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.

Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Q2 Holdings. The Motley Fool has a disclosure policy.