What happened
Week to date, shares of Q2 Holdings (QTWO 3.17%) were down 24.7% as of 1:20 p.m. ET on Friday, according to data provided by S&P Global Market Intelligence. The fintech company previously received takeover interest from private equity firms, but the market correction has caused demand for software and fintech businesses to evaporate.
Earlier this week, Q2 Holdings reportedly put on hold its plan to solicit offers after bids came in too low. Year to date, the stock is down 50%, along with those of other leading fintech companies.
So what
For patient shareholders, this might be good news, since it allows investors to benefit from the eventual recovery in sentiment for the sector once the market correction comes to an end. In the first quarter, Q2 Holdings reported revenue growth of 15% year over year, representing a sequential increase of 1% over the fourth quarter.
Management believes the company is well positioned for more growth after seeing strong adoption for its Q2 Innovation Studio, which allows financial institutions and partners to integrate with Q2's digital banking platform.
Now what
One thing the market might be missing with software-as-a-service companies that have seen their share prices fall sharply is the increased value they bring amid labor shortages. During the first-quarter earnings call, management alluded to the increased efficiency its software platform brings to employees after scoring a deal with a top U.S. bank.
"This bank sees our loan pricing tools as a valuable way to enable their commercial bankers with actionable, in-the-moment insights, enhance the efficiency and experience of their staff and help them better serve their clients," CEO Matthew Flake said.
The company now has nearly 20 million registered customers using its digital banking platform, up 8% year over year. More than half of Q2's digital banking customers are using its Innovation Studio. That spells tighter relationships with customers and more opportunities to grow revenue with existing users.
