Q2 Holdings, Inc.

Good afternoon. My name is Kevin and I will be your conference operator today. At this time, I would like to welcome everyone to the Q2 Holdings First Quarter 2026 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 would like to ask a question, please raise your hand. If you have dialed in to today's call, please press star 9 to raise your hand and star 6 to unmute when called upon. I will now hand the conference over to Josh Yankovich, Investor Relations. Sir, please begin.

Thank you, Operator. Good afternoon, everyone, and thank you for joining us today. With me on the call are Matt Flake, our CEO, and Jonathan Price, our CFO. 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 first quarter of 2026 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 day 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 and 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 filed today with the SEC. We have also published additional materials related to today's results on our Investor Relations website. Let me now turn the call over to Matt.

Thanks Josh and good afternoon everyone. Thank you for joining us today. I'll start by sharing our first quarter results and highlights from across the business. I'll then hand the call over to Jonathan to discuss our financial results in more detail and provide our outlook for the remainder of the year. Starting with the quarter, we delivered a strong start to 2026 with financial performance that reflects continued execution across our key priorities. In the first quarter, we generated revenue of $216.5 million, representing 14% year-over-year growth. We also delivered adjusted EBITDA of $60 million, or 27.7% of revenue, and generated free cash flow of $44.2 million. Overall, we're pleased with our performance to start the year, including continued strength in our subscription model, ongoing demand for the mission critical solutions we deliver to our customers, and meaningful progress in our AI journey, which I will provide more detail on momentarily. Starting with sales, we had a strong quarter of bookings activity to start the year, building on the momentum we carried out of 2025 with a record bookings performance for our first quarter. performance was highlighted by nine total tier one and enterprise wins across the portfolio and as we've seen in recent quarters our bookings execution continued to be characterized by a balanced mix of net new and expansion activity as well we saw particularly strong performance in both our digital banking and our risk and fraud solutions i want to highlight a few deals from the quarter that exemplify some of the themes that have defined our recent sales performance first We closed a significant digital banking expansion driven by an M&A transaction involving existing digital banking customer Synovus, who merged with Pinnacle Financial Partners. Following the merger, the combined institution selected Q2 as the go-forward platform for commercial digital banking and commercial fraud management solutions. We continue to view Bank sector M&A is an opportunity for our business and an area where our platform strategy differentiates us. In scenarios like these, customers are making long-term strategic decisions, and we're proud to be selected as the platform of choice in a highly competitive and complex environment. Second, we also signed the largest fraud deal in our company's history in the quarter. This was a win with a new enterprise customer and represents another example of the growing scale and importance of fraud solutions within our portfolio. As we've discussed in recent quarters, the cost and complexity of fraud continues to increase across financial institutions. What we're seeing now is that fraud is no longer episodic or confined to a single channel. It's becoming a continuous enterprise-wide challenge and one that is driving increasing levels of investment from our customers. This deal is particularly notable because of its size, and it marks another quarter where we've delivered a fraud booking of magnitude, reinforcing both the strength of our solutions and the urgency of this problem for our customers. So from a sales perspective, we were very pleased with the breadth and quality of our bookings performance in the quarter. We're seeing continued demand across our platform, strong engagement from both new and existing customers, and increasing alignment between our product portfolio and the strategic priorities of financial institutions. Of note, we're also seeing the term length of expansion deals increase compared to historical averages, which we view as a signal of our customers' long-term commitment to us as the partner of choice as they navigate their AI and digital transformations. On AI, we announced two product sets in recent weeks, and I want to update you on our strategy and where we're executing. As we've discussed on prior calls, there are three key differentiators we see for Q2 in the current wave of AI innovation. Data, distribution, and incumbency and trust. As AI lowers the cost of generating insights and writing code, we believe the value shifts towards platforms that can apply those insights in a trusted, compliant, and operationally sound way. That's where we believe the platform we've been building gives us a real advantage. First, on data. Last quarter, I described Q2 as the system of context for our customers. While the core processor is the transactional system of record, Q2 sits in the flow of every digital interaction, seeing every login, transaction, alert, message, and user decision. That gives us the context of behavior, not just ledger entries. We see login patterns, navigation paths, hesitations, retries, and the full path a commercial payment takes from initiation through approval to execution. We believe that's the kind of banking-specific context AI needs to be useful, and it's a meaningful differentiator for us. Second, on distribution, we have an established customer and partner network ready to consume AI as we deliver it. That network took more than two decades to build and operate at scale, and it matters because AI is only valuable as the places it can actually be deployed. Lastly, on incumbency and trust, our customers are coming to us for direction on AI because of the trust we've built with them over many years. And because AI and banking has to be highly secure and compliant from day one, we have the infrastructure, the technical know-how, and the long-term customer relationships needed to deliver bank-grade AI at scale. Our customers are eager to adopt AI, but we have also seen an increase in customer conversations around the importance of managing data, privacy, and access. Customers are turning to Q2 to help them work through this transition. And we believe that choice is continuing to show up in our bookings results as they make long-term strategic commitments to Q2 as their AI and digital transformation partner. Importantly, we are already converting those strategic advantages into tangible outcomes and innovation for our customers. Our near-term product focus is in three areas, improving efficiency for bankers, strengthening fraud detection and prevention, and driving deeper personalization for account holders. We announced two new products in those areas over the last few weeks. The first is Q2 Code, our AI-assisted development capability, which improves efficiency It embeds AI directly into the development experience, allowing customers and partners to build on our platform using natural language while leveraging the full power of our SDK. The second is a new set of AI driven fraud capabilities focused on account takeover. We're using AI to continuously monitor user activity, identify signs of compromise and intervene in real time. That shifts fraud management from after the fact detection to real time prevention. inside the platform where the transaction is happening. Looking ahead, AI is moving toward more agentic models where systems take action on behalf of users. In financial services, that will require trust, transparency, and control. The platforms that win will combine context, execution, and compliance. We believe that Q2 is uniquely positioned to be one of them and that we can capitalize on the value this creates for our customers. When you combine the progress we're making on our AI journey with our continued sales momentum, we're pleased with our start to the year. We believe that our sustained bookings performance, particularly coming off a strong second half of 2025, suggests that the demand environment remains healthy. And even with the continued sales execution, our pipeline is strong, giving us confidence in our ability to continue executing in 2026. With that, I'll hand the call to Jonathan to walk through our financial results in more detail and provide our outlook for the remainder of the year.