Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil Hydroworld Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Q2 Holdings, Inc. Announces Third Quarter 2021 Financial Results By: Q2 Holdings, Inc. via Business Wire November 03, 2021 at 16:30 PM EDT 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, 2021. GAAP Results for the Third Quarter 2021 Revenue for the third quarter of $126.7 million, up 22 percent year-over-year and up 3 percent from the second quarter of 2021. GAAP gross margin for the third quarter of 45.0 percent, up from 44.7 percent for the prior-year quarter and 44.8 percent for the second quarter of 2021. GAAP net loss for the third quarter of $31.6 million, compared to GAAP net losses of $26.7 million for the prior-year quarter and $30.1 million for the second quarter of 2021. Non-GAAP Results for the Third Quarter 2021 Non-GAAP revenue for the third quarter of $127.3 million, up 22 percent year-over-year and up 3 percent from the second quarter of 2021. Non-GAAP gross margin for the third quarter of 51.9 percent, down from 52.5 percent for the prior-year quarter and flat versus 51.9 percent for the second quarter of 2021. Adjusted EBITDA for the third quarter of $7.3 million, down from $8.1 million for the prior-year quarter and $9.9 million for the second quarter of 2021. For a reconciliation of our GAAP to non-GAAP results, please see the tables below. “In the third quarter, we experienced strong sales performance consistent with our previous belief that the buying environment would steadily improve in the back half of 2021,” said Matt Flake, Q2 CEO. “We saw substantial growth in net new bookings in addition to continued strength in expansion activity. The variety of deals we signed in the quarter across our portfolio demonstrates that our vision and strategy are resonating with the market. Looking ahead, I believe our deal activity, pipeline, and the strength of our product portfolio position us for continued success for the remainder of the year and into 2022.” Third Quarter Highlights Signed a Tier 1, Top 10 credit union to a digital banking contract for our commercial banking, risk management and business account opening solutions. Signed a Tier 1 bank to a contract for our full digital banking suite, including retail, small business and commercial banking solutions. Signed a Tier 1 bank, an existing client, to a digital banking contract for our retail digital banking and account onboarding solutions. Signed a Tier 2 bank to a large digital transformation contract for a broad set of solutions led by retail digital banking and loan origination. Signed a large loan pricing contract extension to expand existing functionality with an existing global enterprise bank customer. Supported a new program launch with one of the largest fintechs in the United States, utilizing our BaaS platform. Exited the third quarter with approximately 19.2 million registered users on the Q2 Platform, representing 12 percent year-over-year growth and 2 percent sequential growth. “We delivered third quarter financial results that exceeded the high end of our revenue and adjusted EBITDA guidance,” said David Mehok, Q2 CFO. “The performance in the quarter was driven by our continued ability to efficiently deliver solutions to our customers in a timely manner, as well as solid organic growth contribution from existing customers. Based on our strong performance in the third quarter and visibility into the fourth quarter, we are raising our guidance for both revenue and adjusted EBITDA for the remainder of the year.” Financial outlook As of November 3, 2021, Q2 Holdings is providing guidance for its fourth quarter of 2021 and revised guidance for its full-year 2021. 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, income taxes, unoccupied lease charges, partnership termination 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 2021 as follows: Total non-GAAP revenue of $131.3 million to $132.8 million, which would represent year-over-year growth of 20 to 21 percent. Adjusted EBITDA of $7.3 million to $7.9 million. Q2 Holdings is providing updated guidance for the full-year 2021 as follows: Total non-GAAP revenue of $499.8 million to $501.3 million, which would represent year-over-year growth of 23 percent. Adjusted EBITDA of $34.4 million to $35.0 million, representing 7 percent of non-GAAP revenue for the year. Conference Call Details Date: Thursday, November 4, 2021 Time: 8:30 a.m. EDT Hosts: Matt Flake, CEO / David Mehok, CFO / Jonathan Price, EVP, Emerging Businesses, Corporate & Business Development Conference ID: 6574867 Registration: http://www.directeventreg.com/registration/event/6574867 Please join the conference call at least 10 minutes early to ensure the line is connected. A live 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/. An archived replay of the webcast will be available on this website on a temporary basis shortly 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, taxes, depreciation and amortization, stock-based compensation, acquisition-related costs, unoccupied lease charges, partnership termination 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, unoccupied lease charges, partnership termination charges, 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 GAAP 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 the Company’s 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: sales performance; improvement in the buying environment; strength in expansion activity; market acceptance of our vision and strategy; the ability of our deal activity, pipeline, and the strength of our product portfolio to position us for continued success for the remainder of the year and into 2022; 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 the adverse impacts of the COVID-19 pandemic on Q2’s business operations and performance and on global economic and financial markets, including on Q2’s customers, partners and suppliers and employees and business, as well as 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, new markets with Alt-FIs and fintechs and new products and services; (b) the risk that COVID-19, government actions or other factors continue to negatively impact or disrupt the markets for Q2’s solutions and that the markets for Q2’s solutions do not return to normal or grow as anticipated, in particular with respect to Tier 1 customers and Alt-FI and fintech 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 impact 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, including risks related to the timing and predictability of sales of Q2’s solutions and the impact that the timing of bookings may have on Q2’s revenue and financial performance in a period or any future period, including that any declines in bookings growth may not impact Q2’s revenue and financial performance until future periods; (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 cyberattacks, data breaches and breaches of security measures within Q2’s products, systems and infrastructure or the products, systems and infrastructure of third parties upon which Q2 relies and the resultant costs and liabilities and harm to Q2’s business and reputation and its ability to sell its products and services; (h) the impact that a slowdown in the economy, financial markets and credit markets may have 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) the risks associated with anticipated higher operating expenses in 2021 and beyond; (q) litigation related to intellectual property and other matters and any related claims, negotiations and settlements; (r) the risks associated with further consolidation in the financial services industry; (s) risks associated with selling Q2 solutions internationally; and (t) the risk that Q2 debt repayment obligations may adversely affect its financial condition and cash flows from operations in the future and that Q2 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, 2021 2020 Assets Current assets: Cash and cash equivalents $ 294,771 $ 407,703 Restricted cash 2,972 3,482 Investments 99,805 131,352 Accounts receivable, net 53,499 36,430 Contract assets, current portion, net 1,263 1,088 Prepaid expenses and other current assets 21,059 8,861 Deferred solution and other costs, current portion 23,377 19,042 Deferred implementation costs, current portion 7,335 8,258 Total current assets 504,081 616,216 Property and equipment, net 66,919 49,558 Right of use assets 54,012 34,709 Deferred solution and other costs, net of current portion 28,596 32,782 Deferred implementation costs, net of current portion 18,424 15,184 Intangible assets, net 170,960 184,859 Goodwill 512,869 462,274 Contract assets, net of current portion and allowance 21,704 18,694 Other long-term assets 2,082 2,426 Total assets $ 1,379,647 $ 1,416,702 Liabilities and stockholders' equity Current liabilities: Accounts payable and accrued liabilities $ 55,161 $ 57,047 Deferred revenues, current portion 100,119 81,935 Lease liabilities, current portion 8,658 6,844 Total current liabilities 163,938 145,826 Convertible notes, net of current portion 544,703 557,468 Deferred revenues, net of current portion 20,552 29,203 Lease liabilities, net of current portion 63,700 36,739 Other long-term liabilities 5,025 4,102 Total liabilities 797,918 773,338 Stockholders' equity: Common stock 6 6 Additional paid-in capital 1,050,182 1,024,577 Accumulated other comprehensive income (loss) 93 (32 ) Accumulated deficit (468,552 ) (381,187 ) Total stockholders' equity 581,729 643,364 Total liabilities and stockholders' equity $ 1,379,647 $ 1,416,702 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, 2021 2020 2021 2020 Revenues (1) $ 126,736 $ 103,804 $ 366,829 $ 293,765 Cost of revenues (2) (3) 69,726 57,366 201,278 163,676 Gross profit 57,010 46,438 165,551 130,089 Operating expenses: Sales and marketing (2) 22,664 18,403 63,067 54,597 Research and development (2) 30,763 23,568 86,987 72,168 General and administrative (2) 20,352 17,563 57,890 53,876 Acquisition related costs (4) 476 818 2,514 (22 ) Amortization of acquired intangibles 4,483 4,465 13,465 13,447 Partnership termination charges - - - 13,244 Unoccupied lease charges (5) 1,244 1,468 2,056 2,136 Total operating expenses 79,982 66,285 225,979 209,446 Loss from operations (22,972 ) (19,847 ) (60,428 ) (79,357 ) Other income (expense), net (8,015 ) (6,757 ) (26,028 ) (19,821 ) Loss before income taxes (30,987 ) (26,604 ) (86,456 ) (99,178 ) Provision for income taxes (596 ) (116 ) (909 ) (621 ) Net loss $ (31,583 ) $ (26,720 ) $ (87,365 ) $ (99,799 ) Other comprehensive loss: Unrealized loss on available-for-sale investments (8 ) (52 ) (3 ) (66 ) Foreign currency translation adjustment 163 66 128 14 Comprehensive loss $ (31,428 ) $ (26,706 ) $ (87,240 ) $ (99,851 ) Net loss per common share: Net loss per common share, basic and diluted $ (0.56 ) $ (0.50 ) $ (1.55 ) $ (1.95 ) Weighted average common shares outstanding, basic and diluted 56,559 53,574 56,242 51,141 (1) Includes deferred revenue reduction from purchase accounting of $0.6 million and $1.0 million for the three months ended September 30, 2021 and 2020, respectively, and $1.7 million and $3.7 million for the nine months ended September 30, 2021 and 2020, respectively. (2) Includes stock-based compensation expense as follows: Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Cost of revenues $ 2,728 $ 2,110 $ 8,026 $ 7,422 Sales and marketing 2,885 2,209 8,352 6,353 Research and development 3,388 2,901 10,039 9,780 General and administrative 5,068 4,376 14,374 13,360 Total stock-based compensation expense $ 14,069 $ 11,596 $ 40,791 $ 36,915 (3) Includes amortization of acquired technology of $5.6 million and $5.3 million for the three months ended September 30, 2021 and 2020, respectively, and $16.4 million and $16.2 million for the nine months ended September 30, 2021 and 2020, respectively. (4) The nine months ended September 30, 2020 includes a $2.9 million reduction to estimated contingent consideration as a result of the actual contingent consideration calculated as of the final measurement date of March 31, 2020. (5) Unoccupied lease charges include costs related to the early vacating of various facilities, partially offset by anticipated sublease income from these facilities. For the three and nine months ended September 30, 2021, the charges related to an updated assessment and vacating of facilities in Georgia, Texas, North Carolina and Nebraska, and for the three and nine months ended September 30, 2020, the charges related to the vacating of facilities in California, North Carolina, and Texas. Q2 Holdings, Inc. Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited) Nine Months Ended September 30, 2021 2020 Cash flows from operating activities: Net loss $ (87,365 ) $ (99,799 ) Adjustments to reconcile net loss to net cash from operating activities: Amortization of deferred implementation, solution and other costs 17,394 13,947 Depreciation and amortization 40,580 38,975 Amortization of debt issuance costs 1,550 1,427 Amortization of debt discount 19,398 15,381 Amortization of premiums on investments 751 114 Stock-based compensation expense 41,796 38,076 Deferred income taxes 52 313 Loss on extinguishment of debt 1,513 - Other non-cash charges 2,517 2,522 Changes in operating assets and liabilities (46,572 ) (32,935 ) Net cash used in operating activities (8,386 ) (21,979 ) Cash flows from investing activities: Net maturities of investments 30,793 1,252 Purchases of property and equipment (16,059 ) (16,538 ) Business combinations, net of cash acquired (64,652 ) - Capitalization of software development costs (3,908 ) (653 ) Net cash used in investing activities (53,826 ) (15,939 ) Cash flows from financing activities: Proceeds from issuance of common stock, net of issuance costs - 311,321 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 to purchase common stock 5,822 8,568 Payment of contingent consideration - (16,862 ) Net cash provided by (used in) financing activities (51,230 ) 303,027 Net increase (decrease) in cash, cash equivalents, and restricted cash (113,442 ) 265,109 Cash, cash equivalents, and restricted cash, beginning of period 411,185 103,562 Cash, cash equivalents, and restricted cash, end of period $ 297,743 $ 368,671 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, 2021 2020 2021 2020 GAAP revenue $ 126,736 $ 103,804 $ 366,829 $ 293,765 Deferred revenue reduction from purchase accounting 554 957 1,677 3,720 Non-GAAP revenue $ 127,290 $ 104,761 $ 368,506 $ 297,485 GAAP gross profit $ 57,010 $ 46,438 $ 165,551 $ 130,089 Stock-based compensation 2,728 2,110 8,026 7,422 Amortization of acquired technology 5,604 5,255 16,365 16,184 Acquisition related costs 105 244 327 735 Deferred revenue reduction from purchase accounting 554 957 1,677 3,720 Non-GAAP gross profit $ 66,001 $ 55,004 $ 191,946 $ 158,150 Non-GAAP gross margin: Non-GAAP gross profit $ 66,001 $ 55,004 $ 191,946 $ 158,150 Non-GAAP revenue 127,290 104,761 368,506 297,485 Non-GAAP gross margin 51.9 % 52.5 % 52.1 % 53.2 % GAAP sales and marketing expense $ 22,664 $ 18,403 $ 63,067 $ 54,597 Stock-based compensation (2,885 ) (2,209 ) (8,352 ) (6,353 ) Non-GAAP sales and marketing expense $ 19,779 $ 16,194 $ 54,715 $ 48,244 GAAP research and development expense $ 30,763 $ 23,568 $ 86,987 $ 72,168 Stock-based compensation (3,388 ) (2,901 ) (10,039 ) (9,780 ) Non-GAAP research and development expense $ 27,375 $ 20,667 $ 76,948 $ 62,388 GAAP general and administrative expense $ 20,352 $ 17,563 $ 57,890 $ 53,876 Stock-based compensation (5,068 ) (4,376 ) (14,374 ) (13,360 ) Non-GAAP general and administrative expense $ 15,284 $ 13,187 $ 43,516 $ 40,516 GAAP operating loss $ (22,972 ) $ (19,847 ) $ (60,428 ) $ (79,357 ) Deferred revenue reduction from purchase accounting 554 957 1,677 3,720 Partnership termination charges - - - 13,244 Stock-based compensation 14,069 11,596 40,791 36,915 Acquisition related costs 581 1,062 2,841 714 Amortization of acquired technology 5,604 5,255 16,365 16,184 Amortization of acquired intangibles 4,483 4,465 13,465 13,447 Unoccupied lease charges 1,244 1,468 2,056 2,136 Non-GAAP operating income $ 3,563 $ 4,956 $ 16,767 $ 7,003 GAAP net loss $ (31,583 ) $ (26,720 ) $ (87,365 ) $ (99,799 ) Deferred revenue reduction from purchase accounting 554 957 1,677 3,720 Partnership termination charges - - - 13,244 Loss on extinguishment of debt - - 1,513 - Stock-based compensation 14,069 11,596 40,791 36,915 Acquisition related costs 581 1,062 2,841 714 Amortization of acquired technology 5,604 5,255 16,365 16,184 Amortization of acquired intangibles 4,483 4,465 13,465 13,447 Unoccupied lease charges 1,244 1,468 2,056 2,136 Amortization of debt discount and issuance costs 6,849 5,686 20,948 16,808 Non-GAAP net income $ 1,801 $ 3,769 $ 12,291 $ 3,369 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 56,559 53,574 56,242 51,141 Non-GAAP weighted-average effect of potentially dilutive shares 802 2,013 1,148 1,990 Non-GAAP diluted weighted-average number of common shares 57,361 55,587 57,390 53,131 Calculation of non-GAAP income per share: Non-GAAP net income $ 1,801 $ 3,769 $ 12,291 $ 3,369 Non-GAAP diluted weighted-average number of common shares 57,361 55,587 57,390 53,131 Non-GAAP net income per share $ 0.03 $ 0.07 $ 0.21 $ 0.06 Reconciliation of GAAP net loss to adjusted EBITDA: GAAP net loss $ (31,583 ) $ (26,720 ) $ (87,365 ) $ (99,799 ) Depreciation and amortization 14,082 12,929 40,580 38,975 Stock-based compensation 14,069 11,596 40,791 36,915 Provision for income taxes 596 116 909 621 Interest (income) expense, net 7,761 6,727 24,056 19,586 Acquisition related costs 581 1,062 2,841 714 Unoccupied lease charges 1,244 1,468 2,056 2,136 Loss on extinguishment of debt - - 1,513 - Deferred revenue reduction from purchase accounting 554 957 1,677 3,720 Partnership termination charges - - - 13,244 Adjusted EBITDA $ 7,304 $ 8,135 $ 27,058 $ 16,112 Q2 Holdings, Inc. Reconciliation of GAAP to Non-GAAP Revenue Guidance (in thousands) Q4 2021 Guidance Full Year 2021 Guidance Low High Low High GAAP revenue $ 130,852 $ 132,352 $ 497,675 $ 499,175 Deferred revenue reduction from purchase accounting 448 448 2,125 2,125 Non-GAAP revenue $ 131,300 $ 132,800 $ 499,800 $ 501,300 View source version on businesswire.com: https://www.businesswire.com/news/home/20211103006137/en/Contacts 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 Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
Q2 Holdings, Inc. Announces Third Quarter 2021 Financial Results By: Q2 Holdings, Inc. via Business Wire November 03, 2021 at 16:30 PM EDT 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, 2021. GAAP Results for the Third Quarter 2021 Revenue for the third quarter of $126.7 million, up 22 percent year-over-year and up 3 percent from the second quarter of 2021. GAAP gross margin for the third quarter of 45.0 percent, up from 44.7 percent for the prior-year quarter and 44.8 percent for the second quarter of 2021. GAAP net loss for the third quarter of $31.6 million, compared to GAAP net losses of $26.7 million for the prior-year quarter and $30.1 million for the second quarter of 2021. Non-GAAP Results for the Third Quarter 2021 Non-GAAP revenue for the third quarter of $127.3 million, up 22 percent year-over-year and up 3 percent from the second quarter of 2021. Non-GAAP gross margin for the third quarter of 51.9 percent, down from 52.5 percent for the prior-year quarter and flat versus 51.9 percent for the second quarter of 2021. Adjusted EBITDA for the third quarter of $7.3 million, down from $8.1 million for the prior-year quarter and $9.9 million for the second quarter of 2021. For a reconciliation of our GAAP to non-GAAP results, please see the tables below. “In the third quarter, we experienced strong sales performance consistent with our previous belief that the buying environment would steadily improve in the back half of 2021,” said Matt Flake, Q2 CEO. “We saw substantial growth in net new bookings in addition to continued strength in expansion activity. The variety of deals we signed in the quarter across our portfolio demonstrates that our vision and strategy are resonating with the market. Looking ahead, I believe our deal activity, pipeline, and the strength of our product portfolio position us for continued success for the remainder of the year and into 2022.” Third Quarter Highlights Signed a Tier 1, Top 10 credit union to a digital banking contract for our commercial banking, risk management and business account opening solutions. Signed a Tier 1 bank to a contract for our full digital banking suite, including retail, small business and commercial banking solutions. Signed a Tier 1 bank, an existing client, to a digital banking contract for our retail digital banking and account onboarding solutions. Signed a Tier 2 bank to a large digital transformation contract for a broad set of solutions led by retail digital banking and loan origination. Signed a large loan pricing contract extension to expand existing functionality with an existing global enterprise bank customer. Supported a new program launch with one of the largest fintechs in the United States, utilizing our BaaS platform. Exited the third quarter with approximately 19.2 million registered users on the Q2 Platform, representing 12 percent year-over-year growth and 2 percent sequential growth. “We delivered third quarter financial results that exceeded the high end of our revenue and adjusted EBITDA guidance,” said David Mehok, Q2 CFO. “The performance in the quarter was driven by our continued ability to efficiently deliver solutions to our customers in a timely manner, as well as solid organic growth contribution from existing customers. Based on our strong performance in the third quarter and visibility into the fourth quarter, we are raising our guidance for both revenue and adjusted EBITDA for the remainder of the year.” Financial outlook As of November 3, 2021, Q2 Holdings is providing guidance for its fourth quarter of 2021 and revised guidance for its full-year 2021. 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, income taxes, unoccupied lease charges, partnership termination 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 2021 as follows: Total non-GAAP revenue of $131.3 million to $132.8 million, which would represent year-over-year growth of 20 to 21 percent. Adjusted EBITDA of $7.3 million to $7.9 million. Q2 Holdings is providing updated guidance for the full-year 2021 as follows: Total non-GAAP revenue of $499.8 million to $501.3 million, which would represent year-over-year growth of 23 percent. Adjusted EBITDA of $34.4 million to $35.0 million, representing 7 percent of non-GAAP revenue for the year. Conference Call Details Date: Thursday, November 4, 2021 Time: 8:30 a.m. EDT Hosts: Matt Flake, CEO / David Mehok, CFO / Jonathan Price, EVP, Emerging Businesses, Corporate & Business Development Conference ID: 6574867 Registration: http://www.directeventreg.com/registration/event/6574867 Please join the conference call at least 10 minutes early to ensure the line is connected. A live 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/. An archived replay of the webcast will be available on this website on a temporary basis shortly 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, taxes, depreciation and amortization, stock-based compensation, acquisition-related costs, unoccupied lease charges, partnership termination 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, unoccupied lease charges, partnership termination charges, 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 GAAP 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 the Company’s 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: sales performance; improvement in the buying environment; strength in expansion activity; market acceptance of our vision and strategy; the ability of our deal activity, pipeline, and the strength of our product portfolio to position us for continued success for the remainder of the year and into 2022; 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 the adverse impacts of the COVID-19 pandemic on Q2’s business operations and performance and on global economic and financial markets, including on Q2’s customers, partners and suppliers and employees and business, as well as 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, new markets with Alt-FIs and fintechs and new products and services; (b) the risk that COVID-19, government actions or other factors continue to negatively impact or disrupt the markets for Q2’s solutions and that the markets for Q2’s solutions do not return to normal or grow as anticipated, in particular with respect to Tier 1 customers and Alt-FI and fintech 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 impact 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, including risks related to the timing and predictability of sales of Q2’s solutions and the impact that the timing of bookings may have on Q2’s revenue and financial performance in a period or any future period, including that any declines in bookings growth may not impact Q2’s revenue and financial performance until future periods; (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 cyberattacks, data breaches and breaches of security measures within Q2’s products, systems and infrastructure or the products, systems and infrastructure of third parties upon which Q2 relies and the resultant costs and liabilities and harm to Q2’s business and reputation and its ability to sell its products and services; (h) the impact that a slowdown in the economy, financial markets and credit markets may have 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) the risks associated with anticipated higher operating expenses in 2021 and beyond; (q) litigation related to intellectual property and other matters and any related claims, negotiations and settlements; (r) the risks associated with further consolidation in the financial services industry; (s) risks associated with selling Q2 solutions internationally; and (t) the risk that Q2 debt repayment obligations may adversely affect its financial condition and cash flows from operations in the future and that Q2 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, 2021 2020 Assets Current assets: Cash and cash equivalents $ 294,771 $ 407,703 Restricted cash 2,972 3,482 Investments 99,805 131,352 Accounts receivable, net 53,499 36,430 Contract assets, current portion, net 1,263 1,088 Prepaid expenses and other current assets 21,059 8,861 Deferred solution and other costs, current portion 23,377 19,042 Deferred implementation costs, current portion 7,335 8,258 Total current assets 504,081 616,216 Property and equipment, net 66,919 49,558 Right of use assets 54,012 34,709 Deferred solution and other costs, net of current portion 28,596 32,782 Deferred implementation costs, net of current portion 18,424 15,184 Intangible assets, net 170,960 184,859 Goodwill 512,869 462,274 Contract assets, net of current portion and allowance 21,704 18,694 Other long-term assets 2,082 2,426 Total assets $ 1,379,647 $ 1,416,702 Liabilities and stockholders' equity Current liabilities: Accounts payable and accrued liabilities $ 55,161 $ 57,047 Deferred revenues, current portion 100,119 81,935 Lease liabilities, current portion 8,658 6,844 Total current liabilities 163,938 145,826 Convertible notes, net of current portion 544,703 557,468 Deferred revenues, net of current portion 20,552 29,203 Lease liabilities, net of current portion 63,700 36,739 Other long-term liabilities 5,025 4,102 Total liabilities 797,918 773,338 Stockholders' equity: Common stock 6 6 Additional paid-in capital 1,050,182 1,024,577 Accumulated other comprehensive income (loss) 93 (32 ) Accumulated deficit (468,552 ) (381,187 ) Total stockholders' equity 581,729 643,364 Total liabilities and stockholders' equity $ 1,379,647 $ 1,416,702 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, 2021 2020 2021 2020 Revenues (1) $ 126,736 $ 103,804 $ 366,829 $ 293,765 Cost of revenues (2) (3) 69,726 57,366 201,278 163,676 Gross profit 57,010 46,438 165,551 130,089 Operating expenses: Sales and marketing (2) 22,664 18,403 63,067 54,597 Research and development (2) 30,763 23,568 86,987 72,168 General and administrative (2) 20,352 17,563 57,890 53,876 Acquisition related costs (4) 476 818 2,514 (22 ) Amortization of acquired intangibles 4,483 4,465 13,465 13,447 Partnership termination charges - - - 13,244 Unoccupied lease charges (5) 1,244 1,468 2,056 2,136 Total operating expenses 79,982 66,285 225,979 209,446 Loss from operations (22,972 ) (19,847 ) (60,428 ) (79,357 ) Other income (expense), net (8,015 ) (6,757 ) (26,028 ) (19,821 ) Loss before income taxes (30,987 ) (26,604 ) (86,456 ) (99,178 ) Provision for income taxes (596 ) (116 ) (909 ) (621 ) Net loss $ (31,583 ) $ (26,720 ) $ (87,365 ) $ (99,799 ) Other comprehensive loss: Unrealized loss on available-for-sale investments (8 ) (52 ) (3 ) (66 ) Foreign currency translation adjustment 163 66 128 14 Comprehensive loss $ (31,428 ) $ (26,706 ) $ (87,240 ) $ (99,851 ) Net loss per common share: Net loss per common share, basic and diluted $ (0.56 ) $ (0.50 ) $ (1.55 ) $ (1.95 ) Weighted average common shares outstanding, basic and diluted 56,559 53,574 56,242 51,141 (1) Includes deferred revenue reduction from purchase accounting of $0.6 million and $1.0 million for the three months ended September 30, 2021 and 2020, respectively, and $1.7 million and $3.7 million for the nine months ended September 30, 2021 and 2020, respectively. (2) Includes stock-based compensation expense as follows: Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Cost of revenues $ 2,728 $ 2,110 $ 8,026 $ 7,422 Sales and marketing 2,885 2,209 8,352 6,353 Research and development 3,388 2,901 10,039 9,780 General and administrative 5,068 4,376 14,374 13,360 Total stock-based compensation expense $ 14,069 $ 11,596 $ 40,791 $ 36,915 (3) Includes amortization of acquired technology of $5.6 million and $5.3 million for the three months ended September 30, 2021 and 2020, respectively, and $16.4 million and $16.2 million for the nine months ended September 30, 2021 and 2020, respectively. (4) The nine months ended September 30, 2020 includes a $2.9 million reduction to estimated contingent consideration as a result of the actual contingent consideration calculated as of the final measurement date of March 31, 2020. (5) Unoccupied lease charges include costs related to the early vacating of various facilities, partially offset by anticipated sublease income from these facilities. For the three and nine months ended September 30, 2021, the charges related to an updated assessment and vacating of facilities in Georgia, Texas, North Carolina and Nebraska, and for the three and nine months ended September 30, 2020, the charges related to the vacating of facilities in California, North Carolina, and Texas. Q2 Holdings, Inc. Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited) Nine Months Ended September 30, 2021 2020 Cash flows from operating activities: Net loss $ (87,365 ) $ (99,799 ) Adjustments to reconcile net loss to net cash from operating activities: Amortization of deferred implementation, solution and other costs 17,394 13,947 Depreciation and amortization 40,580 38,975 Amortization of debt issuance costs 1,550 1,427 Amortization of debt discount 19,398 15,381 Amortization of premiums on investments 751 114 Stock-based compensation expense 41,796 38,076 Deferred income taxes 52 313 Loss on extinguishment of debt 1,513 - Other non-cash charges 2,517 2,522 Changes in operating assets and liabilities (46,572 ) (32,935 ) Net cash used in operating activities (8,386 ) (21,979 ) Cash flows from investing activities: Net maturities of investments 30,793 1,252 Purchases of property and equipment (16,059 ) (16,538 ) Business combinations, net of cash acquired (64,652 ) - Capitalization of software development costs (3,908 ) (653 ) Net cash used in investing activities (53,826 ) (15,939 ) Cash flows from financing activities: Proceeds from issuance of common stock, net of issuance costs - 311,321 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 to purchase common stock 5,822 8,568 Payment of contingent consideration - (16,862 ) Net cash provided by (used in) financing activities (51,230 ) 303,027 Net increase (decrease) in cash, cash equivalents, and restricted cash (113,442 ) 265,109 Cash, cash equivalents, and restricted cash, beginning of period 411,185 103,562 Cash, cash equivalents, and restricted cash, end of period $ 297,743 $ 368,671 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, 2021 2020 2021 2020 GAAP revenue $ 126,736 $ 103,804 $ 366,829 $ 293,765 Deferred revenue reduction from purchase accounting 554 957 1,677 3,720 Non-GAAP revenue $ 127,290 $ 104,761 $ 368,506 $ 297,485 GAAP gross profit $ 57,010 $ 46,438 $ 165,551 $ 130,089 Stock-based compensation 2,728 2,110 8,026 7,422 Amortization of acquired technology 5,604 5,255 16,365 16,184 Acquisition related costs 105 244 327 735 Deferred revenue reduction from purchase accounting 554 957 1,677 3,720 Non-GAAP gross profit $ 66,001 $ 55,004 $ 191,946 $ 158,150 Non-GAAP gross margin: Non-GAAP gross profit $ 66,001 $ 55,004 $ 191,946 $ 158,150 Non-GAAP revenue 127,290 104,761 368,506 297,485 Non-GAAP gross margin 51.9 % 52.5 % 52.1 % 53.2 % GAAP sales and marketing expense $ 22,664 $ 18,403 $ 63,067 $ 54,597 Stock-based compensation (2,885 ) (2,209 ) (8,352 ) (6,353 ) Non-GAAP sales and marketing expense $ 19,779 $ 16,194 $ 54,715 $ 48,244 GAAP research and development expense $ 30,763 $ 23,568 $ 86,987 $ 72,168 Stock-based compensation (3,388 ) (2,901 ) (10,039 ) (9,780 ) Non-GAAP research and development expense $ 27,375 $ 20,667 $ 76,948 $ 62,388 GAAP general and administrative expense $ 20,352 $ 17,563 $ 57,890 $ 53,876 Stock-based compensation (5,068 ) (4,376 ) (14,374 ) (13,360 ) Non-GAAP general and administrative expense $ 15,284 $ 13,187 $ 43,516 $ 40,516 GAAP operating loss $ (22,972 ) $ (19,847 ) $ (60,428 ) $ (79,357 ) Deferred revenue reduction from purchase accounting 554 957 1,677 3,720 Partnership termination charges - - - 13,244 Stock-based compensation 14,069 11,596 40,791 36,915 Acquisition related costs 581 1,062 2,841 714 Amortization of acquired technology 5,604 5,255 16,365 16,184 Amortization of acquired intangibles 4,483 4,465 13,465 13,447 Unoccupied lease charges 1,244 1,468 2,056 2,136 Non-GAAP operating income $ 3,563 $ 4,956 $ 16,767 $ 7,003 GAAP net loss $ (31,583 ) $ (26,720 ) $ (87,365 ) $ (99,799 ) Deferred revenue reduction from purchase accounting 554 957 1,677 3,720 Partnership termination charges - - - 13,244 Loss on extinguishment of debt - - 1,513 - Stock-based compensation 14,069 11,596 40,791 36,915 Acquisition related costs 581 1,062 2,841 714 Amortization of acquired technology 5,604 5,255 16,365 16,184 Amortization of acquired intangibles 4,483 4,465 13,465 13,447 Unoccupied lease charges 1,244 1,468 2,056 2,136 Amortization of debt discount and issuance costs 6,849 5,686 20,948 16,808 Non-GAAP net income $ 1,801 $ 3,769 $ 12,291 $ 3,369 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 56,559 53,574 56,242 51,141 Non-GAAP weighted-average effect of potentially dilutive shares 802 2,013 1,148 1,990 Non-GAAP diluted weighted-average number of common shares 57,361 55,587 57,390 53,131 Calculation of non-GAAP income per share: Non-GAAP net income $ 1,801 $ 3,769 $ 12,291 $ 3,369 Non-GAAP diluted weighted-average number of common shares 57,361 55,587 57,390 53,131 Non-GAAP net income per share $ 0.03 $ 0.07 $ 0.21 $ 0.06 Reconciliation of GAAP net loss to adjusted EBITDA: GAAP net loss $ (31,583 ) $ (26,720 ) $ (87,365 ) $ (99,799 ) Depreciation and amortization 14,082 12,929 40,580 38,975 Stock-based compensation 14,069 11,596 40,791 36,915 Provision for income taxes 596 116 909 621 Interest (income) expense, net 7,761 6,727 24,056 19,586 Acquisition related costs 581 1,062 2,841 714 Unoccupied lease charges 1,244 1,468 2,056 2,136 Loss on extinguishment of debt - - 1,513 - Deferred revenue reduction from purchase accounting 554 957 1,677 3,720 Partnership termination charges - - - 13,244 Adjusted EBITDA $ 7,304 $ 8,135 $ 27,058 $ 16,112 Q2 Holdings, Inc. Reconciliation of GAAP to Non-GAAP Revenue Guidance (in thousands) Q4 2021 Guidance Full Year 2021 Guidance Low High Low High GAAP revenue $ 130,852 $ 132,352 $ 497,675 $ 499,175 Deferred revenue reduction from purchase accounting 448 448 2,125 2,125 Non-GAAP revenue $ 131,300 $ 132,800 $ 499,800 $ 501,300 View source version on businesswire.com: https://www.businesswire.com/news/home/20211103006137/en/Contacts 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
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, 2021. GAAP Results for the Third Quarter 2021 Revenue for the third quarter of $126.7 million, up 22 percent year-over-year and up 3 percent from the second quarter of 2021. GAAP gross margin for the third quarter of 45.0 percent, up from 44.7 percent for the prior-year quarter and 44.8 percent for the second quarter of 2021. GAAP net loss for the third quarter of $31.6 million, compared to GAAP net losses of $26.7 million for the prior-year quarter and $30.1 million for the second quarter of 2021. Non-GAAP Results for the Third Quarter 2021 Non-GAAP revenue for the third quarter of $127.3 million, up 22 percent year-over-year and up 3 percent from the second quarter of 2021. Non-GAAP gross margin for the third quarter of 51.9 percent, down from 52.5 percent for the prior-year quarter and flat versus 51.9 percent for the second quarter of 2021. Adjusted EBITDA for the third quarter of $7.3 million, down from $8.1 million for the prior-year quarter and $9.9 million for the second quarter of 2021. For a reconciliation of our GAAP to non-GAAP results, please see the tables below. “In the third quarter, we experienced strong sales performance consistent with our previous belief that the buying environment would steadily improve in the back half of 2021,” said Matt Flake, Q2 CEO. “We saw substantial growth in net new bookings in addition to continued strength in expansion activity. The variety of deals we signed in the quarter across our portfolio demonstrates that our vision and strategy are resonating with the market. Looking ahead, I believe our deal activity, pipeline, and the strength of our product portfolio position us for continued success for the remainder of the year and into 2022.” Third Quarter Highlights Signed a Tier 1, Top 10 credit union to a digital banking contract for our commercial banking, risk management and business account opening solutions. Signed a Tier 1 bank to a contract for our full digital banking suite, including retail, small business and commercial banking solutions. Signed a Tier 1 bank, an existing client, to a digital banking contract for our retail digital banking and account onboarding solutions. Signed a Tier 2 bank to a large digital transformation contract for a broad set of solutions led by retail digital banking and loan origination. Signed a large loan pricing contract extension to expand existing functionality with an existing global enterprise bank customer. Supported a new program launch with one of the largest fintechs in the United States, utilizing our BaaS platform. Exited the third quarter with approximately 19.2 million registered users on the Q2 Platform, representing 12 percent year-over-year growth and 2 percent sequential growth. “We delivered third quarter financial results that exceeded the high end of our revenue and adjusted EBITDA guidance,” said David Mehok, Q2 CFO. “The performance in the quarter was driven by our continued ability to efficiently deliver solutions to our customers in a timely manner, as well as solid organic growth contribution from existing customers. Based on our strong performance in the third quarter and visibility into the fourth quarter, we are raising our guidance for both revenue and adjusted EBITDA for the remainder of the year.” Financial outlook As of November 3, 2021, Q2 Holdings is providing guidance for its fourth quarter of 2021 and revised guidance for its full-year 2021. 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, income taxes, unoccupied lease charges, partnership termination 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 2021 as follows: Total non-GAAP revenue of $131.3 million to $132.8 million, which would represent year-over-year growth of 20 to 21 percent. Adjusted EBITDA of $7.3 million to $7.9 million. Q2 Holdings is providing updated guidance for the full-year 2021 as follows: Total non-GAAP revenue of $499.8 million to $501.3 million, which would represent year-over-year growth of 23 percent. Adjusted EBITDA of $34.4 million to $35.0 million, representing 7 percent of non-GAAP revenue for the year. Conference Call Details Date: Thursday, November 4, 2021 Time: 8:30 a.m. EDT Hosts: Matt Flake, CEO / David Mehok, CFO / Jonathan Price, EVP, Emerging Businesses, Corporate & Business Development Conference ID: 6574867 Registration: http://www.directeventreg.com/registration/event/6574867 Please join the conference call at least 10 minutes early to ensure the line is connected. A live 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/. An archived replay of the webcast will be available on this website on a temporary basis shortly 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, taxes, depreciation and amortization, stock-based compensation, acquisition-related costs, unoccupied lease charges, partnership termination 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, unoccupied lease charges, partnership termination charges, 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 GAAP 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 the Company’s 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: sales performance; improvement in the buying environment; strength in expansion activity; market acceptance of our vision and strategy; the ability of our deal activity, pipeline, and the strength of our product portfolio to position us for continued success for the remainder of the year and into 2022; 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 the adverse impacts of the COVID-19 pandemic on Q2’s business operations and performance and on global economic and financial markets, including on Q2’s customers, partners and suppliers and employees and business, as well as 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, new markets with Alt-FIs and fintechs and new products and services; (b) the risk that COVID-19, government actions or other factors continue to negatively impact or disrupt the markets for Q2’s solutions and that the markets for Q2’s solutions do not return to normal or grow as anticipated, in particular with respect to Tier 1 customers and Alt-FI and fintech 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 impact 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, including risks related to the timing and predictability of sales of Q2’s solutions and the impact that the timing of bookings may have on Q2’s revenue and financial performance in a period or any future period, including that any declines in bookings growth may not impact Q2’s revenue and financial performance until future periods; (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 cyberattacks, data breaches and breaches of security measures within Q2’s products, systems and infrastructure or the products, systems and infrastructure of third parties upon which Q2 relies and the resultant costs and liabilities and harm to Q2’s business and reputation and its ability to sell its products and services; (h) the impact that a slowdown in the economy, financial markets and credit markets may have 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) the risks associated with anticipated higher operating expenses in 2021 and beyond; (q) litigation related to intellectual property and other matters and any related claims, negotiations and settlements; (r) the risks associated with further consolidation in the financial services industry; (s) risks associated with selling Q2 solutions internationally; and (t) the risk that Q2 debt repayment obligations may adversely affect its financial condition and cash flows from operations in the future and that Q2 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, 2021 2020 Assets Current assets: Cash and cash equivalents $ 294,771 $ 407,703 Restricted cash 2,972 3,482 Investments 99,805 131,352 Accounts receivable, net 53,499 36,430 Contract assets, current portion, net 1,263 1,088 Prepaid expenses and other current assets 21,059 8,861 Deferred solution and other costs, current portion 23,377 19,042 Deferred implementation costs, current portion 7,335 8,258 Total current assets 504,081 616,216 Property and equipment, net 66,919 49,558 Right of use assets 54,012 34,709 Deferred solution and other costs, net of current portion 28,596 32,782 Deferred implementation costs, net of current portion 18,424 15,184 Intangible assets, net 170,960 184,859 Goodwill 512,869 462,274 Contract assets, net of current portion and allowance 21,704 18,694 Other long-term assets 2,082 2,426 Total assets $ 1,379,647 $ 1,416,702 Liabilities and stockholders' equity Current liabilities: Accounts payable and accrued liabilities $ 55,161 $ 57,047 Deferred revenues, current portion 100,119 81,935 Lease liabilities, current portion 8,658 6,844 Total current liabilities 163,938 145,826 Convertible notes, net of current portion 544,703 557,468 Deferred revenues, net of current portion 20,552 29,203 Lease liabilities, net of current portion 63,700 36,739 Other long-term liabilities 5,025 4,102 Total liabilities 797,918 773,338 Stockholders' equity: Common stock 6 6 Additional paid-in capital 1,050,182 1,024,577 Accumulated other comprehensive income (loss) 93 (32 ) Accumulated deficit (468,552 ) (381,187 ) Total stockholders' equity 581,729 643,364 Total liabilities and stockholders' equity $ 1,379,647 $ 1,416,702 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, 2021 2020 2021 2020 Revenues (1) $ 126,736 $ 103,804 $ 366,829 $ 293,765 Cost of revenues (2) (3) 69,726 57,366 201,278 163,676 Gross profit 57,010 46,438 165,551 130,089 Operating expenses: Sales and marketing (2) 22,664 18,403 63,067 54,597 Research and development (2) 30,763 23,568 86,987 72,168 General and administrative (2) 20,352 17,563 57,890 53,876 Acquisition related costs (4) 476 818 2,514 (22 ) Amortization of acquired intangibles 4,483 4,465 13,465 13,447 Partnership termination charges - - - 13,244 Unoccupied lease charges (5) 1,244 1,468 2,056 2,136 Total operating expenses 79,982 66,285 225,979 209,446 Loss from operations (22,972 ) (19,847 ) (60,428 ) (79,357 ) Other income (expense), net (8,015 ) (6,757 ) (26,028 ) (19,821 ) Loss before income taxes (30,987 ) (26,604 ) (86,456 ) (99,178 ) Provision for income taxes (596 ) (116 ) (909 ) (621 ) Net loss $ (31,583 ) $ (26,720 ) $ (87,365 ) $ (99,799 ) Other comprehensive loss: Unrealized loss on available-for-sale investments (8 ) (52 ) (3 ) (66 ) Foreign currency translation adjustment 163 66 128 14 Comprehensive loss $ (31,428 ) $ (26,706 ) $ (87,240 ) $ (99,851 ) Net loss per common share: Net loss per common share, basic and diluted $ (0.56 ) $ (0.50 ) $ (1.55 ) $ (1.95 ) Weighted average common shares outstanding, basic and diluted 56,559 53,574 56,242 51,141 (1) Includes deferred revenue reduction from purchase accounting of $0.6 million and $1.0 million for the three months ended September 30, 2021 and 2020, respectively, and $1.7 million and $3.7 million for the nine months ended September 30, 2021 and 2020, respectively. (2) Includes stock-based compensation expense as follows: Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Cost of revenues $ 2,728 $ 2,110 $ 8,026 $ 7,422 Sales and marketing 2,885 2,209 8,352 6,353 Research and development 3,388 2,901 10,039 9,780 General and administrative 5,068 4,376 14,374 13,360 Total stock-based compensation expense $ 14,069 $ 11,596 $ 40,791 $ 36,915 (3) Includes amortization of acquired technology of $5.6 million and $5.3 million for the three months ended September 30, 2021 and 2020, respectively, and $16.4 million and $16.2 million for the nine months ended September 30, 2021 and 2020, respectively. (4) The nine months ended September 30, 2020 includes a $2.9 million reduction to estimated contingent consideration as a result of the actual contingent consideration calculated as of the final measurement date of March 31, 2020. (5) Unoccupied lease charges include costs related to the early vacating of various facilities, partially offset by anticipated sublease income from these facilities. For the three and nine months ended September 30, 2021, the charges related to an updated assessment and vacating of facilities in Georgia, Texas, North Carolina and Nebraska, and for the three and nine months ended September 30, 2020, the charges related to the vacating of facilities in California, North Carolina, and Texas. Q2 Holdings, Inc. Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited) Nine Months Ended September 30, 2021 2020 Cash flows from operating activities: Net loss $ (87,365 ) $ (99,799 ) Adjustments to reconcile net loss to net cash from operating activities: Amortization of deferred implementation, solution and other costs 17,394 13,947 Depreciation and amortization 40,580 38,975 Amortization of debt issuance costs 1,550 1,427 Amortization of debt discount 19,398 15,381 Amortization of premiums on investments 751 114 Stock-based compensation expense 41,796 38,076 Deferred income taxes 52 313 Loss on extinguishment of debt 1,513 - Other non-cash charges 2,517 2,522 Changes in operating assets and liabilities (46,572 ) (32,935 ) Net cash used in operating activities (8,386 ) (21,979 ) Cash flows from investing activities: Net maturities of investments 30,793 1,252 Purchases of property and equipment (16,059 ) (16,538 ) Business combinations, net of cash acquired (64,652 ) - Capitalization of software development costs (3,908 ) (653 ) Net cash used in investing activities (53,826 ) (15,939 ) Cash flows from financing activities: Proceeds from issuance of common stock, net of issuance costs - 311,321 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 to purchase common stock 5,822 8,568 Payment of contingent consideration - (16,862 ) Net cash provided by (used in) financing activities (51,230 ) 303,027 Net increase (decrease) in cash, cash equivalents, and restricted cash (113,442 ) 265,109 Cash, cash equivalents, and restricted cash, beginning of period 411,185 103,562 Cash, cash equivalents, and restricted cash, end of period $ 297,743 $ 368,671 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, 2021 2020 2021 2020 GAAP revenue $ 126,736 $ 103,804 $ 366,829 $ 293,765 Deferred revenue reduction from purchase accounting 554 957 1,677 3,720 Non-GAAP revenue $ 127,290 $ 104,761 $ 368,506 $ 297,485 GAAP gross profit $ 57,010 $ 46,438 $ 165,551 $ 130,089 Stock-based compensation 2,728 2,110 8,026 7,422 Amortization of acquired technology 5,604 5,255 16,365 16,184 Acquisition related costs 105 244 327 735 Deferred revenue reduction from purchase accounting 554 957 1,677 3,720 Non-GAAP gross profit $ 66,001 $ 55,004 $ 191,946 $ 158,150 Non-GAAP gross margin: Non-GAAP gross profit $ 66,001 $ 55,004 $ 191,946 $ 158,150 Non-GAAP revenue 127,290 104,761 368,506 297,485 Non-GAAP gross margin 51.9 % 52.5 % 52.1 % 53.2 % GAAP sales and marketing expense $ 22,664 $ 18,403 $ 63,067 $ 54,597 Stock-based compensation (2,885 ) (2,209 ) (8,352 ) (6,353 ) Non-GAAP sales and marketing expense $ 19,779 $ 16,194 $ 54,715 $ 48,244 GAAP research and development expense $ 30,763 $ 23,568 $ 86,987 $ 72,168 Stock-based compensation (3,388 ) (2,901 ) (10,039 ) (9,780 ) Non-GAAP research and development expense $ 27,375 $ 20,667 $ 76,948 $ 62,388 GAAP general and administrative expense $ 20,352 $ 17,563 $ 57,890 $ 53,876 Stock-based compensation (5,068 ) (4,376 ) (14,374 ) (13,360 ) Non-GAAP general and administrative expense $ 15,284 $ 13,187 $ 43,516 $ 40,516 GAAP operating loss $ (22,972 ) $ (19,847 ) $ (60,428 ) $ (79,357 ) Deferred revenue reduction from purchase accounting 554 957 1,677 3,720 Partnership termination charges - - - 13,244 Stock-based compensation 14,069 11,596 40,791 36,915 Acquisition related costs 581 1,062 2,841 714 Amortization of acquired technology 5,604 5,255 16,365 16,184 Amortization of acquired intangibles 4,483 4,465 13,465 13,447 Unoccupied lease charges 1,244 1,468 2,056 2,136 Non-GAAP operating income $ 3,563 $ 4,956 $ 16,767 $ 7,003 GAAP net loss $ (31,583 ) $ (26,720 ) $ (87,365 ) $ (99,799 ) Deferred revenue reduction from purchase accounting 554 957 1,677 3,720 Partnership termination charges - - - 13,244 Loss on extinguishment of debt - - 1,513 - Stock-based compensation 14,069 11,596 40,791 36,915 Acquisition related costs 581 1,062 2,841 714 Amortization of acquired technology 5,604 5,255 16,365 16,184 Amortization of acquired intangibles 4,483 4,465 13,465 13,447 Unoccupied lease charges 1,244 1,468 2,056 2,136 Amortization of debt discount and issuance costs 6,849 5,686 20,948 16,808 Non-GAAP net income $ 1,801 $ 3,769 $ 12,291 $ 3,369 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 56,559 53,574 56,242 51,141 Non-GAAP weighted-average effect of potentially dilutive shares 802 2,013 1,148 1,990 Non-GAAP diluted weighted-average number of common shares 57,361 55,587 57,390 53,131 Calculation of non-GAAP income per share: Non-GAAP net income $ 1,801 $ 3,769 $ 12,291 $ 3,369 Non-GAAP diluted weighted-average number of common shares 57,361 55,587 57,390 53,131 Non-GAAP net income per share $ 0.03 $ 0.07 $ 0.21 $ 0.06 Reconciliation of GAAP net loss to adjusted EBITDA: GAAP net loss $ (31,583 ) $ (26,720 ) $ (87,365 ) $ (99,799 ) Depreciation and amortization 14,082 12,929 40,580 38,975 Stock-based compensation 14,069 11,596 40,791 36,915 Provision for income taxes 596 116 909 621 Interest (income) expense, net 7,761 6,727 24,056 19,586 Acquisition related costs 581 1,062 2,841 714 Unoccupied lease charges 1,244 1,468 2,056 2,136 Loss on extinguishment of debt - - 1,513 - Deferred revenue reduction from purchase accounting 554 957 1,677 3,720 Partnership termination charges - - - 13,244 Adjusted EBITDA $ 7,304 $ 8,135 $ 27,058 $ 16,112 Q2 Holdings, Inc. Reconciliation of GAAP to Non-GAAP Revenue Guidance (in thousands) Q4 2021 Guidance Full Year 2021 Guidance Low High Low High GAAP revenue $ 130,852 $ 132,352 $ 497,675 $ 499,175 Deferred revenue reduction from purchase accounting 448 448 2,125 2,125 Non-GAAP revenue $ 131,300 $ 132,800 $ 499,800 $ 501,300 View source version on businesswire.com: https://www.businesswire.com/news/home/20211103006137/en/
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