Why Q2 Holdings Stock Soared Today

Shares of Q2 Holdings (QTWO 9.89%) closed up 9.9% on Thursday after the digital banking solutions company announced strong fourth-quarter results and encouraging forward guidance.

Q2 closes 2023 on a high note

Q2’s fourth-quarter revenue grew 11% year over year to $162.1 million, translating to adjusted (non-GAAP) net income of $0.27 per share. Analysts, on average, were modeling earnings of $0.24 per share on slightly lower revenue.

Q2 Holdings CEO Matt Flake noted the company closed the year with its best bookings performance on record, including its two largest-ever deals. Indeed, Q2 signed four tier-1 digital banking contracts during the quarter, including a top-10 U.S. credit union using its retail solutions, and three banks utilizing its commercial and small business solutions.

Q2’s subscription-based annualized recurring revenue (ARR) also grew 19% year over year to end 2023 at $593.9 million.

What’s next for Q2 Holdings investors?

For full-year 2024, Q2 Holdings issued guidance for revenue in the range of $683 million to $689 million, or up 9% to 10% from 2023. Trending toward the bottom line, that should translate to adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $107 million to $111 million for the year.

In the end, this was as solid a quarter as any Q2 Holdings shareholder could have hoped for. If the company can continue growing its predictable recurring revenue stream as more large banking clients adopt its platform, these gains could prove to be only part of a much longer-term uptrend.

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