QTWO - Earnings call transcript Q3 2018

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, my name is Emily, and I will be your conference operator today. At this time, I would like to welcome everyone to the Q2 Holdings Q3 2018 Conference Call. [Operator Instructions]. Bob Gujavarty, Vice President Investor Relations, you may begin your conference.

Bobby Gujavarty

Welcome to the Q2 Holdings Conference Call for the Third Quarter ended September 30, 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 rebroadcast 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 relations the section

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

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

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

turn call Let over to the me now Matt.

Matthew Flake

start quarter well, from year-over-year I'll Jennifer some at I'll the handing the to XXXX. call more successes our quarter particularly and X% our look then a had start user third We and than business I'll as the perspective. operations sales we quarter revenue of the generated both $XX.X Bob. up remarks today's the of revenue XX% by by call users the growth In of quarter. platform XX% our highlighting growth on the up highlights sequentially. and XX.X with previous detailed from a the million, discuss team, million performance and for user ending Thanks, prepared platform, from sharing up financials. X% from third quarter, before of registered a year-over-year strong over my quarter QX

the sales teams quarters. net cross-sales each solid front, new had On and our

QX we to well credit credit managed for as the our OnPoint, a as On rolled credit out OnPoint including by union providers several evaluation, addition of their signed well. to highly top-XX a retail we competitive in more one our performance I XXX,XXX we this in assets. core in XX we to Northwest a union, retail successful of making what every credit area, new than day, both improve. delivery this this originally billion to XXX,XXX made on into the the with a the only track to the which platform than to processing systems also users years a and is point more out suite is space. corporate areas. thank of In and solution than one account with union the union our OnPoint where we X execution, for like our adding incumbent several substantial of their beat a in highlight providers platform Pacific holders past, of regularly we the XXXX, provided encounter with continue and growth launches the QX, in a banking products felt net today. and we like X progress $X partnership markets, differentiator holders mentioned Northeast. traction, our implementation decision union Even product side, for the quarter such was believe QX successful suggest, OnPoint a Transitioning successful our in as of quality XX implementation of organic continued most move go-lives. of business, saw a Tier with in continue through team's new to the use particularly I'd gaining learn was I meaningful the team X and project, This credit continued retail In from a balanced we our across partnership. for user more our suite end that record later account processes the record had to fantastic project of major Open I've strong Tier as saw in in growth

quarter will its payments among we their functionality product for reached existing who agreement portfolio. was date, Biller On API use largest space several a the to in had them consume clients the provider Chief to reseller enhance the signing a of sales Direct the Open of set. front, with the Open new bookings large

discuss expect her prepared about the development ramp QX adoption, Open impacts quarter. While this the products we and terms and third excited Jennifer several that in to roll of who there further I the exciting in QX I'm remarks. clients is win of validates will financial an a also time in out Open-powered progress began further feel substantial our portfolio,

launch business. reminder, a different Open of to model and is As substantially QX the our path that from platform revenue

lower with the their by and quarter, their the financial see with share cards, accounts. much and we our to of will cards began I'm said, generated users, these cards. interchange some potential that share high of Open that these which will related technology debit this and QX a bank minimums and in supported Fintech held by typically Open on by Interchange issued start transactions the float few partners. our moderate and QX, contract minimums float growth are begin be debit Fintech but balances debit revenue QX whose for growth. by be time, rollout In driven clients platform, With institution to generated through more the in large phased to third of opposed to arrangement, the will the enter over As with a pleased rapid deals in

will considerable continue provide So revenue of of we in updates and going agreements, anticipate ramp business debit-focused this forward. these line of to terms impact on we

As helping I QX in said we mutual these in for last institutions is by growing this evidenced on momentum. teams Open gap, believe role opportunity partner we continued the as with bridging quarter's benefit, critical playing financial call, that there's Fintechs feel a and a

XX. officially like I'd Cloud mentioning as up Solutions, by Finally, the on has wrap announced to we Lending my closed October remarks that of acquisition prepared QX

our both we market from Cloud and the origination all we a agreement Their services had products, range unanimous a our existing abroad. anticipate digital business they between platform. As XX sides lead to in solutions a the their as faster a Solutions commercial end-to-end that By many transformation the adding in offers Cloud product better the platform. prospects U.S. can in QX's thanks is Lending to their they reminder, leasing about announcement and which of and synergies and of them and scale SaaS throughout from There powerful close providers a more portfolio lending benefits more deposit enter days to the the of is broad provide the partners, of existing from partners experience lending. retail end-to-end We're and of expressed part unique Lending to QX. financial with Lending help investment initial that platform Lending realizing on to and definitive borrowers the market, are Cloud have loans, Cloud confident lenders meet the close and suite for to Many customers, Lending excitement process. Cloud position customers both I've and about lending opportunity

Additionally, from with that, order the to has institutions been and workshop pent-up to with are integrating our on among platform demand turn their their digitize increase interest sit stronger Jennifer. staff call deliberately Several can tremendous in, come these the loan customers on is QX asked There received to customers us automate we've Solution have financial but volumes, Lending on to anticipated. inbound use quickly with Cloud the in how And and technologies borrowers. down even of we and Thanks. they capitalize both than platform opportunities. to for I our and Lending's their process, focused over Cloud I'll them lending

Jennifer Harris

I results the Matt. review finishing will guidance third quarter. Thanks, quarter briefly for before fourth the updated for with our

largely As for up was adjusted Therefore, uptick a user from transaction-based comparisons which resell the quarter, comparison. a increase in Direct quarter, results and Transaction-based in quarter XXX, certain Total higher up previous up was we represented retrospective adopted reflect adoption in from modified the in XX% XX% increase an of ASC period. previous quarter an reminder, do a results quarter true driven was the not that for X% dollars apples-to-apples XXXX Matt quarter the using year-ago the and result our year-over-year been up XX% updated the in primarily of total referenced by third XXXX of not guidance the and method. XX% earlier. The the such revenue. Biller have growth as the reflect of expenses and from actual million, from agreement revenue $XX.X the and third revenue and second in year-over-year third the revenue revenue

revenue we the transaction interchange be agreement, adoption because increase from to impact the account the holders. This as debit fees, Open from which customer's Biller Direct be XXXX, more QX revenue begin forecast is customers slightly generate to by float and and driven Beyond will mix card in the will pace of to transaction the our as difficult revenue. reported revenue production expect

pay debit gross unlike revenue be to margins. I transactions, of bill However, expect accretive card to growth transaction

note signed We the approximately number. would million Turning partially only ending of backlog. quarter that is increase sequential reflected I committed experienced quarter a resell million, with in under just during QX to $XXX agreement the the Open in $XX backlog backlog.

term, and reflected has in as September years, While X-year of the a years X be XX. contract after renegotiated can only commitment the terms therefore, minimum backlog have first we X agreement the

XXXX driven gross the but X and Open increase only the results administrative and the non-GAAP year-over-year previous a on of Total of $XX.X were XX.X% stated, up basis. note to was year Gross and expenses our sequential we by are operating million XX% $XXX We flow and previous million, As was largely expenses, sales from marketing please up operating decline was from largely in cash, a and XX.X% $XX.X slightly improvement of operating that million, references was the the from operations up $X.X margin. ago, margin expense the quarter impact turn the the was expenses margin marketing all by unless ended with of second April. year-ago XX.X%, the QX otherwise from to free in Adjusted The driven was the quarter in in was resell in third higher and held which Research our $XX.X in the general quarter. quarter. by and The quarter. of $XXX.X was period. sequentially, and development Cash offset spending up agreement. and related The expense. client for $X.X was from investments cash timing third positive flow gross up resulting million. sales equivalents million, EBITDA and million, cash up conference, from to which annual million revenue decline quarter in in and

$XX.X now the million me turn We for guidance to excluding to $XX.X $XX.X Cloud Lending inclusive forecast million, outline in range to million the Let and of business Lending. and $XX.X impact fourth Lending. of our the million updated of revenue core Cloud Cloud quarter

quarter with and Given business EBITDA in Cloud recognition We becoming deferred structure the half the revenue, purchase the XXXX. fourth impact the of over Lending in will the X contracts impact second forecast close, core decline the to including significant the first and in $X.X treatment million million, place significantly post for the less investments X of adjusted personnel Cloud revenue adjusted accounting I and the of $X.X driving The impact earlier accounting to from we excluding in Cloud integrate Lending Lending revenue are are technology $X.X million mentioned million, $X.X to well range purchase to EBITDA. Cloud as as select putting Lending. months

adjusted expect in into another to purchase conclusion, the the significant. those well, less half impact adjustments While XXXX of we accounting moderate improvement margins I the I in saw and feel In and Despite positioned cash back flow, I in growth sequential quarter. lower XXXX impact the positive as another the will confident the to trends operating positive become We EBITDA generated of company well revenue I gross as we a optimistic expect of in posted XXXX. strong are extend third in quarter. fourth flow quarter, am cash for post accelerated the quarter

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

Matthew Flake

Thanks, Jennifer.

is you business rapidly. As can tell, evolving our

business digital With taking that as this with And we has when across as has our and I'm the here, I'm that place it to to what fourth this our questions. become all new units industry. ahead of excited to capabilities in look new as I'll closing to to a call. on and our encouraged enhance markets, the entering to officially that, installing it's continuing over and us quarter, with are expanding on portfolio. acquisition, customers call, opportunity growth, transformation We pipeline company. product we for gotten turn Lending focus the I paramount I our joining want that about continue and for QX reiterate about have the ever global customers maintain experience Cloud picking strong. schedule again, Thanks, leading in our expand phone up or forward customers the operator we the the the year said,

Operator

Instructions]. [Operator

first comes Tom from from Your question Roderick Stifel.

Thomas Roderick

if of into headwind it's but of been macro few Tier amongst and could swirling years, Brexit, great are Tier put in face it, more either rates fourth there back that and you're little I year. lot question All start of X, into little the a that, on then going I I conversion the a a There's and on after speaking, thinking sort one importantly, bit the if guess go right, all out just Tier X. you your with a tailwind mean the about election, of quarter next how back about generally crosscurrents or sort the in great, pipeline X, but commentary pipeline

a to that, a pipeline, Just it about going to it some that. more just, timeliness into thoughts thinking does for last you're next this Matt, thinking look like broader the also you've it'll the on fourth start curious in where as year, like So sort paced year feel was would about Does love more? bit out of there if quarter sitting gangbuster but got about fourth thoughts of be little what's your quarter? hear qualitative

Matthew Flake

Tom. Yes,

off coming QX. quarter a So of navigate tough to

a performance, hit looks QX it's we We Just up we solid expectations. where just not great It had to really exceed talked could like or before, - is be solid buying a a it it's our numbers. shaping our about quarter quarter. hit

different what and that Your on. night are them all of We've things closely as these I last got the morning this guess. is we're behind of crosscurrents watching us one or going commentary

at impressed very mentioned also the the customers with to very that, will more that, positive so on as customers pipes prospects, that and for pipe have color, also a are call, us. financial any good, QX the seems we not inbound looks do We're activity received closely with 'XX of but the in The which from and 'XX. I the I've positive. Lending believe very to scientist I but a us and closely Fintech Cloud around I'm that that, the that activity world win got been been watching in believe, pipeline, looks I the some those for mean, and but a well we've And our impact looking then as or political beyond the be in there. good well pipeline I as the from meeting are will activity up institutions, I seeing I'm the companies We're QX, us. of positive have be

give QX. in mentioned, and be we're things but about up a going but year, better now, feel a you our as QX right especially So off execute, of you And then 'XX all we always, good ability update our the shaping to is I to to will, coming to continue good the February monitor.

Thomas Roderick

Great.

Okay, good. next my QX I Open. wanted turn here to question to

felt You've like had building some sort past nice of those the announcements few quarters and blocks. in

and signed deals, X with we're now, with payments chess sort in for on of you the the and You pieces And here volumes. game provider. agreement wait the a the another board sitting to of to a come form put reseller you

our even up. to and So lines, on looking of pieces with hear and chance we that requests link what sort something of are signing signed sort inbound some of are like and those lot on of base, that debit card pre-existing tech love how to do of from that sort partners that? more of those volumes tech you that I'd NexGen install the these a in the you're then at maybe solutions customers happening And there's a to perspective with some getting looks partake saying, to Open board, NexGen or the QX link along are partners your up of banks over you

Matthew Flake

Tom. Yes,

continues I million So with lot and that want say to on had quarter shared I is a prepared that make last and commentary them. these I information to that going mean, lot million. that, that, of trend we released of with Fintechs volume are sure $X.X but guarded very the I Acorns one protect would that information, Fintech around quarter $X I A publicly. the the growth, last They have only I from

the it customers mean,, speaking bank existing have you our participate in get them Fintechs. on as those, the customers, in program, or is as the but will the go will ability many about which adoption whether and looking for how then far even also products, can I begin pipeline participate then said Open our Fintechs deposits the a a help to So we're as and warehouse don't can union us union with the the are it's interchange that call, to to and are from this differentiate. And to I continuing at and credit bank, And see right growing as of now yes, credit the in us that float and compete compelling. they very revenue customers well, drive to opportunity

targeted want these direct focused well to up out products or banks and So one into they incorporating as move stuff able to of a or that of are loan to of obviously, sports beginning existing Lending. when talking them is of growth it's into services that is is - these they're veterans, customers throw our innovate affiliation millennial so be looking things get digital the are for out our to out the some to Biller platform sales to maybe begin we're reps to that now and to banking, to potential with spaces Direct so banks to faster or about them platform with the or Cloud whether that generate begin talking conversation help on collect be rapidly, deposits a CorePro able then many it like the them a part

Operator

Your Sterling Auty next JP Morgan. question from comes from

Sterling Auty

right. All

related start gas looking other for forward? how but that other think on we I want quarter. for conceptually, much with at the going any directly guiding how the stepping investments in Lending out changes about XXXX, expense margin do the acquisition and estimates, QX I of were be items? terms The question, just was just any you're the And to Cloud terms capitalizing not to my Open our that for So know in fourth versus may that of your of made flat on or structure

Jennifer Harris

Sterling. Yes,

to acquisition. think CLS So it's all related the XXX% I

guide that exactly business, first mention fact it that's quarter year. QX that. could look, is is where is out to from X I of by our core that exacerbated that you the would believe, we to between core here the post we of If said deferred CLS for it's so reasons always still and we heavier also to The the that one was see split business And had first to tracking that CLS in the X - revenue the close, going accounting comes from any impact months and year. the purchase adjusted the EBITDA you

So than I that our next the with back moderate will year financial I comfortable you after EBITDA, early At for of I planning. of - no adjusted back accounting would for less in that time the think, of in this we're the becomes year But significant. integration and of that's be that, going full we're early million, you am planning to XXXX half to approximately marrying telling next get the million $XX a XX% EBITDA year the that floor to half bit is would that expect what point, year, for XXXX, adjusted $XX given purchase still little more that by adjustment that believe than I the XXXX. and part guidance give no lower come

Sterling Auty

the the gross of we the mix it's or traditional you margins on the what's completely will And into up the as quantitatively about, transactional end actually to rank just we makes question, of how about then a accretive much sense. platform versus bit And kind QX the to the QX think where think QX order directionally, we structurally, going? as years qualitatively, And in business mix follow-up revenue out you but for long-term, wondering Open my being future? you're it's versus too break bill it That gross of think so should comment Open. made you early willing do tell, of terms think pay little margins the for maybe I'm the whether move how of could about Open

Jennifer Harris

before is deployed and as center cloud completely revenue to QX higher-margin time, data would on so costs, expect to and have relatively QX contributes data center it the over the costs, overall, so margin it's the that it's What just but it's the remember, is So a increase will meaningfully to doesn't have in in that growth. bill it I transactional those. it Open Open while say platform, given margin grows, But small the our any pay, to - that will unlike it revenue has infrastructure than I it. third-party will have related pass-through the doesn't going which it compared a doesn't Biller take particular revenue cost revenue, obviously, Direct infrastructure underlying transactional on be the an the business internal product, of

to expect So in remarks business margin that by And the how because on very our how mentioned float has determined that the be prepared would to Direct the be subscription can it margin much about Matt interchange adoption grow really I XX%. on the higher account closer at holders high that and much and margin. would Biller utilize they it's

cards utilize debit these Biller like or CardSwap, up access that revenue margins draw adopt time. over consumers as the gross could and things see you up So really the Direct and

Operator

from comes Peterson James. question from next Your Brian Raymond

Brian Peterson

I seasonality bit. a to wanted booking on So hit just

been the by the fourth then and quarter followed bookings, biggest quarter. traditionally, the has So that's quarter for second

think for Lending, the about And bookings Open the about time bookings now you then with of As does seasonality change Cloud think as should QX line, and impact Open we all? launched we Lending? to and how at Cloud QX revenue

Matthew Flake

revenue. and are - seasonality, the the perspective, QX, how hits take can correct, quarters the business. it typically On from the a you platform bigger are in QX Jennifer the take I'll seasonality

tricky I but mentioned predict. to to earlier, QX, As that's we a a typically try have solid quarter

every talked about activity. from so side, as we quarter pipeline open it's it's us so On nascent and growing the the is that growing is for

So it's I talk space. think to that it's that what about - very seasonality a because of is too new the early what

As that's as as far far - cloud a well as as goes, space it's greenfield. new

North as us, transactions. would expect banking, is because I'm in and those so the for opportunity be. would of huge quite Brian, of when to in the it say, on or seasonality it's which I make American can much there And think they seasonality yet, I are we going trends same to what a follow rhythm the buying business the actually those not

monitor not would it to ANZ those pipelines, I'm timing - North you would, I progress. on we Asia update I the will as America, it, just yet and and we'll comfortable but about So but thinking EMEA, talking of continue

Jennifer Harris

And time Cloud Lending more they have than bit Yes. given QX, lines model Their that business. the the revenue on right? on to stuff, a complex of revenue is various

For American market. them into example, in we as that opportunity bring the to the leasing and well they we as certain think have geographies. North banking AltFi use And also systems integrators

days. turn the leasing AltFi or quickly, fairly I those space, would in So XX expect revenue within that say, to

X months convert However, large expect if and American approximately into a to at similar to QX you to revenue. platform cross-sell look moving North the take banking space, I that to be

Brian Peterson

product maybe you Lending. impact, about color moderating revenue. margins, appreciate the product Cloud or on And curious, XXXX? but it question sounds referenced investment ramp just deferred we about think Sterling's on there, following the impact of should it. a bit Got quarter hit sustained to you little on are like I on the really a kind just thinking we I'm even the of maybe impact sales margin and through as so XXXX a and a fourth

Jennifer Harris

for able the them XX be put infrastructure be operate. margins to it invest for place the months, next Yes, probably the I to and as do to dilutive in that continue to product we XX expect in to to

data also the cost cloud, underlying that Lending mention in center and would the and in is I they right infrastructure. again, don't the However, there Cloud have deployed sales so force cloud,

and product place et longer initial to margins that the support the So to infrastructure accretive investment in I will the be around cetera, think processes, it their term. after in first implementation gross put the

Operator

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

Joseph Vafi

some at Cloud strategy this alternatives at I Lending, to they was a smaller some you maybe this larger to other and online them the and you solution Tier How a context Do looking and potentially point versus ones, point? customers these have of feel compare at opportunity? initial at are think, solution Xs I wondering, Matt, in the have having your discussions, customer. of with what of mentioned, many this what their lending looking exploit is workshops

Matthew Flake

usually Yes, experience. a there's well very Joseph. Tier has very and a, would call, the that that do, X, Tier true few the Tier ones it's online And work X, browsers, not I borrower it's very they and good Right now, what loan don't they're origination whether mobile on platform. X, legacy

And so it's greenfield in all of different those spaces.

things you volume X, the on build to the category got we Tier us workshop, and Xs, number go do the workshops way. and vastly those the one of loans you the so - the different volume then the a through the we most asset how we've is to continue to that then they and on how Tier common of that's remember - Now and from invest working what's want in. of And it what been out is

that's of kind U.S. way what's through and figure to that's So the out best workshops look integrate, as been in to the these approach the we

well done a amount there's - a it's work in from leasing those or there, companies AltFinance in of perspective, are Now, whether that's equipment tremendous been categories. seeing, what doing and very we we're companies, that leasing

out After your and we're good continue you to talk is that, as with business. you progress invest culture what the announce continue and kind to There and some are build keep and far North to the We've that and to space, same those. try come and beginning and were systems. we we're it's a going time, some the legacy that started and you're market, banking successes initial us coming processes, about little on people the going platform to already. like out old the companies everybody to American But to able an the together see that as I started inbound then to intentions just highly about have the continue - the than how of out think As feel to it we QX mostly in find are updated competitive is wants to see and go continue got earlier some we'll by differentiated, acquisition activity. Cloud of keep some

the better it's we So where be good a to announced it. today than did we feel very spot day we in

that's So people, the that technology the good feel about good we a to continue and sign talent. the

Joseph Vafi

updates this change Is on early the online? you new schedule and of all of those there cadence amount business Okay, the implementation any there any great. on And won getting integration year? of to large customers

Jennifer Harris

the don't year we've starting end talked I see that about. online is you're No, to signed that of think were the any things there's this thing the here The would year. there, to say cadence I in last one the at those come ones XXXX, change

as were revenue In direct the schedule on some of pull overachievement QX able pull fact, a forward into late QX but revenue. that and our all are QX to was couple in those out on well. We to result QX forward of year, a

Operator

Matt Your Hedberg next question comes from Markets. from Capital RBC

Matthew Hedberg

Congrats Lending. on of the Cloud closing

sense, of that? million business a QX better give in Lending sense I be growing Cloud adjustment might it to QX think you That purchase Jennifer, than mentioned true give could run that minor, to last but - accounting adjustment contribution. purchase quarter year? to million us you that, and us for the like I rate it $X what think - next you that you $X wondering, faster I'm the a made alluded was was a may obviously,

Jennifer Harris

take exactly haircut X still going accounting to going fairly months of purchase purchase of a and in close. valuation how that's point to work, revenue to are estimated at this to the post the price kind that X the concentrated in significant. kind middle third-party Yes. allocations we've That's in first We're but we deferred the have really are of independent

the millions XXXX next year, expect to for low from purchase impact revenue I double-digit the CLS accounting CLS. would after So adjustment,

Matthew Hedberg

if you and had the you super of environment, well? change then And sort talk environment, selling update wondering about us another give the as X quarter. about I obviously, the helpful. noticed a competitive Tier earlier you environment. an on That's competitive Just a an you about capitalizing core from they sort there. processors, this can can Have question rate asking was of are environment guess, win overall rising

Matthew Flake

of very we companies to When retail solid to is lines in we When we the are that the Like that side of mostly because - of the to growth on on look the win-loss environment business a or competitive we're that perspective, have. lead. I the of sure the make X a Matt. that mentioned, are XX-plus X quarter. on Tier From distinguishing I about at different Yes, environment, the competitive out the winning This start-up platform so talk the we're want doing or similar competing feel as deals had little that X, continues good are products, is it thing, There a activity we're Tier report, same that with. a to the the than the and continue our in to cores fourth to like pace I those build try we're retail I where at X it quarters faster QX. get to new trying was extend going to and straight going I we but there. investing that's midsized we be feel and do we're the percent and side still guys,

competitive to us So side. well platform the environment out for very the on continues play

had of the On on some us, business, worked competing some Open of - reasons and that the of are and experience really one the Fintechs there so the advantages haven't, building did we've feel then that before, just like going navigate coming platform, we there's we just are the and we're to a then QX up we mistakes side. Cloud, and be processes, Cloud the a made. And the we of us, help like we're that's execution our players but with, it's avoid it's deliver number experience there and side differentiating able that optimistic so a we've out that because with names new the and and ability Open the company we've to with we our lot of to and greenfield, like is company, of really we mentioned like talked we and we it feels legacy as serious some a maybe new, spreadsheets, where of

Operator

comes Hynes David Your from next Genuity. from Canaccord question

David Hynes

is to perspective, So sell a you Lending from bank about inside dealing platform? same Cloud with, is the a wanted maker accustomed if and just the is ask lending I a other you're the core a go-to-market decision that like feel you something can terms you regional to requirements still of pretty this quicker in or process on front, stand than into implementation implementation then up systems? digital involved implementation integration And banking

Matthew Flake

so side. the Yes, - decision just what platform maker decision-making committee is on different see the to than going say, you're the let's

about at us it's you Cloud by in bank level, drive the So the the the further but where to into trying gets there. side, is of these people. it's We're going getting the house us, if that's executive sales, loan for an deposit same platform so think different the it we're committee, from side which a to

be So Digital it Head of the CIO, Chief Operating Strategy. Officer, could

there out that but the a people it's So is to do that of make to different going of going are leverage decision. some relationships, we be get can group

and trying platform, we what think multiple now of off at that As and take product off-the-shelf one to size do. think far classes get really things we're the as lending trying possible, where implementation rolling it depends much much to asset and as vision to the by differentiate want product. there It's the install, to can we a has platform the faster. that's people, for working highly standing being of to on to hard deliver do can able want of broader because of a we customer examples - the are more that it as configurable to much I this X right of point, they of some the we're the do. models through. then up what there's more build out because have we're they the but models process and X They do, they efficiency like that organization that on how to longer Obviously, But take, are of trying weeks, the in we're

David Hynes

Yes.

maybe you to the give the we there of Okay. Matt, a percentage see adoption that your Can platform you in as at bank banking I at the sense, maybe the a digital you big where you kind of do what for banks? kind you same-store follow-up, And terms a think banking is question, center customers mean, growth. sales penetration customers guess then inside And of banks, credit higher-level then money on I of your digital customers wins difference registered are important, me it unions? So like kind compared the users think and how does very of of have, still customer the but you of within are a runway, between scaling customers look your if Investors to Tier right? customers? digital your bigger there's X Is base? inside where side your a of us good pretty seems

Matthew Flake

Yes.

the part So way let I'll me first, take my last down. and work

percent about think Wells, adoption function they're you if That's of America, Chase, running a So Bank on all desktop. XX-plus and it. mobile at of

years. they that. to to go to 'XX, to did a do would they do credit for you began that reasons, online 'XX, the and DNA drive send XXXX, until had did ask online, think platform different XXXX, phone, you centers me the member had banks the that contact Bank in give you and push 'XX, And didn't you to you up. back unions would to customer know channel to you, do some do that You them they've to on to and that. different statement, call America something, can you to want a say, mobile digital their the can of if call approaches of or have with push know you in They they for

holders the is the do - where we and of their And adoption more see adoption. XX% probably platform. And have and at of XX% range adopted have credit they then customer typically account look better bank so probably side a therefore, been you XX% job unions in the are on between more what it's

to call to up. does continue with and So them and that campaigns marketing them Bank somebody we're there's of drive a it room for us adoption, through they tremendous to like for sign working online amount centers, do a America the I can even get of or asks check, tell mentioned, that calls and customers our

more on of nail the internal they hit it. see can the you I for you and it, customer using where There's base growth think head. just our so a customers opportunity get that's within so And lot

Operator

line comes SunTrust. the Your Tillman next Terry of from question from

Eric Lemus

for is This Terry. Eric on

early your total on there's bit revenue on Cloud question the and see synergy from opportunity total some little side, guys the the this TAM? as to a about customers have that interest - good you opportunities you and increases just now Another looks Lending, talk more how you can time what like analyze

Matthew Flake

Yes, we've that. been on working

number, we a think I is, think come with conservative tough we to. about are think rough it, We've been pretty and general, from in talked $X.X to that's $X TAMs. it it's billion, when had those what numbers - to we is billion

XXXX it, we $X.X platform, include that you about at billion our Open, doesn't doesn't Corporate QX in TAM came clearly think with include the out include If for Banking, it doesn't Cloud.

at a think ability in utilization towards. account as to to account can financial their - from customer X look probably and think platform I a it's I we've holder, XX things to probably think to would you you in cross-sale if going within you when get adds that that institution cross-sell I data the dollar perspective customers, biggest become about sticker, drives it's products. it's one an to on our it's got billion the the base, just probably of case than it become represents make holder And borrower on that's become use to $X.X our But those going here and It to working to to borrower increase months, so and move so far much our - bigger So significant billion. the we're a I value a $X more next TAM. it more be, move the as SMART

we global perspective. to at So opportunity, work continue defining opportunities and tremendous look we'll TAM as from a the it's on the a

Operator

question next comes First Your from Berlin of Larry Analysis.

Lawrence Berlin

work especially consumers their do, just you to on showing do to debit the how First card huge side, they the of with you, and banks commitment they to a a adopt? are them, question getting couple users, do in mentioned of expand product, revenue transaction what

Matthew Flake

yes. Well,

If credit which drives a the or debit it's certainly, about, is whether bank, or something Fintech the card card interchange them, hungry utilization a you think they're of for for. revenue

when it of think do volumes about but have millions these have to using you So they of are it right. cards, also, yes, hungry to people you debit the

done there's and that a a sure ready it far, when ramp-up process that get the So in getting go more to And and forever. long flip those we've look to we're turn when we data - so manage we'll right. they those seen it that's like expectations - everybody, make numbers we've on will to to they with have on but trying like, switch just

so - them. to something get revenue generate do production it So is it's but that, the to that that debit into cards are can continue we'll they they eager off of start to

Lawrence Berlin

switch just R&D And Then point? focus is this gears year-over-year curious Okay. at for what a second. I'm internal just the the increase R&D, in

Matthew Flake

our that SDKs with to - We're QX products going have solving coming driving that platform is into we Cloud and platform customers. to drive you a it, integrating Well, of Larry, it, Cloud we're for the more when think, or our focus, haven't acquisition, the driving us, seen our announcement FinEx, talked be financial thinking. we're openness as our product, the and use experience, platform driving as in APIs. into we about, data obviously, to the through SMART be for design we're so problem these more building we I call - can also We're off trying

XX you to where Tuesday, that want to pay your down at in for What banking, into day month, we're the this log is Do drive is you experience you pay second when AT&T the in. an bill. of today do usually that to it's you when So logged history. account your the this to we're we've get Internet clicked trying idea the away to and - balance, you see years, you've from log to looked trying

to the innovation products. of as that is to trying obviously, You also then, And up, the and us. as CardSwap where would So CorePro that's to cash you we're - move This more taking view. looks we're is of well like roadmap on through flow product to QX and account? how trying driving all Open, some is our more Biller interest-bearing like money your Direct

Operator

from question from next Brad Berning Your comes Craig-Hallum.

Bradley Berning

positioning positioning up follow market? your in strengths, little bit talked the but in us What Open winning help more winning go where and little bit understand are just And to in this. wanted what changes in kind that? us differentiating you services, market understand of understand And Obviously, little financial a on sectors you're how not for us where competitive your in? you help QX - see I help early areas in about bit. is just within do a versus days it's the a the pitch differentiation? just on your to you you that distribution yourself And are the

Matthew Flake

Yes.

the banking in generate the people us. So side. network that not we of opportunities are a for This Fintech is

then trying about, talk and okay, trying to a then and people through, it's our we and is or these deposits, So we work experience whether legal create are customers, come where eyeballs through to user will us banking to direct to in through they Fintechs out then as through have that as bring we or begin this reach force or that, them they're a financing rules, happen process, of via network on we going sales you. that phase that. to And capture in to in you two you can and And unions Well, long plenty have to next you're to to regulatory warehouse credit want how to it we've weeks, is and the can as sandbox do to these take we standards. deposits references begin have of you those, to got going banks XXX customers it's in in, developing in bring have this. you and and compliant We that's somebody to the participate that meets

I'm then So that's to goes than a seen we haven't the and anybody sales a those go sure then the competitive from card more reps lot It And a say, want a create millennials. similar of a the have on. is for And to you what bank you debit perspective, say. into bank lot a that has side, that. complicated or pieces. more program all would on savings conversation, nutshell, sales in process, account

put at consulting have two about time in it, they look and and digital thinking you a users unions beginning in the They're with these have commercials is to talking or already for they front, because for they products get as it. company put as there marketing to want market, big weeks. cloud, rest up it minimums product you it's in we're are you success They're feel you the Capital and - may there we participate look to the the and The out them. - compete there CorePro see market banks out to commercials and trying They to for trying this quickly, of do built TV, get the for feel, Bank, don't the they're can in credit in to One, out quickly for the on, on transformation, you your front, Ally those Here's they that AMEX a possible. we then watch to we'll time pay have that workflows and huge their the plug it, that we're see writing and begin together. differentiator customers and the

cover, opportunities are it's deposits of So are can than say that's there's we Fintechs continue Brad. the large corporations that've the right some more other beginning us really, two. it's warehouse to to the we we've - about out that's over. and and banks, we'll be those sectors there And reached the two banks Fintech been grace some explore and now, those things may to do sectors. where But got but to with

Bradley Berning

then on that And helpful. in for very that's one it while no, follow-up the you've a been Yes, now. is

perspective like and are able think kind to you you got guys, more the at interchange, gather to this on models originally, understanding put enough portion share more now, I the opportunities economics? type you around pie? an ability and that? of You've of out do think you wanted of in what amazing everybody, Where economics there's in to customers some about for time. ROI participate are Just in kind some of get this you you value-add you charge what have help for are pricing of, total and you When for your how

Matthew Flake

be got cautious everybody be drive I be I more float, debit it It different could want will could to with it coming be, what here. a they're different say when to say they that on could strategy this. has card, I things.

below network differentiated, think believe our ability deposits that about they sometimes have higher platform, debit we our some $XX value so believe highly valuable, with of is financial things, we our of experience and of banks And working in billion they're that the and if institution and distribute you assets, interchange, more these interchange a rates. to the

So to there's money more split be those environments. in up

So it's continue also all - we is that. of value this to too don't banks to the going we're transaction in giving something are it's - a Fintechs and drive add all the really I and out think, in up, and partnership, utilization up as to going percentages confidential but more give want to something and that something we participate QX,

in lot I here. ones to And and and different know so interchange, a using the opportunity large of a the be for cool debit very opportunity important we're approach a subscription has is participating thing with the here, It's everybody it's - but platform to I'm want, to well. as trying think they fees which not float

Operator

at and are you concludes no more now may time. today's There disconnect. call, questions conference This this

Q2 (QTWO) 11 Nov 182018 Q3 Earnings call transcript