Q2 (QTWO) 5 May 182018 Q1 Earnings call transcript

Company Profile

Participants

Bob Gujavarty	IR
Matthew Flake	CEO & Director
Jennifer Harris	CFO
Jackson Ader	JPMorgan
Terrell Tillman	SunTrust Robinson Humphrey
Tom Roderick	Stifel
Mayank Tandon	Needham & Company
Brian Peterson	Raymond James
Bradley Berning	Craig-Hallum
Matt Hedberg	RBC Capital Markets
Peter Heckmann	Davidson
Joseph Vafi	Loop Capital
David Hynes	Canaccord Genuity
Arvind Ramnani	KeyBanc
Larry Berlin	First Analysis

Call transcript

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Operator

Good day, my name is Jack, and I will be your conference operator today. At this time, I would like to welcome everyone to Q2 Holdings First Quarter 2018 Results Conference Call. [Operator Instructions] Bob Gujavarty, Vice President of Investor Relations.

You may begin your conference.

Bob Gujavarty

Welcome to the Q2 holdings conference call for the first quarter ended March 31, 2018. President call, Relations, CEO; are Harris, CFO. Vice today, with and Gujavarty, our the on Matt Bob of and Investor me Jennifer I'm Flake, our

via conference being As call reminder, today's broadcast a live webcast. is

In addition, will on a you website our distributed copy now, the of the By release have be yesterday that call. was available following should replay a of call received our press afternoon.

our is available on Investor website. have you of not, it If Services the section

in York several in Insight participation events Stifel me this Emerging be our Let Boston. also Sector We'll investor attending Technology quarter. highlight Cross in Conference Conference and Needham the in New the

to These caution made differ solely can to numerous statements Before must materially are you beginning, projected uncertainties, statements the information today's important and factors, discussion, results these Also, during risks the remarks we could from implied to statements session, in results subject and and by statements. these cause on statements. question-and-answer to actual forward-looking differ including statements. present forward-looking in are actual this results the which other risks uncertainties based from those or subject are cause that that forward-looking contain

the please other factors For our additional update the statements. forward-looking not to any We Securities refer and undertake and filings do contained information, Commission with disclosures. Exchange and to risk therein any duty

we be expect the measures the non-GAAP GAAP will are Relations things, our which we GAAP stock-based press provide dependent reconciled the to on we estimate cannot GAAP financial because GAAP comparable outlook outlook business, measure to Website. is future financial as among release, our on effort. both we to is we number. future to non-revenue compensation are been tables call, not which referring expense, Since reconciliation representative a state our a the unless is we forward-looking we Investor price. has they significant compensation reconciled in are measures other that reliably today this non-GAAP future the available of will internally non-GAAP expense We Any discuss and our During basis on unreasonable not attached have a believe and future The stock non-GAAP results, stock-based our on to financial impact how available GAAP measures. measure without

call Now turn let me the Matt to over Flake.

Matthew Flake

February, I XX% recently to first our performances to the the for our in million, the revenue I client pipeline my year-over-year. provide slow and Bob. quarter Today the quarter year financials the up provide highlights a at users XXXX. and In quarter too business In some the over quarter to then detailed like than mentioned first and annual XXX,XXX guidance the is seasonally our look will it best more in and like some would generated second quarter turn will of discuss we We We event. completed our call, what year-over-year, first from X% first quarter. ability first typically Thanks XXXX. million more $XX.X We registered a ending users, I approximately full conference $XX.X of up I'd CONNECT But our execution I'll quarter. than later to Jennifer, sequentially. sales with confidence for the one highlight in more XX% bookings. updates pipelines our in had convert provide and added who

bank had space QX we added and the with Tier worthy quarter the execution including I in investing in market the with pleased sales, rates, additional Tier about financial particularly I'm we year tax performance confident improving quarter. and feeling And Open. to X strong anticipated the in wins reforms, first signed tenure cross of to channel. factor our a community credit relief the the union, momentum. in all multiple pleased no quarter institutions and in particularly regulatory we factors have deals seeing the X digital from breadth in banks was Our these X contributing markets. was and improvements encouraging We be interest with last appear are Bank, conditions

of few the the system vendor could We’ve with function evaluation uncertainty their the use of as attendance the end-to-end bank's create round West what online my some we color providers online began quarter will the banking platform by remarks sold client year in In the clients providing come. One banks $X that last our of year institution the I legacy majority to a just from of prepared and from record the and successfully deploy institutions years This I to our the major of core they products. for future out for annual focus marking system, on of signed Coast. In execution located was banking their to has in about and delivery operations billion feat. culture Based want an is a space. our the CONNECT, particular a their continued sell for our on our on what the last moment this brought prospects for representing usually platform from seamlessly April. one up and bank client business and years, XXX,XXX decision. easy platform over bank. mission with this attendance. conference, retail of early believe their operations individuals, felt their no a which replacement in they customers unique XX% Because a them and systems. large with bank retail our happy bank we of platform of and is high leading quarter their take strong slow to is growth, concluded experience bookings single thank mix the a tireless believe is up The teams fundamental business case, key customers the full live network to we serve and a business also segment a our value to a single their ability was banking select sided of year, the including performance serve to our alignment go another modern built added clients. partially this for customer our ability of driver I referenceable users to a teams our work to team their

influence As clients our the sentiment have get the our conference we majority and the past, speaking CONNECT to was I've at with The overwhelming direction. of more are more play serving struck in the the was said be leading growing market in clients, channel. This with to best opportunity year, conditions their role, is which will the them. strategic our investment we to on once, digital by to And I in I optimistic, believe clients earlier, translate referred positive. we to

clients to create continue using our our financial forward-looking and helping experiences, strategic portfolio not data a charged thinking view digital we As a merely and product fold strategies. partner, expand design as their as vendor to shape strategies us technology, in open increasingly with around but

for us. hand I results. our a financial opportunity optimistic the we clients, As about call to as been Jennifer that, as I'll I on ahead believe have ever result, are the a we of With and aligned we our have over remain discussion detailed with

Jennifer Harris

second review first for XXXX. results I quarter finishing full for will year updated our Thanks briefly and before the quarter Matt. the with guidance

it able million, X% ASC which majority method. first of XX% XXXX certain apples-to-apples ASC added approximately results of XXXX of adopted modified the the comparison. are from revenue such XXXX to updated from driving amount timing and guidance Therefore, XXX, to scheduled reflect that pull quick recognition reflect adoption year. later buyout XXXX, not year-over-year, we XX% a forward the reminder, the as the we an As the quarter. for do results adoption The up XXX quarters occur sequential been previous increase. $XX.X determinations to the not the million revenue, payments. in that using the first was $X to expenses of year-over-year that and was within quarter and related of our revenue have for of Approximately, comparisons were of Total quarter adjusted increase retrospective revenue

in were previous Centrix With quarter the to being and in slightly year. forward Transaction the revenue and based up price the revenues the amount total contract represented XX% from first remaining which premise. consistent was quarter escalators our annual the prior from on of license dollars various products, revenue deployed actual related with pull and of

quarter expected XXX As payments. Gross up of margin we and a otherwise Total turn had expenses merely reflected $XXX,XXX quarter are The ago, seasonal the to unless commission marketing able to result factors the under benefited was to The are XXXX as Adjusted increase And bond sequential warrant XXX, adoption incurred of modest entered capital as upon million improvement our note our all We The leverage timing but driven the due year. resulting year $XX.X net investments XX% in due revenue end net million bond of And gross million cost; to the incremental with up as higher taxes the operations of up the $XX.X from expenditures for convertible higher raised expenses $X margin In annual year-over-year on from higher notes, offering convertible timing the the basis. bonus such from and from the period. results ASC convertible cash and and company payout. XXX, capitalize the ASC recognized first $XXX.X and over improvement approximately in operating the the of was we expense be notes. XX.X%, dilution $X.X $X.X up our quarter driven $XXX the X from partially first the it the flow million largely we Sales headcount in of we approximately as more in adoption our customer due our cash, to annual sequential warrant. last headcount million, was that margin $X.X of ASC transaction. as was majority associated higher revenue million, EBITDA previous offset the utilized up expenses, of the payroll please while bonus of of gross million, XX.X% from with of by stock equivalents proceeds potential the hedge, The currently We year non-GAAP separate Cash were revenue of at of XXX. million. year-over-year largely to in primarily was purchase benefit. from the and was which recognition. as previous February, conversion. was sale only and fees operating now was well of adoption million there proceeds to and of amortized approximate from continued references of hedge $X quarter. sales negative ASC expenses. $XX.X into period the XX.X% of by million largely reduced of by million, we the quarter. given ago operating very to received ended The stated, of the X% operating with well to $XX.X from increase revenue

expense to interest costs the cash expect million a earned to convertible discount note balance. which the basis, per related issuance including higher We income amortization a be by $X.X any go-forward of partially and offset interest quarter approximately will on on be

reflects of ASC all XXX, over the current contract backlog, contracts. which contractually reporting adoption for will revenue remaining term the begin With committed we

would ASC in the entirely XXX I March million. of decline deferred assets almost XXXX, netting sequential the and was was the adoption contract to more XX, of liabilities. As and of note $XXX the related backlog revenue than

$XX to year revenue full million the turn quarter second updated Let of XX% $XXX.X $XX year-over-year the EBITDA $XX.X million million, me and of full to We $XXX.X guidance. revenue to for $X.X forecast XX% to million range quarter year $XX.X to in We $X.X in range the second million and representing to of forecast million adjusted of XXXX. now growth. our million million

a implementation will Our capacity. Strong and the require six months incremental last investment modest over performance bookings

positive for on However, XXXX. remain full flow track to cash the generate we free year

and thank to detail. the to ASC transitioning you team moment I countless reporting have a for It thank finance spent for and a been take accounting hours standards. has and they to all to attention revenue recognition my your want I exercise Finally, the tedious time and XXX new

over for turn the call his remarks. to Now back closing Matt, let me

Matthew Flake

quarter. Thanks closing, great Jennifer. was a QX In

execution. Our days brought with user segments, wins solid growth all across sales performance was based and broad strong

aligned direction questions. strategic conference will mutual our for Between to was for it well at our addition, customers that, with call another the great products I client In all ensure great and with it QX. I believe of Thank are for our turn operator and I'll should connect want about the suite, success. their feel be enthusiasm annual market support to and to and of breadth you, their year thank our missions continued I over partnership. and them conditions the back our XXXX

Operator

line Thank you. comes from [Operator of JPMorgan. question Instructions] Sterling Auty the Your first with

open. Your line is

Jackson Ader

good morning guys. Ader is for thanks, Hey Sterling. Jackson on This

Matthew Flake

morning, Jack. Good

Jackson Ader

maybe solution business QX on with prepared in if rewind on couple before Question the Matt gone have that their you we then that do think deal, that without And remarks, -- still this years would banking side Coast this selected your corporate client think you maybe wins the the business into space, another you QX strides West of made you mentioned do corporate? your capabilities? a for retail

Matthew Flake

late were disclosure, Well, these 'XXs. in actually in back customers of mine full guys

relationship XX Now with almost years. for got I've them

guess I I movers would win the it But been we've to very they while. answer Banking functionality because are our question won slow think, we they do helped. it with be think a Corporate trying that conservative. have So for are wouldn't do I

they for time another like Banking, into down life would've there on, think gone retail Corporate business Banking product. we the where product look it they probably were were put was our Corporate in of small But slam and the a feel I I the with this time. with and energy the

on excited have So XX-year them to we hopefully. look are forward with to relationship really them and

Jackson Ader

were sense or can then banking retail, business whether in you. quarter, both? a or other us Got corporate wins give they And for the large the you

Matthew Flake

corporate little the of we call a which version union mix The Tier that The business we X opportunity of credit a lighter light, retail them towards rest and were signed corporate was leaned of Corporate a then other retail and the and product. largely mix. what Community Banking small is is main were Banks bit the

good the XXXX So and we a quarter of like case usually strong. a the really executed not probably which More balance well, mix, just between credit a and said, really nice crossed XX-XX for so first especially half solid a I happy last been banks it with, for unions. -- quarter unions, are banks hasn't that open we had really in that's really QX credit

Jackson Ader

Okay, thank you.

Matthew Flake

Jackson. Thanks,

Operator

Your with of comes from next Robinson the question Tillman Terrell SunTrust line Humphrey.

Your line is open.

Terrell Tillman

guess, has good to job Jennifer the past on momentum. QX the Matt, time first a about and Matt, question Very booking me I ask Hey, Bob. become for Open.

with of I terms to of or bank this how of is option like it that. in see could kind becoming I But than continue you feels a play just so its and have So call should non-traditional plays a hedge, of in big more kind want a kind out, hedge. this that. market

business? how curious So could where the monetizing you are terms this relationship in be big of I'm in And of this? to rest the kind of just

Matthew Flake

we we the we four money ones Yes, are the we’ve line. all signed we are disclosed. signed And those ones signed last capital, bank, still we’ve Acorns, [Indiscernible] quarters it are think those about, early. the But talk just just we about talked we’ve signed if about you

to signed The the you're than the it's there we're turn was the credit I bank on XXXX got. end. about see of Community of our continuing business So is XX XXXX. growth deals with think deposits these that things start it's because to and when going of gain to side we us. about many actually we to other could revenue high to continued But a it the business take margins XXXX, in X% It gives on partnership I the think days for when But out less in momentum. and the Banks, compete are us very union ability are to customers, help like we

there hedge So yes, we for a real resources. forward. to made hires a us. and lot it's investing not opportunity; we we're invest to We've It's continue heavily, allocating as going just are move in of

almost the moving pipeline Direct, You the whether opportunity, things as look cross-sell XX% at of platform CorePro is know the a product. the or was --when deals CardSwap of have forward, Biller I one opened that

and having to are just opportunity. excited selling and group the also into to the really us those out integrate encouraging really our we sales So is FinTech platform for then products start there about

Terrell Tillman

that point, in of -- you that terms Thanks sounds you for thank then in like $XXX data mentioned with Jennifer, of give you. there a average number. the Can year? say us contract yes really staying and And backlog prior million reflected an $XXX end had compares million or how big what's the and duration? the it that job. nice to update Is Thanks in that last year just

Jennifer Harris

Yes, Terry.

are that links I XX remind contract So would months. average you our

forward carries recognized timing be would next years. into tell you expect roughly X would over to a revenue to next months. that that I backlog that XX the the perspective, of I So X From to half

Operator

Roderick comes line from question Stifel. next of Your with the Tom

Your open. line is

Thomas Roderick

morning good question. guys, Hey thanks for the

you through guys six last is what why you when these the bookings in accelerate. Tier has continue there common mean the it it expected at have are the X recognize kind a economic and don't and it's going. underlying And now Matt, for your through of decisions now finally terms been conference in year? technological pull that particularly rare and you in of if this deals it working Maybe rest momentum So and have could be up Xs to of there Tier What a kind the getting tremendous the user of of look particularly be changes been job of done I buyers but these months, back of I are part that those conversations out hearing kind environment to kind long could interest just on momentum undoubtedly environment of threat of rising there better this know for you've buyers had there some the be from are time. to have Tier never. the view you part a starting or probably conversation. got rate why some picking to of maybe you X talk some you could certainly

Matthew Flake

we're know market are of interest the those I the of You out them more things And rates, reform, regulatory revolves think, out pointed too. around like urgency all sense contributing you conditions. change, really tax seeing

with as If that they any advertising are technology you Chase, America, are Bank – interact watch you of think all about to TV, way Wells them.

Your have that's to to that to differentiating technology experience or to there, are user plan FinTech betterment a begin financially personal use like out you have pushing capital as borrow way money.

that mounting is existing has community And the different each and then technology, look your see it the to customer and accounts, other. people brand a into business and on the application So you these institutions. they when phone financial four it trust to desktop, integrity to keep be diminishes login, commercial staff and matters. customer experiences, doesn't that pressure at look and login rely different a kid’s with doesn't talk and And could of The that your desktops. wife's you a interacts retail mobile when their the brand, tablets your logins, have your then your your for on accounts, those like accounts, somebody's how money mobile, bank that's in

technology future with the to get compete somebody walk it's driving of pretty have urgency out platform, decisions. And breath so, experience user our the really QX when administer. and that. I And tough single code when promise that's to we single to you around of with customers that functionality, you message a with to then upgrade, once get have the these onto you’re really we the product the eight efficient, product better think simple, a signed set is And and taken sense you what's platforms going where our become it. of of and operationally able consolidate our more faster with the data, has it SMART We're to off then have a XX% you for platform system one up seven,

to live are getting. these taking starting insight we people months, actionable get three are data the of two We in to out we are

happening that beyond is positive really for So I pressure things for them banks and stuff. and to from the encouraging the just the think economy that it's there do are competitors

that's hearing. we're So general thing the

Thomas Roderick

Fairly good color, thanks.

the So right a XXX gathering soon make when came it's am ASC probably we if on again, never we you, I If want you the year, sure follow-up Jennifer, question into for here the hear to I here but are. page. phrase I'm just too

guiding for So the [ph] you year. of year this said think a were X% on and I guys XXX bump had you looking beginning basis, of kind

then bit think help within a at about part So should guidance above XXX accelerating can were rest discussion and year, of of preplanned of your And to how relates conversions, context look numbers quarter just the accelerating. the second QX that. that we it's the benefiting key as numbers the just the correct? Those you conversions us from But year? last and maybe understand little we or your also

Jennifer Harris

That's expect was in still the somewhere to with that revenue year talking that It year. of Tom. forward termination. or about -- X% to pull the material the in I material the somewhere between full right, you're the to timing because full be the X% QX not more overall impact to of

contract result term of we in time over that the deconvert that new customers the So Under the now XXX, basically the they from actually negotiated re-spreading the is off remaining time it's of a buyout deconverted system. recognize to the all that the revenue the system. Under buyout modification termination XXX, payments when new including those off

I quarter. planned of fees roughly our original adjusted mentioned QX that So that in the QX QX termination really at upside different that $X of million half forward had pull was and guidance we

Thomas Roderick

very it. thank helpful, you Really much. Got

Matthew Flake

Thanks, Tom. Appreciate it.

Operator

next Your Tandon comes from line & Mayank question Company. the Needham with of

line open. Your is

Mayank Tandon

you guidance. result smaller the in impact the on and terms your or in for you Maybe Matt good favorable Jennifer, the in given of medium-sized the curious out and market have accretion expectations called banks you, business the Thank of amongst Matt? environment in just for Congratulations the morning. M&A

Matthew Flake

saw see last which you I year. M&A think going you're to activity probably somewhere, continue Yes,

of we seen anticipated. outside what haven't numbers We any

for still Our XXXX. X% less current than numbers

Mayank Tandon

in is imagine professional say then it. see. the level if terms to and maybe for with quick SIs fair that the stretching to involved, of Got Jennifer, then I've your a case a great wins that which consider you for fair is means you be you that which And deemphasizing customization large going obviously there these and professional maybe Is have forward? of follow-up services I might be of services, internal which is some partnering actually that then would team. margins would maybe could positive

Jennifer Harris

think, that's flow in the I upside to my the mentioned prepared revenue the didn’t EBITDA why I remarks, that through on and adjusted full you would see guide guid.

will more And and bit not -- the X continued just Tier the that doing you when don't to the see and is, Waterhouse given on the of do high the to management bank Especially, project But SIs somebody It's do the side think customizations you X. investment I they it's play. the in capacity have back Xs, a end piece use the see we that really in you the set integrations that's very some system Whether, to in Tier for or have. can end not to the and industry. might we amplifications the lower momentum. get common Tier Price systematic integrators, our them. larger skill

future. changing the to I see So in near going you're don't that think

Matthew Flake

on the there quarters, in the allow a in than own we've signed I function banks batch Mayank, at also have signed is to we've their a banking configurable we breadth Xs that APIs less of X STKs add want look stuff the the Yes, I customization they and the the previous that or parity and of which roll years. on in the Tier out last if products, corporate create the also done side highly last three more that that remember to. And is do that would to the we stuff work then

really feel work So nine as are more Tier of for we good than feel last had where the far the given earlier the signed. some to of shelves often to that about do Xs good I today Also some about sign. the as to products we

Mayank Tandon

you. Thank helpful. That's

Matthew Flake

you. Thank

Operator

line next Your with question of the from Peterson James. comes Raymond Brian

Your open. line is

Brian Peterson

congratulations referenced your seems given morning. favorable. obviously, strong the about think Matt, X I'm last the potentially over curious, on you plans go-to-market the accelerating some And on more echo results. Good Hi. and few or that Tier the just the I'll sales commentary of my backdrop backdrop? strength, just do quarters, hiring you such

Matthew Flake

past what we think, is our is for going Arthur driving I've we of Travis thing more on need the to happy what where continue been hire runs we've people done who has more about But on talked I and and just we're a with he the job demand them. really the great that brought department focus really get. that us, opportunities to marketing trying of targets we're --

and a of were happy But the with a really amount I'm So, lot customers. been for connect we also prospects that team had We marketing what has tremendous there. able to do. had an excellent

where ratios, he's really coverage and has are look our XX about marketing we of good or his he's to in to feel make to do do seven and can we only what and now, necessarily ratios But feel to need months. So there XX -- urgency continues can think coverage we're things. I perspective. I from good are, now, we'll to continue forward about the them I right pick faster some add I good our the right going you sales And but may to here some feel we months, I and but up, next happen where been six now wind about some really since monitor there

Brian Peterson

hearing. Good Jennifer, you. for one maybe And

related make just we're I think the number, the just What backlog is want clear investors, metrics be wouldn't that to wanted probably going of percentage from that component sure to be clear more services, garner revenue included I on that in correct? a transactional attention so lot to is this. to

Jennifer Harris

to not will in included a that not be still submitted revenue happens contract and of recognized minimum minimum be number revenue transactional that. that fees in there transactional would The number. reported That's customer, is of that included the in then are there. You But considered the committed correct. is that's incurred. some has the it's majority Unless that transactions be as transactional by

Brian Peterson

services subscription it? about the of What next the rest for

Jennifer Harris

backlog probably Yes. that subscription is Of The the that range. in roughly than million $XXX services backlog. $XXX XX% the is somewhere less million I of mentioned

Brian Peterson

Congrats. Great. Thanks guys.

Matthew Flake

Thanks. Appreciate it.

Operator

line comes question Bradley Berning of the next Craig-Hallum. with Your from

open. is line Your

Bradley Berning

on sales Good good morning. job the effort. Again,

for number about your you a into. job your great If the a about strategic talk year other and been a customers. over wallets, little role on Can give your PayPal, you by partnerships done of you whether map solutions what talked to of strategic et in payment partnership you're cetera. role years Zelle of obviously it bit where fit innovation have us be are PXP, that in growth guys your Lexus, you number obviously that kind moving payments? initiatives about There's Can thoughts thoughts of you've with been last your some of competitors,

Matthew Flake

Yes.

lot So say payments. not we're but of payments as a do we a we initiate company

So directing for those the those us. their lease them whether opportunities own, its cost and routing, on or payments sell bank are to

of flexibility a way. in that So have we lot

we'll day pay whether continue but payments. on with ACH stuff as Though with Zelle we instance, we also find lot those talking we're with same handle it's bill doing to of data a or PXP, PXP, partnered payments, For an first opportunity. people about

which card to the so we that go quickly of ties not Dealings your technology to up the get don't the we Biller tell make people that up, of to whenever I kind it's to best way end-users and to seeing allowing providers the believe our us we whether some will Netflix, the to CardSwap momentum seeing is reset single card directly lot go or out is our slowdowns But necessarily tools a to a so picking somewhat off-set And that from to to it's we're it there. for away product, stolen make you replace system by augment a that in have -- Direct to go you ground of we That's Uber, pay bill built those allows some is we're you their every also, payments, Amazon, payments. helps neutrality something there. of payments card. it back that but

payment, to So not card. tied that's a it's the

on lot So we're of payments. a payments, in involved we're neutral but

$XXX talked system. about, more I think rent payments billion year we the through did in we last than

paved, cost feels or ways So of becoming put payments looking figuring drive payments kind more we're efficient and customers, the for is been but roads road like our make a to that has do. out payments faster which down to to on, that, what processor

Bradley Berning

or announced, $XXX Yes, trends? there the just of backlog, in assumptions number? the $XXX where Are understood. subscription new that there that sales that growth but trends that. does And then on any yet, one questions not million assumptions that behind fit of And in revenues historical couple include question some cross-sell million these on are follow-up into organic a implemented

Jennifer Harris

amounts It's organic contract. about So no committed assumptions there the strictly growth. are in the

in included It's So deployed yet any signed, fees, not that there's signed the as there's are minimum are that variable in new user not the And cost. minimum the as far but of number. any excess not committed those committed contracts. that existing are contracts the contracts

Bradley Berning

That's very you. helpful. Thank

Matthew Flake

it. Appreciate Brad. Thanks

Operator

Matt question with next line RBC Markets. of from Capital Your comes the Hedberg

line is open. Your

Matthew Hedberg

Hey, guys. curious, can Matt, do circle XX% on far. signed a sort QX Good I think I want pricing comment you back, thus for was SMART give ACVO strong think, Congrats sense the that interesting uplift up was of to earlier I'm SMART that the or made benefiting customers results. thought is may I us morning. it when a what you customer added? [ph] of you be how for about it

Matthew Flake

to asset it's because hard a financial -- based call the -- It's would a size of its I it up-sell the from institution. say reasonable through

using a size had trees look into. customers mean, from up-sell, tree of Centrix think that then they customer don't corporate Christmas helped South cross-sell average, Christmas ours I their sells, saw use but it products their we farm. that the and the at more couple then a of SMART were general good and to used hard and in began falls it tool have And quarter our to of cross-selling moved the so starting had number or feedback. category driving quarter if to parts that revenue. What's products go usage adoption I it coming a get of Christmas of I that's with the good the They you their But to of some drive it farm to So through actually give to really cross-sell you of We customers cross-sells a were more you seeing cross banked. top to the customers they of really to with had initially customer a help three a it's tree and we're customers corporate products. started it, their to in in other number. that online customers it's kind first last product. the drive give it communication that banking a We customers' it.

unique contracts, we coming for drive really relationships linked will things and would are be of our which our for help some extend out will are us. So that and good revenue this, think customers, in interesting our

Matthew Hedberg

maybe for one Thanks. great. That's then Jennifer. And

still Tier QX, of last QX QX On big of eluded the live in determine are those planning some more to early you fact sort if think, trying the banks bank in call, may the you X phases year that signed or I of seven and phase, deployments. in kind some with go more you

another two of QX, Tier last rollout got of Now obviously updated some you little additional more and any deals in you've this thoughts potential more a quarter, bit plans on or time the Xs year? that for thoughts QX signed those

Jennifer Harris

move were full phase. with go the signed the a year identified to towards the and corporate they the where second that piece they've first bought ones the in other and last have then the the live of platform or elected we think, of couple end either retail I

that they X or full XXXX. that much role from in into some are they the starts X others think either are to there think the couple reason have with phase obviously. do I revenues phase revenue see whatever a won't But revenue phases elected may go you that for some be So from impact half an The majority of of back the not so XXXX still I are the hit to that late XXXX. of

Matthew Hedberg

a Great. Very lot. Thanks helpful.

Matthew Flake

Thanks, Appreciate Matt. it.

Operator

next from with Peter Heckmann comes Davidson. the Your of question line

line is Your open.

Peter Heckmann

increases [Indiscernible] could industry all give vendors? to banking to or I has insight Tier if win your Is wanted spending showing been than the benefiting bookings. the digital current of win Do market? see in some greater about the factors be continue X Even comment in feel share to that the lion a interesting you opportunities rate? share pretty really on talking you're you of seem like that some to you come

Matthew Flake

Pete. Yes,

than in the of we the X space X win Tier XX% more time. and still the Tier So

a really are how deals. it's last like get We I would don't number by -- X, we winning in quarters. trickier of of share, good to for I yes don't year, XXX that space we more I Tier like classify sometimes because we Tier deals the last the X side, On a X represented but Last that. winning little I wins. XX% qualify In out. thre seven early their say have it don't won in nine of we Tier days the year them. than the And

really feel we good So in deals. those

Peter Heckmann

the XXX, account in than question, expenses for for follow-up XXX% majority a based year? capitalizing just previous so of more guidance. of But of guidance for like revenue the Jennifer Okay, accounted EBITDA the couple then, increase increase it's that's questions it in upon did the on adoption of some for actually great. ASC And the it look the

Jennifer Harris

for a just of like over of other the revenue was the account QX quarters. chunk XXX% more of didn't EBITDA a guidance. it than big No, that pull from Because forward remember achievement

the adjusted the in million related but approximately timing EBITDA, half of incremental revenue the within. was So that of to biggest some is over the achievement $X of first piece

is I So timing XX% within. that think of

of the to of operating million leverage of XXX, we the that seeing. being XX% increase the related other probably but where it So rest the $X ASC million $X was are part ASC XXX,

Peter Heckmann

then you And into last quarter on you give year can backlog great. quarter a comparison year. just that fourth of us can first or last the number -- Okay, the

So you tracking can how we that? start can give us an idea of

Jennifer Harris

this We as adopted so not method, have actually do using the of retrospective we backlog modified period.

Peter Heckmann

Got it.

Okay. Thank you.

Matthew Flake

it. Appreciate Pete. Thanks,

Operator

comes Your Vafi from of question Loop the next with Capital. Joseph line

Your line open. is

Joseph Vafi

part a Good perspective lot through give then stays and and a won still wondering And -- some the are because of Hey, of I of in depleted. angles that's results. pipeline a competitive was at point. of with consistent emerging Tier is landscape know technology. secondly Open on a of players that was I coming involved the I different this on you they from wondering, can type deals, or gone was us of yet. little market FinTech QX a Good know robust you've know areas. bit I there little if but slightly different and guys. morning. are it's wondering Matt, early it's kind I pipeline start And lot for if and that I this journey if at X

Matthew Flake

come probably expectations would more in the Tier later some see probably felt. X them. set engaged will Xs that quite in. and pipe, clearly at some where desk a we've pipe the you Xs we're conference On you I good say are year we of to cleared Joseph. in we I know Thanks, feel Tier a with But good about had the somewhat. I really Tier yes, I our But those. client few feel

I you it the landscape all Open I -- that QX On have getting think, got space. see players to are over start side, there, the the around has is into that they're mean but something FIS competitive are you place. all

we of Money the processing really thing which deposit -- understand deposits they they ground people. able to -- December We release stone basically relationship distribute Social have press that stock travel the a and the have us FinTechs talked is tool. FinTechs with have to core the didn't And help up over castle, things and XXXX network they some build -- around for knowledge much these they take. One these about start those at in from start and based that were this bought of deposit I that

I can investing is many We've is I'm a that no to to investors engaged is I deals. But the sales the the then with in still I'm one opportunity really with the compete these win Open I'm in is tell and ways enhance a these. where got on there continue in happy we these but time. about pipeline have and thing side happy we so QX deals we has go of with new person bring happy you the think innings really are that So so to execution product the we and is been Open early great QX and -- team really and in and FinTechs talking all that the long with are and

Joseph Vafi

very Thanks Great. much.

Operator

David with Canaccord Your next Hynes the comes of question Genuity. line from

Your line is open.

David Hynes

customers I to what you like implement. recent or is as you you guys. Thanks really talked about about can and that the he Is at hurdle time to that X manage or the demand puts Nice point easier prospects? becoming products There Hey. that success become up prospects. selling so a just all at banks. I the had expectations. How talk some to new curious think feel don't want are keep with need Tier takes you is a the ask you with do talk to you, I'm worry results. Matt, to the

Matthew Flake

Is over John Breeden of the Chris really you are the delivery sign capacity sales number sure up start sits that Jennifer think, project and side the up, and seat on get prospects make sign very side with you the correct. to that to on the we accordingly. our of top guys there I we'll transparent Yes, we -- is limited have and seats about planning when

give back the pipeline to are will absorb that. report, them the people this or percentage will say come So what on close and a it need was going be to she rates and -- I John many at look then implementations

not early having through go that ever And So we process. to of went don't days through of I indigestion again. want the that

now feel runs I and we together Jennifer the out But and Chris way we brought that process, work good on way appropriately. the problems. like it So John feel it, about those with

on of did in is We pressure is coming. the what and with have forward. implementations third quarter and enough deliver there we slots a more to the moving then team them Obviously, running lot fourth

So I together works our in for it. that way we move feel plan capacity the team good as forward to the about

David Hynes

revenue with half or second just of to the this about we it spending incremental Okay. us or guide, this the kind And cost there that, is we've the EBITDA. in I forward live seasonality the mean Tier different year support first a of from may is just I or year, in seen generally pull because pattern be ramp past your EBITDA profitability year some the linear of had then of of back X suggests stronger think really before half more that the help Jennifer, year. mean is high-margin Guidance a the in in EBITDA these half anything go in this year.

Jennifer Harris

this be QX. QX QX. going of the think, I achievement to is in of year said out of I simply that forward it that million -- $X and more ASC million over because linear Yes, of XXX, with was a so $X half just pull

the the we the when decreasing be in the ramp provided more in offset margins had of agreements more because impact investment sought so it's we the that, part you year. timing year. first bit XXX a implementations of expected But that really so of for timed linear quarters, a set the to this the in with I half of capacity guidance And which those those year, back termination initial

David Hynes

sense. Make

Okay. guys. Thanks

Matthew Flake

Thanks, Appreciate David. it.

Operator

of comes with line the Wells Tim Your question next from Willi Fargo.

Your line is open.

Unidentified Analyst

terms one, point The in I And other a XX had guidance touch us again. last This any Good But Chuck you should from margin forward in that above think, Hi. increase you sense of The revenues. XXXX? at this all? want Willi. above -- think go-lives might And that in in the is if number touched for relative this on basis I to get to. you last you we your wanted to was Tim margin of pace on guided impacted have still timing that increase morning. the [ph] -- to to I the the well pull quarter the be if was range in quarter to quarter. response question this XXX increase

Jennifer Harris

benefit timing doesn't drop revenue from did impact the margin. margin go-lives through the that At XXX. as not much of of was planned, the the the was go go-lives the pretty timing of the The improvement literally ASC

I expected call when probably was I basis think than the kind XXX. but guidance for timing. mentioned that better year, pre-XXX, all our on And provided year last So it XX this than I of not I year-end better of I expected

now the XXX probably With this it between somewhere to of points improvement be basis year, be XXX I impact would year-over-year. XXX expect to

Unidentified Analyst

Thank Tier Great. a X touch as your on And X want and you. I to Tier clients. follow-up,

wanted an as those as banks in-house to looks increased anything hearing if solutions. and alluded to a Tier from pipeline to to had what of consistently X And well the small technologies peers your you're as adopt get willingness outsource of newer well? shift I X sense Some clients like Tier and a community for

Matthew Flake

technology in hearing mean I beginning these And -- been are -- have the competitors the are story think here Yes, they are are to about about cloud. all probably is I why the cloud, what in you gone those has you new that finally, adopt aren't why cloud. guys other push regulators from talking

as that's -- And do keep the that we But of we last to so more quarters. all momentum that. up two we them to have see in seen freeing continue

billion X. a X, $X Tier unions this been and But the great $XX X We like at all butter it Tier to it Tiers least Tier yes, built Tier really talked in bank. our quarter. Tier credit X to So we about Tier X, was and with billion or so bread organization. X is In

be Now many grown up of billion those $XX financial have to institutions.

last said are we than through I now Many assets. $XX on of XX those in call, banks the billion acquisition. I I that think greater grown than more earnings have think have

banks acquire tried ones a not loose. for to get our more mode customers way our see technology the that's looking do a X right looking be for you out acquisitions long acquire target we use a to going -- usually may is of is acquisitions. grow, and what more than what why to in And means term are game that they're the in in as so compete low-cost on make to differentiate. think they out we happens customers are just that somebody they side solution, us Tier so I acquired. So growth We space when is to If coming

opportunity So to invest all right we But long where to those for We're them. inherent us. for the great X space And majority and a going run things we've of continue our business are the Tier kind is. ones organization a of time. how That's X, target Tier in continue in the win it. the is sales

Unidentified Analyst

Great. Appreciate the Thank color. you.

Matthew Flake

Thanks Tim.

Operator

of question from line KeyBanc. the next with comes Arvind Ramnani Your

Your line is open.

Arvind Ramnani

Hi. Congrats on continued Tier another good quarter and X wins.

how deliver wins, larger these customization it now. two encouraging Are is was it on products back able overall With than your or it see built to dependency you that years is and your help services you lower margins? be getting minimal your to it finding them does given that are with what are to three

Matthew Flake

we to think obviously to work less there helps but the have of these lifting implemented. think systems heavy lot on ultimately, I goes that still margins Well, do I our is a get

networks. CONNECT to go have You

want. way system the the configure they that to You've got

You've banking the rollout, larger have you build some corporate got the you're months data the six data institutions cases. rollouts, migration in to do and then customers And institutions financial phase, for on more when side. migrate especially, large the more

perspective, scale product an it's more So that. get continue the it, you I can Jennifer, more through to and whether users begin on and more matures implementations improving? think, comment margins you will on as more or improve the from and same But -- you will and

Jennifer Harris

the The XXX, ASC is XX get. of that scheme implementations we about efficiencies improvement of from XXX, talking I think seeing scale the to they Yes, and pre beginning points to improvements slight coming primarily impact XX are we basis the majority are improvement. the in to are that XXX the

Arvind Ramnani

Good.

pipeline we Just [ph]. we're I you good follow-up. pipeline your most you done look you're where Tier about? that of indicated a at are look of what most in number you so a of the and your that converting next you you and And year when about over really when when Xs really -- pipeline kind excited from? plans pipeline you upside the mean, when expect components year pipeline when to certainly or excited quick your you talked at should at look Last out job look the now

Matthew Flake

do the And the of up for be just I more am X. mean, of was don't cross-sell beginning about said year or though solid open, the we in credit at in Well, for Tier in had to ever now. have went myself X Tier said X Tier of products I unions the excited a than last shelves to us. the flying one -- what bank, kind pipeline taken think don't quarter banks the union I digital were other. I great The for call, the me. doing The off clear, I or right like performance the after third I credit great XXXX into Cintrex us. are we we are want exciting doing

are. the customer's excited about products had, with about just I really excited I'm the has our of excited talked up are pipe matching platform the conference. talked Open than cross-selling XX I'm products client we QX Our SMART. about up QX so about that where for them things, our side Open conditions. the more QX about I ago days well. I'm engagement XX% market for it

about where of and So I'm what done. and are the the proud we excited company industry we've I'm really

good conditions got I think as all same. of things us as these stay the we've ahead long

Arvind Ramnani

rest and for Congrats of luck good the Good. year.

Matthew Flake

Arvind. it. Thanks Appreciate

Jennifer Harris

Thanks.

Operator

Analysis. with Larry First question of comes Berlin next from Your the line

Your open. line is

Larry Berlin

guys. morning Good

quick a for Just one you.

pipeline what a at R&D this point? curious is the for Just and new is like for focus what and looks products

Matthew Flake

product Yes, the move as so think about when we we forward.

customers What they do, based like We opportunity says corporate customers gather corporate allows to more to a to might commercial going our we home their things system. depths cross-sell so products. are a functionality I'm more whether data be holders banking are are they From or allows are gold customers continue for banks college. around. our saving improvement wanting who somebody around or account money or technology customers get on or their go perspective that larger to to from and home Those driving that to savings, retail

customers more their drive third-party example, software firms in the quite banks. management third-party to we've -- management use. at for be would going with are property got firms We There's that are that integrations systems property few a so,

experience. into application. QX that We Open data those they are single-user our use our with Direct, about Biller excited so APIs, CardSwap and integrating a can we're in that CorePro

So in that products other to started And offerings. that product. [Indiscernible] enhanced QX now the corporate compliance continue in functionality, the then SMART, XXXX user we rollout mobile, fraud around around team data to center experience, us And invest data that. security and are analytics for storage

So XX% still to there's go digitize banking a we're of the our way to revenue a lot opportunity experience. us for long There's of into putting R&D.

to it. And the XX based if that's ground than in years so look up I'm the And deliver know at in we're production. more our really innovation who's optimistic confident I team's put about us, last and really don't ability on running you in

excited the opportunities really move about as we I'm forward. So

Larry Berlin

you Thank much. very

Matthew Flake

Thanks for Larry. XXth Thanks the for hanging in there question.

Larry Berlin

No problem.

Matthew Flake

you Lucky XX. There go.

Operator

in QX call. further XXXX today's There This holdings' the participation results questions. are quarter concludes call. you conference no We'd like your first to thank for

disconnect. now may You

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