Net loss $ (4,683 ) $ (3,708 ) $ (10,249 ) $ (6,197 )
Interest (income) expense, net 119 116 326 167
Depreciation and amortization 1,031 624 2,030 1,262
Stock-based compensation 1,068 376 1,986 710
Provision for income taxes 15 14 33 19
Loss from discontinued operations - - - 199
Unoccupied lease charges   -     148     -     148  
Adjusted EBITDA $ (2,450 ) $ (2,430 ) $ (5,874 ) $ (3,692 )
 
(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.

More Stories By Business Wire

Copyright © 2009 Business Wire. All rights reserved. Republication or redistribution of Business Wire content is expressly prohibited without the prior written consent of Business Wire. Business Wire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

@CloudExpo Stories
SYS-CON Events announced today that Outscale will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Outscale's technology makes an automated and adaptable Cloud available to businesses, supporting them in the most complex IT projects while controlling their operational aspects. You boost your IT infrastructure's reactivity, with request responses that only take a few seconds.
SYS-CON Events announced today that Systena America will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Systena Group has been in business for various software development and verification in Japan, US, ASEAN, and China by utilizing the knowledge we gained from all types of device development for various industries including smartphones (Android/iOS), wireless communication, security technology and IoT serv...
DevOps at Cloud Expo – being held October 31 - November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA – announces that its Call for Papers is open. Born out of proven success in agile development, cloud computing, and process automation, DevOps is a macro trend you cannot afford to miss. From showcase success stories from early adopters and web-scale businesses, DevOps is expanding to organizations of all sizes, including the world's largest enterprises – and delivering real r...
Cloud applications are seeing a deluge of requests to support the exploding advanced analytics market. “Open analytics” is the emerging strategy to deliver that data through an open data access layer, in the cloud, to be directly consumed by external analytics tools and popular programming languages. An increasing number of data engineers and data scientists use a variety of platforms and advanced analytics languages such as SAS, R, Python and Java, as well as frameworks such as Hadoop and Spark...
Cloud promises the agility required by today’s digital businesses. As organizations adopt cloud based infrastructures and services, their IT resources become increasingly dynamic and hybrid in nature. Managing these require modern IT operations and tools. In his session at 20th Cloud Expo, Raj Sundaram, Senior Principal Product Manager at CA Technologies, will discuss how to modernize your IT operations in order to proactively manage your hybrid cloud and IT environments. He will be sharing bes...
Interested in leveling up on your Cloud Foundry skills? Join IBM for Cloud Foundry Days on June 7 at Cloud Expo New York at the Javits Center in New York City. Cloud Foundry Days is a free half day educational conference and networking event. Come find out why Cloud Foundry is the industry's fastest-growing and most adopted cloud application platform.
Five years ago development was seen as a dead-end career, now it’s anything but – with an explosion in mobile and IoT initiatives increasing the demand for skilled engineers. But apart from having a ready supply of great coders, what constitutes true ‘DevOps Royalty’? It’ll be the ability to craft resilient architectures, supportability, security everywhere across the software lifecycle. In his keynote at @DevOpsSummit at 20th Cloud Expo, Jeffrey Scheaffer, GM and SVP, Continuous Delivery Busine...
In order to meet the rapidly changing demands of today’s customers, companies are continually forced to redefine their business strategies in order to meet these needs, stay relevant and continue to see profitable growth. IoT deployment and development is integral in this transformation, and today businesses are increasingly seeing the value of investing their resources into IoT deployments. These technologies are able increase ROI through projects such as connecting supply chains or enabling sm...
SYS-CON Events announced today that Twistlock, the leading provider of cloud container security solutions, will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Twistlock is the industry's first enterprise security suite for container security. Twistlock's technology addresses risks on the host and within the application of the container, enabling enterprises to consistently enforce security policies, monitor...
SYS-CON Events announced today that CollabNet, a global leader in enterprise software development, release automation and DevOps solutions, will be a Bronze Sponsor of SYS-CON's 20th International Cloud Expo®, taking place from June 6-8, 2017, at the Javits Center in New York City, NY. CollabNet offers a broad range of solutions with the mission of helping modern organizations deliver quality software at speed. The company’s latest innovation, the DevOps Lifecycle Manager (DLM), supports Value S...
SYS-CON Events announced today that Outscale, a global pure play Infrastructure as a Service provider and strategic partner of Dassault Systèmes, will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Founded in 2010, Outscale simplifies infrastructure complexities and boosts the business agility of its customers. Outscale delivers a secure, reliable and industrial strength solution for its customers, which in...
SYS-CON Events announced today that Peak 10, Inc., a national IT infrastructure and cloud services provider, will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Peak 10 provides reliable, tailored data center and network services, cloud and managed services. Its solutions are designed to scale and adapt to customers’ changing business needs, enabling them to lower costs, improve performance and focus intern...
Everywhere we turn in our industry we can find strong opinions about the direction, type and nature of cloud’s impact on computing and business. Another word that is used in every context in our industry is “hybrid.” In his session at 20th Cloud Expo, Alvaro Gonzalez, Director of Technical, Partner and Field Marketing at Peak 10, will use a combination of a few conceptual props and some research recently commissioned by Peak 10 to offer a real-world consideration of how the various categories of...
A strange thing is happening along the way to the Internet of Things, namely far too many devices to work with and manage. It has become clear that we'll need much higher efficiency user experiences that can allow us to more easily and scalably work with the thousands of devices that will soon be in each of our lives. Enter the conversational interface revolution, combining bots we can literally talk with, gesture to, and even direct with our thoughts, with embedded artificial intelligence, whic...
SYS-CON Events announced today that Super Micro Computer, Inc., a global leader in compute, storage and networking technologies, will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Supermicro (NASDAQ: SMCI), the leading innovator in high-performance, high-efficiency server technology, is a premier provider of advanced server Building Block Solutions® for Data Center, Cloud Computing, Enterprise IT, Hadoop/...
IBM helps FinTechs and financial services companies build and monetize cognitive-enabled financial services apps quickly and at scale. Hosted on IBM Bluemix, IBM’s platform builds in customer insights, regulatory compliance analytics and security to help reduce development time and testing. In his session at 20th Cloud Expo, Tom Eck, Industry Platforms CTO at IBM Cloud, will discuss how these tools simplify the time-consuming tasks of selection, mapping and data integration, allowing developers ...
DevOps is often described as a combination of technology and culture. Without both, DevOps isn't complete. However, applying the culture to outdated technology is a recipe for disaster; as response times grow and connections between teams are delayed by technology, the culture will die. A Nutanix Enterprise Cloud has many benefits that provide the needed base for a true DevOps paradigm. In his Day 3 Keynote at 20th Cloud Expo, Chris Brown, a Solutions Marketing Manager at Nutanix, will explore t...
Regardless of what business you’re in, it’s increasingly a software-driven business. Consumers’ rising expectations for connected digital and physical experiences are driving what some are calling the "Customer Experience Challenge.” In his session at @DevOpsSummit at 20th Cloud Expo, Marco Morales, Director of Global Solutions at CollabNet, will discuss how organizations are increasingly adopting a discipline of Value Stream Mapping to ensure that the software they are producing is poised to o...
This talk centers around how to automate best practices in a multi-/hybrid-cloud world based on our work with customers like GE, Discovery Communications and Fannie Mae. Today’s enterprises are reaping the benefits of cloud computing, but also discovering many risks and challenges. In the age of DevOps and the decentralization of IT, it’s easy to over-provision resources, forget that instances are running, or unintentionally expose vulnerabilities.
With major technology companies and startups seriously embracing Cloud strategies, now is the perfect time to attend @CloudExpo | @ThingsExpo, June 6-8, 2017, at the Javits Center in New York City, NY and October 31 - November 2, 2017, Santa Clara Convention Center, CA. Learn what is going on, contribute to the discussions, and ensure that your enterprise is on the right path to Digital Transformation.