Q2 (QTWO) Q4 2025 earnings summary

Executive summary

• Delivered strong Q4 and full year 2025 results, exceeding guidance on revenue, bookings, and profitability, with Q4 as the second-largest bookings quarter in company history.

• Achieved record bookings, driven by large enterprise deals, balanced mix of new and expansion wins, and strong demand for AI-driven and digital banking solutions.

• Digital banking, relationship pricing, and risk/fraud solutions saw robust growth, with risk/fraud as a top cross-sold product and AI innovation expanding across workflows.

• Positioned as a key partner for financial institutions amid rising M&A, digital transformation, and vendor consolidation trends.

• GAAP net income for Q4 was $20.4M; full-year net income was $52.0M, reversing a prior-year loss.

Financial highlights

• Q4 2025 revenue reached $208.2M, up 14% year-over-year and 3% sequentially; full-year revenue was $794.8M, up 14%.

• Subscription revenue grew 16% in Q4 and 17% for the year, now 82% of total revenue.

• Adjusted EBITDA for Q4 was $51.2M (up 36% YoY, 24.6% margin); full year Adjusted EBITDA was $186.5M (up 49% YoY, 23.5% margin).

• Free cash flow for 2025 was $173.4M, with a 93% conversion rate of Adjusted EBITDA.

• Non-GAAP gross margin improved to 58.6% in Q4 and 58% for the year, up 200 bps YoY.

• Total ARR grew to $921M (up 12% YoY); subscription ARR reached $780M (up 14% YoY).

• Backlog increased to $2.7B, up 21% YoY.

• Ended Q4 2025 with $433M in cash, cash equivalents, and investments.

Outlook and guidance

• 2026 revenue guidance: $871M–$878M (10% YoY growth); Q1 2026 revenue guidance: $212.5M–$216.5M (12–14% YoY growth).

• 2026 subscription revenue growth outlook raised to at least 14%; at least 60% gross margin expected.

• 2026 Adjusted EBITDA guidance: $225M–$230M (26% margin).

• 2027 targets: subscription revenue growth of 12.5%–13%, Adjusted EBITDA margin expansion of 150–200 bps.

• Long-term (2030) targets: non-GAAP gross margin ≥65%, Adjusted EBITDA margin ≥35%.