Total third quarter revenue of $60.5 million, up 21 percent
year-over-year, and up 3 percent from the previous quarter
AUSTIN, Texas--(BUSINESS WIRE)--
Q2
Holdings, Inc. (NYSE:QTWO), a leading provider of digital banking
solutions for financial institutions, today announced results for its
third quarter ending Sept. 30, 2018.
Third Quarter 2018 Results
-
Revenue for the third quarter of $60.5 million, up 21 percent
year-over-year and up 3 percent from the previous quarter.
-
GAAP gross margin for the third quarter of 50.2 percent, up from 48.5
percent one year ago. Non-GAAP gross margin for the third quarter of
53.8 percent, up from 52.3 percent one year ago.
-
GAAP net loss for the third quarter of $8.9 million, which compares to
a GAAP net loss of $5.8 million for the third quarter of 2017, and
$8.6 million for the second quarter of 2018. Adjusted EBITDA for the
third quarter of positive $5.7 million, an improvement from positive
$3.6 million one year ago and positive $5.1 million for the second
quarter of 2018.
“We saw solid sales performance in the quarter, highlighted by record
bookings for Q2 Open and adding a top 50 credit union,” said Matt Flake,
CEO of Q2. “Our delivery teams had an outstanding quarter as we added
more than 900,000 registered users, a record for a single quarter.
Looking ahead, our pipeline is healthy and we believe will be even
stronger with the addition of Cloud Lending. I am optimistic that we are
positioned well for strong bookings in the fourth quarter.”
Third Quarter 2018 Highlights.
-
Signed a top 50 credit union in the northeastern United States with
more than $5 billion in assets as a retail customer.
-
Exited the third quarter with more than 12.3 million registered users
on the Q2 platform, representing 24 percent year-over-year growth and
up 8 percent sequentially.
-
Q2 Open signed eight deals including a reseller agreement with a large
payments provider for our biller direct solution.
Financial Outlook
Q2 Holdings is providing guidance for its fourth quarter 2018 as follows:
-
Total revenue, excluding the acquisition of Cloud Lending, of $64.9
million to $65.3 million, which would represent year-over-year growth
of 26 percent. We anticipate Cloud Lending will add approximately $1.0
million to $2.0 million in revenue to the fourth quarter after all
related purchase accounting adjustments, increasing the revenue guide
for the quarter to $65.9 million to $67.3 million on a combined basis,
which would represent year-over-year growth of 27 percent to 30
percent.
-
Adjusted EBITDA, excluding the acquisition of Cloud Lending, of $7.1
million to $7.5 million. We anticipate the initial investment we are
making to integrate Cloud Lending and achieve our 2019 go to market
strategy will reduce adjusted EBITDA in the fourth quarter by
approximately $4.0 million to $5.0 million, reducing the adjusted
EBITDA guide for the quarter to $2.1 million to $3.5 million. GAAP net
loss is the most comparable GAAP measure to adjusted EBITDA. Adjusted
EBITDA differs from GAAP net loss in that it excludes things such as
depreciation and amortization, stock-based compensation,
acquisition-related costs, interest, income taxes and unoccupied lease
charges. 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.
Q2 Holdings is providing guidance for the full-year 2018 as follows:
-
Total revenue, excluding the acquisition of Cloud Lending, of $238.8
million to $239.2 million, which would represent year-over-year growth
of approximately 23 percent. The addition of Cloud Lending will
increase the revenue guide for the full year to $239.8 million to
$241.2 million on a combined basis, which would represent
year-over-year growth of 24 percent.
-
Adjusted EBITDA, excluding the acquisition of Cloud Lending, of $23.0
million to $23.4 million. The addition of Cloud Lending will reduce
the adjusted EBITDA guide for the full year to $18.0 million to $19.4
million on a combined basis. Adjusted EBITDA differs from GAAP net
loss in that it excludes things such as depreciation and amortization,
stock-based compensation, acquisition-related costs, interest, income
taxes and unoccupied lease charges. 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.
|
Conference Call Details
|
|
Date:
|
|
Nov. 7, 2018
|
Time:
|
|
8:30 a.m. EST
|
Hosts:
|
|
Matt Flake, CEO / Jennifer Harris, CFO
|
Dial in:
|
|
US toll free: 1-833-241-4254
|
|
|
International: 1-647-689-4205
|
Conference ID:
|
|
1082127
|
|
|
|
Please join the conference call at least 10 minutes before start time to
ensure the line is connected. A live webcast of the conference call will
be accessible from the investor services section of the Q2 Holdings,
Inc. website at http://investors.q2ebanking.com/.
A replay of the webcast will also be available at this website on a
temporary basis shortly after the call.
About Q2 Holdings, Inc.
Q2 is a secure, cloud-based digital banking solutions company
headquartered in Austin, Texas. Since 2004, it has been our mission to
build stronger communities by strengthening their financial
institutions. Our digital banking solutions for deposits, money
movement, lending, leasing, security and fraud enable financial
institutions to deliver a better financial experience to their account
holders. Our bank and credit union customers, along with emerging
financial services providers, also benefit from actionable data
analytics and access to open technology tools. To learn more about Q2,
visit www.q2ebanking.com.
Use of Non-GAAP Measures
Q2 uses the following non-GAAP financial measures: 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 loss; and,
non-GAAP net loss. 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 adjusted EBITDA, Q2 adjusts net loss for such things as
interest, taxes, depreciation and amortization, stock-based
compensation, acquisition-related costs, amortization of technology and
intangibles, and unoccupied lease charges. In the case of non-GAAP gross
margin and non-GAAP gross profit, Q2 adjusts gross profit and gross
margin for stock-based compensation and amortization of acquired
technology. 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. In the case of non-GAAP operating loss
and non-GAAP net loss, Q2 adjusts operating loss and net loss,
respectively, for stock-based compensation, acquisition related-costs,
amortization of acquired technology, amortization of acquired
intangibles, and unoccupied lease charges.
These non-GAAP measures 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 positive sales pipeline and bookings momentum, Q2’s
performance for the remainder of 2018 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 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 and new products and services; (b) the risk that the market
for Q2’s solutions does not grow as anticipated, in particular with
respect to Tier 1 customers; (c) the risks associated with integrating
acquired companies, including Cloud Lending, and successfully selling
and maintaining their solutions; (d) the risk that changes in Q2’s
market, business or sales organization negatively impacts 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; (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 data breaches and
breaches of security measures within Q2’s products, systems and
infrastructure and the resultant harm to Q2’s business and its ability
to sell its products and services; (h) the impact that a slowdown in the
economy, financial markets, and credit markets has 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 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; (p) litigation related to intellectual property and other
matters and any related claims, negotiations and settlements; and (q)
the risks associated with further consolidation in the financial
services industry.
Additional information relating to the uncertainty affecting the Q2
business are contained in Q2’s filings with the Securities and Exchange
Commission. These documents are available on the SEC Filings section of
the Investor Services section of Q2’s website at http://investors.q2ebanking.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)
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
Assets
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
$
|
211,779
|
|
|
|
$
|
57,961
|
|
Restricted cash
|
|
|
|
|
2,315
|
|
|
|
|
2,315
|
|
Investments
|
|
|
|
|
86,236
|
|
|
|
|
41,685
|
|
Accounts receivable, net
|
|
|
|
|
23,121
|
|
|
|
|
13,203
|
|
Contract assets, current portion
|
|
|
|
|
487
|
|
|
|
|
-
|
|
Prepaid expenses and other current assets
|
|
|
|
|
4,795
|
|
|
|
|
3,115
|
|
Deferred solution and other costs, current portion
|
|
|
|
|
10,456
|
|
|
|
|
9,246
|
|
Deferred implementation costs, current portion
|
|
|
|
|
3,599
|
|
|
|
|
3,562
|
|
Total current assets
|
|
|
|
|
342,788
|
|
|
|
|
131,087
|
|
Property and equipment, net
|
|
|
|
|
35,132
|
|
|
|
|
34,544
|
|
Deferred solution and other costs, net of current portion
|
|
|
|
|
16,273
|
|
|
|
|
12,973
|
|
Deferred implementation costs, net of current portion
|
|
|
|
|
10,215
|
|
|
|
|
8,295
|
|
Intangible assets, net
|
|
|
|
|
7,720
|
|
|
|
|
12,034
|
|
Goodwill
|
|
|
|
|
12,876
|
|
|
|
|
12,876
|
|
Contract assets, net of current portion
|
|
|
|
|
8,346
|
|
|
|
|
-
|
|
Other long-term assets
|
|
|
|
|
1,751
|
|
|
|
|
1,006
|
|
Total assets
|
|
|
|
$
|
435,101
|
|
|
|
$
|
212,815
|
|
|
|
|
|
|
|
|
|
Liabilities and stockholders' equity
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
|
|
$
|
26,156
|
|
|
|
$
|
29,694
|
|
Deferred revenues, current portion
|
|
|
|
|
34,799
|
|
|
|
|
38,379
|
|
Total current liabilities
|
|
|
|
|
60,955
|
|
|
|
|
68,073
|
|
Convertible notes, net of current portion
|
|
|
|
|
180,122
|
|
|
|
|
-
|
|
Deferred revenues, net of current portion
|
|
|
|
|
25,428
|
|
|
|
|
28,289
|
|
Deferred rent, net of current portion
|
|
|
|
|
8,017
|
|
|
|
|
9,393
|
|
Other long-term liabilities
|
|
|
|
|
590
|
|
|
|
|
438
|
|
Total liabilities
|
|
|
|
|
275,112
|
|
|
|
|
106,193
|
|
Stockholders' equity:
|
|
|
|
|
|
|
|
Common stock
|
|
|
|
|
4
|
|
|
|
|
4
|
|
Treasury stock
|
|
|
|
|
-
|
|
|
|
|
(855
|
)
|
Additional paid-in capital
|
|
|
|
|
320,627
|
|
|
|
|
259,726
|
|
Accumulated other comprehensive loss
|
|
|
|
|
(83
|
)
|
|
|
|
(139
|
)
|
Accumulated deficit
|
|
|
|
|
(160,559
|
)
|
|
|
|
(152,114
|
)
|
Total stockholders' equity
|
|
|
|
|
159,989
|
|
|
|
|
106,622
|
|
Total liabilities and stockholders' equity
|
|
|
|
$
|
435,101
|
|
|
|
$
|
212,815
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q2 Holdings, Inc.
|
Condensed Consolidated Statements of Comprehensive Loss
|
(in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
$
|
60,541
|
|
|
|
$
|
50,116
|
|
|
|
$
|
173,923
|
|
|
|
$
|
142,275
|
|
Cost of revenues (1) (2) |
|
|
|
|
30,140
|
|
|
|
|
25,813
|
|
|
|
|
86,420
|
|
|
|
|
72,913
|
|
Gross profit
|
|
|
|
|
30,401
|
|
|
|
|
24,303
|
|
|
|
|
87,503
|
|
|
|
|
69,362
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing (1) |
|
|
|
|
11,467
|
|
|
|
|
9,904
|
|
|
|
|
34,541
|
|
|
|
|
30,878
|
|
Research and development (1) |
|
|
|
|
12,904
|
|
|
|
|
10,092
|
|
|
|
|
35,817
|
|
|
|
|
29,665
|
|
General and administrative (1) |
|
|
|
|
11,237
|
|
|
|
|
9,596
|
|
|
|
|
32,331
|
|
|
|
|
27,316
|
|
Acquisition related costs
|
|
|
|
|
1,811
|
|
|
|
|
270
|
|
|
|
|
2,325
|
|
|
|
|
969
|
|
Amortization of acquired intangibles
|
|
|
|
|
251
|
|
|
|
|
369
|
|
|
|
|
987
|
|
|
|
|
1,113
|
|
Unoccupied lease charges (3) |
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
658
|
|
|
|
|
-
|
|
Total operating expenses
|
|
|
|
|
37,670
|
|
|
|
|
30,231
|
|
|
|
|
106,659
|
|
|
|
|
89,941
|
|
Loss from operations
|
|
|
|
|
(7,269
|
)
|
|
|
|
(5,928
|
)
|
|
|
|
(19,156
|
)
|
|
|
|
(20,579
|
)
|
Other income (expense), net
|
|
|
|
|
(1,877
|
)
|
|
|
|
149
|
|
|
|
|
(5,005
|
)
|
|
|
|
292
|
|
Loss before income taxes
|
|
|
|
|
(9,146
|
)
|
|
|
|
(5,779
|
)
|
|
|
|
(24,161
|
)
|
|
|
|
(20,287
|
)
|
Benefit from (provision for) income taxes
|
|
|
|
|
287
|
|
|
|
|
(3
|
)
|
|
|
|
627
|
|
|
|
|
(356
|
)
|
Net loss
|
|
|
|
$
|
(8,859
|
)
|
|
|
$
|
(5,782
|
)
|
|
|
$
|
(23,534
|
)
|
|
|
$
|
(20,643
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain (loss) on available-for-sale investments
|
|
|
|
|
78
|
|
|
|
|
15
|
|
|
|
|
56
|
|
|
|
|
(15
|
)
|
Comprehensive loss
|
|
|
|
$
|
(8,781
|
)
|
|
|
$
|
(5,767
|
)
|
|
|
$
|
(23,478
|
)
|
|
|
$
|
(20,658
|
)
|
Net loss per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common share, basic and diluted
|
|
|
|
$
|
(0.21
|
)
|
|
|
$
|
(0.14
|
)
|
|
|
$
|
(0.55
|
)
|
|
|
$
|
(0.50
|
)
|
Weighted average common shares outstanding, basic and diluted
|
|
|
|
|
42,993
|
|
|
|
|
41,386
|
|
|
|
|
42,597
|
|
|
|
|
41,030
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes stock-based compensation expenses as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
Cost of revenues
|
|
|
|
$
|
1,240
|
|
|
|
$
|
983
|
|
|
|
$
|
3,320
|
|
|
|
$
|
2,526
|
|
Sales and marketing
|
|
|
|
|
1,474
|
|
|
|
|
699
|
|
|
|
|
4,128
|
|
|
|
|
2,142
|
|
Research and development
|
|
|
|
|
1,758
|
|
|
|
|
1,149
|
|
|
|
|
4,680
|
|
|
|
|
3,127
|
|
General and administrative
|
|
|
|
|
3,026
|
|
|
|
|
2,576
|
|
|
|
|
8,469
|
|
|
|
|
6,831
|
|
Total stock-based compensation expenses
|
|
|
|
$
|
7,498
|
|
|
|
$
|
5,407
|
|
|
|
$
|
20,597
|
|
|
|
$
|
14,626
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2)
|
|
Includes amortization of acquired technology of $0.9 million for
each of the three months ended September 30, 2018 and 2017 and
$2.7 million for each of the nine months ended September 30, 2018
and 2017.
|
|
|
|
(3)
|
|
Unoccupied lease charges include costs related to the early exit
from a portion of our south Austin facility, partially offset by
anticipated sublease income from that facility.
|
|
|
|
Q2 Holdings, Inc.
|
Condensed Consolidated Statements of Cash Flows
|
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
$
|
(23,534
|
)
|
|
|
$
|
(20,643
|
)
|
Adjustments to reconcile net loss to net cash from operating
activities:
|
|
|
|
|
|
|
|
Amortization of deferred implementation, solution and other costs
|
|
|
|
|
6,234
|
|
|
|
|
5,526
|
|
Depreciation and amortization
|
|
|
|
|
11,441
|
|
|
|
|
11,049
|
|
Amortization of debt issuance costs
|
|
|
|
|
587
|
|
|
|
|
28
|
|
Amortization of debt discount
|
|
|
|
|
5,370
|
|
|
|
|
-
|
|
Amortization of premiums on investments
|
|
|
|
|
2
|
|
|
|
|
263
|
|
Stock-based compensation expenses
|
|
|
|
|
20,597
|
|
|
|
|
14,626
|
|
Deferred income taxes
|
|
|
|
|
(429
|
)
|
|
|
|
227
|
|
Other non-cash charges
|
|
|
|
|
771
|
|
|
|
|
5
|
|
Changes in operating assets and liabilities
|
|
|
|
|
(24,899
|
)
|
|
|
|
(9,738
|
)
|
Cash provided by (used in) operating activities
|
|
|
|
|
(3,860
|
)
|
|
|
|
1,343
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
Net redemptions of investments
|
|
|
|
|
(44,498
|
)
|
|
|
|
(6,748
|
)
|
Purchases of property and equipment
|
|
|
|
|
(12,174
|
)
|
|
|
|
(11,379
|
)
|
Business combinations and asset acquisitions, net of cash acquired
|
|
|
|
|
(150
|
)
|
|
|
|
(3,816
|
)
|
Capitalization of software development costs
|
|
|
|
|
-
|
|
|
|
|
(970
|
)
|
Purchases of intangible assets
|
|
|
|
|
(46
|
)
|
|
|
|
-
|
|
Increase in restricted cash
|
|
|
|
|
-
|
|
|
|
|
(1,600
|
)
|
Cash used in investing activities
|
|
|
|
|
(56,868
|
)
|
|
|
|
(24,513
|
)
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
Proceeds from issuance of convertible notes, net of issuance costs
|
|
|
|
|
223,167
|
|
|
|
|
-
|
|
Purchase of convertible notes bond hedge
|
|
|
|
|
(41,699
|
)
|
|
|
|
-
|
|
Proceeds from issuance of warrants
|
|
|
|
|
22,379
|
|
|
|
|
-
|
|
Proceeds from issuance of common stock
|
|
|
|
|
10,699
|
|
|
|
|
8,437
|
|
Net cash provided by financing activities
|
|
|
|
|
214,546
|
|
|
|
|
8,437
|
|
Net increase (decrease) in cash, cash equivalents, and restricted
cash
|
|
|
|
|
153,818
|
|
|
|
|
(14,733
|
)
|
Cash, cash equivalents, and restricted cash, beginning of period
|
|
|
|
|
60,276
|
|
|
|
|
57,788
|
|
Cash, cash equivalents, and restricted cash, end of period
|
|
|
|
$
|
214,094
|
|
|
|
$
|
43,055
|
|
|
|
|
|
|
|
|
|
Reconciliation of cash, cash equivalents, and restricted cash as
shown
|
|
|
|
|
|
|
|
in the statements of cash flows:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
$
|
211,779
|
|
|
|
$
|
40,140
|
|
Restricted cash
|
|
|
|
|
2,315
|
|
|
|
|
2,915
|
|
Total cash, cash equivalents, and restricted cash
|
|
|
|
$
|
214,094
|
|
|
|
$
|
43,055
|
|
|
|
|
|
|
|
|
|
|
Q2 Holdings, Inc.
|
Reconciliation of GAAP to Non-GAAP Measures
|
(in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
|
(unaudited)
|
GAAP gross profit
|
|
|
|
$
|
30,401
|
|
|
|
$
|
24,303
|
|
|
|
$
|
87,503
|
|
|
|
$
|
69,362
|
|
Stock-based compensation
|
|
|
|
|
1,240
|
|
|
|
|
983
|
|
|
|
|
3,320
|
|
|
|
|
2,526
|
|
Amortization of acquired technology
|
|
|
|
|
912
|
|
|
|
|
912
|
|
|
|
|
2,736
|
|
|
|
|
2,710
|
|
Non-GAAP gross profit
|
|
|
|
$
|
32,553
|
|
|
|
$
|
26,198
|
|
|
|
$
|
93,559
|
|
|
|
$
|
74,598
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP gross margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP gross profit
|
|
|
|
$
|
32,553
|
|
|
|
$
|
26,198
|
|
|
|
$
|
93,559
|
|
|
|
$
|
74,598
|
|
GAAP revenue
|
|
|
|
|
60,541
|
|
|
|
|
50,116
|
|
|
|
|
173,923
|
|
|
|
|
142,275
|
|
Non-GAAP gross margin
|
|
|
|
|
53.8
|
%
|
|
|
|
52.3
|
%
|
|
|
|
53.8
|
%
|
|
|
|
52.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP sales and marketing expense
|
|
|
|
$
|
11,467
|
|
|
|
$
|
9,904
|
|
|
|
$
|
34,541
|
|
|
|
$
|
30,878
|
|
Stock-based compensation
|
|
|
|
|
(1,474
|
)
|
|
|
|
(699
|
)
|
|
|
|
(4,128
|
)
|
|
|
|
(2,142
|
)
|
Non-GAAP sales and marketing expense
|
|
|
|
$
|
9,993
|
|
|
|
$
|
9,205
|
|
|
|
$
|
30,413
|
|
|
|
$
|
28,736
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP research and development expense
|
|
|
|
$
|
12,904
|
|
|
|
$
|
10,092
|
|
|
|
$
|
35,817
|
|
|
|
$
|
29,665
|
|
Stock-based compensation
|
|
|
|
|
(1,758
|
)
|
|
|
|
(1,149
|
)
|
|
|
|
(4,680
|
)
|
|
|
|
(3,127
|
)
|
Non-GAAP research and development expense
|
|
|
|
$
|
11,146
|
|
|
|
$
|
8,943
|
|
|
|
$
|
31,137
|
|
|
|
$
|
26,538
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP general and administrative expense
|
|
|
|
$
|
11,237
|
|
|
|
$
|
9,596
|
|
|
|
$
|
32,331
|
|
|
|
$
|
27,316
|
|
Stock-based compensation
|
|
|
|
|
(3,026
|
)
|
|
|
|
(2,576
|
)
|
|
|
|
(8,469
|
)
|
|
|
|
(6,831
|
)
|
Non-GAAP general and administrative expense
|
|
|
|
$
|
8,211
|
|
|
|
$
|
7,020
|
|
|
|
$
|
23,862
|
|
|
|
$
|
20,485
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP operating loss
|
|
|
|
$
|
(7,269
|
)
|
|
|
$
|
(5,928
|
)
|
|
|
$
|
(19,156
|
)
|
|
|
$
|
(20,579
|
)
|
Stock-based compensation
|
|
|
|
|
7,498
|
|
|
|
|
5,407
|
|
|
|
|
20,597
|
|
|
|
|
14,626
|
|
Acquisition related costs
|
|
|
|
|
1,811
|
|
|
|
|
270
|
|
|
|
|
2,325
|
|
|
|
|
969
|
|
Amortization of acquired technology
|
|
|
|
|
912
|
|
|
|
|
912
|
|
|
|
|
2,736
|
|
|
|
|
2,710
|
|
Amortization of acquired intangibles
|
|
|
|
|
251
|
|
|
|
|
369
|
|
|
|
|
987
|
|
|
|
|
1,113
|
|
Unoccupied lease charges
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
658
|
|
|
|
|
-
|
|
Non-GAAP operating income (loss)
|
|
|
|
$
|
3,203
|
|
|
|
$
|
1,030
|
|
|
|
$
|
8,147
|
|
|
|
$
|
(1,161
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net loss
|
|
|
|
$
|
(8,859
|
)
|
|
|
$
|
(5,782
|
)
|
|
|
$
|
(23,534
|
)
|
|
|
$
|
(20,643
|
)
|
Stock-based compensation
|
|
|
|
|
7,498
|
|
|
|
|
5,407
|
|
|
|
|
20,597
|
|
|
|
|
14,626
|
|
Acquisition related costs
|
|
|
|
|
1,811
|
|
|
|
|
270
|
|
|
|
|
2,325
|
|
|
|
|
969
|
|
Amortization of acquired technology
|
|
|
|
|
912
|
|
|
|
|
912
|
|
|
|
|
2,736
|
|
|
|
|
2,710
|
|
Amortization of acquired intangibles
|
|
|
|
|
251
|
|
|
|
|
369
|
|
|
|
|
987
|
|
|
|
|
1,113
|
|
Unoccupied lease charges
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
658
|
|
|
|
|
-
|
|
Amortization of debt discount and issuance costs
|
|
|
|
|
2,523
|
|
|
|
|
-
|
|
|
|
|
5,957
|
|
|
|
|
28
|
|
Non-GAAP net income (loss)
|
|
|
|
$
|
4,136
|
|
|
|
$
|
1,176
|
|
|
|
$
|
9,726
|
|
|
|
$
|
(1,197
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation from diluted weighted-average number of common shares
|
|
|
|
|
|
|
|
|
|
|
as reported to pro forma diluted weighted average number of common
shares
|
|
|
|
|
|
|
|
|
|
Diluted weighted-average number of common shares, as reported
|
|
|
|
|
42,993
|
|
|
|
|
41,386
|
|
|
|
|
42,597
|
|
|
|
|
41,030
|
|
Weighted-average effect of potentially dilutive shares
|
|
|
|
|
2,386
|
|
|
|
|
2,050
|
|
|
|
|
2,277
|
|
|
|
|
-
|
|
Pro forma diluted weighted-average number of common shares
|
|
|
|
|
45,379
|
|
|
|
|
43,436
|
|
|
|
|
44,874
|
|
|
|
|
41,030
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calculation of non-GAAP income (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income (loss)
|
|
|
|
$
|
4,136
|
|
|
|
$
|
1,176
|
|
|
|
$
|
9,726
|
|
|
|
$
|
(1,197
|
)
|
Diluted weighted-average number of common shares (pro forma for
three and
|
|
|
|
|
|
|
|
nine months ended Sep. 30, 2018 and three months ended Sep. 30, 2017)
|
|
|
|
|
45,379
|
|
|
|
|
43,436
|
|
|
|
|
44,874
|
|
|
|
|
41,030
|
|
Non-GAAP net income (loss) per share
|
|
|
|
$
|
0.09
|
|
|
|
$
|
0.03
|
|
|
|
$
|
0.22
|
|
|
|
$
|
(0.03
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP net loss to adjusted EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net loss
|
|
|
|
$
|
(8,859
|
)
|
|
|
$
|
(5,782
|
)
|
|
|
$
|
(23,534
|
)
|
|
|
$
|
(20,643
|
)
|
Depreciation and amortization
|
|
|
|
|
3,689
|
|
|
|
|
3,822
|
|
|
|
|
11,441
|
|
|
|
|
11,049
|
|
Stock-based compensation
|
|
|
|
|
7,498
|
|
|
|
|
5,407
|
|
|
|
|
20,597
|
|
|
|
|
14,626
|
|
(Benefit from) provision for income taxes
|
|
|
|
|
(287
|
)
|
|
|
|
3
|
|
|
|
|
(627
|
)
|
|
|
|
356
|
|
Interest (income) expense, net
|
|
|
|
|
1,877
|
|
|
|
|
(149
|
)
|
|
|
|
5,005
|
|
|
|
|
(292
|
)
|
Acquisition related costs
|
|
|
|
|
1,811
|
|
|
|
|
270
|
|
|
|
|
2,325
|
|
|
|
|
969
|
|
Unoccupied lease charges
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
658
|
|
|
|
|
-
|
|
Adjusted EBITDA
|
|
|
|
$
|
5,729
|
|
|
|
$
|
3,571
|
|
|
|
$
|
15,865
|
|
|
|
$
|
6,065
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
View source version on businesswire.com:
https://www.businesswire.com/news/home/20181106005927/en/
Media Contact:
Red Fan Communications
Emma Chase,
512-551-9253
C: 512-917-4319
emma@redfancommunications.com
or
Investor
Contact:
Q2 Holdings, Inc.
Bob Gujavarty, 512-439-3447
bobby.gujavarty@q2ebanking.com
Source: Q2 Holdings, Inc.