Q2 Holdings (QTWO) Reports Q1: Everything You Need To Know Ahead Of Earnings

Adam Hejl /
2023/05/08 5:06 am EDT

Banking software provider Q2 (NYSE:QTWO) will be announcing earnings results tomorrow after market close. Here's what to look for.

Last quarter Q2 Holdings reported revenues of $146.5 million, up 11.1% year on year, missing analyst expectations by 1.87%. It was a weak quarter for the company, with revenue guidance for the next quarter and full year missing analysts' expectations.

Is Q2 Holdings buy or sell heading into the earnings? Read our full analysis here, it's free.

This quarter analysts are expecting Q2 Holdings's revenue to grow 12.2% year on year to $150.4 million, slowing down from the 15.1% year-over-year increase in revenue the company had recorded in the same quarter last year. Adjusted earnings are expected to come in at $0.07 per share.

Q2 Holdings Total Revenue

Majority of analysts covering the company have reconfirmed their estimates over the last thirty days, suggesting they are expecting the business to stay the course heading into the earnings. The company missed Wall St's revenue estimates three times over the last two years.

Looking at Q2 Holdings's peers in the vertical software segment, some of them have already reported Q1 earnings results, giving us a hint of what we can expect. nCino delivered top-line growth of 45.7% year on year, beating analyst estimates by 4.5% and Cadence reported revenues up 13.3% year on year, exceeding estimates by 1.51%. nCino traded flat on the results, Cadence was down 1.9%. Read our full analysis of nCino's results here and Cadence's results here.

Technology stocks have been hit hard on fears of higher interest rates and while some of the software stocks have fared somewhat better, they have not been spared, with share price declining 6.57% over the last month. Q2 Holdings is down 3.75% during the same time, and is heading into the earnings with analyst price target of $32.4, compared to share price of $22.35.

One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 70% year on year and best-in-class SaaS metrics it should definitely be on your radar.

The author has no position in any of the stocks mentioned.