Q2 Holdings, Inc.

My name is Tyler and I will be your conference operator today. At this time, I would like to welcome everyone to the Q2 Holdings third quarter 2025 financial results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question, please raise your hand. If you have dialed into today's call, please press star nine to raise your hand and star six to unmute when called upon. I will now hand the call over to Josh Yankovich, Investor Relations. Sir, please begin.

Thank you, Operator. Good afternoon, everyone, and thank you for joining us for our third quarter 2025 conference call. With me on the call today are Matt Flake, our CEO, Jonathan Price, our CFO, and Kurt Coleman, our president, who will join us for the Q&A portion of the call. This call contains forward-looking statements that are subject to significant risks and uncertainties, including, among other things, with respect to our expectations for the future operating and financial performance of Q2 Holdings and for the financial services industry. Actual results may differ materially from those contemplated by these forward-looking statements, and we can give no assurance that such expectations or any of our forward-looking statements will prove to be correct. Important factors that could cause actual results to differ materially from those reflected in the forward-looking statements are included in our periodic reports filed with the SEC, copies of which may be found on the Investor Relations section of our website, including our quarterly report on Form 10-Q for the third quarter of 2025 and the press release distributed this afternoon and filed in our Form 8-K with the SEC regarding the financial results we will discuss today. Forward-looking statements that we make on this call are based on assumptions only as of the date discussed. Investors should not assume that these statements will remain operative at a later time, and we undertake no obligation to update any such forward-looking statements discussed in this call. Also, unless otherwise stated, all financial measures discussed on this call, other than revenue, will be on a non-GAAP basis. A discussion of why we use non-GAAP financial measures in a reconciliation of the non-GAAP measures to the most comparable GAAP measures is included in our press release, which is available on the Investor Relations section of our website and in our Form 8K file today with the SEC. We also have published additional materials related to today's results on our Investor Relations website. Let me now turn the call over to Matt.

Thanks, Josh. I'll start today's call by sharing our third quarter results and highlights from across the business. I'll then hand it over to Jonathan to walk through our financial performance and guidance. In the third quarter, we delivered strong financial results with revenue and adjusted EBITDA both above our guidance. We generated revenue of $202 million, representing 15% year-over-year growth, and adjusted EBITDA of $49 million, or a 24.2% margin. We also generated free cash flow of $37 million in the quarter. In addition to the strong financial performance, we had the best third quarter in company history from a bookings perspective. As we shared earlier this year, we expected our larger deals to be weighted toward the second half, and we saw that begin to take shape with seven total Tier 1 and Enterprise deals in the quarter. This concentration combined with a solid mix of new and expansion wins drove the record third quarter bookings activity. Several of the Tier 1 and Enterprise wins were net new, showcasing continued momentum in acquiring new customers. and all three major product lines contributed to the quarter's performance. On the digital banking front, we saw continued success upmarket, including a net new win with a bank exceeding $80 billion in assets that will begin by using our platform for retail and small business. We also signed a major expansion with a $60 billion bank that started with commercial and will now add retail. As demonstrated by these wins, our single-platform approach, unifying retail, small business, and commercial, continues to differentiate Q2, help us compete more broadly, and creates meaningful expansion opportunities over time. During the quarter, we also had two instances where a Q2 bank was acquired by a larger institution. And in both cases, the acquiring bank selected Q2's platform to serve the combined entity. This is an indicator of our competitiveness and the scalability of our technology, especially as bank M&A activity continues. Our fraud solutions continued to gain traction as well. We signed the largest fraud deal in company history during the quarter, a significant expansion with an existing $200 billion digital banking customer. This win was for our check and ACH fraud solution, which continues to see robust demand in the market. With the cost and complexity of fraud growing, customers are increasingly turning to Q2 as a strategic partner to help them manage risk more efficiently and effectively. We also had our strongest relationship pricing quarter of the year. Highlighted by multi-year renewals with two top 10 U.S. banks, our relationship pricing solutions continued to be an important lever for financial institutions seeking to optimize yield, profitability, and growth across both loans and deposits. Beyond our strong sales performance, we also recently hosted Dev Days 2025, our second annual conference for partners, customers, and employees who build on the Q2 platform using our APIs and SDK. While our annual client conference, Connect, is our venue to showcase production-ready innovation and customer adoption proof points, Dev Days is an event where we share architecture and technology enhancements and explore the next frontier of our platform. At this year's event, AI was front and center, and we showcased several ways we intend to bring leading AI capabilities to our platform for the benefits of bankers, account holders, developers, and our FinTech partners. We demonstrated a range of planned AI offerings that illustrate the breadth of our strategy. The first was an AI co-pilot that can help account holders and bank staff alike, enabling account holders to receive guidance and manage money through natural language prompts and customer service representatives to retrieve and summarize information. We demonstrated AI-assisted coding in our SDK, which makes all of our developer documentation available via conversational developer tools and will help customers, partners, and even Q2 go from idea to execution faster. We shared a customer-facing extension of our internal AI assistant that indexes the vast archives of our internal Q2 knowledge and makes it available through an LLM, which we believe will help our customers self-serve and get faster customer support outcomes. And finally, we shared a new partner data integration strategy that is intended to enable us, over time, to turn our wealth of 1,000-plus backend integrations and more than 200 fintech partners into a unified data and capabilities ecosystem that will empower agentic innovation. The key takeaway from Dev Days was our customers need to invest in innovation, which requires mission critical partners with expertise in handling highly regulated data and managing complex integrations to enable AI adoption. We believe we are well positioned to be that partner of choice. As we have a proven track record of innovation, can leverage our network of customers, partners, and integrations to build new capabilities on our platform, strengthening it with every generation of innovation. Our platform and the ecosystem that surrounds it can facilitate AI innovation in financial services. As technology and financial services continue to evolve, we believe advancements in AI will flow through Q2, not around it. Looking ahead, we feel very good about the success we've had heading into the final quarter of the year. Our pipeline remains solid. We expect demand to remain strong as we close out 2025. And as Jonathan will share in a moment, we're raising our financial outlook, reflecting our confidence and our ability to deliver on the full year expectations we set earlier this year. Before I hand the call over to Jonathan, I wanted to share some exciting updates to our leadership team, which we believe will better align with our talent and efforts with our long-term strategy. First, Hema Mukamala has been appointed as our Chief Operating Officer, expanding his role to include our service delivery and customer experience functions. In Hema's time overseeing our engineering team since 2023, he has demonstrated operational excellence and an extreme focus on AI enablement, both to drive internal efficiencies as well as external innovation. In conjunction, Kirk Coleman will continue to lead our go-to-market functions as Chief Business Officer, reinforcing his focus on sales and customer success, leveraging his deep industry expertise to advance our product strategy and next phase of growth. I want to thank Mike Volanovsky, our Chief Revenue Officer, for his contributions during his time at Q2. And he will remain with us through December 12th to ensure a smooth transition. With that, let me pass it over to Jonathan.