8-K
Q2 Holdings, Inc. (QTWO)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): May 6, 2020
Q2 HOLDINGS, INC.
(Exact Name of Registrant as Specified in Charter)
| Delaware | 001-36350 | 20-2706637 |
|---|---|---|
| (State or Other Jurisdiction<br><br>of Incorporation) | (Commission<br><br>File Number) | (I.R.S. Employer<br><br>Identification No.) |
13785 Research Blvd, Suite 150
Austin, Texas
78750
(Address of Principal Executive Offices, and Zip Code)
(512) 275-0072
Registrant's Telephone Number, Including Area Code
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Securities registered pursuant to Section 12(b) of the Act:
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | | --- | --- || ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | | --- | --- || ☐ | Pre-commencement communication pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | | --- | --- || ☐ | Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | | --- | --- || Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | --- | --- | --- | | Common Stock, $0.0001 par value | QTWO | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On May 6, 2020, Q2 Holdings, Inc. (the "Company") issued a press release regarding its financial results for the first quarter ended March 31, 2020. A copy of the Company's press release is furnished herewith as Exhibit 99.1.
The information furnished in this Current Report under this Item 2.02 and the exhibit furnished herewith shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
| Exhibit No. | Description |
|---|---|
| 99.1 | Press release dated May 6, 2020 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Q2 HOLDINGS, INC. | |
|---|---|
| May 6, 2020 | /s/ Jennifer N. Harris<br><br>Jennifer N. Harris<br><br>Chief Financial Officer |
Exhibit
Exhibit 99.1
FOR IMMEDIATE RELEASE
Q2 Holdings, Inc. Announces First Quarter 2020 Financial Results
AUSTIN, Texas (May 6, 2020)-Q2 Holdings, Inc. (NYSE:QTWO), a leading provider of digital transformation solutions for banking and lending, today announced results for its first quarter ending March 31, 2020.
“Over the past 90 days, we have been carefully monitoring and assessing the effects of COVID-19, with our top priority being to protect the health and safety of our employees, our customers and our partners and suppliers. As our customers shift their near-term focus to ensuring business continuity and providing immediate support to the communities they serve, we are aligning our resources to correspond with those objectives and are continuing to strategically invest across our organization to position us to increase revenues and to improve operating efficiencies over the longer term. We are handling record login volumes as our customers have played a pivotal role in the disbursement of funds to both consumers and small businesses as a part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. We believe that although the COVID-19 pandemic creates significant risks and uncertainties for our clients, their customers, our partners and suppliers, our employees and our business generally, it also could accelerate the transition to digital financial solutions and that our portfolio of digital financial services solutions and our position and reputation in the market provide us with an opportunity to continue to serve clients and grow our business.
I am encouraged by how our employees and customers have responded to the crisis thus far, and we will continue to navigate these unprecedented challenges together,” said Matt Flake, CEO of Q2.
GAAP Results for the First Quarter 2020
| • | Revenue for the first quarter of $92.4 million, up 30 percent year-over-year and up 6 percent from the previous quarter. |
|---|---|
| • | GAAP gross margin for the first quarter of 42.5 percent, down from 47.8 percent for the prior-year quarter and down from 48.4 percent for the fourth quarter of 2019. |
| --- | --- |
| • | GAAP net loss for the first quarter of $34.1 million, compared to GAAP net losses of $19.3 million for the prior-year quarter and $15.7 million for the fourth quarter of 2019. |
| --- | --- |
Non-GAAP Results for the First Quarter 2020
| • | Non-GAAP revenue for the first quarter of $93.8 million, up 32 percent year-over-year and up 6 percent from the previous quarter. |
|---|---|
| • | Non-GAAP gross margin for the first quarter of 53.1 percent, up from 52.3 percent for the prior-year quarter and down from 56.8 percent for the fourth quarter of 2019. |
| --- | --- |
| • | Adjusted EBITDA for the first quarter of negative $0.1 million, compared to $0.3 million for the prior-year quarter and $10.6 million for the fourth quarter of 2019. |
| --- | --- |
For a reconciliation of our GAAP to non-GAAP results, please see the tables below.
“We had a solid first quarter, even as COVID-19 began to impact our customers and us in March,” said Matt Flake, CEO of Q2. “I was encouraged by our sales performance and our ability to execute deals in March as we shifted to working remotely. We added two new Tier 1 digital banking customers in addition to two new Tier 1 digital lending customers. Our delivery and customer success teams aided in the
onboarding of approximately 800,000 users as the importance of our digital channel continued to grow due to social distancing restrictions. As our customers shift their time and resources to mitigating the impact of COVID-19, we anticipate a slowdown in new business bookings along with decisions to delay implementations in the coming months. Nevertheless, we will remain focused on providing our customers with exceptional service and reliability as long as this environment persists, and remain confident that we will emerge from this crisis in a strong position to continue our leadership in digital transformation across financial services.”
First Quarter Highlights
| • | Signed two new Tier 1 digital banking deals, including a $9 billion bank in the Midwest. |
|---|---|
| • | Signed a digital banking contract for our retail solution with an existing Tier 1 corporate customer, a $12 billion bank in the Northeast. |
| --- | --- |
| • | Signed a Tier 1 PrecisionLender contract with an $8 billion bank in the Northeast. |
| --- | --- |
| • | Signed a Tier 1 Cloud Lending contract with a European asset finance company. |
| --- | --- |
| • | Exited the first quarter with approximately 15.4 million registered users on the Q2 platform, representing 18 percent year-over-year and 5 percent sequential growth. |
| --- | --- |
“We reported first quarter adjusted EBITDA above our previously-issued guidance in part due to the proactive measures we took to limit travel and marketing related spend in March as we began to experience the impacts of COVID-19," said Jennifer Harris, CFO of Q2. “We are being cautious as a result of the uncertainties and risks posed by COVID-19 and are revising our full-year guidance to reflect our current outlook on new customer bookings, as well as the potential for project delays on new implementations in the coming months.”
Financial Outlook
As of May 6, 2020, Q2 Holdings is providing guidance for its second quarter of 2020 and revised guidance for its full-year 2020, which represent Q2 Holdings’ estimates as of the date hereof of the anticipated impacts of the COVID-19 pandemic on Q2 Holdings’ operations and financial results. The financial information below represents forward-looking non-GAAP financial information, including an estimate of non-GAAP revenue and adjusted EBITDA. GAAP net loss is the most comparable GAAP measure to adjusted EBITDA. Adjusted EBITDA differs from GAAP net loss in that it excludes items such as depreciation and amortization, stock-based compensation, acquisition-related costs, interest, income taxes, unoccupied lease charges and the impact to deferred revenue from purchase accounting. 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, although it is important to note that these excluded items could be material to our results computed in accordance with GAAP in future periods.
Q2 Holdings is providing guidance for its second quarter 2020 as follows:
| • | Total Non-GAAP revenue of $94.0 million to $96.0 million, which would represent year-over-year growth of 21 percent to 24 percent. |
|---|---|
| • | Adjusted EBITDA of $3.0 million to $4.0 million. |
| --- | --- |
Q2 Holdings is providing guidance for the full-year 2020 as follows:
| • | Total Non-GAAP revenue of $393.0 million to $400.0 million, which would represent year-over-year growth of 24 percent to 26 percent. |
|---|---|
| • | Adjusted EBITDA of $16.0 million to $19.0 million. |
| --- | --- |
Conference Call Details
| Date: | May 7, 2020 |
|---|---|
| Time: | 8:30 a.m. EST |
| Hosts: | Matt Flake, CEO / Jennifer Harris, CFO |
| Dial in: | U.S. toll free: 1-833-979-2706 |
| International: 1-236-714-2219 | |
| Conference ID: | 9408339 |
Please join the conference call at least 10 minutes early to ensure the line is connected. A live webcast of the conference call and financial results will be accessible from the investor relations section of the Q2 website at http://investors.q2ebanking.com/.
An archived replay of the webcast will be available on this website on a temporary basis shortly after the call.
About Q2 Holdings, Inc.
Q2 is a secure, cloud-based digital transformation 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: non-GAAP revenue; 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 expense; non-GAAP operating income (loss); non-GAAP net income; non-GAAP net income per share; and pro forma weighted-average diluted number of common shares outstanding. 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 non-GAAP revenue, Q2 adjusts revenue to exclude the impact to deferred revenue from purchase accounting adjustments. In the case of adjusted EBITDA, Q2 adjusts net loss for such items as interest, taxes, depreciation and amortization, stock-based compensation, acquisition-related costs, amortization of technology and intangibles, unoccupied lease charges and the impact to deferred revenue from purchase accounting. In the case of non-GAAP gross margin and non-GAAP gross profit, Q2 adjusts gross profit and gross margin for stock-based compensation amortization of acquired technology, acquisition-related costs and the impact to deferred revenue from purchase accounting. 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. Non-GAAP Operating Expense is calculated by taking the sum of non-GAAP sales and marketing expense, non-GAAP research and development expense, and non-GAAP general and administrative expense. In the case of non-GAAP operating income (loss), non-GAAP net income (loss), and non-GAAP net income (loss) per share, Q2 adjusts operating loss and net loss, respectively, for stock-based compensation, acquisition related-costs, amortization of acquired technology, amortization of acquired intangibles, unoccupied lease charges, the impact to deferred revenue from purchase accounting, and with respect to non-GAAP net income, amortization of debt discount and issuance costs. In the case of pro forma diluted weighted-average number of common shares outstanding, we adjust diluted weighted-average number of common shares outstanding by the weighted-average effect of potentially dilutive shares.
There are limitations associated with the use of these non-GAAP financial measures. These non-GAAP financial measures are not prepared in accordance with GAAP, do not reflect a comprehensive system of accounting and may not be completely comparable to similarly titled measures of other companies due to potential differences in the exact method of calculation between companies. Certain items that are excluded from these non-GAAP financial measures can have a material impact on operating and net income (loss). As a result, these non-GAAP financial measures have limitations and 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 the impacts of the COVID-19 pandemic on Q2 and its customers, and Q2’s response thereto, the transition to digital financial solutions and Q2’s market opportunity, sales and bookings momentum, investments in innovation and growth 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 the adverse impacts of the COVID-19 pandemic on Q2’s business operations and on global economic and financial markets, including on Q2’s clients, its customers, partners and suppliers and employees and business, as well as 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, new markets with Alt-FIs and FinTechs 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 and Alt-FI and FinTech customers; (c) 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; (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, including risks related to the timing and predictability of sales of Q2’s solutions and the impact that the timing of bookings may have on Q2’s
revenue and financial performance in a period; (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 may have 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 risks associated with integrating acquired companies and successfully selling and maintaining their solutions; (p) the risks associated with anticipated higher operating expenses in 2020 and beyond; (q) litigation related to intellectual property and other matters and any related claims, negotiations and settlements; (r) the risks associated with further consolidation in the financial services industry; (s) risks associated with selling Q2 solutions internationally; and (t) the risk that Q2 debt repayment obligations may adversely affect its financial condition and cash flows from operations in the future and that Q2 may not be able to obtain capital when desired or needed on favorable terms.
Additional information relating to the uncertainty affecting the Q2 business is contained in Q2’s filings with the Securities and Exchange Commission. These documents are available on the SEC Filings section of the Investor Relations 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.
| MEDIA CONTACT: | INVESTOR CONTACT: |
|---|---|
| Beth Williams | Josh Yankovich or Steve Calk |
| Q2 Holdings, Inc. | Q2 Holdings, Inc. |
| O: 512.685.2023 | O: (512) 682-4463 |
| beth.williams@q2ebanking.com | josh.yankovich@q2ebanking.com |
| stephen.calk@q2ebanking.com |
Q2 Holdings, Inc.
Condensed Consolidated Balance Sheets
| (in thousands) | March 31, 2020 | December 31, 2019 | |||||
|---|---|---|---|---|---|---|---|
| (unaudited) | (unaudited) | ||||||
| Assets | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 83,078 | $ | 100,094 | |||
| Restricted cash | 3,450 | 3,468 | |||||
| Investments | 29,752 | 32,325 | |||||
| Accounts receivable, net | 26,582 | 22,442 | |||||
| Contract assets, current portion, net | 993 | 872 | |||||
| Prepaid expenses and other current assets | 9,315 | 6,354 | |||||
| Deferred solution and other costs, current portion | 17,256 | 15,609 | |||||
| Deferred implementation costs, current portion | 8,388 | 5,171 | |||||
| Total current assets | 178,814 | 186,335 | |||||
| Property and equipment, net | 48,681 | 39,252 | |||||
| Right of use assets | 33,211 | 35,388 | |||||
| Deferred solution and other costs, net of current portion | 32,621 | 29,220 | |||||
| Deferred implementation costs, net of current portion | 14,586 | 15,848 | |||||
| Intangible assets, net | 213,998 | 223,861 | |||||
| Goodwill | 462,274 | 462,023 | |||||
| Contract assets, net of current portion and allowance | 16,988 | 15,189 | |||||
| Other long-term assets | 1,325 | 2,318 | |||||
| Total assets | $ | 1,002,498 | $ | 1,009,434 | |||
| Liabilities and stockholders' equity | |||||||
| Current liabilities: | |||||||
| Accounts payable and accrued liabilities | $ | 67,376 | $ | 65,976 | |||
| Deferred revenues, current portion | 64,192 | 57,850 | |||||
| Lease liabilities, current portion | 8,960 | 9,140 | |||||
| Total current liabilities | 140,528 | 132,966 | |||||
| Convertible notes, net of current portion | 430,272 | 424,784 | |||||
| Deferred revenue, net of current portion | 33,406 | 32,954 | |||||
| Lease liabilities, net of current portion | 33,717 | 36,079 | |||||
| Other long-term liabilities | 3,665 | 3,239 | |||||
| Total liabilities | 641,588 | 630,022 | |||||
| Stockholders' equity: | |||||||
| Common stock | 5 | 5 | |||||
| Additional paid-in capital | 638,743 | 622,692 | |||||
| Accumulated other comprehensive income (loss) | (163 | ) | 14 | ||||
| Accumulated deficit | (277,675 | ) | (243,299 | ) | |||
| Total stockholders' equity | 360,910 | 379,412 | |||||
| Total liabilities and stockholders' equity | $ | 1,002,498 | $ | 1,009,434 |
Q2 Holdings, Inc.
Condensed Consolidated Statements of Comprehensive Loss
(in thousands, except per share data)
| Three Months Ended March 31, | ||||||
|---|---|---|---|---|---|---|
| 2020 | 2019 | |||||
| (unaudited) | (unaudited) | |||||
| Revenues ^(1)^ | $ | 92,380 | $ | 71,296 | ||
| Cost of revenues ^(2) (3)^ | 53,107 | 37,184 | ||||
| Gross profit | 39,273 | 34,112 | ||||
| Operating expenses: | ||||||
| Sales and marketing ^(2)^ | 19,884 | 15,805 | ||||
| Research and development ^(2)^ | 24,958 | 17,657 | ||||
| General and administrative ^(2)^ | 19,110 | 13,860 | ||||
| Acquisition related costs ^(4)^ | (1,967 | ) | 2,718 | |||
| Amortization of acquired intangibles | 4,491 | 1,215 | ||||
| Total operating expenses | 66,476 | 51,255 | ||||
| Loss from operations | (27,203 | ) | (17,143 | ) | ||
| Other income (expense), net | (6,465 | ) | (2,207 | ) | ||
| Loss before income taxes | (33,668 | ) | (19,350 | ) | ||
| Benefit from (provision for) income taxes | (440 | ) | 39 | |||
| Net Loss | $ | (34,108 | ) | $ | (19,311 | ) |
| Other comprehensive loss: | ||||||
| Unrealized gain (loss) on available-for-sale investments | (122 | ) | 113 | |||
| Foreign currency translation adjustment | (55 | ) | 12 | |||
| Comprehensive loss | $ | (34,285 | ) | $ | (19,186 | ) |
| Net loss per common share: | ||||||
| Net loss per common share, basic and diluted | $ | (0.70 | ) | $ | (0.44 | ) |
| Weighted average common shares outstanding, basic and diluted | 48,581 | 43,773 | ||||
| ^(1)^ | Includes deferred revenue reduction from purchase accounting of $1.4 million for the three months ended March 31, 2020. | |||||
| --- | --- | |||||
| ^(2)^ | Includes stock-based compensation expenses as follows: | |||||
| --- | --- | |||||
| Three Months Ended March 31, | ||||||
| --- | --- | --- | --- | --- | ||
| 2020 | 2019 | |||||
| Cost of revenues | $ | 3,408 | $ | 1,548 | ||
| Sales and marketing | 2,754 | 1,806 | ||||
| Research and development | 3,770 | 2,012 | ||||
| General and administrative | 4,604 | 3,530 | ||||
| Total stock-based compensation expenses | $ | 14,536 | $ | 8,896 | ||
| ^(3)^ | Includes amortization of acquired technology of $5.5 million and $1.6 million for the three months ended March 31, 2020 and 2019, respectively. | |||||
| --- | --- |
^(4)^Includes a reduction of $3.1 million in the estimated payment of contingent consideration based on the Company's expectations of actual achievement.
Q2 Holdings, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
| Three Months Ended March 31, | ||||||
|---|---|---|---|---|---|---|
| 2020 | 2019 | |||||
| (unaudited) | (unaudited) | |||||
| Cash flows from operating activities: | ||||||
| Net loss | $ | (34,108 | ) | $ | (19,311 | ) |
| Adjustments to reconcile net loss to net cash | ||||||
| from operating activities: | ||||||
| Amortization of deferred implementation, solution and other costs | 3,905 | 1,464 | ||||
| Depreciation and amortization | 13,017 | 5,821 | ||||
| Amortization of debt issuance costs | 459 | 250 | ||||
| Amortization of debt discount | 5,031 | 2,298 | ||||
| Amortization of premiums on investments | (49 | ) | (84 | ) | ||
| Stock-based compensation expenses | 14,866 | 9,154 | ||||
| Deferred income taxes | 414 | 133 | ||||
| Other non-cash charges | 133 | 76 | ||||
| Changes in operating assets and liabilities | (19,467 | ) | (10,687 | ) | ||
| Net cash used in operating activities | (15,799 | ) | (10,886 | ) | ||
| Cash flows from investing activities: | ||||||
| Net maturities of investments | 2,500 | 15,204 | ||||
| Purchases of property and equipment | (4,642 | ) | (5,545 | ) | ||
| Capitalization of software development costs | (287 | ) | — | |||
| Net cash provided by (used in) investing activities | (2,429 | ) | 9,659 | |||
| Cash flows from financing activities: | ||||||
| Proceeds from exercise of stock options to purchase common stock | 1,194 | 3,428 | ||||
| Net cash provided by financing activities | 1,194 | 3,428 | ||||
| Net increase (decrease) in cash, cash equivalents, and restricted cash | (17,034 | ) | 2,201 | |||
| Cash, cash equivalents, and restricted cash, beginning of period | 103,562 | 110,156 | ||||
| Cash, cash equivalents, and restricted cash, end of period | $ | 86,528 | $ | 112,357 |
Q2 Holdings, Inc.
Reconciliation of GAAP to Non-GAAP Measures
| (in thousands, except per share data) | Three Months Ended March 31, | ||||||
|---|---|---|---|---|---|---|---|
| 2020 | 2019 | ||||||
| (unaudited) | (unaudited) | ||||||
| GAAP revenue | $ | 92,380 | $ | 71,296 | |||
| Deferred revenue reduction from purchase accounting | 1,442 | — | |||||
| Non-GAAP revenue | $ | 93,822 | $ | 71,296 | |||
| GAAP gross profit | $ | 39,273 | $ | 34,112 | |||
| Stock-based compensation | 3,408 | 1,548 | |||||
| Amortization of acquired technology | 5,477 | 1,631 | |||||
| Acquisition related costs | 258 | — | |||||
| Deferred revenue reduction from purchase accounting | 1,442 | — | |||||
| Non-GAAP gross profit | $ | 49,858 | $ | 37,291 | |||
| Non-GAAP gross margin: | |||||||
| Non-GAAP gross profit | $ | 49,858 | $ | 37,291 | |||
| Non-GAAP revenue | 93,822 | 71,296 | |||||
| Non-GAAP gross margin | 53.1 | % | 52.3 | % | |||
| GAAP sales and marketing expense | $ | 19,884 | $ | 15,805 | |||
| Stock-based compensation | (2,754 | ) | (1,806 | ) | |||
| Non-GAAP sales and marketing expense | $ | 17,130 | $ | 13,999 | |||
| GAAP research and development expense | $ | 24,958 | $ | 17,657 | |||
| Stock-based compensation | (3,770 | ) | (2,012 | ) | |||
| Non-GAAP research and development expense | $ | 21,188 | $ | 15,645 | |||
| GAAP general and administrative expense | $ | 19,110 | $ | 13,860 | |||
| Stock-based compensation | (4,604 | ) | (3,530 | ) | |||
| Non-GAAP general and administrative expense | $ | 14,506 | $ | 10,330 | |||
| GAAP operating loss | $ | (27,203 | ) | $ | (17,143 | ) | |
| Deferred revenue reduction from purchase accounting | 1,442 | — | |||||
| Stock-based compensation | 14,536 | 8,896 | |||||
| Acquisition related costs | (1,709 | ) | 2,718 | ||||
| Amortization of acquired technology | 5,477 | 1,631 | |||||
| Amortization of acquired intangibles | 4,491 | 1,215 | |||||
| Non-GAAP operating loss | $ | (2,966 | ) | $ | (2,683 | ) | |
| GAAP net loss | $ | (34,108 | ) | $ | (19,311 | ) | |
| Deferred revenue reduction from purchase accounting | 1,442 | — | |||||
| Stock-based compensation | 14,536 | 8,896 | |||||
| Acquisition related costs | (1,709 | ) | 2,718 | ||||
| Amortization of acquired technology | 5,477 | 1,631 | |||||
| Amortization of acquired intangibles | 4,491 | 1,215 | |||||
| Amortization of debt discount and issuance costs | 5,490 | 2,548 | |||||
| Non-GAAP net loss | $ | (4,381 | ) | $ | (2,303 | ) | |
| 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 | 48,581 | 43,773 | |||||
| Weighted-average effect of potentially dilutive shares | — | — | |||||
| Pro forma diluted weighted-average number of common shares | 48,581 | 43,773 | |||||
| Calculation of non-GAAP loss per share: | |||||||
| Non-GAAP net loss | $ | (4,381 | ) | $ | (2,303 | ) | |
| Pro forma diluted weighted-average number of common shares | 48,581 | 43,773 | |||||
| Non-GAAP net loss per share | $ | (0.09 | ) | $ | (0.05 | ) | |
| Reconciliation of GAAP net loss to adjusted EBITDA: | |||||||
| GAAP net loss | $ | (34,108 | ) | $ | (19,311 | ) | |
| Depreciation and amortization | 13,017 | 5,821 | |||||
| Stock-based compensation | 14,536 | 8,896 | |||||
| (Benefit from) provision for income taxes | 440 | (39 | ) | ||||
| Interest (income) expense, net | 6,275 | 2,178 | |||||
| Acquisition related costs | (1,709 | ) | 2,718 | ||||
| Deferred revenue reduction from purchase accounting | 1,442 | — | |||||
| Adjusted EBITDA | $ | (107 | ) | $ | 263 |
Q2 Holdings, Inc.
Reconciliation of GAAP to Non-GAAP Revenue Guidance
(in thousands)
| Q2 2020 Guidance | Full Year 2020 Guidance | |||||||
|---|---|---|---|---|---|---|---|---|
| Low | High | Low | High | |||||
| GAAP Revenue | $ | 92,700 | $ | 94,700 | $ | 388,650 | $ | 395,650 |
| Deferred revenue reduction from purchase accounting | 1,300 | 1,300 | 4,350 | 4,350 | ||||
| Non-GAAP revenue | $ | 94,000 | $ | 96,000 | $ | 393,000 | $ | 400,000 |