QTWO - Earnings call transcript Q2 2019

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Operator

Good morning. My name is Benida, and I will be your conference operator today. At this time, I would like to welcome everyone to the Q2 Holdings Second Quarter 2019 Financial Results. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator

like please the begin. now Josh over Yankovich. Sir, to would call turn to I

Josh Yankovich

XXXX me Thank thank Matt CFO. us quarter you operator. Flake, for call. you, Good Jennifer joining for morning, our CEO; our Harris, today the call on everyone, and and conference is With our second

materially by contains call including are Holdings. future our forward and operating that to results the prove give and of Actual significant we QX be contemplated any statements forward-looking to such no This subject statements from may statements looking assurance correct. will differ of financial these expectations forward-looking uncertainties, risks those performance can and or that

are could to XX-K reports actual results results periodic press we will that including those filed regarding differ with factors today. yesterday the reflected filings financial most subsequent cause release Form in forward-looking on included distributed annual report afternoon SEC our from Important the statements and our and materially in discuss the the

Forward-looking not no statements of such Investors and a undertake call time discussed. are update the to in statements date we only should this on later assumptions forward-looking based that remain operative statements as these we will at call. make any discussed this obligation assume that on

measures the GAAP afternoon. on our our Also, comparable be financial in non-GAAP measures unless SEC on on discussed measures discussion in website press found of with otherwise will the why stated, X-K of we use most the section be included yesterday and non-GAAP filed all Form which Relations our this release, a is Investor may or the A call to financial measures reconciliation of non-GAAP basis. a

the to Matt. Let me call over now turn

Matt Flake

the highlights and call, at over results Thanks financials call our look Then I'll from to updated hand I'll share business guidance. our Josh. second for Jennifer detailed quarter On a XXXX. the key and today's

solid had represents than to X% growth quarter than year-over-year users. users and In us $XX.X registered of XX% million, XX% adding million up digital QX more We the second growth. the sequentially. year-over-year more as quarter, well XX.X we another and XXX,XXX of brings on platform banking generated revenue This user

Let's by from discussing the start two second quarter. highlights

raise, raise wrapped conference in as annual May. client Our stock partnerships In up concurrent continue capital our sheet of our balance additional recent June $XXX in to $XXX successfully acquisitions. a This provide considerably investing as cash balance and XX we common proceeds raised of growth potential approximately to which million. June, strengths raise CONNECT, well as and strategic we innovation, convertible through building capital million in through our debt approximately net

transactions I'd for their our like on the our to their to execute those involved confidence on for our and support in strategy. thank investors ability

had This we Now, XX a clients. to CONNECT updates attendance few representing share XXX institutions I'd like to conference. close from year clients our more XXX prospective than financial record with a and

a roadmap. As of our share opportunities our and one feedback clients, strategic our on progress direction with their best seek to engage reminder, product on CONNECT is

clients delivery. and year future proof in this shared and the The execution theme future with our Our our was is is proof. QX's vision

of consistent announced This and We QX days we technology themes. TrustView few banking of based on lending for the year first a data also with its blockchain of we governance kind and spoke protection and hundreds heard course over few the technology. the clients

and aligned. our strategies are that are our highly First, differentiated solutions

digital This and overall QX banking Lending, the operational excited customer must excellence. support Cloud invest future from about was system and customers conference platform, continue innovation, Our with are from a to representation broadest portfolio Open our velocity, delivery product more. we in perspective, availability, and our

our broader perspective customers tell and are with us landscape that working markets expansion FinTechs strategic key our broaden a the also has directions. I given that you in the global facing perspective much is will competitive that informing in on

our of new product out as business strong activity clients with as well and alignment roadmap an my cross-sell going our as is drive CONNECT ever. as the our in vision expectation for and my expanded forward. will that confidence us event Coming And it's

I'd cross-pollination expanded some on first for is the we suite. Now to our At have banking in the say the halfway sales largely to digital quarters. execution. performance like point product of our to shift offerings This result of expectations can relative our we and a that increasing the commentary outperformed two

we union a half credit in strong first and X both across X the On bank side, digital banking markets. and and had balanced Tiers X,

in did our bank in from Tier with assets to teams X three ranging $XX well. $X and billion from quarter the Tier along with second momentum X continued Our as particularly well teams X deals billion

quarter An have increasingly banks banking digital market. second the the of their our especially new and is compete of the clients unions functionality. purchasing our and in product aspect common to which This we true continue our our proved our characteristic new wins of suite, helps credit for trend expand with and inclusion which in some clients corporate corporate with majority mature business in

to cross-pollination bases platforms and various continue our strong in see the quarter. customer also among We

digital For for clients major of support technology not existing deals. was integrated vendor strategies our this, the to like Gro bringing banks their scenarios of and more example, front-end and tightly more much ability Solutions. one differentiator the platform to into single a the an us and because becoming bank customer through all we is stack they In signed if introduced a of QX were

clients highlighting markets. American in In this North performance solid QX signed same the in two Cloud quarter, van, Lending existing another deals with the platform

acquisition of accelerate component in that a while America expected. hypotheses and In bank set there sales is the Lending solutions we help it's and of strong environment compete incumbent quarters deals. only not newer platforms regularly. the both Cloud platforms with was that note three into to existing playing wins, these vendors both market, presence these felt our Lending's success important could winning With out broad the its in are that we the included a the we our as lending a is between it's to that acquisition, reason North key competitive differentiation synergy Cloud And

deals, to and small In Lending's these business ability factor. lines asset was consumer, important commercial as serve Cloud an cited all

continue Lending's that Cloud reduce administration ability to also costs, to the it hear loan make unique. We while experience improving borrower

internationally, quarter In and success Cloud in second institutions in its both to addition deals financial North well Lending performed Fintechs. America, and the multiple traditional cross-sale net-new with winning

fuel and with team synergy The QX our pleased Lending sale success. Cloud making to really Lending beginning continue investment among Cloud extends the emerge stage and we to that platforms to as between this well Open see plan that early the Cloud is I'm QX Open and at post into acquisition Lending to progress clients. we're sales business opportunities

a single compress Open bank this and to partnership platform to through faced launch To bank kind. to first to a win deal I'd was their Fintech In to this QX rigorous dramatically the the necessary modern QX charter, access Both and deposit of client this, their quarter process the build sourcing accounts. technology Lending offer like from API, all to own client by Open was core go-to-market the the the wanted its a partnerships demonstrate and customers. team timeline. able Without Fintech's share in a that Cloud second bank accounts full-featured providing

new issue QX. ultimately And deposit to the Open for partner offer the to all with to facilitated consumer Lending, Combined ability deposit Cloud now their products its and with QX by loans wide range customers Fintech able initiative. decided of the is to Fintech via a lending

banking positioned ahead technology of uniquely to we're Fintech how demonstrate, broad this bookings of through that one to first this I of year. are like is providers the reasons target range its challenged the for needs Stories the meet team of that capture. Open traditional believe half the a QX is companies

that And processing We are our Debit to to core Visa Open an continuing quarter our in technology. DPS QX Service excited completed Visa's platform. we Open capabilities integration the the within with strategically second of Processing or QX I'm also announce expand

of The a Visa their partner on of processing clients the increased an components programs. reliability as and provides DPS debit scale our addition card with

presence widespread space, Given a only as QX activity the Open believe sales with I partnership our tailwind as for Visa's in new serve well.

with reiterating the pleased prepared the first half of wrap by year. progress With I'm remarks that, up through I'll my that, our

sales continue successful investing delivering to outcomes. and integration, plan we client our innovation in execution Given

positioned As I look carry at our of believe well into and to momentum XXXX the our back half are pipelines we I'm optimistic beyond. and

call Thanks. And the that, turn over with to I'll Jennifer.

Jennifer Harris

the year the updated third quarter Thanks quarter Matt. full reviewing XXXX. I'll for guidance our results begin and finishing by before for second with

We are pleased of sequentially. deliver was revenue X% revenue $XX.X year-over-year guidance. up million, our Total that and second increase quarter an XX% exceeded to

customer of related the revenue increase The go-live subscription QX growth increase platform user business driven by organic services sequential a revenue quarter. an as result in was to the and during primarily and

quarter sequential quarter In revenue in XXXX. the acquired increase revenue the a addition from the fourth businesses of second from benefited during

Revenue from for portion these XX% total previous XX% the in prior contributed revenue the of with also revenue quarter and period. a represented year of the consistent quarter year-over-year businesses up growth. acquired significant the Transaction

As let a and basis. you we turn are expenses to me all unless stated, otherwise on remind results expenses, our references margin gross non-GAAP operating operating and that to

in up the related year-over-year acquisitions and in XX.X% accounting quarter from prior adjustments XX.X% head previous is to of the addition Gross was XX.X%, fourth largely count the the the The XXXX. margin from attributable and in down closed year. decline purchase quarter to

sequentially well X% XX% up business additions in and as year-over-year year. combination from increase by acquisitions. operating headcount the the of up support million, The the expenses $XX.X were expenses operating driven is continued in growth Total our prior core as total to

and on to and investing in was existing sales R&D capitalize improve across growing demand the lines. The our our to marketing of sequential continue offerings, business concentrated all increase where and while we innovate further

offset call, annual in reduction of also to which QX conference, the sequential of the payroll increase client expenses on was a due was timing by our mentioned I partially taxes. As the in the operating cost

of the period. payments reminder a equity increase the and in combination award associated of bonus and awards elevated payments were and bonus vested with the during the annual in exercises timing vestings due first taxes value that a quarter the to equity payroll our of As

driven during Adjusted to increase with increase first the million compared only $X.X The gross a combined expenses sequential EBITDA revenue is modest profit quarter million quarter. to in and prior increased by $XXX,XXX operating the year. was increase the in an in in attributable $X.X

headcount of million cash note investments stock Cloud We the and the a end additions from of previously. to common our $XXX.X quarter quarter of with decline June. offerings and and senior convertible attributable year-over-year investments ended is concurrent first result up $XXX.X Lending discussed the in the as in million made Gro and at primarily acquisitions equivalents The cash, the

our provided common call to and the are with costs raises These issuance convertible after help upon capped million approximately to designed conversion stock net potential associated offset the $XXX which us capital notes. proceeds any dilution of the of transactions

annual Cash to improvement the million for timing negative second the negative in the was flow payout the taxes is operations $XX.X The the from payroll of first attributable our quarter bonus million in $X.X compared sequential quarter. quarter. and first associated to

cash we free During as $XX.X of in $X.X incurred the $XX.X flow expenditures first net to in of million negative million negative quarter, the quarter. resulting capital compared million

I customer which free improvement sequential For discussed signings. the the upfront year, first of show our to second cash expect collections timing deposit half flow dependent of call upon on on as is of the largely we quarter continue to

for in Turning signings million our to last end solutions driven represents a increase digital $XXX million at banking at quarter as of by platform the the ended sequential $XX This well backlog. approximately year. digital acquired continued backlog. in success of lending as We our customer committed

turn of revenue million the XX%. $XX.X year growth of in $XX.X quarter updated in million million to of full let to range XX% representing guidance. $XXX forecast revenue third our Now million to $XXX to range me the We and year-over-year

adjustments accounting into As overachievement adjusted of we acquisition capitalize million call continued and million million. our we cadence allows and momentum. discussed bookings EBITDA back to Therefore, impact quarter the last to reflects us on the closed further are the the to forecasting on to year $XX call, our This $X mentioned business invest EBITDA quarter revenue third million the XXXX. full first the of of adjusted quarter related of in fourth the in the and purchase $XX $X.X

our with second In are pleased closing, very results. quarter we

markets. execute the successfully We including operations integration we capital of to newly acquired and the continue on access businesses our

With call that, closing back Matt his remarks. I'll to for the turn

Matt Flake

capital closing, raises In solid quarter. client to second Thanks, drive of Jennifer. global successful conference, annual We hosted financial record a continued services. delivered transformation digital executed we a and a

our a look strong momentum finish Fintech I markets bank of opportunity As success and front on ecosystem. and we're the solid confident us, the note at in broad-based in credit I'm in continued year with position the a in growing to union

with operator that today. Thanks for joining the it over to us for questions. I'll hand again And

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

Sterling Auty

wins, only and guys. Hi, look about the wins what half you've you does Wondering other XXXX? if Thanks. with had we deployment here unions back remind moving Yes. that the schedule bank Tier but these on X both could with into the three the especially us as like and not or think rollout credit

Jennifer Harris

Sure, Sterling.

by last do that elected signed Tier in deals them deals -- in to all all back the one of out the of is we Three the live now four mind roll we XXXX end signed holidays the but live of they now should in early to on however be it quarter are fully the as So of the into in the fully XXXX Keep it X remember the XXXX. the may four year. of that as had I end be quarter mentioned phases. the were second half up. rolled platform They're rollout of expected coming remaining of end those year and

and live fall. go four year Tier and XXXX to expected of first X live Tier remaining half the in signed this next are at go or of now And months all right deal are we to-date we deals the on that end of X are expected the X Tier the early deals the to -- system the X to deals Tier XXXX be is one three signed live The remaining first the nine expected in by that XXXX. live the other

all they're tracking that X. frame to of XX-month that time So kind on previously discussed average Tier we

Sterling Auty

-- of upon to a give at can expectations? on I we ramping specific you a meaningful But not And Open Perfect. also right. on line? and All touched quantifying appreciate more sense Gro exactly they're -- relative QX think contribution, how with you And both you that. point examples. what can your a some to contributor but the becoming top do them start to about the us

Jennifer Harris

Sure.

From contributed backlog increase quarter in the of that and pieces. the increase we different increase quarter you of two think perspective in I backlog. bookings about couple the this XX% that's some a with like XX% of from So backlog the last just contributing told about acquisitions consistent

expect historically. some Lending revenue Gro back so begin the total to half. contribute And I very say And consistent -- with from roll I to of to do we've range believe discussed X% revenue that close a to XXXX strong it's perspective and with in the see what deals revenue of past. of here to top-line total CLS's still contribution we've will is in that Cloud could X% start said those the year we X% for that still to same in

Sterling Auty

much. Great. so you Thank

Matt Flake

Sterling. Thanks,

Jennifer Harris

Sterling. Thanks,

Operator

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

Tom Roderick

Thanks guys. for morning, Good taking questions. my

Tier Xs -- I'm XX on probably I you're looking up So I the great I over -- math recognize and not think at But creeping here. historically years.

of at X was historically, have they sort they've looking selling added platform, what good years kind the much a the you how platform gives It's on than thought of subs you Xs. cohort started that of analysis grown. the Tier when So what guys different it X,

newer and upsell those much are hear seeing or Just QX feedback whether broader the how And the that the I'd many around of to going of platform? is from Open reacting commercial? come love Tier it's Lending QX hear are some SMART? to up Gro to especially Xs actively about biggest user some Matt and to how attraction or Cloud or of even the cross-sell, How buy love many customers. Xs and sniffing they're those Tier anecdotally the product particularly a how larger conference from How you coming back

Matt Flake

Thanks, Yes. Tom.

retail financial I think offering look then buy them about of come meaning group have. that retail the some as and banking business that Banking they we business line started of talked we Corporate when they'll X these will signing we Tier by may or at larger a the institutions buy

and So patient delivery been that well. message been the we've side we've -- then as in and the has on platform driven single executed

of and to about XXXX. then they these Trustmark So a in more the four And rolled XXXX bought and a the signed later. into year business and small more corporate in see -- some talked deals and We're ultimately then that. retail we we they of customer examples beginning

our those in for able correct is And products base. as I shaking side you we that's deepened of second types to a Banking, quarter head. lot -- platform whether in probably And customer of into then products quarter SMART our product the offerings we've even which I was add sell her on believe the been it's the Gro, think cross-sold Centrix, Corporate the top Jennifer those one of cross

Jennifer Harris

Yes.

Matt Flake

So these we're that's and good a top The job. life easier so product roll side the one pleased administer, of they're to out system is product financial single into out. very going that acquisitions, using also them have. and will how product that how done one with what with vendor relationship one integrating We're platform innovation the a that their but the the management the with team become doing we And with I've current to been that -- are, offerings on we've the product cross-sell sharing manage. institutions to

about talking new to about have borrowers that resonate. And to as digital now accounts, Cloud product. we using banking, create so walk beginning the so Lending new And with customers about is -- - we that data into the onboarding we're open talking we're talking to story we're

get growth organic larger one And last and the that to try to that more more to Officer -- open with as as for Strategy platform to products then so and And -- existing they're was going cross-sell Chief more growth with households. our products one me how of customers. and volume -- they're month we're about drive accounts well he our organic is I customers going the all him. in more loan driving and new key told to

So with just have around in these accounts. spreading Tier relationship ability space well. and really pleased in And say X those wouldn't the product to Xs. with Tier as management X, the would limit team's conversations go the house we're I Tier products strategic to I offering it

Tom Roderick

intrigued more to expected. going than better that's Excellent. that of your customers loan trying volume, And, going growth. Open organic Matt, Really And just that QX accounts, for drive positive more on is new great. to topic open they're hear and

mouse lot in of landing You've cut a wins. some of sort of there, out traps these terms of big

the And showing you think is got always, message into the sort last might see let's mice you there, we've those some wins start framework up. from translating and a side? how that when okay, started contribution landing I wait What's about on happening traps And think year? QX do on volume Open great have transactional revenue of out the that

Matt Flake

talk Yes. about can I'll what growth. on the I

accounts from about you've these processing lot account more on platform, XX% growth I than CorePro payment A think, the of be. lot of whatever seen -- on account cards plans, it Fintechs I the or have deposit are adding debit business. that seen think an side strategies you've our of might system. or bill to rolling a and out And drive then, to different it's trying whether they

seeing we're in of a good those So groups. lot activity

these share those. have it initiatives Open is, that private a as are just of of as the can't the far lot strategic Fintechs I happening One sharing with business, and challenges QX

see nicely. on to in as continuing they're much we try growing at this lot to about, but of wins So a as those share talked said can, great point the I we the a half pipeline we're then activity as And -- We the that the back for exceeded for the for half scripted year we into looks this. had bookings version first of this XXXX. and our -- of and Open QX year great of target the we

Tom Roderick

Great stuff. Outstanding.

Matt Flake

Yeah. Thanks, Tom.

Tom Roderick

Thank Great you, guys. job.

Operator

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

Matt Hedberg

this your several you've a your quite wondering, can bit quarters, sense is penetrated left questions. -- prepared I Hey, about taking had gauge I'm of Well not mean, give Matt, runway your past, success remarks guys. Just CorePro your a done. product. corporate -- your you us lot for you talked in to the of well, trying Thanks in in if success for your How years. of kind my is base? product? the sort base of a

Matt Flake

top I don't my off head. of know the

range product drive opportunities. as I different to attached think there's we're -- in build probably this we -- more product the mind, Banking. set, going our keep opportunities, drive XX% that'll is also but of But And cross-sell customers. to more about and out XX% Corporate modules more the continue adoption XX%, to deepen

a as people function, of our our customers, many doesn't or seeing they're we tablets they -- large legacy product their experience. you're platforms. those our And or mobile that still what corporate So clunky has platforms they're it's phones on doing legacy have user from moving work build banking to is, clunky feature

well. So we're driving more as usage

still there's the development headroom on lot of a the base So Corporate perspective. within a from also and side Banking

Matt Hedberg

core, all on customers, then, does rolling great. of the new sort sort when you're top think when about funding And potentially innovations guys discussion customers things? these out, that go are the how net That's they days where with of you are targeting of,

functionality the of as at of here sort of and one are days? the of of, of saying, top that talking the run top core processors, that you you is of the customers one let's value imagine, -- to take ability let's in the about core the the drivers hey, these out provided are there? have Is sort cost sort all I of like, invest that props on

Matt Flake

think The our and go digital Citi, put I we're core of room if they about driving into team And putting deposit moving they're processing. what's if that's I not the logically, think in forward, you what's a going. when that conversation. just energy you to happen sit there's the into about think side talking are digital America, about to a strategy think that -- the meetings. is Bank you enough energy of of banking things, bunch where And and beginning just people can't in Yes. capacity Chase processor driving that is Wells, -- not it mean, I

that have happening The the of on it lot a technology processors innovative but there's happened, driving it truly of now. and was core done of importance when innovation an it job amazing not

with is so products, of And what driving data doing a of how around the those out integrate there. get we're to dialogue lot to how

But there's also a to where coming is of lot there areas starting to we're contribute platform well. other that that's our as data

banking digital get of the would mind digital the core So that or from I that top of And say, conversation lot for processing, happening -- folks. is of not out lending to a there. they are of some there's trying innovation cost

Matt Hedberg

Sure. Makes a done, lot of Well guys. sense.

Matt Flake

Matt. Thanks,

Operator

Your of next Blair. with question Bob comes from William the Napoli line

Bob Napoli

still I guess, you on being is and Tier a there expanding? versus a much that And replacing lending one Thank are of Xs? product Tier it the product new product offered with how by you. the is Xs,

Matt Flake

all Well, those on three digital systems we quarter the of in platform replaced side of digital the banking Tier legacy examples. Xs, for the banking this piece,

Banking had those Banking, -- of to them And some Corporate some Corporate had are those of attached well. corporate as

So, we're on some side, platform replacing type legacy system. always of the

more talked in direct there and starting having we're banks, more conversations. first success banks beginning from And we had -- digital and had our more we're also there those as quarter, then, we more the customers of seeing, which around to you're and success interest or we've see some about

-- than that Lending does. their On system is, opposed legacy to does of kind what business, the a replacing replacing lending we're probably it's of to the what more additive side as the there systems process Lending Cloud Cloud spreadsheets, out

Bob Napoli

and What your of see Great. Is raised it obviously to the areas I And focus look opportunities Thank add of platform you ecosystem the bigger-picture to if that just you you money to add a to would? the the you. QX biggest question, -- the of platform. where a was InsurTech? you want RegTech, in lot are guys curious to

Matt Flake

Yes.

in in share doing we they fundraiser to internal got, to be that. them so record solid when to about which And together around each do we've including the talked track I and all a think, about we innovation, data. would keep So continue they investing on mind, other that we're and the platforms, that integrating going talk talked

Dev perspective, acquisition about there From Corporate into and we're -- diving a when integration. the on team you there's Jonathan vertical clearly think

functions lending the about banking, digital digital So thinking and go feature that that. digital onboarding, then through

So you or data, documents referred optimization. security the value or GRC, like around that in to, would lending be pricing new assets chain somewhere or or

for also horizontal in then, there's And the business. expansion potential

be digital wealth, insurance So to find there markets. at done and execute a But are trying fit. that digital the or could trying in on things things also, like and to we past. capital good we've what out we're looking And what's

we're we're looking but we're it. So as through active and at to things, go going we and diligent be prudent

Bob Napoli

Thanks Matt. you, Jennifer. Thank

Matt Flake

Thanks Bob.

Jennifer Harris

Thanks Bob.

Operator

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

Terry Tillman

that of technology it in potentially to now as would years? footing to them? me Maybe for Could couple years compare rank as Hi, for though -- of and finding good it contrast from congrats them your at been question and two revenue nicely. and and compare us contributor development, stack of sounds you're kind Lending Cloud the next with and morning Matt, well. first you it just more to like and upside those the relates you've investors couple recent a QX relates How over you maybe growth Open

Matt Flake

amazing That's like put have bank effort -- the these with an trying of these the having of execution really prospects, that in with impressive. biggest the kid they're been and named base that to private Fintechs. the Fintechs you Fintechs, most. the different to reach that the really And not in they happy has of but with some which delivering referral that space types -- be getting customers the business done say equity I'm business. team we're that and And QX may in are Open getting together Terry, involved just or to that job the out like the in very people some and of has

And there about upside so excited I'm the really is tremendous it. and

the right are huge on more lending product wins technology, opportunities the is of the do we product, nature. bought culture very I'll there have. QX side from to built But each growth to Cloud a a the tremendous team bought best, that the but all -- platform see one which the the in integrating our we bought seeing the the in And side, And of the that those It's global it's against perspective. trajectories little they pit right than and the similar them We're Open On nice other both can opportunity. work they obviously stuff. we team represent than the on a geographies. right Lending and

Terry Tillman

I be guess love clear do your to children. all though, you

in of out the was timing the that's it good more you your -- on guess, the side that. just banking the of -- at digital $X.X and year of Jennifer you. it in increase like just think any on So Is some guidance. on Thank full goes I Matt. one stood then guess CLS? million a the the the it Or I item what increase year midpoint in Thank Yes, into guidance? Or guidance? the you like for I that rollouts? was full increase terms for

Jennifer Harris

and bookings lines result of execution The execution seen expectations of good all business the we've across a the tiers the all is across lines. business. It's revenue all combination increase of in really just

original at end pulled it's on the quarter, just of Additionally, had guide really happen teams of June, the quarter middle this out. XX% went that's XX% go-lives within live quarter, about that the the happened by customer the to the continue good that our of forward the in of how is execute the in happened of those go-lives came But live We and that historically the And platforms. for the that factor timing did in anticipated customers play right? the get May. quarter delivery into and played other team April job the and actually of deals would a such various kind

so And revenue than anticipated. those deals would quarter yes, in have more from the we

Matt Flake

Thanks Terry.

Terry Tillman

Thanks.

Operator

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

Brad Berning

ratio? a of as wanted Hey, together follow are as competitors the versus race innovation the morning, Congrats to guys, those How gaps see again. to product how areas well. innovation versus further talk kind are And And point close and across the platform. gap gaps lines wins you business have good up is seeing you going forward? as to that or ratios impacting gap help you win platform on priorities the for of and versus where win-loss also yourself competitors? that do competitors? the more where the differentiating innovation that I about in And loss to are raise attributes you now that on the suite

Matt Flake

Okay. That's big question. a

to try me frame. Let

do on so what third think is viewing parties of market essentially to do unions I FinTech innovation. begin can message all on XX system, probably our -- or so the a from office platform opening month to developers and what up coming or and software our that seeing can the messaging to a SDK of our APIs, how plan kit once XX loads our integrate they openness to banks or trained have they're is our that up to which we're or different are so we that customers what we're the FinTech, they trying technology our credit is to And critical. our development get to

unique their so to products their sell into cross can huge we data that strategy, and do this data can drive understand customers relationships, more are, get who data better innovation, them part a that deepen that's do provide is will the how ultimately. revenue generate service, that -- customers our the so of they As they so

And from that experiences credit do accomplish and their somebody, FinTech drive they your cash to a want of not help that that the -- people then union this or don't want financial opening people, bank as small we as they that want or bill to that. life these quarter I meaning get to loyalty. their raise meaning to experience, trying to loan, innovate, what in drive so your your people will feel flow are entities trying trying the our account a And that this run can go they or their debt paying family and that lastly we those their build of loan manage transfer are or where a these And move a them house doing we from heard that to a that's idea to customers and they to an to people are in is business. things trying are

we we're or billion signing or the using are bank and where and using lasting that is up, the last FinTech we're a credit gathering system union -- in brand system then a and growth up to data two year experiences the whether -- curve meaningful digital now, log-ins. the going. with There the said in is as opening are driving data like the right people we're So up -- from it's customers that opening associate

keeping on just focus do, there's I customers our is what and what to doing, look competitive, much to technology have around operating about be of Bank doing Amazon them at efficiency. way. our helps may what thinking we think what corners And done America that You also -- is be some helps the what Facebook that see so we're

we're us, and not get trying a we're it. but do, do that afraid opportunities make to thoughtful there's investment But sure we out of fast we're if So out to figure -- lot also and we way for a we're fail. new to

question So answers your hope that Brad.

Brad Berning

That's kind have one those the the internal? that willing the outside Tier the still historically you to a you follow have versus Xs of about outsourced to consider that What X opportunities? an And there penetration how insight. out And vendor of opportunities in do been of is when see pace speaking. market Xs, then in-house Tier is up talk Tier more good

Matt Flake

Yes.

is your running still an facilities possible. stack, to running out having entire quickly as as internal from that it technology to of own resources. they want continue are But get the We can't larger trying own -- their -- as using product to well. Open to are is drive on the to learning that QX business. their SDK people or doing suite are our to build that whatever platform our right that product abandoning side the to developers a nuts unique like or products product development the They some go of development idea to -- entities your wanting team shop, they development They're hear

to and loan the best and growth. get technology more So, be what and is business we're management out and larger their more move deposit growth larger average of and to customers continuing development

Brad Berning

much. you Understood. thank Hey, very

Jennifer Harris

Thanks Brad.

Operator

question with Your Huff Stephens. Brett comes of from next the line

Unidentified Analyst

on Joe is This Brett. Congrats for on the guys. quarter. Hey

Matt Flake

Thanks.

Unidentified Analyst

that So, in my will bank's seen net volatility the what if rates, curious you've first interest if provide Thank if and has on given any any you that? any question margin demand you. recent just the color impact of interest on just that affect

Matt Flake

Joe. for have environment Yes. operating I low-interest we've this a rate in Thanks No, while. mean

a -- last actually question. what part the kind go contributes away change some to drive is strategy. it. to was I take would say of from what need the week a that And of that So, is doesn't their It digital

to go need margins generate interest continue continue down can middle interest income net or as -- the down, goes they loan efficient them get in more that. to drive and to ways the a net so in they to they deposit -- of So, way right invest we're to

then So, user costs. this there XX help just to to there out so help revenue of years that and much cost kind Their replace. to provide administer standard for customers we're helps a they trying I is operating and can meaningful and is for this drive them. whatever the -- we more decrease manage them have technology environment last know to experience legacy that and these

Unidentified Analyst

bank. imagine lot And but they you differentiate? kind there's differentiate just color of of could be demand would if you. Great. the just between Thank unions you do would a any trends then just credit my follow-up helpful. I How be there, similarities base and

Matt Flake

think credit a mean in community think retail little adopted the are. deals. unit -- is the more general more And Yes. unions almost focused retail all I of majority on Banking a credit banks little seeing you're are our -- I it's And so of the Corporate slant. bank than in I side

tell credit union credit are world. you Although, see And build beginning both well Banking with side you're on a new side the that very in of banking cross-sell and net on the the Corporate business doing I union the our presence will we side. to offering

So, they're And in the quarter, bit. little started launching we beginning a first billion had banks we we to a see talked direct blend about bank X Tier as a $XX bank. some they

all they're things. deposits blend to they get bunch loans, So, fund these on have you're a a beginning need And to And it. of see trying to help loans. to to deposit they if

sit that's core So, and help it much and just as possible. of we're as middle of trying what them doing in they're the to

Unidentified Analyst

Thank you, again, congrats.

Matt Flake

Thanks Joe.

Operator

Peter of the Your Co. from Davidson D.A. line next question with Heckmann comes &

Alexis Huseby

for this Hi, is on Alexis Pete.

you non-GAAP provide Gro for and So, just GAAP Lending a separately? couple the Could of Cloud revenue and modeling questions.

Jennifer Harris

that. disclose don't We

Alexis Huseby

retail you the clarify were could banks X Okay. commercial Could the if quarter those the signings on And Gro for you the then by great way. Tier for or clarify Solutions?

Matt Flake

for were mix customers Corporate and banking. of They a were digital Banking. They platform retail

Alexis Huseby

on in that space. Okay, one Digital DX? great. $XX Thanks. stronger subsidiary then And market a on Could NCR's general you thoughts assets? billion buying think more the in competitive about Inside result with Do provide the of banks in that any may you competitor

Matt Flake

We'll to DX. I don't what happens We with run didn't have see that. know. into

probably I less But think they don't than think had I XX I they -- know. customers.

So, what with we that. see them to NCR didn't run It'll does interesting lot. be into a

two. and it now busy I keeps system us one and have mean we have they

yet, that it -- watching they've So, they much of in seen closely. we'll happens as obviously but got we what the put together market. be But haven't I you -- out tell we'll

Alexis Huseby

you. Thank Okay.

Matt Flake

Alexis. Thanks

Operator

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

Brian Peterson

the my Hi thanks for echo bookings. on the taking question strong and congratulations I'll

just terms XXXX? of half. pipeline about momentum of the about kind So, Matt, that of feel as pipeline second think rest we your how strong confidence Anything can as share in you very and the first through you kind of half the

Matt Flake

Tier off flow I it's team a coming obviously, executing all of I of of Tier Xs, Yes. -- whether are The had a Tier on XXXX steady very -- Xs, XXXX and we is high Xs. that think have level. mean

backed to the all Banking, keeping the though onboarding Our lending, it by delivering messaging retail happy. is customers business, around adding, single for well. very software, up teams small It's a resonating our Corporate execution platform of

be client want at growing of tough. it I support could company the to a off innovation but us infrastructure As of -- they the to which about don't the are and said and the excited take those customers types things is in our eyes conference,

happy back Lending, innovation, it's I it's Open, the deliver also you're this to think the execution keep Cloud the see continue I continue whether of QX -- Digital but half When Banking, we our to year. same, as long to look pipeline healthy. as the or So, going at customers at it's into

We have down path. a the are -- deals that

Tier to land great borrowed from little in job QX. in probably we team space of a in going X the from a that bit I those The thought pulling deals one QX QX. was did think I of

back Xs of got we've And coming well out that's see us competitively you'll to our So, half against I market the in year, see out the the do think in. there. Tier for But think in continue you'll us QX. more work cut I

Brian Peterson

really sounded like to up of customers. know seeing I'm Matt. it in ramped this, particularly attach kind customers but I stages. there's way your that don't -- if have rates the a wanted And suite curious new corporate to early know Thanks. with are the the and I if just need bifurcate for

corporate come products later more for be suite. looking for then they products it the the multiple purchasing pipeline whole or the one in And in particularly come where of are and they may potentially So, portfolio? is value in stage see the

Matt Flake

lot think business, sales team I I a leads also lot the our platform of we roadmap banking the a the on things. of of with functionality the also people we And depth track we the of but functionality. single surprised a the -- delivering. future for all of side when record lot them think are them are by corporate, show into at platform, on prospects -- build dive those our Well, And our the of the

with banking side is the corporate on leading along. are retail we coming and So,

little On got the we've union there. I think education side, credit more

see is well this for opportunity as they they us. start think So, an to it

a retail with buy be it quickly Corporate may on the follow that opportunity. first platform So, Banking they and

Brian Peterson

Thanks Matt.

Matt Flake

Thanks Brian. Appreciate it.

Operator

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

Kyle Peterson

for Mayank. the Thanks morning. good on taking Kyle Hey, questions. is This Peterson for

kind client, kind stable maybe that down in solutions move on have of is deposit interest any the just might maybe interest the she Or changes pressure steady any you goes? start to given CLS of lessened? wanted kind pretty pricing priorities, in now or are of Just more seeing on bank spending, it rates as

Matt Flake

our it's been contract the steady I digital less they mean, as experience to an of or that want for need account more – is managing it it's opening want which stable expense couple attaches more goes cash. to a human has directly automation from their a or and borrowing whether to consistent have customers Yeah, from They single something the devices for brand. They all from our years across your last have intervention. want what and

environment demand as perspective. is So it's – the it's been good as ever that from

Kyle Peterson

particularly follow kind lately of service And Thanks. that especially banking in pretty could if been hot no with it. I a charter as competition platform. on guess, just Great. I has competitors, QX up having then, Open I know has bank full-fledged advertised other how the offering

and the deals platform competitors? maybe of these winning thoughts kind see to where some of Open of – get kind your of what QX these some of on most offerings wanted – and other offers apart success see you sets from vast do kind you your Just think

Matt Flake

Yeah.

and a writing I technologists core think system within can user into that breadth the front-end can that, banks as interface the about or offering talked of and the is people they they FinTechs we've write cloud-based with processing weeks whatever And too. APIs with Open and open sandbox two QX these begin our get it's want.

our we them customers for deposits. to customers the participate taking – in bank the have can is with as begin people customers that these FinTechs. existing So interchange as after to then bank FinTechs for well as the part with both and deposits for interface user well as they our write a want where generator And the a partner revenue which network, record and of then float,

on people give or replace issued – we as card to Direct, then, experienced another have that debit or And pay of talked offerings. kind customers allows then Lending, on to are we the we have to about have do Biller bill we you them. manage we these to flexibility Visa around cards nuts And like which to choose also things Cloud CardSwap want also also about we stolen and call talked ability payment soup go network the

the our offering So differentiated. in of is our offering flexibility the breadth and highly

these ones you much it's of And also top don't do nothing have seeing gives lending, our but of the work there's pay. a our lot gives see right with the success anything bill with. that's but bank it around card vendor with can why think have they them because some – as I because not optionality you're in that's them now, one other techs they A the account. deposit it don't around offering There's to world optionality XX a you

our continue in And of really business. So of you're our see that going delivering this just to think track market. breath invest in has the – record to offering differentiated it's I product as we us do us the

Kyle Peterson

All right. you. color. good Thank That's

quarter. Next

Operator

you. Thank

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

Arvind Ramnani

ones. Hi. Thanks quick questions of have been Most just of for squeezing answered, in. my me but couple

impacted opened they market With that environment are focused mega for opportunities up that there still in any guys? with impact mergers or – additional competitive Worldpay given First you Fiserv that has on overall demand on the integration had kind has does of Data and really that

Matt Flake

those the acquirers say can't experiences. driving we good environment the falling this. They business. people at are stick but they vastly I that more they're do they into out, attribute plan digital do. wish doing to to going RFI's get that. what is is guys different But we're Bunch environment more professional know I I good. Fiserv Arvind, And than very about what payments our game they're good what is I mean and the But and could anything or doing. still to of

we're those guys well. win competitive we the continue what as environment So on focusing we're an to eye but keeping And out on there. doing,

Arvind Ramnani

Great. it's acquisition. And been since then Lending, a Cloud year

the the to three back the confident to kind do kind two a offering clients growth it acquisition? just of feel overall, next how of And trajectory? change integrate about it. you at really feel kind – How of longer-term revenue looking you your taken had will year, chance You've combined years the over do that

Matt Flake

it, work close it's Not but announced of of There's of that of we a of been a that's a – lot yet. a not in a So, time of year there's just But keep business. lot and into till gone big XXXX. XXXX, didn't lot of there's there's integration a that lot things August a of mind October we deal. in it lot

As bought the by way around the some sure we the to outkick culture it I doing said we coverage that's right after. the we classes process earlier, right right that right of sales don't the we're having make We're that our made people technology. trying on and going – asset our happening, discipline

to growth I and the the improvement of long business be think will contributor run. in it that profitability the margin a this

with on I But digital investment extremely we've investments quarters. I'm positive team that. to there obviously think a transformation. to it's clear think and create opportunity different tremendous transaction, people the require they the of digital happy that around our power I task our And platform very in is long the for and – and with the going no in of made out that do to we're Cloud last and Lending. and We're to nature platform it's to and compelling going are on-boarding But continue term digital that products So more single lending. up and to most couple infrastructure digital for banking is have the revolve

Arvind Ramnani

the of you Thank the helpful. Very luck for year. rest much. very Good

Matt Flake

Thanks, Arvind.

Operator

your Second this QX today's concludes XXXX Results. Quarter participation. Thank Holdings Financial you And for

may disconnect. now You

Q2 (QTWO) 9 Aug 192019 Q2 Earnings call transcript