Q2 Holdings, Inc 10-Q for FY2026 Q3

Q2 Holdings, Inc. (QTWO)

10-Q 2026-10-28 For: 2026-09-30

Added on October 28, 2026

About this 10-Q

Q2 Holdings, Inc filed this 10-Q on October 28, 2026, covering the quarter ended September 30, 2026 (FY2026 Q3).

Headline figures

Quarter ended September 30, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $225.77M; up 11.9% from $201.7M a year earlier
Net income: $33.22M; up 120.8% from net income of $15.05M a year earlier
Diluted EPS: $0.52; up 126.1% from $0.23 a year earlier

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		PAGE
PART I: FINANCIAL INFORMATION

Item 1.	Financial Statements.	7

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations.	24

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	40

Item 4.	Controls and Procedures.	40

PART II: OTHER INFORMATION

Item 1.	Legal Proceedings.	42

Item 1A.	Risk Factors.	42

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	42

Item 3.	Defaults Upon Senior Securities.	42

Item 4.	Mine Safety Disclosures.	42

Item 5.	Other Information.	43

Item 6.	Exhibits.	43

SIGNATURES		45


	September 30, 2026		December 31, 2025
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	116,312	$	367,631
Restricted cash	1,746		1,672
Investments	6,679		65,064
Accounts receivable, net	94,041		51,716
Contract assets, current portion, net	8,868		8,596
Prepaid expenses and other current assets	20,611		28,234
Deferred solution and other costs, current portion	22,562		22,631
Deferred implementation costs, current portion	11,873		10,508
Total current assets	282,692		556,052
Property and equipment, net	27,855		27,783
Right of use assets	25,282		27,188
Deferred solution and other costs, net of current portion	29,342		27,827
Deferred implementation costs, net of current portion	34,080		28,929
Intangible assets, net	71,456		78,377
Goodwill	512,869		512,869
Contract assets, net of current portion and allowance	15,948		14,103
Other long-term assets	4,530		3,149
Total assets	$	1,004,054	$	1,276,277
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	21,311	$	20,473
Accrued liabilities	25,769		24,572
Accrued compensation	25,792		31,754
Convertible notes, current portion	—		303,368
Deferred revenues, current portion	197,693		155,003
Lease liabilities, current portion	8,411		8,915
Total current liabilities	278,976		544,085

Deferred revenues, net of current portion	27,467		26,826
Lease liabilities, net of current portion	30,482		33,832
Other long-term liabilities	9,344		9,723
Total liabilities	346,269		614,466
Commitments and contingencies (Note 8)
Stockholders' equity:
Preferred stock: $0.0001 par value; 5,000 shares authorized, no shares issued or outstanding as of September 30, 2026 and December 31, 2025	—		—
Common stock: $0.0001 par value; 150,000 shares authorized, 61,782 issued and outstanding as of September 30, 2026 and 62,741 shares issued and outstanding as of December 31, 2025	6		6

Additional paid-in capital	1,183,238		1,275,980
Accumulated other comprehensive loss	(2,954)		(1,953)
Accumulated deficit	(522,505)		(612,222)
Total stockholders' equity	657,785		661,811
Total liabilities and stockholders' equity	$	1,004,054	$	1,276,277


	Three Months Ended September 30,				Nine Months Ended September 30,
	2026		2025		2026		2025
Revenues	$	225,771	$	201,704	$	662,042	$	586,587
Cost of revenues	90,928		92,859		269,085		272,188
Gross profit	134,843		108,845		392,957		314,399
Operating expenses:
Sales and marketing	24,536		26,401		76,200		79,965
Research and development	41,356		38,932		124,351		113,699
General and administrative	33,641		31,705		98,896		95,061
Transaction-related costs	—		—		270		—
Amortization of acquired intangibles	—		—		—		93
Lease and other restructuring charges	1,352		803		2,252		2,548
Total operating expenses	100,885		97,841		301,969		291,366
Income from operations	33,958		11,004		90,988		23,033
Other income (expense):
Interest and other income	917		5,487		7,591		15,076
Interest and other expense	(544)		(1,283)		(2,778)		(4,164)

Total other income, net	373		4,204		4,813		10,912
Income before income taxes	34,331		15,208		95,801		33,945
Provision for income taxes	(1,111)		(160)		(6,084)		(2,380)
Net income	$	33,220	$	15,048	$	89,717	$	31,565
Other comprehensive income (loss):
Unrealized gain (loss) on available-for-sale investments	—		65		(61)		(12)
Foreign currency translation adjustment	(274)		(483)		(940)		29
Comprehensive income	$	32,946	$	14,630	$	88,716	$	31,582
Net income per common share
Basic	$	0.53	$	0.24	$	1.44	$	0.51
Diluted	$	0.52	$	0.23	$	1.38	$	0.49
Weighted average common shares outstanding
Basic	62,153		62,458		62,325		62,015
Diluted	63,529		69,858		65,690		65,076


	Three Months Ended September 30,				Nine Months Ended September 30,
	2026		2025		2026		2025
Total stockholders' equity, beginning balances	$	643,454	$	584,335	$	661,811	$	517,796

Common stock and additional paid-in capital:
Beginning balances	1,201,859		1,233,486		1,275,986		1,183,899
Stock-based compensation expense	20,713		23,920		63,050		69,289
Exercise of stock options	—		—		—		547
Issuance of common stock under ESPP	—		—		3,617		3,671
Repurchases of common shares	(39,328)		—		(159,409)		—




Ending balances	1,183,244		1,257,406		1,183,244		1,257,406

Accumulated deficit:
Beginning balances	(555,725)		(647,713)		(612,222)		(664,230)

Net income	33,220		15,048		89,717		31,565
Ending balances	(522,505)		(632,665)		(522,505)		(632,665)

Accumulated other comprehensive loss:
Beginning balances	(2,680)		(1,438)		(1,953)		(1,873)
Other comprehensive income (loss)	(274)		(418)		(1,001)		17
Ending balances	(2,954)		(1,856)		(2,954)		(1,856)

Total stockholders' equity, ending balances	$	657,785	$	622,885	$	657,785	$	622,885

Common stock (in shares):
Beginning balances	62,360		62,442		62,741		60,728
Exercise of stock options	—		—		—		12
Issuance of common stock under ESPP	—		—		90		49
Repurchases of common shares	(633)		—		(2,900)		—
Shares issued for the vesting of restricted stock awards	55		68		1,851		1,721


Ending balances	61,782		62,510		61,782		62,510


	Nine Months Ended September 30,
	2026		2025
Cash flows from operating activities:
Net income	$	89,717	$	31,565
Adjustments to reconcile net income to net cash from operating activities:
Amortization of deferred implementation, solution and other costs	22,548		21,983
Depreciation and amortization	36,274		40,888
Amortization of debt issuance costs	768		1,628
Amortization of premiums and discounts on investments	(20)		(934)
Stock-based compensation expense	60,806		66,767
Deferred income taxes	(1,284)		(897)
Lease restructuring and impairments	706		103
Other non-cash items	(886)		536
Changes in operating assets and liabilities:
Accounts receivable, net	(42,635)		(27,965)
Prepaid expenses and other current assets	8,014		4,485
Deferred solution and other costs	(11,171)		(12,098)
Deferred implementation costs	(18,467)		(14,013)
Contract assets, net	(2,116)		(1,225)
Other long-term assets	2,233		4,340
Accounts payable	4,017		(1,409)
Accrued liabilities	(3,637)		(2,141)
Deferred revenues	43,338		33,944
Deferred rent and other long-term liabilities	(6,549)		(7,792)
Net cash provided by operating activities	181,656		137,765
Cash flows from investing activities:
Purchases of investments	(226)		(91,503)
Maturities of investments	58,743		84,150
Purchases of property and equipment	(10,366)		(4,812)
Capitalized software development costs	(21,119)		(16,175)

Net cash provided by (used in) investing activities	27,032		(28,340)
Cash flows from financing activities:


Repurchases of common shares	(158,881)		—
Payment for maturity of convertible notes	(303,995)		—




Proceeds from exercise of stock options and ESPP	3,617		4,218
Net cash provided by (used in) financing activities	(459,259)		4,218
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(674)		96
Net increase (decrease) in cash, cash equivalents and restricted cash	(251,245)		113,739
Cash, cash equivalents and restricted cash, beginning of period	369,303		360,793
Cash, cash equivalents and restricted cash, end of period	$	118,058	$	474,532
Supplemental disclosure of non-cash investing and financing activities:
Property and equipment acquired and included in accounts payable and accrued liabilities	$	805	$	542

Stock-based compensation for capitalized software development	$	1,425	$	1,515













Investments:	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level I)		Significant Other Observable Inputs (Level II)		Significant Unobservable Inputs (Level III)

Certificates of deposit	$	5,767	$	—	$	5,767	$	—


			Fair Value Measurements Using:
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level I)		Significant Other Observable Inputs (Level II)		Significant Unobservable Inputs (Level III)

Cash Equivalents:
Money market funds	$	94,119	$	94,119	$	—	$	—






Investments:	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level I)		Significant Other Observable Inputs (Level II)		Significant Unobservable Inputs (Level III)
Corporate bonds and commercial paper	$	41,443	$	—	$	41,443	$	—
Certificates of deposit	8,839		—		8,839		—
U.S. government securities	14,095		—		14,095		—
	$	64,377	$	—	$	64,377	$	—








Investments:	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value

Certificates of deposit	$	5,767	$	—	$	—	$	5,767


	September 30, 2026		December 31, 2025
Due within one year or less	$	5,767	$	58,782
Due after one year through two years	—		5,595
	$	5,767	$	64,377


	Less than 12 months				12 months or greater
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Corporate bonds and commercial paper	$	1,492	$	(3)	$	1,009	$	—
Certificates of deposit	—		—		494		—
U.S. government securities	1,236		—		—		—
	$	2,728	$	(3)	$	1,503	$	—


	As of September 30, 2026						As of December 31, 2025
	Gross Amount		Accumulated Amortization		Net Carrying Amount		Gross Amount		Accumulated Amortization		Net Carrying Amount

Acquired technology	$	117,737	$	(114,525)	$	3,212	$	117,737	$	(101,481)	$	16,256
Capitalized software development costs	122,187		(53,943)		68,244		103,884		(41,763)		62,121
	$	239,924	$	(168,468)	$	71,456	$	221,621	$	(143,244)	$	78,377


	Amortization
Year Ended December 31,
2026 (October 1 to December 31)	$	8,029
2027	23,873
2028	17,647
2029	12,190
2030	7,404
Thereafter	2,313
Total amortization	$	71,456


	Operating Leases
Year Ended December 31,
2026 (October 1 to December 31)	$	2,636
2027	9,856
2028	6,866
2029	5,379
2030	5,495
Thereafter	17,864
Total lease payments	48,096
Less: imputed interest	(9,203)
Total operating lease liabilities	$	38,893


	Contractual Commitments
Year Ended December 31,
2026 (October 1 to December 31)	$	20,022
2027	92,631
2028	56,795
2029	499
2030 and thereafter	—

Total commitments	$	169,947


	As of September 30, 2026		As of December 31, 2025
Principal	$	—	$	303,995
Unamortized debt issuance costs	—		(627)
Net carrying amount	$	—	$	303,368


	Total Number of Shares Purchased	Average Price Paid Per Share(2)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1)	Approximate Dollar Value of Shares That May Be Purchased Under the Plans or Programs (in thousands)(1)(2)
July 1 - 31, 2026	5,485	$	49.93	5,485	$	374,645
August 1 - 31, 2026	311,100	64.27		311,100	354,645
September 1 - 30, 2026	316,434	58.53		316,434	336,119
Total	633,019	$	61.27	633,019


	Three Months Ended September 30,				Change				Nine Months Ended September 30,				Change
	2026		2025		$		(%)		2026		2025		$		(%)
Revenues	$	225,771	$	201,704	$	24,067	11.9	%	$	662,042	$	586,587	$	75,455	12.9	%


Exhibit Number		Description of Document

3.1	*	Fifth Amended and Restated Certificate of Incorporation of the Registrant (filed as Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on June 12, 2019).

3.2	*	Amended and Restated Bylaws of the Registrant (filed as Exhibit 3.2 to the Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on June 12, 2019).

31.1	**	Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2	**	Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1	#	Certification pursuant to 18 U.S.C. 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by Chief Executive Officer.

32.2	#	Certification pursuant to 18 U.S.C. 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by Chief Financial Officer.

101.INS	**	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH	**	Inline XBRL Taxonomy Extension Schema Document.

101.CAL	**	Inline XBRL Taxonomy Extension Calculation Linkbase Document.

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101.LAB	**	Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE	**	Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104	**	Cover Page Interactive Data File (embedded within the Inline XBRL document)


Date: October 28, 2026						/s/ MATTHEW P. FLAKE
						Matthew P. Flake
						President, Chief Executive Officer and Chairman
						(Principal Executive Officer)


Date: October 28, 2026						/s/ JONATHAN A. PRICE
						Jonathan A. Price
						Chief Financial Officer
						(Principal Financial and Accounting Officer)