Delaware (State or Other Jurisdiction of Incorporation) | 001-36350 (Commission File Number) | 20-2706637 (IRS Employer Identification No.) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Exhibit No. | Description | |||
Press release dated May 2, 2018 | ||||
Q2 HOLDINGS, INC. | |
May 2, 2018 | /s/ Jennifer N. Harris Jennifer N. Harris Chief Financial Officer |
Exhibit No. | Description | |||
Press release dated May 2, 2018 | ||||
• | Revenue for the first quarter of $54.8 million, up 23 percent year-over-year and up 6 percent from the previous quarter. |
• | GAAP gross margin for the first quarter of 50.8 percent, up from 48.9 percent one year ago. Non-GAAP gross margin for the first quarter of 54.3 percent, up from 52.5 percent one year ago. |
• | GAAP net loss for the first quarter of $6.0 million, which compares to a GAAP net loss of $7.0 million for the first quarter of 2017, and $5.5 million for the fourth quarter of 2017. Adjusted EBITDA for the first quarter of positive $5.0 million, an improvement from positive $1.1 million one year ago and positive $4.1 million for the fourth quarter of 2017. |
• | Signed a Top 50 credit union and two Tier 1 banks in the first quarter, including a $10 billion bank in the Southeast and a $7 billion bank in the West. |
• | Exited the first quarter with approximately 10.9 million registered users on the Q2 platform, representing 22 percent year-over-year growth and up 5 percent sequentially. |
• | Continued Q2 Open momentum, signing MoneyLion, a savings and investment platform with two million customers. |
• | Total revenue of $57.9 million to $58.5 million, which would represent year-over-year growth of 22 percent to 23 percent. |
• | Adjusted EBITDA of $4.7 million to $5.3 million. GAAP net loss is the most comparable GAAP measure to adjusted EBITDA. Adjusted EBITDA differs from GAAP net loss in that it excludes things such as depreciation and amortization, stock-based compensation, acquisition-related costs, interest, income taxes and unoccupied lease charges. 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. |
• | Total revenue of $236.5 million to $238.5 million, which would represent year-over-year growth of 22 percent to 23 percent. |
• | Adjusted EBITDA of $21 million to $23 million. Adjusted EBITDA differs from GAAP net loss in that it excludes things such as depreciation and amortization, stock-based compensation, acquisition-related costs, interest, income taxes and unoccupied lease charges. 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. |
Date: | May 3, 2018 | |
Time: | 8:30 a.m. EDT | |
Hosts: | Matt Flake, CEO / Jennifer Harris, CFO | |
Dial in: | US toll free: 1-833-241-4254 | |
International: 1-647-689-4205 | ||
Conference ID: | 2697347 |
March 31, 2018 | December 31, 2017 | |||||||
(unaudited) | (unaudited) | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 255,411 | $ | 57,961 | ||||
Restricted cash | 2,315 | 2,315 | ||||||
Investments | 38,704 | 41,685 | ||||||
Accounts receivable, net | 16,897 | 13,203 | ||||||
Contract assets, current portion | 336 | — | ||||||
Prepaid expenses and other current assets | 4,699 | 3,115 | ||||||
Deferred solution and other costs, current portion | 8,392 | 9,246 | ||||||
Deferred implementation costs, current portion | 3,740 | 3,562 | ||||||
Total current assets | 330,494 | 131,087 | ||||||
Property and equipment, net | 36,592 | 34,544 | ||||||
Deferred solution and other costs, net of current portion | 16,333 | 12,973 | ||||||
Deferred implementation costs, net of current portion | 8,374 | 8,295 | ||||||
Intangible assets, net | 10,556 | 12,034 | ||||||
Goodwill | 12,876 | 12,876 | ||||||
Contract assets, net of current portion | 5,539 | — | ||||||
Other long-term assets | 1,090 | 1,006 | ||||||
Total assets | $ | 421,854 | $ | 212,815 | ||||
Liabilities and stockholders' equity | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued liabilities | $ | 23,451 | $ | 29,694 | ||||
Deferred revenues, current portion | 38,344 | 38,379 | ||||||
Total current liabilities | 61,795 | 68,073 | ||||||
Convertible notes, net of current portion | 175,170 | — | ||||||
Deferred revenues, net of current portion | 20,599 | 28,289 | ||||||
Deferred rent, net of current portion | 9,075 | 9,393 | ||||||
Other long-term liabilities | 360 | 438 | ||||||
Total liabilities | 266,999 | 106,193 | ||||||
Stockholders' equity: | ||||||||
Common stock | 4 | 4 | ||||||
Treasury stock | — | (855 | ) | |||||
Additional paid-in capital | 298,087 | 259,726 | ||||||
Accumulated other comprehensive loss | (163 | ) | (139 | ) | ||||
Accumulated deficit | (143,073 | ) | (152,114 | ) | ||||
Total stockholders' equity | 154,855 | 106,622 | ||||||
Total liabilities and stockholders' equity | $ | 421,854 | $ | 212,815 |
Three Months Ended March 31, | ||||||||
2018 | 2017 | |||||||
(unaudited) | (unaudited) | |||||||
Revenues | $ | 54,808 | $ | 44,534 | ||||
Cost of revenues (1) (2) | 26,977 | 22,772 | ||||||
Gross profit | 27,831 | 21,762 | ||||||
Operating expenses: | ||||||||
Sales and marketing (1) | 10,966 | 9,878 | ||||||
Research and development (1) | 11,157 | 9,651 | ||||||
General and administrative (1) | 10,296 | 8,452 | ||||||
Acquisition related costs | 256 | 348 | ||||||
Amortization of acquired intangibles | 368 | 371 | ||||||
Total operating expenses | 33,043 | 28,700 | ||||||
Loss from operations | (5,212 | ) | (6,938 | ) | ||||
Other income (expense), net | (1,023 | ) | 34 | |||||
Loss before income taxes | (6,235 | ) | (6,904 | ) | ||||
Benefit from (provision for) income taxes | 187 | (136 | ) | |||||
Net Loss | $ | (6,048 | ) | $ | (7,040 | ) | ||
Other comprehensive loss | ||||||||
Unrealized loss on available-for-sale investments | (24 | ) | (1 | ) | ||||
Comprehensive loss | $ | (6,072 | ) | $ | (7,041 | ) | ||
Net loss per common share: | ||||||||
Net loss per common share, basic and diluted | $ | (0.14 | ) | $ | (0.17 | ) | ||
Weighted average common shares outstanding, basic and diluted | 42,170 | 40,630 |
(1) | Includes stock-based compensation expenses as follows: |
Three Months Ended March 31, | ||||||||
2018 | 2017 | |||||||
Cost of revenues | $ | 1,015 | $ | 724 | ||||
Sales and marketing | 1,226 | 631 | ||||||
Research and development | 1,356 | 945 | ||||||
General and administrative | 2,498 | 1,897 | ||||||
Total stock-based compensation expenses | $ | 6,095 | $ | 4,197 |
(2) | Includes amortization of acquired technology of $0.9 million for each of the three months ended March 31, 2018 and 2017. |
Three Months Ended March 31, | ||||||||
2018 | 2017 | |||||||
(unaudited) | (unaudited) | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (6,048 | ) | $ | (7,040 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Amortization of deferred implementation, solution and other costs | 2,218 | 1,719 | ||||||
Depreciation and amortization | 3,878 | 3,525 | ||||||
Amortization of debt issuance costs | 123 | 24 | ||||||
Amortization of premiums on investments | 56 | 69 | ||||||
Amortization of debt discount | 1,099 | — | ||||||
Stock-based compensation expenses | 6,095 | 4,197 | ||||||
Deferred income taxes | 36 | 117 | ||||||
Other non-cash charges | 22 | (6 | ) | |||||
Changes in operating assets and liabilities | (14,582 | ) | (13,273 | ) | ||||
Cash used in operating activities | (7,103 | ) | (10,668 | ) | ||||
Cash flows from investing activities: | ||||||||
Net redemptions of investments | 2,901 | 2,770 | ||||||
Purchases of property and equipment | (5,396 | ) | (5,361 | ) | ||||
Business combinations and asset acquisitions, net of cash acquired | (150 | ) | (1,316 | ) | ||||
Capitalization of software development costs | — | (532 | ) | |||||
Cash used in investing activities | (2,645 | ) | (4,439 | ) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from issuance of convertible notes, net of issuance costs | 223,675 | — | ||||||
Purchase of convertible notes bond hedge | (41,699 | ) | — | |||||
Proceeds from issuance of warrants | 22,379 | — | ||||||
Proceeds from issuance of common stock | 2,843 | 2,990 | ||||||
Net cash provided by financing activities | 207,198 | 2,990 | ||||||
Net increase (decrease) in cash and cash equivalents | 197,450 | (12,117 | ) | |||||
Cash, cash equivalents, and restricted cash beginning of period | 60,276 | 56,188 | ||||||
Cash, cash equivalents, and restricted cash end of period | $ | 257,726 | $ | 44,071 | ||||
Reconciliation of cash, cash equivalents, and restricted cash as shown in the statements of cash flows: | ||||||||
Cash and cash equivalents | $ | 255,411 | $ | 42,756 | ||||
Restricted cash | 2,315 | 1,315 | ||||||
Total cash, cash equivalents, and restricted cash | $ | 257,726 | $ | 44,071 |
Three Months Ended March 31, | ||||||||
2018 | 2017 | |||||||
(unaudited) | (unaudited) | |||||||
GAAP gross profit | $ | 27,831 | $ | 21,762 | ||||
Stock-based compensation | 1,015 | 724 | ||||||
Amortization of acquired technology | 912 | 885 | ||||||
Non-GAAP gross profit | $ | 29,758 | $ | 23,371 | ||||
Non-GAAP gross margin: | ||||||||
Non-GAAP gross profit | $ | 29,758 | $ | 23,371 | ||||
GAAP revenue | 54,808 | 44,534 | ||||||
Non-GAAP gross margin | 54.3 | % | 52.5 | % | ||||
GAAP sales and marketing expense | $ | 10,966 | $ | 9,878 | ||||
Stock-based compensation | (1,226 | ) | (631 | ) | ||||
Non-GAAP sales and marketing expense | $ | 9,740 | $ | 9,247 | ||||
GAAP research and development expense | $ | 11,157 | $ | 9,651 | ||||
Stock-based compensation | (1,356 | ) | (945 | ) | ||||
Non-GAAP research and development expense | $ | 9,801 | $ | 8,706 | ||||
GAAP general and administrative expense | $ | 10,296 | $ | 8,452 | ||||
Stock-based compensation | (2,498 | ) | (1,897 | ) | ||||
Non-GAAP general and administrative expense | $ | 7,798 | $ | 6,555 | ||||
GAAP operating loss | $ | (5,212 | ) | $ | (6,938 | ) | ||
Stock-based compensation | 6,095 | 4,197 | ||||||
Acquisition related costs | 256 | 348 | ||||||
Amortization of acquired technology | 912 | 885 | ||||||
Amortization of acquired intangibles | 368 | 371 | ||||||
Non-GAAP operating income (loss) | $ | 2,419 | $ | (1,137 | ) | |||
GAAP net loss | $ | (6,048 | ) | $ | (7,040 | ) | ||
Stock-based compensation | 6,095 | 4,197 | ||||||
Acquisition related costs | 256 | 348 | ||||||
Amortization of acquired technology | 912 | 885 | ||||||
Amortization of acquired intangibles | 368 | 371 | ||||||
Non-GAAP net income (loss) | $ | 1,583 | $ | (1,239 | ) | |||
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 | 42,170 | 40,630 | ||||||
Weighted-average effect of potentially dilutive shares | 1,970 | — | ||||||
Pro forma diluted weighted-average number of common shares | 44,140 | 40,630 | ||||||
Calculation of non-GAAP income (loss) per share: | ||||||||
Non-GAAP net income (loss) | $ | 1,583 | $ | (1,239 | ) | |||
Diluted weighted-average number of common shares (pro forma for three months ended March 31, 2018) | 44,140 | 40,630 | ||||||
Non-GAAP net income (loss) per share | $ | 0.04 | $ | (0.03 | ) | |||
Reconciliation of GAAP net loss to adjusted EBITDA: | ||||||||
GAAP net loss | $ | (6,048 | ) | $ | (7,040 | ) | ||
Depreciation and amortization | 3,878 | 3,525 | ||||||
Stock-based compensation | 6,095 | 4,197 | ||||||
(Benefit from) provision for income taxes | (187 | ) | 136 | |||||
Interest (income) expense, net | 1,023 | (34 | ) | |||||
Acquisition related costs | 256 | 348 | ||||||
Adjusted EBITDA | $ | 5,017 | $ | 1,132 |
MEDIA CONTACT: | INVESTOR CONTACT: | |||
Emma Chase | Bob Gujavarty | |||
Red Fan Communications | Q2 Holdings, Inc. | |||
O: (512) 551-9253 / C: (512) 917-4319 | O: (512) 439-3447 | |||
emma@redfancommunications.com | bobby.gujavarty@q2ebanking.com |