Q2 Holdings (NYSE:QTWO) reported fourth-quarter results on Feb. 14. The provider of cloud-based software continues to benefit from surging demand for digital banking solutions.

Q2 Holdings results: The raw numbers


Q4 2017

Q4 2016

Year-Over-Year Change


$51.703 million

$42.155 million


Net earnings

($5.521 million)

($7.513 million)


Net earnings per share




Data source: Q2 Holdings Q4 2017 earnings release.

What happened with Q2 this quarter?

Fourth-quarter revenue jumped 23% year over year to $51.7 million. This growth was fueled by a 21% rise in registered users, to 10.4 million. For the full year, revenue leapt 29%, to $194 million.

Moreover, Q2's trailing-12-month revenue retention rate -- which compares revenue of all installed customers at the end of the previous year with the revenue from that same group of customers at the end of the current year -- came in at 122%. This was similar to prior years and demonstrates that Q2 continues to grow its book of business among its existing customers, in addition to gaining new customers.

"We had a great finish to 2017 with record bookings in the quarter," CEO Matt Flake said in a press release. "We saw a significant increase in activity in the bank market, where an improved economic environment is accelerating banks' decision-making."

A person using a mobile phone to deposit a check into his bank account.

Q2 is helping financial institutions adapt to an increasingly mobile world. Image source: Getty Images.

Adjusted operating expenses rose only 10%, to $25.7 million, mostly due to employee headcount growth. In turn, adjusted operating income improved to $1.5 million, compared to a loss of $845,000 in the fourth quarter of 2016. And adjusted EBITDA increased to $4.1 million, up from $1.3 million in the prior-year quarter.

All told, Q2 delivered adjusted net income of $2.3 million in the fourth quarter, or $0.05 per share. That compares to a net loss of $1 million, or $0.03 per share, in the year-ago period. 

Looking forward  

Q2 Holdings expects first-quarter revenue to rise 18% to 20% year over year, to a range of $52.6 million to $53.2 million. The company is also forecasting adjusted EBITDA of $1.4 million to $2 million.

In addition, Q2 issued full-year guidance for 2018, including:

  • Total revenue of $234 million to $236 million, signifying year-over-year growth of 21% to 22%.
  • Adjusted EBITDA of $19 million to $21 million, up from $10.2 million in 2017.

"With the addition of four Tier 1 banks in the fourth quarter and a solid pipeline entering the year, I believe 2018 should be another strong year for Q2," added Flake.

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