Q2 (QTWO) Q2 2024 earnings summary

Executive summary

• Achieved strong Q2 2024 sales execution with 12% year-over-year revenue growth to $172.9M, driven by new and expansion wins across business lines and a growing customer base of over 1,400, including 450 digital banking platform customers and 23.6M registered users.

• Adjusted EBITDA rose to $29.9M, up 69% year-over-year, with margin improvement and narrowing GAAP net loss to $13.1M from $23.6M a year ago.

• Subscription annualized recurring revenue increased 19% year-over-year to $633.9M, with total ARR at $783.0M and net revenue retention at 108%.

• Investments in technology, customer support, and innovation remain a priority, with a focus on expanding product offerings and supporting long-term growth.

• The company operates primarily through a SaaS model, serving financial institutions, FinTechs, and Alt-FIs.

Financial highlights

• Q2 2024 non-GAAP revenue was $172.9M, up 12% year-over-year; six-month revenues reached $338.4M, up 10%.

• Adjusted EBITDA margin improved to 17.3% from 11.4% in Q2 2023; non-GAAP gross margin was 55.7%, up from 54.2%.

• Free cash flow for H1 2024 was $34.8M, up from $0.5M in the prior year; cash, cash equivalents, and investments totaled $372M at quarter-end.

• Net loss for Q2 2024 was $13.1M, an improvement from $23.6M in Q2 2023.

• Subscription revenue accounted for 79% of total revenue in Q2 2024, with 17% year-over-year growth.

Outlook and guidance

• Full-year 2024 non-GAAP revenue guidance is $688.5M–$692.5M, representing 10–11% growth, with adjusted EBITDA margin expected at 17%.

• Q3 2024 non-GAAP revenue guidance is $171.5M–$174.5M, with adjusted EBITDA of $27.5M–$29.5M.

• Management expects subscription revenue to continue increasing as a percentage of total revenue, driven by new customer wins and expanded usage.

• Ongoing investments in R&D and customer support are anticipated to drive long-term margin improvement and operating leverage.

• Raised full-year outlook for both revenue and adjusted EBITDA following strong Q2 results.