Q2 Holdings Raises 2026 Outlook After Revenue Grows 12% to $225.8 Million
Key Facts
Q2 Holdings reported revenue of $225.8 million for the third quarter ended September 30, up 12% year over year and 3% from the second quarter, and raised its full-year revenue outlook to $888–892 million. The company said in its earnings release that revenue and adjusted EBITDA exceeded the high end of its quarterly guidance. Net income under generally accepted accounting principles was $33.2 million, compared with $15.0 million in the same period last year. GAAP gross margin also rose to 59.7% from 54.0%. The outlook increase came as recurring revenue and contracted commitments expanded, while the stock fell in after-hours trading following the results.
The company raised its 2026 revenue outlook to a range of $888–892 million, equivalent to 12% year-over-year growth, and set adjusted EBITDA at between $253 and $256 million. For the fourth quarter, it expects revenue of between $226 and $230 million, representing year-over-year growth of 9% to 10%, and adjusted EBITDA of between $62.4 and $65.4 million. The final-quarter guidance implies a lower revenue growth rate than the company expects for the full year. The company said third-quarter revenue and adjusted EBITDA exceeded the high end of its previous guidance range. Adjusted EBITDA was $67.8 million for the quarter, according to CEO Matt Flake's comments on the results.
Profitability metrics improved alongside revenue growth: GAAP net income rose to $33.2 million from $15.0 million a year earlier, while gross margin increased to 59.7% from 54.0%. Flake said the company delivered "another quarter of strong financial performance," citing revenue of $225.8 million and adjusted EBITDA of $67.8 million. Free cash flow was $55 million, up 48% year over year. The company said its revenue and adjusted EBITDA exceeded the high end of its quarterly guidance. This came alongside an increase in the expected annual adjusted EBITDA range to $253–256 million.
Q2 Holdings signed seven contracts with institutions and Tier 1 clients during the quarter, and annual recurring subscription revenue rose to $846 million, up 13.5% from a year earlier. Remaining performance obligations, which represent contracted business, were about $2.8 billion at quarter-end, up 10% year over year. CEO Matt Flake said strong bookings were led by digital banking. He added that credit unions were a key contributor, with the company winning several Tier 1 deals. These metrics combine new contracts, a larger recurring subscription base and future contracted obligations, as the company raised its annual revenue outlook.
The company also repurchased about 0.6 million shares during the quarter for $38.8 million, at an average price of about $61.27 per share. Free cash flow was $55 million, up 48% year over year, according to coverage of the company's results. After the results were announced, the stock fell 2.08% to $66.5 in after-hours trading on October 28. The company reported its results after the market closed that day, so the after-hours move followed the disclosure. On leadership, the company named CFO Jonathan Price co-CEO alongside Matt Flake, effective October 29, 2026. Price will remain CFO until a successor is appointed.
On the earnings call, the company said its artificial intelligence products remain in the early stages of adoption and are not included in its 2027 framework. It added that these products could represent an additional opportunity later if strong adoption continues. The reference to this activity comes as the company's published outlook focuses on 2026 revenue and adjusted EBITDA and fourth-quarter guidance. Price's duties as co-CEO begin on October 29, while he retains the CFO role during the search for a successor. The annual outlook announced by the company includes revenue of between $888 and $892 million and adjusted EBITDA of between $253 and $256 million.