Key Highlights

  • Consensus EPS of 0.71 compares with second-quarter diluted EPS of 0.46, against 0.18 a year earlier.
  • Consensus revenue of USD 221.23 million sits within third-quarter guidance of USD 218.5 million to USD 222.5 million.
  • Management guided 2026 revenue of USD 881 million to USD 886 million for the full year.
  • Subscription revenue was USD 182.8 million, up 15%, and adjusted EBITDA was USD 62.8 million at a 28.6% margin.

Q2 Holdings (NYSE:QTWO) reports third-quarter results on Wednesday, Oct. 28, after the market closes. Consensus stands at EPS of 0.71 on revenue of USD 221.23 million, and the company has a market capitalization of USD 4.35 billion.

Q2 Holdings provides digital banking and fraud solutions for financial institutions, largely on a subscription model. Second-quarter revenue was USD 219,765 thousand against USD 195,148 thousand, and net income was USD 29,858 thousand against USD 11,764 thousand.

Estimates Against Third-Quarter Guidance

The revenue estimate of USD 221.23 million is within third-quarter revenue guidance of USD 218.5 million to USD 222.5 million, which management put at year-over-year growth of 8% to 10%. Management also guided third-quarter adjusted EBITDA of USD 58.5 million to USD 61.5 million.

The EPS estimate of 0.71 is above the second-quarter diluted EPS of 0.46, which compared with 0.18 a year earlier. The estimates table does not state its EPS basis, and management gave no EPS guidance.

What Management Guided and What It Left Open

For 2026, management guided revenue of USD 881 million to USD 886 million, approximately 11% annual growth, and adjusted EBITDA of USD 244 million to USD 248 million, approximately 28% of revenue. It raised subscription revenue growth guidance to 14.5% from 14%.

Management left open non-subscription revenue, which was roughly flat year over year as transactional growth was offset by pressure in discretionary professional services. Total ARR growth remains below subscription ARR growth for that reason.

Subscription, ARR and Backlog Detail

Subscription revenue was USD 182.8 million, up 15%, and 83% of total revenue. Total ARR was USD 971 million, up 13% from USD 861 million, and subscription ARR was USD 826 million, up 15%. Backlog was USD 2.8 billion, up 17%.

Transactional revenue was USD 17.9 million against USD 16.7 million, while services and other revenue was USD 19.1 million against USD 20.0 million. Eight tier 1 and enterprise contracts were signed in the quarter.

Income Statement Lines, Cash and Capital Returns

Gross profit was USD 130,200 thousand against USD 104,564 thousand, and operating expenses were USD 100,859 thousand against USD 94,724 thousand. Operating income was USD 29,341 thousand against USD 9,840 thousand, and basic EPS was 0.48 against 0.19. Non-GAAP gross margin was 62.3%.

The company repaid USD 304 million of convertible notes at maturity and ended the quarter debt-free, with cash of USD 106 million. It has USD 375 million of repurchase capacity and repurchased 0.5 million shares for USD 22.9 million. Free cash flow was USD 51 million. The estimates table lists a market capitalization of USD 4.35 billion.

Figures to Follow in the Release

Reported EPS against 0.71 and revenue against USD 221.23 million are the headline comparisons. Other markers are subscription revenue, ARR and backlog against the guidance ranges.