Q2 Holdings's (NYSE:QTWO) Q1: Beats On Revenue, Stock Soars
Banking software provider Q2 (NYSE:QTWO) reported Q1 CY2025 results exceeding the market's revenue expectations , with sales up 14.6% year on year to $189.7 million. Guidance for next quarter's revenue was better than expected at $193 million at the midpoint, 0.8% above analysts' estimates. Its GAAP profit of $0.07 per share was significantly above analysts' consensus estimates.
Is now the time to buy Q2 Holdings? Find out in our full research report.
Q2 Holdings (QTWO) Q1 CY2025 Highlights:
Revenue: $189.7 million vs analyst estimates of $186.6 million (14.6% year-on-year growth, 1.7% beat)
EPS (GAAP): $0.07 vs analyst estimates of -$0.01 (significant beat)
Adjusted Operating Income: $32.7 million vs analyst estimates of $29.96 million (17.2% margin, 9.1% beat)
The company slightly lifted its revenue guidance for the full year to $779.5 million at the midpoint from $775.5 million
EBITDA guidance for the full year is $172.5 million at the midpoint, above analyst estimates of $168.1 million
Operating Margin: 1.2%, up from -8.6% in the same quarter last year
Free Cash Flow Margin: 19.9%, similar to the previous quarter
Market Capitalization: $4.94 billion
Company Overview
Founded in 2004 by Hank Seale, Q2 (NYSE:QTWO) offers software-as-a-service that enables small banks to provide online banking and consumer lending services to their clients.
Sales Growth
Examining a company's long-term performance can provide clues about its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last three years, Q2 Holdings grew its sales at a 11.7% annual rate. Although this growth is acceptable on an absolute basis, it fell short of our standards for the software sector, which enjoys a number of secular tailwinds.
Q2 Holdings Quarterly Revenue
This quarter, Q2 Holdings reported year-on-year revenue growth of 14.6%, and its $189.7 million of revenue exceeded Wall Street's estimates by 1.7%. Company management is currently guiding for a 11.6% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 10.4% over the next 12 months, similar to its three-year rate. Despite the slowdown, this projection is above the sector average and implies the market is forecasting some success for its newer products and services.
Unless you've been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. While Nvidia and AMD are trading close to all-time highs, we prefer a lesser-known (but still profitable) stock benefiting from the rise of AI. Click here to access our free report one of our favorites growth stories.
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