Q2 (QTWO) Q2 2025 earnings summary

Executive summary

• Q2 2025 revenue reached $195.1 million, up 13% year-over-year, with adjusted EBITDA of $45.8 million, both above guidance.

• Net income was $11.8 million, reversing a net loss of $13.1 million in Q2 2024.

• Six Tier 1 contracts were signed, including expansions with top U.S. banks and new digital banking and relationship pricing contracts.

• Innovation Studio adoption exceeded 85% of digital banking customers, driving operational efficiency and product cross-sell.

• Strong customer engagement at the annual Connect conference, with focus on digital transformation, fraud, AI, and commercial innovation.

Financial highlights

• Total revenue for Q2 was $195.1 million, up 13% year-over-year and 3% sequentially.

• Adjusted EBITDA was $45.8 million, up 53% year-over-year and 12% sequentially; margin was 23.5%.

• Subscription-based revenue grew 16% year-over-year, now 81% of total revenue.

• Gross margin improved to 57.5% non-GAAP and 53.6% GAAP, both up year-over-year.

• Cash, cash equivalents, and investments ended at $532 million.

• Free cash flow for the first half of 2025 was $79.5 million, up from $34.8 million in the prior year.

Outlook and guidance

• Q3 2025 revenue guidance: $196–$200 million; adjusted EBITDA: $44–$47 million.

• Full-year 2025 revenue guidance raised to $783–$788 million, 12–13% year-over-year growth.

• Full-year adjusted EBITDA guidance raised to $177–$181 million (23% margin).

• Full-year subscription revenue growth outlook increased to at least 16%.

• Long-term targets include average annual subscription revenue growth of 15% and free cash flow conversion above 90% by 2026.