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3rd Quarter 2026 Results October 28, 2026
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2 Safe Harbor Statement This presentation and the accompanying oral presentation contain forward - looking statements and information that are based on our management's beliefs and assumptions and on information currently available to our management . The statements and information contained in this presentation that are not purely historical are forward - looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 , Section 27 A of the Securities Act of 1933 , as amended, and Section 21 E of the Securities Exchange Act of 1934 , as amended . Forward - looking statements include statements about : our expectations for the Co - CEO structure ; our board’s focus on long - term continuity ; our ability to scale ; CFO succession planning ; our consistent execution against our profitable growth strategy ; continued investment in products and customer experience ; our long - term growth opportunity ; our sales opportunities in different market segments ; the capabilities of our solutions to meet customer needs and help them compete and grow ; the ability of our customer base to support long - term growth ; the capabilities and potential of our existing and contemplated AI solution offerings ; the benefits of our developer and partner ecosystems ; the market opportunity presented by AI for Q 2 ; continued demand for our solutions ; the strength of our pipeline ; our ability to execute against our long - term financial framework ; continued pressure on more discretionary services revenue ; continued strong free cash flow generation ; continued substantial balance sheet capacity and resulting flexibility in capital allocation ; our focus on maintaining a healthy balance sheet to support organic investment and inorganic opportunities ; and our quarterly and annual financial guidance and outlook . Forward - looking statements include all statements that are not historical facts and can be identified by terms such as “anticipates,” “believes,” “could,” “seeks,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “will,” “would, ” “strategy,” “future,” “likely” or similar expressions and the negatives of those terms . Forward - looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward - looking statements . Forward - looking statements represent our management’s beliefs and assumptions only as of the date of this presentation . These statements are not guarantees of future performance or development and involve known and unknown risks, uncertainties and other factors that are in some cases beyond our control . Factors that may cause such differences include, but are not limited to, the risks described in our earnings press release for the period ending September 30 , 2026 and under “Risk Factors” in our Annual Report on Form 10 - K for the year ended December 31 , 2025 filed with the SEC on February 11 , 2026 , and those discussed in other documents we file and furnish with the SEC . Except as required by law, we assume no obligation to update these forward - looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in the forward - looking statements, even if new information becomes available in the future . This presentation includes references to adjusted EBITDA, which is a non - GAAP financial measure under SEC rules . Adjusted EBITDA differs from GAAP net income in that it excludes items such as depreciation and amortization, stock - based compensation, transaction - related costs, interest and other (income) expense, income taxes, lease and other restructuring charges, and non - recurring legal settlements not in our ordinary course of business . This presentation also references non - GAAP gross margin and non - GAAP gross profit, which adjusts gross profit and gross margin for stock - based compensation, amortization of acquired technology, transaction - related costs, lease and other restructuring charges . This presentation also references free cash flow, which adjusts net cash provided by operating activities for purchases of property and equipment and capitalized software development costs . This presentation also references adjusted EBITDA margin, which is determined by dividing adjusted EBITDA by revenue . This presentation also references non - GAAP operating income and non - GAAP net income, which adjusts operating income, for stock - based compensation, transaction - related costs, amortization of acquired technology, amortization of acquired intangibles, lease and other restructuring charges and non - recurring legal settlements not in our ordinary course of business, and with respect to non - GAAP net income, is additionally adjusted for amortization of debt issuance costs and the related tax effects of the adjustments above . The tax effect of non - GAAP adjustments is calculated based on the tax laws and statutory income tax rates applicable in the tax jurisdiction(s) of the underlying non - GAAP adjustment and considers the current and deferred tax impact of those adjustments . The Company is in a cumulative income position on a non - GAAP basis and has not recorded a valuation allowance against deferred tax assets in the non - GAAP tax provision . As a result, the non - GAAP tax expense may differ significantly from the GAAP tax expense . This presentation also references non - GAAP net income per common share, diluted, which divides non - GAAP net income by the diluted weighted average common shares outstanding . Management believes that these non - GAAP measures are useful measures of operating performance because they exclude items that we do not consider indicative of our core performance . However, these non - GAAP financial measures should be considered in addition to, not as a substitute for or superior to, the most directly comparable GAAP measure, or other financial measures prepared in accordance with GAAP . Our management uses these non - GAAP financial measures as a measure of operating performance ; to prepare our annual operating budget ; to allocate resources to enhance the financial performance of our business ; to evaluate the effectiveness of our business strategies ; to provide consistency and comparability with past financial performance ; to facilitate a comparison of our results with those of other companies, many of which use similar non - GAAP financial measures to supplement their GAAP results ; and in communication with our board of directors concerning our financial performance . A reconciliation to the closest GAAP measures of these non - GAAP measures is contained in tabular form at the end of this presentation . A reconciliation of forward - looking adjusted EBITDA guidance used in this presentation to GAAP net income is not available without unreasonable effort due to the uncertainty regarding, and the potential variability of, certain of the adjustments required to calculate adjusted EBITDA that may be incurred in the future . Unless otherwise indicated, all financial measures discussed in this presentation are presented on a non - GAAP basis .
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3 $ 225.8M REVENUE $ 2.8B Ending backlog as of September 30, 2026 $ 123M End of Quarter balance of cash, cash equivalents + investments3 30.0 % Adjusted EBITDA margin 1 $ 67.8M Adjusted EBITDA 1 7 Tier 1 + Enterprise Wins 2 $ 846M Subscription Annualized Recurring Revenue 1 3rd Quarter 2026 Review 1 1 For the third quarter ended September 30, 2026. 2 Number of contracts signed with customers above $5 billion in assets (Tier 1) and $50B in assets (Enterprise), throughout the th ird quarter 2026. 3 As of September 30, 2026, excluding restricted cash from the calculation.
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4 We delivered another strong quarter, with solid bookings led by digital banking and continued momentum across the business. Credit unions were a key contributor again this quarter, including multiple Tier 1 wins and some of our largest contracted deals in the period. Our AI progress was highlighted by our third annual Dev Days, and early demand for our new AI - driven fraud solution was particularly strong, with early - adopter sign - ups roughly twice what we initially expected. We feel good about our momentum as we move these offerings toward general availability, and with a healthy pipeline heading into year - end, we believe Q2 is well positioned to be the platform our customers build on as they put AI to work. Matt Flake Chairman, President and CEO Non - GAAP Gross Profit $141.3 21% $116.8 Adj EBITDA $67.8 39% $48.8 Revenue $225.8 12% $201.7 Gross Profit $134.8 24% $108.8 Net Income $33.2 121% $15.0 3rd Quarter 2026 Results GAAP 3Q25 Totals 3Q26 Totals Y/Y Change $ in millions
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• Subscription Annualized Recurring Revenue increased to $846 million, up 13 percent year - over - year or $101 million from $745 million at the end of the third quarter of 2025. 3rd Quarter 2026 Highlights Subscription Annualized Recurring Revenue $ 846 million +13 % Y/ Y From $745 million in 3Q25 Total Committed Backlog $ 2.8 billion • Remaining Performance Obligation total, or Backlog, increased by $5 million sequentially, resulting in total committed Backlog of approximately $2.8 billion at quarter - end, flat compared to the prior quarter and representing 10 percent year - over - year growth. +10 % Y/ Y Compared to 3Q25 New Customer Wins & Expansion Opportunities Subscription ARR Backlog See the “Customer Tiering” and Subscription Annualized Recurring Revenue (Subscription ARR) definitions in the Appendix to th is presentation. 7 Tier 1 + Enterprise Wins • Signed seven Tier 1 + Enterprise contracts in the quarter highlighted by: o A net new agreement with a Tier 1 credit union for our commercial digital banking solutions. o A net new agreement with a Tier 1 bank for our commercial digital banking solutions following the bank’s merger with another institution. o An expansion agreement with an Enterprise bank to add multiple risk and fraud solutions, including our AI - driven User Activity Monitoring solution. 5
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6 Annualized Recurring Revenue Subscription ARR growth of 13%; Total ARR growth continues to be impacted by declines in non - Subscription ARR Subscription Annualized Recurring Revenue and Total Annualized Recurring Revenue (ARR) are defined in the appendix of this pr ese ntation. 13% Y/Y Growth 11% Y/Y Growth
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7 Remaining Performance Obligations (RPO, Backlog) Continued solid year - over - year growth driven by new, expansion & renewal bookings RPO Expected to be Recognized in the Next: % of Total RPO Amount 24 months 54% 25 - 48 months 33% $ 2.8B RPO Balance as of September 30, 2026 Remaining Performance Obligations, or “Backlog”, represents contracted revenue minimums that have not yet been recognized, in clu ding amounts that are contracted to be invoiced and recognized as revenue in future periods. 10% Y/Y Growth 0% Seq. Growth
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8 Revenue Breakout Diverse base of customers across asset size and customer type Note: Data as of three months ended September 30, 2026. See “Customer Tiering” in the Appendix to this presentation for further information on how we define the various Tiers of our customers. Totals may not add to 100% due to rounding. Asset Size Customer Type Customer Concentration
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9 Financial Guidance Represents 12% full - year revenue growth and full - year adjusted EBITDA margin of 28 % to 29% Low High $226.0 $230.0 $62.4 $65.4 Adj EBITDA Low High $888.0 $892.0 $253.0 $256.0 4Q 2026 Full - Year 2026 $ In Millions$ In Millions Revenue As of October 28, 2026, Q2 Holdings is providing guidance for its fourth quarter of 2026 and full - year 2026, which represents Q2 Holdings’ current estimates on Q2 Holdings’ operations and financial results. The financial information above represents forward - looking, non - GAAP estimates of adjusted EBITDA financial information. GAAP net income is the most comparable GAAP measure to adjusted EBITDA. Adjusted EBITDA differs from GAAP net in com e in that it excludes items such as stock - based compensation, transaction - related costs, depreciation and amortization, lease and other restructuring charges, non - recurring legal settlements not in our ordinary course of business, income taxes and interest and other (income) expense, net. Q2 Holdings is un able to predict with reasonable certainty the ultimate outcome of these exclusions without unreasonable effort. Therefore, Q2 Holdings has not provided guida nce for GAAP net income or a reconciliation of the foregoing forward - looking adjusted EBITDA guidance to GAAP net income. However, it is important to note th at these excluded items could be material to our results computed in accordance with GAAP in future periods.
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10 1 FY’26 current outlook reflects the Company’s expectations for the full fiscal year 2026, including approximately 14.5% subscr ipt ion revenue growth, approximately 62% gross margin, and adjusted EBITDA margin of approximately 29%, which represents the midpoint of the Company ’s FY’26 adjusted EBITDA guidance provided on October 28, 2026. 2 Financial framework represents directional financial objectives and does not constitute guidance. FY’27 subscription revenue growth and adjusted EBITDA margin expansion represent preliminary objectives the Company targets to achieve for the f ull - year 2027. Gross and adjusted EBITDA margins represent annual performance objectives the Company is targeting to achieve by the end of FY’30. Forw ard - looking statements are subject to risks and uncertainties, and actual results may differ materially. Non - GAAP Subscription Revenue Growth 16.2% 17.2% ~ 14.5% Gross Margin 56.0% 58.0% ~ 62% Adj EBITDA Margin 18.0% 23.5% ~ 28.6% Free Cash Flow Conversion 85.1% 93.0% > 90% FY’24A FY’25A FY’26 Current Outlook 1 Financial Framework 2 ~ 35% Adj EBITDA Margin FY’30 12.5% - 13% Subscription Revenue Growth FY’27 150 - 200bps Adj EBITDA Margin Expansion ~ 65% Non - GAAP Gross Margin Financial Outlook
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Appendix
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12 Strong Visibility, Increasing Profitability, Expanding Opportunity Long Runway to Sustain High Growth and Margin Expansion ~ 1,200 Total Customers 1 5 % Recurring Revenue Churn Rate 5 ~ 28M Registered End Users 7 61 % Avg. Customer Contracted Revenue Growth at 48 months 8 > 5 Years 83 % Subscription Revenue as a % of Total 4 Avg. Contract Length 3 $ 23B Total Addressable Market 9 13 % YoY Growth in Subscription ARR 2 > 22 % New Customer ASP Increase Y/Y 6 1 Total numbers of customers signed as of December 31, 2025. 2 Subscription Annualized Recurring Revenue (ARR) growth as measured from the total balance of Subscription ARR on September 30, 2026 compared to the total balance of Subscription ARR on September 30, 2025. 3 For digital banking platform customers as of December 31, 2025. 4 Subscription revenue as a percentage of total company revenue for the third quarter ended September 30, 2026. 5 Recurring revenue churn for the full year 2025 as discussed in our 10 - K filed on February 11, 2026. 6 Average Selling Price (ASP) is derived by assessing new Digital Banking Platform deals sold in full year 2025 compared to 2024. 7 Registered end users on our digital banking platform, as of September 30, 2026. 8 Based on digital banking platform customers that went live from 2013 - 2025. Growth of contracted recurring revenue by Q2 platform customers 48 months afte r implementation. 9 We believe our expanded solution offerings and the continued growth of our customer base and market opportunity have increased t he addressable market for our solutions to greater than $23 billion as discussed in our annual report on 10 - K filed on February 11, 2026. These forward - lookin g figures represent Q2’s financial targets, may prove to be inaccurate, and do not constitute guidance.
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13 Consolidated Balance Sheets Q2 Holdings, Inc. Condensed Consolidated Balance Sheets (in thousands) unaudited September 30, 2026 December 31, 2025 Assets Current assets: Cash and cash equivalents $ 116,312 $ 367,631 Restricted cash 1,746 1,672 Investments 6,679 65,064 Accounts receivable, net 94,041 51,716 Contract assets, current portion, net 8,868 8,596 Prepaid expenses and other current assets 20,611 28,234 Deferred solution and other costs, current portion 22,562 22,631 Deferred implementation costs, current portion 11,873 10,508 Total current assets 282,692 556,052 Property and equipment, net 27,855 27,783 Right of use assets 25,282 27,188 Deferred solution and other costs, net of current portion 29,342 27,827 Deferred implementation costs, net of current portion 34,080 28,929 Intangible assets, net 71,456 78,377 Goodwill 512,869 512,869 Contract assets, net of current portion and allowance 15,948 14,103 Other long - term assets 4,530 3,149 Total assets $ 1,004,054 $ 1,276,277 Liabilities and stockholders' equity Current liabilities: Accounts payable and accrued liabilities $ 72,872 $ 76,799 Convertible notes, current portion — 303,368 Deferred revenues, current portion 197,693 155,003 Lease liabilities, current portion 8,411 8,915 Total current liabilities 278,976 544,085 Deferred revenues, net of current portion 27,467 26,826 Lease liabilities, net of current portion 30,482 33,832 Other long - term liabilities 9,344 9,723 Total liabilities 346,269 614,466 Stockholders' equity: Common stock 6 6 Additional paid - in capital 1,183,238 1,275,980 Accumulated other comprehensive loss (2,954) (1,953) Accumulated deficit (522,505) (612,222) Total stockholders' equity 657,785 661,811 Total liabilities and stockholders' equity $ 1,004,054 $ 1,276,277
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14 Consolidated Statements of Comprehensive Income Q2 Holdings, Inc. Condensed Consolidated Statements of Comprehensive Income (in thousands, except per share data) (unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2026 2025 2026 2025 Revenues (1) $ 225,771 $ 201,704 $ 662,042 $ 586,587 Cost of revenues (2) 90,928 92,859 269,085 272,188 Gross profit 134,843 108,845 392,957 314,399 Operating expenses: Sales and marketing 24,536 26,401 76,200 79,965 Research and development 41,356 38,932 124,351 113,699 General and administrative 33,641 31,705 98,896 95,061 Transaction - related costs — — 270 — Amortization of acquired intangibles — — — 93 Lease and other restructuring charges 1,352 803 2,252 2,548 Total operating expenses 100,885 97,841 301,969 291,366 Income from operations 33,958 11,004 90,988 23,033 Total other income, net 373 4,204 4,813 10,912 Income before income taxes 34,331 15,208 95,801 33,945 Provision for income taxes (1,111) (160) (6,084) (2,380) Net income $ 33,220 $ 15,048 $ 89,717 $ 31,565 Other comprehensive income (loss): Unrealized gain (loss) on available - for - sale investments — 65 (61) (12) Foreign currency translation adjustment (274) (483) (940) 29 Comprehensive income $ 32,946 $ 14,630 $ 88,716 $ 31,582 Net income per common share Basic $ 0.53 $ 0.24 $ 1.44 $ 0.51 Diluted $ 0.52 $ 0.23 $ 1.38 $ 0.49 Weighted average common shares outstanding Basic 62,153 62,458 62,325 62,015 Diluted 63,529 69,858 65,690 65,076 Three Months Ended September 30, Nine Months Ended September 30, 2026 2025 2026 2025 Subscription $ 188,156 $ 165,218 $ 550,815 $ 477,929 Transactional 18,060 17,886 53,792 53,237 Services and Other 19,555 18,600 57,435 55,421 Total Revenues $ 225,771 $ 201,704 $ 662,042 $ 586,587 (2) Includes amortization of acquired technology of $4.3 million and $5.5 million for the three months ended September 30, 2026 a nd 2025, respectively, and $13.0 million and $16.5 million for the nine months ended September 30, 2026 and 2025, respectively. (1) The following table disaggregates the Company's revenue by major source:
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15 Consolidated Statements of Cash Flows Q2 Holdings, Inc. Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited) Nine Months Ended September 30, 2026 2025 Cash flows from operating activities: Net income $ 89,717 $ 31,565 Adjustments to reconcile net income to net cash from operating activities: Amortization of deferred implementation, solution and other costs 22,548 21,983 Depreciation and amortization 36,274 40,888 Amortization of debt issuance costs 768 1,628 Amortization of premiums and discounts on investments (20) (934) Stock - based compensation expense 60,806 66,767 Deferred income taxes (1,284) (897) Other non - cash items (180) 639 Changes in operating assets and liabilities: (26,973) (23,874) Net cash provided by operating activities 181,656 137,765 Cash flows from investing activities: Net maturities (purchases) of investments 58,517 (7,353) Purchases of property and equipment (10,366) (4,812) Capitalized software development costs (21,119) (16,175) Net cash provided by (used in) investing activities 27,032 (28,340) Cash flows from financing activities: Repurchases of common shares (158,881) — Payment for maturity of convertible notes (303,995) — Proceeds from exercise of stock options and ESPP 3,617 4,218 Net cash provided by (used in) financing activities (459,259) 4,218 Effect of exchange rate changes on cash, cash equivalents and restricted cash (674) 96 Net increase (decrease) in cash, cash equivalents and restricted cash (251,245) 113,739 Cash, cash equivalents and restricted cash, beginning of period 369,303 360,793 Cash, cash equivalents and restricted cash, end of period $ 118,058 $ 474,532
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16 Reconciliation of GAAP to Non - GAAP Measures Three Months Ended September 30, Nine Months Ended September 30, 2026 2025 2026 2025 GAAP gross profit $ 134,843 $ 108,845 $ 392,957 $ 314,399 Stock - based compensation 2,140 2,323 6,442 7,603 Amortization of acquired technology 4,347 5,503 13,043 16,512 Lease and other restructuring charges — 143 333 460 Non - GAAP gross profit $ 141,330 $ 116,814 $ 412,775 $ 338,974 Revenues $ 225,771 $ 201,704 $ 662,042 $ 586,587 GAAP gross margin 59.7 % 54.0 % 59.4 % 53.6 % Non - GAAP gross margin 62.6 % 57.9 % 62.3 % 57.8 % GAAP sales and marketing expense $ 24,536 $ 26,401 $ 76,200 $ 79,965 Stock - based compensation (1,918) (3,945) (6,741) (11,386) Non - GAAP sales and marketing expense $ 22,618 $ 22,456 $ 69,459 $ 68,579 GAAP research and development expense $ 41,356 $ 38,932 $ 124,351 $ 113,699 Stock - based compensation (3,746) (4,349) (12,044) (12,552) Non - GAAP research and development expense $ 37,610 $ 34,583 $ 112,307 $ 101,147 GAAP general and administrative expense $ 33,641 $ 31,705 $ 98,896 $ 95,061 Stock - based compensation (12,179) (12,640) (35,579) (35,226) Non - recurring legal settlements — — — (1,750) Non - GAAP general and administrative expense $ 21,462 $ 19,065 $ 63,317 $ 58,085 GAAP operating income $ 33,958 $ 11,004 $ 90,988 $ 23,033 Stock - based compensation 19,983 23,257 60,806 66,767 Transaction - related costs — — 270 — Amortization of acquired technology 4,347 5,503 13,043 16,512 Amortization of acquired intangibles — — — 93 Lease and other restructuring charges 1,352 946 2,585 3,008 Non - recurring legal settlements — — — 1,750 Non - GAAP operating income $ 59,640 $ 40,710 $ 167,692 $ 111,163 GAAP net income $ 33,220 $ 15,048 $ 89,717 $ 31,565 Stock - based compensation 19,983 23,257 60,806 66,767 Transaction - related costs — — 270 — Amortization of acquired technology 4,347 5,503 13,043 16,512 Amortization of acquired intangibles — — — 93 Lease and other restructuring charges 1,352 946 2,585 3,008 Non - recurring legal settlements — — — 1,750 Amortization of debt issuance costs 47 558 767 1,791 Tax adjustment (12,070) (11,199) (33,638) (28,060) Non - GAAP net income $ 46,879 $ 34,113 $ 133,550 $ 93,426 Weighted average common shares outstanding, diluted 63,529 69,858 65,690 65,076 GAAP net income per common share, diluted $ 0.52 $ 0.23 $ 1.38 $ 0.49 Non - GAAP net income per common share, diluted $ 0.74 $ 0.50 $ 2.05 $ 1.44 Reconciliation of GAAP net income to adjusted EBITDA: GAAP net income $ 33,220 $ 15,048 $ 89,717 $ 31,565 Stock - based compensation 19,983 23,257 60,806 66,767 Transaction - related costs — — 270 — Depreciation and amortization 12,472 13,613 36,274 40,888 Lease and other restructuring charges 1,352 946 2,585 3,008 Non - recurring legal settlements — — — 1,750 Provision for income taxes 1,111 160 6,084 2,380 Interest and other income, net (375) (4,206) (5,153) (11,032) Adjusted EBITDA $ 67,763 $ 48,818 $ 190,583 $ 135,326 Adjusted EBITDA margin 30.0 % 24.2 % 28.8 % 23.1 % Q2 Holdings, Inc. Reconciliation of GAAP to Non - GAAP Measures (in thousands) (unaudited)
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17 Reconciliation of Free Cash Flow Q2 Holdings, Inc. Reconciliation of Free Cash Flow (in thousands) (unaudited) Nine Months Ended September 30, 2026 2025 Net cash provided by operating activities $ 181,656 $ 137,765 Purchases of property and equipment (10,366) (4,812) Capitalized software development costs (21,119) (16,175) Free cash flow $ 150,171 $ 116,778
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18 Definitions Adjusted EBITDA: We define adjusted EBITDA as net income before stock - based compensation, transaction - related costs, depreciation, amortization, lease and other restructuring charges, non - recurring legal settlements not in our ordinary course of business, pro vision for income taxes and interest and other (income) expense, net. We believe that adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results for the following reasons: • adjusted EBITDA is widely used by investors and securities analysts to measure a company's operating performance with and wit hou t regard to items that can vary substantially from company to company depending upon their financing, capital structures and th e m ethod by which assets were acquired; • our management uses adjusted EBITDA in conjunction with GAAP financial measures for planning purposes, in the preparation of our annual operating budget, as a measure of our operating performance, to assess the effectiveness of our business strategies an d t o communicate with our board of directors concerning our financial performance; • adjusted EBITDA provides more consistency and comparability with our past financial performance, facilitates period - to - period comparisons of our operations and also facilitates comparisons with other companies, many of which use similar non - GAAP financia l measures to supplement their GAAP results; and • our investor and analyst presentations include adjusted EBITDA as a supplemental measure of our overall operating performance . Contracted Revenue: We refer to contracted recurring revenue as being inclusive of all revenue recognized relating to contracted minimums in addition to variable revenue in excess of contracted amounts. Contracted revenue does not include revenue from professional s erv ices or other sources of revenue that are not deemed to be recurring in nature. Customers: We define customers as individuals or entities that have purchased one or more of our products under a unique customer identification number since our inception and individuals or entities that are contracted for at least one of our products. E ach unique customer identification number constitutes a separate customer regardless of the amount purchased. Customer Tiering: For our financial institution customers, we may refer to their designated tiering, which we use to group customers based upon the total assets they report. We define “Enterprise” customers as having total assets equal to or greater than $50 billi on. We define “Tier 1” customers as having total assets equal to or greater than $5 billion but less than $50 billion. We define “Tier 2” custome rs as having total assets equal to or greater than $1 billion but less than $5 billion. We define “Tier 3” customers as having total assets less th an $1 billion. Total assets are reported by financial institutions to the FDIC or NCUA, as applicable, and are disclosed on a quarterly basis.
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19 Digital Banking Platform : Our digital banking platform allows financial institutions to offer a comprehensive and unified suite of digital banking serv ic es to their End Users. Our open platform architecture, deep integration with other systems and the multi - tenant aspects of our infrast ructure, enable us to develop digital banking solutions that allow our customers to harness the power of the information within their other systems to gain gr eater insights and to improve the overall security of their End Users and themselves. Digital Lending and Relationship Pricing Platforms: Refers to both our PrecisionLender and Symphonix platforms. Free Cash Flow : In the case of free cash flow, we adjust net cash provided by operating activities for purchases of property and equipment an d capitalized software development costs. Customer Accounts: Customer Accounts represent an organization or business entity with a contractual commitment for a specific Q2 solution, whet her or not that solution is live, as of the last day of the reporting period presented. Because many customers have contractual comm itm ents for multiple solutions, a single customer may be represented across multiple offerings; as a result, Customer Accounts by solution overlap and do not r epr esent unique customers when aggregated. PrecisionLender Platform: Our PrecisionLender platform is a cloud - based, data - driven sales enablement, pricing and portfolio management solution that allows financial institutions globally to structure and negotiate commercial lending, deposits and fee - based business transactio ns more effectively. Registered Users: We define a Registered User as an individual associated with an account holder of a customer with an active consumer digital ban king solution who has registered to use one or more of our digital banking solutions and has current access to use those solutions as of the last day of the reporting period presented. Definitions
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20 Subscription Annualized Recurring Revenue: We calculate Subscription ARR as the annualized value of all recurring subscription revenue recognized in the last month of the reporting period, with the exception of variable revenue in excess of contracted amounts for which we inste ad take the average monthly run rate of the trailing three months within that reporting period. Our Subscription ARR also includes the contracted minimum sub scr iption amounts associated with all contracts in place at the end of the quarter for which revenue recognition has not yet commenced. Subscription reven ues are defined within "Critical Accounting Policies and Significant Judgements and Estimates" in our Form 10 - K. Subscription ARR is not a forecast of future rev enue, which can be impacted by contract start and end dates and renewal rates. Subscription ARR should be viewed independently of revenue and de fer red revenue as Subscription ARR is an operating metric and are not intended to be combined with or replace these items. Our use of Subscript ion ARR has limitations as an analytical tool, and investors should not consider it in isolation. Other companies in our industry may calculate Subscriptio n A RR differently, which reduces their usefulness as comparative measures. Symphonix: This modular, end - to - end platform allows non - bank lenders to automate and digitize their lending activities, supporting cloud - ba sed loan origination, loan servicing, collections and investor management applications globally, serving a wide range of industries. Total Annualized Recurring Revenue: We calculate Total ARR as the annualized value of all recurring revenue recognized in the last month of the reporting period, with the exception of variable revenue in excess of contracted amounts for which we instead take the average monthly run rate of the trailing three months within that reporting period. Our Total ARR also includes the contracted minimums associated with all contracts in pla ce at the end of the quarter for which revenue recognition has not yet commenced, and revenue generated from Integrated Services. Integrated Services revenue is generated from select established customer relationships where we have engaged with the customer for more tailored, premium professional services r esu lting in a deeper and ongoing level of engagement with them, which we deem to be recurring in nature. Total ARR does not include revenue from profe ssi onal services or other sources of revenue that are not deemed to be recurring in nature. Total ARR is not a forecast of future revenue, which can be im pacted by contract start and end dates and renewal rates. Total ARR should be viewed independently of revenue and deferred revenue as Total ARR is an oper ati ng metric and is not intended to be combined with or replace these items. Our use of Total ARR has limitations as an analytical tool, and investor s s hould not consider it in isolation. Other companies in our industry may calculate Total ARR differently, which reduces their usefulness as comparative me asures. Definitions