Cloud Stocks: Q2 Holdings At A New High

According to a recent Global Market Insights report, the global digital banking market is estimated to grow at 6% CAGR to $12 trillion by 2026 from $8 trillion in 2019. Total global digital payment transactions exceeded 750 billion in volume in 2019 and accounted for over $700 trillion. The current pandemic conditions have accelerated the need for digital banking among end consumers including commercial customers. Austin-based Q2 Holdings (NYSE: QTWO), a leading cloud-based banking solution provider for regional financial institutions, recently reported its quarterly results and saw its stock soar to 52-week high levels.  

Q2 Holdings’ Financials

Q2 Holdings’ third-quarter revenues grew 30% to $103.8 million, surpassing analyst estimates of $102.91 million. GAAP net loss was $26.7 million. Non-GAAP net income was $0.07 per share, beating analyst estimates of $0.06.

It witnessed a strong growth among its client base. It exited the quarter with 17.1 million registered users on the Q2 platform, representing a 21% y-o-y growth and 5% q-o-q growth.

For the fourth quarter, Q2 Holdings expects to achieve a growth of 18% to 21% and non-GAAP revenue of $105 to $107 million. For 2020, it expects non-GAAP revenue in the range of $402.5 to $404.5 million, which would represent y-o-y growth of 27%.

Q2 Holdings’ Product Upgrades

During the quarter, the company launched a new solution called Treasury Onboarding. Q2 Holdings realizes that there is a big opportunity in the digitization of the onboarding of customers, especially on the commercial side. At present, onboarding of a new client requires greater documentation, and commercial financial institutions rely on a combination of paper-based processes and legacy technologies that need to be integrated to onboard a new commercial client. This paper-intensive process can take as much as 30 days for some organizations. Besides being manually intensive, the onboarding experience also causes a lot of angst among new commercial clients.

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