QTWO - Earnings call transcript Q1 2021

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Operator

Good morning. My name is James and I will be your conference operator today. At this time, I would like to welcome everyone to the Q2 Holdings First Quarter 2021 Financial Results Conference Call. [Operator Instructions] Thank you. I’d now like to begin the call and turn it over to Josh Yankovich, Investor Relations. ahead. go please Sir,

Josh Yankovich

CEO give the or be Good forward-looking can our included and call. future no could differ of statements Actual the results by assurance press materially those factors first call release will Flake, on in operator. and yesterday Important results contains may reports This our joining those our uncertainties, Form With you forward-looking discuss us expectations in that cause significant to including the today. our on Report these and financial are with Matt most of any is for the prove from distributed contemplated the results quarter statements and Annual today David morning, you, to Mehok, thank CFO. such and materially are everyone statements that differ for our me subsequent and and that actual call financial we Thank XXXX XX-K periodic we SEC, afternoon forward-looking regarding to our performance subject correct. risks including operating reflected filings Holdings. statements forward-looking QX recent from conference filed

such website non-GAAP only which the and we the undertake on on in in are the and measures discussed we Forward-looking our afternoon. we X-K statements basis. on a at SEC with of our time, financial most comparable included yesterday our measures otherwise GAAP measures use Form later these operative and the section financial on in forward-looking press measures be non-GAAP the a why will discussion statements of Relations any stated, found a discussed Also, assume that release, to unless call reconciliation this filed make Investor maybe statements of no the date is should that non-GAAP to based as on not call this Investors assumptions all of discussed. will update call. remain obligation A

now the Matt. to call me Let turn over

Matt Flake

year first Thanks, well Josh. for over XXXX. Today, second Financial as I XXXX. will generated In I will XX.X in our non-GAAP to of the results added turn approximately guidance X% look we users million We Officer, quarter call XX% the our million, digital year-over-year that users and revenue first for our detailed share more then the year-over-year up a quarter, first brings platform. than highlights financial quarter Mehok, as on sequentially. $XXX total first banking Chief to of David the updated us quarter, full XX% quarter XXX,XXX increase of from and a registered more at some the

the quarter start encouraging was the success key year business. The an stories with first to across

the the expansion along later call. in side, with will clients. sales continued improvement a I discuss we in existing during with activity the On quarter, decision-making net saw of new an number success key wins

in January. We engagement moment, a of which of the stimulus a also enhanced service we a wave on by latest and payments expand client saw record another had major I’ll as yet digital in round banking launch,

selected purchase bank and The module inside portfolio of initially how first partner next us top drivers with of as new the a believe sought the enable story. than strategy example coming customer corporate in a responding purchased I forward. partner us wins United and and digital was in such pricing wins great broad-based in had loan We with success, execution with improve profitability relationships. when with I commercial X data a engagement in and will operate, the pricing that their because expand improving buying had they is This a sales the develop step they And life believe solution. handle vision. solutions. transform XXXX, sales on-boarding the technology their start any enterprise our puts we decision it quarter commercial well expansion see position The of sales combined banking I and digital design favorably provides of They moving the continue net could Our our suite. and the our top continued data of XX bank worked believe we of solutions. the loans, volume the two demonstrates In lenders I teams XXXX increased more efficient and an treasury they depth single quarter coaching our us. their the where with had in data leverage help XXXX, digitally became to preparation generating expect become of commercial to of grow to enterprise their In our land signed, and XX States. a in flexibility loan across the several bank growth customer noteworthy particularly transformation the indicates with is aims traction data we we our great the solutions to The our to commercial will We of as bear. I as that customer more which pricing, quarter including to aggressively. cycle. which quarter, pricing key XXXX, deals bank QX help wins top first their loan market the bookings see the will solutions portfolio. net impressed highlights. breadth added I better turn to in in they a number new pricing, new to to environment. the ultimately XX quarter, And Tier they our first and loan bank to that our top with in to segment, XX This and sales loan of entire coaching in sales purchased coaching

resonating broad transformation initiatives, a portfolio this with largest, even for a in example stories strategy While sophisticated market with a are of of are our digital this like the demonstrate they financial and of increasingly clear most common, is the and us becoming institutions. set customer partnering some product that

to pricing the good addition we In side. on origination success solutions, activity and loan saw our with loan lease

top services in customers, our One the PPP provider enterprise of us XX world, quarter. in a with the financial existing extended their agreement

quarter, the reopen encouraged the I a government slow in on leasing While with lending the We begin beginning more to major well. broadly, front, X to and for noteworthy as in will success by down a we improving environment new with serve economic the agreement automaker. Tier signed several arm and financing as beginning to businesses wins our tailwind believe the I lending am space of lending business. had our the digital

agreement adding and a signed The expand road And an of selected to the drivers was of set other map relationship the decision fraud portfolio example digital billion side their banking bank discussions will QX to aspects On a opening a customer the joint of over experience with we deliver the develop partner where This corporate active process with of and bank great to of the an banking, of breadth are our with this Digital banking end-to-end in that we QX. account risk platform our time. ability key while digital and competitive as bank. portfolio to another business front, $X a small also win for comprehensive and retail, solutions. robust management

opening, of Additionally, deals. opening account acquisition two one suite, onboarding. customer acquisition select includes banking we account now treasury which solves onboarding had cycle for banks overall Tier This key is the treasury solutions, requirement a life digital in digital aspect and one and more digital becoming for common ClickSWITCH and our and X onboarding a for digital and end-to-end onboarding

solutions positioning new digital wins, land strategy. us well deals acquisition us and expand As demonstrate, for another giving net are avenue these and for onboarding X our yet our standalone,

and X We strength that the wins, credit in and also two our and one union for banking highlighted credit retail experience. by significant success us with one union had a of business chose X space for the end-user small retail for Tier

and expanded into we favorably to new segment digital products that banking digital supports view my success in across continue as space. Our customer markets, banking we’ve the compete

strong we looking deal we the group to focus problems sales And continue to activities The that of market. user continue business, SMB, we the pleased quarter was of retail combined of moving gives to we and will that our exciting of to win banking and doing. our at quarter, variety a our this saw in in the breadth confidence deals has forward. institutions are sales why from state as last improvements with customers deposits in the I when the quarter the work to fourth on of to the product see few in with been in all and mentioned from signed we sizes corporate our delivery the overall from for track experience, solve lending, a of I’d year. record to pipeline that I the the and can improvement provide like performance, Our momentum across robust these the team innovation activity with updates me saw deals our on service compared we

debit milestone a During of a the year launched and program. spend with addition a expanded card achieved in little BaaS money launch product a the with supporting Karma the over checking major Credit program QX Credit and account QX by Karma’s quarter, savings the successfully this first ago of QX. partnership

this in part new As organization. and and to clients a for types partnered with cases Karma differentiate enable number verticals to feature release our also our meaningfully features. of we new BaaS use themselves These sales launch, of unlock enhancements Credit validate of

We like the activity to work over We size launch up significant thrilled their relative of programs upside time role all our this driven launches transactional to clients’ client supporting within leading as are agreement. become Credit the program. revenue represents in the a by for play the are meaningful Karma this the initial potential will increasingly hard grateful believe to and to team

growing banking Going business. expect user a client forward, contribution as of ultimate portion the overall to revenue we to end utilization services a represent launches these and

strong On $XXX much representing more the usage as business, round about the year-over-year latest driven growth of and XX% the as partly by first quarter, of yet we operations we we engagement the than all transacted side in transacted saw stimulus and of in of have again, XXXX. payments levels billion

they we proud year, digital quarter of in teams are our this time industry. a continue scale new reminder of the to required brought critical is of our pandemic, responded at have in which talent operate maturity the to and that played This endure. I Now customers role technological of a the have acceleration the believe in will engagement process and we need. the on strong the we supporting the greatest see by way into am

pandemic. With widespread the the refresh, undergoing financial institutions are technology following

clients. our support to yet position strongest our in We’re

Another from In performance hearing and theme XXXX a delivering and want innovation working account our for innovating I’m customers. remotely, released their our that innovation new in out the substantial of More customers they of holders into we’re rapidly. we’ve incredibly coming remote, to time been we’ve customers. than is our year proud

our deliver continue to takes shorten are the of incremental enhancements. number it products a to those We record time to and delivering customers

have stability, demand for customers. critical. I innovation, those digital transformation As no we consider believe optional, When is it’s our longer balances increasing for differentiated in position I often security a you that highly and are said, needs the

new early bit about ClickSWITCH excited the behind of share the our rationale in and acquisition a the I products, to transaction. subject of we On am completed April

we in opening customers. have With from increasing account the digital the continued months, to theme past our hear on XX a focus

onboarding One and account holders. and critical cross-sell opportunities. is deeper new manual acquiring consumer a steps driving remains in of But time-consuming revenue-generating This engagement, direct the is for deposit. for the activity their most essential process

account result, Furthermore, XX automates a all meaningful as fully setup acquisition onboarding checking the services banking half integration as a employers, deep, As our deposit digital acquire account helping days than holders solutions holders stand-alone and and will the process. providers, easing We service clients differentiate value also of direct the helps less offerings. it believe profitable further helping burden thousands our within through direct account. of digitally consumer drive with engaged enhance for ClickSWITCH digital account offers new banking and ClickSWITCH by then not a for accounts via engagement first in more the are only substantial opening and holders, financial solution, new relationships. but of activated ClickSWITCH create

we two We ClickSWITCH are are innovating. from the welcome family hard companies work to the excited and to at to together selling the supporting team to QX to bring already

to Before having Among experience resigns I’d perspective I to Lynn Lynn leading Lynn our for our Pepsico welcome wealth held Ford, enterprise senior hand of Directors, this roles served at QX of QX Doyle the Board. others, Charles and we after I through addition team. brings companies contributions. announced and in all of the we’re like her call to and Doyle take replaces major of I on having over XXXX. Directors transformation, a QX since add Board opportunity David, to Dell. to the Tyson to recently substantial an excited Board speak his as he thank Mr. for to

would Our have accomplish accomplished insights over not and his years. company able appreciate the his what without been I to we’ve past guidance XX

to and to With David our walk through over to Doyle. will performance. that, Mr. Lynn you, hand welcome the again, thank So financial I call

David Mehok

XXXX. pleased we Thanks, Matt to off morning a to strong to everyone. report am that start are and good I

increased fourth guidance in the And new resulting of Total sequential activity, buying in and with XX% of organic increase we’re increase non-GAAP quarter see sequentially. growth business year-over-year for in I combined we customer building will X% updated and new for with second we’re to driven to and solid million, Both outcomes. go-lives see by results first user revenue, year. the started said, begin year-over-year full quarter growth. reviewing excited largely strong for our quarter. $XXX the revenue XXXX the was Matt financial the a was an first execution, subscription and in the customer As revenue momentum on results and conclude up by quarter

the Transactional increase revenue XX% total period increasing of the interchange prior increase with by associated year from revenue in previous quarter. XX% driven with business. from of the associated cross-sold and of transactional was moderately quarter was revenue contribution In resulting the the total from prior for a The represented go-lives quarter, addition, with consistent sequential in year-over-year in customer mix go-lives of new products. revenue to BaaS part the the up revenue, and due revenue

the backlog, customers which in a XX opportunities expansion sequential largely we past a ended The Turning and with year-over-year with the quarter XX% of added existing billion months. renewal approximately $X.X over million. in to bookings through our $X and of backlog, increase increase total backlog, increase is year-over-year result

the the any first total in mentioned, new saw Matt in as we bookings buying than in As quarter new quarter, the of higher improvement net added dollars from environment XXXX. customer an was

continued strong and lines opportunities. see to all continue across of cross-sell also We our business retention of success in

As XXXX contribution of than mix to bookings improve, terms the last what new we renewals. bookings environment an a in net that the we continues buying as of expect year. unusually strong total percentage was year higher will be of observed

macro opportunities, also the of pandemic us customer a to a caused net of renewals. drive record slowdown the driven it backdrop by allowed new While number

quarter for an capabilities, XXXX, from As of XX.X% and QX solidify margin the first believe driven existing in first down solutions recognize from Gross we was partnership XXXX. their up the XX.X% importance our clearly digital by the quarter wanted customers of to in of with contract the XX.X%, duration. extended and

the of XX.X% to $XX.X in quarter, these new Absent $XX.X gross XXXX of Total quarter with revenue prior the first sequential revenue go-lives. fourth associated investing operating and a our the reminder, headcount our in the and our generated from margin, basis percent combined or steady below accounting expenses quarter a higher-margin asset approximately customers gross to operating is results. XXX prior attributable XX.X% impacted go-lives. reduction the incremental year-over-year across to subscription OpEx of impacts margin an resources in quarter OpEx in increase a ability the in solutions continue customer year-over-year impairment, adjustment implementation the primarily as to products gross of revenue pronounced during million manner. customer in revenue our points of year-over-year driven exhibited million $XX.X expenses The margin of negative to XXXX, growth was in by The expenses we first delivering was was million most negatively the compared XX.X% the to or As in which impact on contract had quarter’s revenue primarily or QX from rate result growth. and resulting a margin scale of accelerated growth was and XXXX. of gross were in sequential improvement The organization decline of The in example from increase we efficiencies R&D, an of the quarter. incremental our an the category capabilities deliver of revenue in of focus to the that continued onboarded as OpEx

expenditures by in negative at largely the in stock market stock and We driven quarter and of free million, down the of the incurred bonus million million. generated of for of $XXX.X $X.X in the the payments timing quarter and was of the cash We In cash, in Adjusted operations and and timing addition vestings the of contract the million $XXX,XXX scaling The and unit higher-margin restricted taxes. was of attributable expenses. unit payroll XXXX. capital from previous Cash used annual annual realized commission an of flow $XXX.X $X.X quarter increased from quarter cash of in equivalents the a asset payout, the positive sequential EBITDA million, fourth attributable unit our vestings. fourth of related associated the and taxes impairment, from increased and million $X.X effective XXXX year-over-year flow million, $X.X a bonus quarter negative the was $XX.X the up was with accounting to restricted ended largely end to quarter. increase quarter first with unit investments stock XXXX. The of net impact mix in loss payroll market to first increase stock adjustment subscription operating revenue

solutions million sharing up ClickSWITCH adjusted wrap of second quarter of to EBITDA mid-single-digit be of dollars, and low growth revenue $XX acquired full X of guidance the of receptivity we an the includes to loss This XX%. our to forecast April mid-single-digit million. representing ratably ClickSWITCH, millions encouraged $XXX in XX% dollars, to year of and XX% accretive quarters. associated meaningful the to of anticipate relatively million, revenue of supports to $XXX by by back low the going which million contribution closing, the In leverage base turn broad over are quarter operating EBITDA to and be contribution We year-over-year $XXX.X representing me feel updated non-GAAP revenue and his recognized year remarks. year benefits. We and We $X.X in to to forecast guidance. market of fiscal our on to closing million, continued to $XXX customer we that, XXXX, Matt range range growth next to millions million second full growth of adjusted call over activity, financial $XX continue expected And for of quarter EBITDA continuing let adjusted the that was will year-over-year diverse In forward. full million the second we X. a XXXX Now revenue million build and with I $X.X with

Matt Flake

the it’s breadth that you clear transformation had are When improving banks, In to year sales first fin-techs. look an we start we enable wins we we credit of Thanks, which steady buying positioned of to take I had indication great teams, and an well broad-based the as From David. I activity, the digital quarter. deal environment. our at in saw in perspective, a for unions improvement closing, believe sequential a the across

macroeconomic our our We innovate by and we the ‘XX to our business, to and across continuing we of service enhancements or program, a a products the solution our by key turn of our rapidly. client supported and our great banking We for questions. as major the couldn’t launch continue it our set. executing us with to over deepen strategy environment offering, I’m to released customers momentum digital to the happier are through to be that, put operator product QX. improvements beyond. in to Thanks. continue new a And environment, seeing they team growing And the I the add supporting in operate will we deliver to usage in record to a business where level innovation pipeline, and remote a at encouraged pace and ClickSWITCH position high are continue

Operator

from of please. ahead, Our Roderick the Stifel. Go Instructions] Tom line [Operator comes first question with

Your line is open.

Tom Roderick

hear the David. will Hi, push, sales banking case, nice is I seeing my – then when Great as side talk largely morning. are are taking net is the the no service to equation What that with or in more the net the Hi, love the onboarding tip banking, where Matt and and whether the new seems what it’s bookings bit leave digital net tries about so reopening a coming it we back think on as bit more. team questions. adding engaging a world spear logo Good start spear choose from banking bit and to really is longer side of often whether with when the from process everybody. of logos a Would analytics. now? this is little banks tip think and new come there of after logo going sort that core relative displacing you something, not digital little a Matt. the and products, you new portfolio of job of for a little broader lending coming understanding about question. with much and competition Is to and to it a new with that are there? Hi, more still as the my quarter in Thanks new to particularly much about a There much hear like is of

Matt Flake

Tom. the question. for Thanks Yes,

a account work and little on we lot accounts as are well, start of – do intelligence we talking a most the we bit this correlated that what part, to – with. size relationships For we trying these have size to is and

the their got about or at. talking strategy, products are commercial to house, of sides whether them looking it’s And move we they our different with retail. digital then to to it We’ve the could start And so we And show started what in they’re be the and be could solutions them. have, digital banking, be interested and least pricing we of sales at that to typically lending, one it it leads could coaching – tools. to it

start evolves found when we more more is there, we what it into have so And and conversations.

you if in bank, our the $XX about they So, think bought in corporate the They live example of ‘XX. went ‘XX. billion

During we PrecisionLender. treasury onboarding with wanted They add them. also the tool to process, built the

So were and the all were very we at the the with in but the worked – corporate we PrecisionLender them beginning, were – they table process. the banking at through

the tip the So of spear there. corporate is

it’s look billion broad-based have that that solutions you product, of they products wins the our We breadth problems the And they credit so have we that right the us these highlights win like had, So retail these retail thought and that different for there. went suite, we nice $X have about solution. you have. for to unions with it the the for solution. customers. quarter if talked Then many just so solve digital a Winning, best-of-breed at many also entire bank, banking that’s the lending

we So bank credit talk customer, but fill where strategic have and blanks where share to want many all right with kind to the a of the now options, able at for then them. can the to or starting to be it’s the go, about in conversation nice to with the fin-tech union executives the or is with we’re so they

anyone in we’re particular. with not it’s leaving – So

have trying what them are concerned And to listen to are the problems what solution now. trying and the we about solve. they out are We a is to the beauty right of majority prospect find for

Tom Roderick

simply bottleneck of the certain implementation. onsite, bit bodies remote such faster think, a about us a of the handling to headwinds? little part come I implementation would degree to slightly implement done could bracing that hard of had Tell would on gather I job time know question a up, the tend follow-on the can’t as those have little and revenue you And time online, a to understandably how implementation, little It’s to I a maybe for logos great but from sort more Yes. new that Matt, be making XXXX we get are some bit longer. to implementations that be or you see revenue preparing side when staffing longer

Matt Flake

Tom. Yes,

You on time. a story the been have long

build have differently. when I think occurs really that, smaller see that though, a scale demand HR capacity our between from the our and to lot that locked the our finance us, organization, company planning you the competition delivery organization our And are and you don’t now. in and for organization, is capacity planning a indigestion we sales you trying impacts that organization and demand

that, So we we make carry opportunities. it’s staffing the certainty look have those of close, the look deal pipeline, at to at the going to sure

that Now PrecisionLender, also, remember, experience. an amazing we running get thing up and in XX days. It’s

On business deliver if and last quickly. legacy doing as year. It deals. up running know, you X digital small were to one of banking, and remotely that that’s And consumer, gets a clean. any we corporate for you and replacing process tech. really Tier not these It’s You’re XX-month are able

the the banks company remotely. when we of largest I of the history period the very two we X-week in highlighted think in that quarter most and a in are delivered did I successful of fourth it we

we these we don’t long-term we we the – the are have. of So to that customers to will we’ll deliver start to to – resources share going because we coverage what expenses the it’s as you if outkick it the little bit, come value add a if along picks just up, with have pipeline

have share be very a the bunch transparent So people. trouble I will the really software to or having don’t happening. with of It’s we’re what’s excuse going just that delivering have – add and picks an that to we’re investors we will we excited think year, be well. of you but are I it we as back prepared half to volume through up, pipeline coming it, the of as a And pipe going see lot for are this this about and

Tom Roderick

That’s great. jump queue. Matt. will back Great Thanks, I color. in

Operator

comes line please. Our JPMorgan. with of Go ahead the Sterling Auty next from question

Your line is open.

Sterling Auty

guys. Hi, thanks. Yes,

to want put margin good So, your explanation interest else now? guess fine improving to not. my customers or Matt, question understand lot a one demand the something at there, it Is net with point increasing of I I why that’s but

Matt Flake

Consumers, the function bit, are coming think get to think up right a $X they running, and I in are trillion in now. lines of to after need it’s back seeing stimulus of get people programs, savings Sterling, have and pandemic, fade starting we you accounts just a PPP to businesses credit. need out, are get little I

year and for for for lot for also their wire, home So phone there customers deposit a where them approve the check working our them to for with customer your then realize, platform. single – a off they’re where of coming at easier you, is demand a the activity, mobile with to the you or from a it’s and

for the the it’s XX%, pipeline you remotely, of the be. obviously, hands decision-making, matter the back able this in work what of but happened that be half We not going we – on conversations hoping as Tier I up on closed we ‘XX. year. that were of move or – think say I an and in that that a what we names I last those – They But it. back I activity of if a capitalize about to the we is said middle are as that remember, continues will years, in hope we acceleration to and in want had work But remotely. of over So first I happening, are seen into am refresh, throughout quarter there saw like bit, one to to in the can pipeline they to realization lot year. it. deals to demos the QX, temper that a have closing there which as all want technology is is and of here, and it’s momentum got next couple this to many pipeline change the be, is We is the and X now little

Sterling Auty

you. Thank

Matt Flake

Auty. Thanks,

Operator

Tillman please. Our next Terry with question line Truist ahead, of the from comes Go Securities.

open. Your line is

Terry Tillman

or question. queue, see assume two-part taking picking so I’ll And you if I it on the Yes. And for color. what on did growth I Just But guess actually Matt that I the be ClickSWITCH, help guess and know you core prospects the you. Thanks the net with the in then for – second look way? that’s is new digital bookings how see or onboarding of to I’m On products a there that ClickSWITCH maybe lending comments you kind if and the way going family segment, I versus Thanks ClickSWITCH? to is excitement Hi, us for I’ve treasury quarter. ClickSWITCH all product in opening up. was to would products? acquisition? product Thank fall kind echo the – see you like my second what’s can that question but of this your like trying part this David. banking don’t if And the on does this of of the at prior pay we’re this, assuming in questions. the gauge kind do a it account

David Mehok

you by year for give be $XX turn now including pay positive see going fees. is will some ClickSWITCH on approximate the And planning million, of we dropping what of the that I price days. two to filing EBITDA good that that the end second information Terry, right this with the to morning. QX. next The with over is that’s we’re

about growth that with see margin that We really business, gross rate we’re rate also and excited with business. accretive an accretive which

Matt Flake

side, Terry, on – it the it acquisition enhances our digital product is product.

account, switch living actually the direct their one make makes hits. that is it checking their and union value you payments it of switching account holder if They opens the So plus reservations where consumer only their so financial of the direct account, opportunities, and or begin easier they leads of think account, and live fintech, not or have. institution, for biggest bank out more is deposit out you but to it simple direct about deposit credit And over. people that real of new about a land that a lot moving account easy ClickSWITCH that they other that the the deposit, that to to the

be differentiated to very first to it, both highly and this new their – and – owning grow have culture one So relationship happy going pandemic what and net add have and lived ClickSWITCH very product there. what so product the bag. becomes to we done products. after XX April business, since that it’s are And of last days we in differentiated out over have with They highly and then onboarding the up that we’ve team, afterwards years. to the through far. with during and have I’m it excited the sales the products – X management with what is I the my hottest expectations team the know you a the the it’s with And

Terry Tillman

Congrats deal. you. the on Thank

Matt Flake

Thanks, Terry.

Operator

of Blair. question comes the with next line from Go Our Napoli Robert head, please. William

line open. Your is

Robert Napoli

the – the deal question, and morning, David, well. met think Matt I you. on I’ve and appreciate ClickSWITCH Thank congratulations him. with good as I

top be Is I businesses, a you I XX product the mean, opportunity tied and as think obviously BaaS the marketplace guess, you BaaS or maybe and for I And the you mean, really name really, then is give good if I question it’s the size little the BaaS a business, – client Credit that marketplace in by And the mean, client. I great us just some the that on well. bit that release? A into the fit for press how marketplace should on the – great like, business? cross-sell mention Karma, doing? didn’t is can seems a

Matt Flake

Yes, Bob.

top that the XX Credit referenced. is client Karma that So we

net to color type a more extremely ways, checking to and to card debit are for because a a business. a then move they become is like they debit many with do going new trying It we’re win tied different they savings launching account provide us. us, And debit with started And come card It’s For – it. is card. associated the as because – becomes business account this meaningful that with to of the meaningful. in things it’s just as what they a program in are transactional

have this banking minimum. go-live, it’s digital this build minimum clients you a when then that the – you us important for client, we have And like are so where to and of begin different articulate a on than to they importance the

this more of that. what side in bank upside client tremendous a X of be on digital of banking would line is the size on amount the with with top So Tier a

care is I’ll you far fin-tech, their people the in multiple want more industries, And group just lot opportunity what’s embedded speak globe bigger you As have Right service, of services as a insurance in to you begin banking but to to with of there activity getting customers. finance now, have have places companies, as a happening. we’re those where provide that around of banking is a deal that not health that people. – out becoming

on but third-party positive. $X really very important a excited way the with in Thanks It’s allows on are so that as the us. providers BaaS. TAM, It but think a anything solution can billion, signs an between we is for it’s very Marketplace There now very gain to us showing typically and for right TAMs, pretty about that’s it marketplace. for at with rapid to we us partner million have revenue meaningful now. other early, for differentiator in good but differentiated where a have So right bullish it’s go conservative engagement, is side, but the momentum. continues about I meaningful business $X the asking very not our they customers

Robert Napoli

Thank you. it. Appreciate

Matt Flake

Bob. Thanks

Operator

James. Brian from question Raymond of comes ahead, the Peterson Go please. Our next line with

open. Your line is

Brian Peterson

and results. the Thanks congrats on strong Hi.

numbers? the wanted to also XXXX of on I I moving just but with it took what’s about I’m would better you. hit of the guidance to guidance million. wanted a more get the little trying BaaS M&A bit, impact that is of of sense looks guidance revenue some do know you like deals, there, some driving quickly, change? to a Thank $X the we there just so parts these that in understand see incrementally ramp-up current year So

Matt Flake

Yes.

You Brian. bet,

in value is the the the QX the continued business opportunities that guidance, So impact of current going investment some long-term obviously and have on creation. what the also are results, for there we we’re to momentum ClickSWITCH, that drive incorporating of but

for the overall BaaS growing we that that’s business part that specifically, question long-term our business to On the framework. at a And is rate accretive sure. an of see planning

we important the there in to remarks, is and that it then transactional BaaS revenue. stream booking prepared of Now called big out the a was ramp over initial long-term going in That difference really between our is time.

X part And currently. ahead our to business We as a going into our this to like years. you guidance material have that feel more be of we factored is much X look

Brian Peterson

Great. Thank you.

Matt Flake

Brian. Thanks,

Operator

comes please. from with the question of Andrew next Citi. Go Our line Schmidt ahead,

Your line is open.

Andrew Schmidt

optimization Good the on Thanks broader. in side on product to for the about question the anything the strategy products As bit be terms strategy – to the sell, on a gets could it driving in But there great execution we obviously some about front, like David, here. portfolio just with it Hey, think pickup continued be seems sales Matt. new bit the there as little see go-to-market changed also portfolio products helpful? execution my part see what’s a as Hey, having of your anything cross-selling? cross-sell net I more – of is can But you as it the taking wonder little go-to-market execution it’s cross-selling to would it more relates well. the there. talk to sell. but has to Is having cross-selling the

Matt Flake

Andrew. Thanks, Yes.

it’s team with really focus more The of engagement I us, our been For our with customers, have. I’m customers than is. leadership a engaging the rest ever levels.

can opening We’re onboarding, bank, $X company what listening listening digital had billion you’re to products. you And solve is we’re products. we XX, treasury because what translates on customers – goes quarter, $XX live as this, account top a more top I tremendous if X,XXX than these that to to sit if us – about a I strategic to think X talking have X,XXX a a billion and for is about if always PrecisionLender. our problems took different digital when of on bank and they conversations trying mean, XX customers really you there of square amount attention say you And look many off appropriately, transformation. we And drive now, we our at are driving with the but

than XXX billion. more billion customers $XX have with more and we with assets, have than $X XX more than We more than in

every they a our that effort to what place it that energy counter tying it want, putting map they quarter tremendous, in up with rather sets is our suite and they how we’re from who huge to just need single when product a than really upside for be understanding are, It relying us. net product nice a So on perspective, expansion into we new with it. our and what opportunity they by, And it. the represents road a intelligence, and want develop for clients back into drive

a listen had is we we still it’s customers think we that solutions. alignment. customers, to we big really trying at realize as didn’t to still have with the far realize of that mode, because customers, or work I banking in it’s strategic it in continue happens – to as PrecisionLender And expand – square can the committed board. center in a digital we and of all our that as or so organization, didn’t And can this our to didn’t focus off lending I’m So the They we is be a do. is as refresh across There have. happening product we a customers small.

funnel the but it, for and into in the deals out it of And us really a winning going that it me a have to that their long-term attached this a things the so to it into gives that and to ClickSWITCH for everybody is lot of and all one of good of cross-sell tailwind to rolling that attention be is business, I the want comfort I’m we’re it’s be future. lot bag. expecting and

Andrew Schmidt

Thanks hear. That’s it. Matt. Appreciate lot, Very a to great constructive.

Matt Flake

Thanks, Andrew.

Operator

ahead, line the comes please. next from Go Josh of Our KBCM. with question Beck

open. is line Your

Josh Beck

engagement to you you’ve the that seen Matt, last in taking the team. Thank wanted ask year. the and about, for question comments your on digital I acceleration of some

will commentary some look you made You think forward. that as this we endure

actually maybe what of users And are providing banks seeing in thoughts much here get ceiling terms thought that curious now could some of what’s confidence? many So we in it’s higher, and having you with that said, topic? how your the and with digital you we behavior on our just curious just that conversation you’re engaged terms your of our was of

Matt Flake

Well, I or desktop. balance you think XXXX, had go your tablet of to on your your check phone out mobile your coming

send go, office, wire home weren’t your your was a out to which had tablet to on your from you office network. connected and You

had don’t to there in fill loan a out couldn’t is had those check – you your So – you don’t started because I person, And have go do. they all couldn’t to movies behaviors, originate a with loan deposit are I – I open applications blockbuster. from branch, you to a you meet because so back online. All rent just people mean those things what we’re to not going –

So done think I it digitally. go don’t the you’ve once we’re with bank going to checks to depositing back

some do habits those gave I are to and off So things. have those charts. out. become the how numbers want And numbers we behaviors

the I engagement in think deposited of at the numbers and the was checks remote you then growth. deposited off around deposit but and And number end charts capture, of at year the the amount logins. around the look last

in obviously. think at will billion ‘XX, XXXX, that than I $X more than we and we were in more see

are part are going and not go they of these that So our habits are now to it. life, against back

the holder? the this fintech, can account service understand what provide what’s can customer the next though, it take my bank, the relationship I doing best credit and or grow that we’re or my my what product to So, and I take business. deepen the data what give can that is is now, engagement, So trying do and they that is to the union back so

have in for us be and the – habit people. of think that’s about And sustaining the going business, a I us. a ahead confidence so of tailwind so what’s to of of we’re that, it’s while it’s And ahead passionate lot I –

Josh Beck

Thanks.

Matt Flake

Thanks, Josh.

Operator

Go ahead, Our next of line Rodriguez comes John with D.A. Company. Davidson from please. question the &

is Your line open.

John Rodriguez

the total that get the ask, is this PrecisionLender back you. in what wanted Heckman. Pete track you thinking to are I to XXXX? expect just Thank guys John operation? on for on with growth perspective you do And calling Hi, for revenue from

Matt Flake

and got shutdown and it’s to end team, you of group, really want had down, products. Usually, it, at cultures has mean, a people about, they of is also talked And in I PrecisionLender that committed of give those of go as I lot the the spend just what to had I a a credit. buying They passion remote. of on founders. time the and to that then Yes. with they integrating buckled a lot paying got momentum. off. team lot acquired we leadership, They ‘XX. it’s think perseverance we that And when and whether

look to in and see in first the which end – the some out half just business, little what excited Europe, the see second momentum turn are. ‘XX. of in If lot life about I think even year And that you of the really is quarter, starting plus may where about bit of a a – of they

do were I David, think you’re numbers, we PL. break think the numbers them return don’t don’t out the yes, see – So I to on going but numbers out to growth the break we expecting. we

John Rodriguez

you. Thank

Matt Flake

John. Thanks,

Operator

Go Our next question BTIG. comes from of ahead, VanVliet the Matt with please. line

Your line is open.

Matt VanVliet

are of out much you move seems where bit? the demand ahead? secondarily, enough quarter. it versus projections sales the someone taking for different the I the team the earlier. sales, into big of overall, wanting what business look But to drive anywhere lot whole, of sales feel then guys, and a a lines, on will do your for success is organizational specialization traction the on digitally? cross-selling, the congrats you structure just need last more on more are a loan you the structure on And total But the some question, like on but sort comments. question coming teams across start their opportunity to back, how little as And you guess running lending maybe need to like Matt, you a your to others and things some Thanks volumes as product having that

Matt Flake

Yes.

Xs, and the talk square we off on we where going we we’re put did account put things customers. that if organization start go to them to our Tier office I’m we little structure, good depends you’re coalesce together beginning Matt, centric. glad like to a for to Tier you a our is It of it’s around with X, office strategy. of the think tier customers. X, Tier geographic more of Sales – the strategy goes it’s us, one you’re that about broader consulting call. product on So, you, – as and team after those been long, our products within solutions But the the it’s

And strategy, so, product, are we now very they close the to to the market. how go

are specializing, the educating these our – the they talking so or to products with. but potential mean prospect together, sure making how we’re that customer to that And come we’re people we we what on are also

obviously is be relationship there the sales the going to momentum the I evolution big but So into we a don’t basis, on back Obviously, really that’s tier we like I of organization, the will those. that’s an on to had coming and and and could and organization with tier a management occur in by any first update you changes. good the have structural year. second half quarter, continue the

throughout but to want don’t there I modifications the want necessarily, I group. we don’t So year make it’s just to broke, will and fix are some to slight if it continue not in – invest then that

the money government the for lines out to and activity you I my I business with back seeing, folks. lending like discussions loans we’re that have volumes just are end. that don’t around the not they tell our customers that side, for money, lending On and getting but on lending are will small of credit

to open more you’re loans seeing of we trillion it easier priced PrecisionLender last year ability very $X so a it from that is that’s just pre-populate grow. data energy tools that plus customer of pricing business the is use that you And can around information, take you from for where experience make the now. we why automate informative. loan data and there a can applications to and And our a So a I with lot use to think digital banking customer, within the right than

there a help in with top help large seeing manufacturer on out use – had we cloud – application the a to auto. You’re activity auto the with – our to that jumped leasing lending very

side credit just there in economy lending, around on banking we’re is So whether that’s good of lot the spot, in revolving it’s a business. really union or finance and the the a the of activity or

Matt VanVliet

Thank you. Wonderful. Alright.

Matt Flake

Matt. it. Appreciate Thanks,

Operator

Point. Our Michael next please. the Compass question ahead, of comes Del Grosso Go line from with

open. Your line is

Michael Del Grosso

question. morning. Good Thanks for taking my

Europe specifically, but on super I as is think – and Somewhat relates geography between, longer I ClickSWITCH a well. term? is question to commentary demand, see international product, And in by actually, on opportunity this the multipart well you’re of U.S. interesting I it first How as a as Europe in specifically large account very and as or and APAC. you opportunity bank guess, overall longer but far And BaaS seeing given then the – if missed it’s would I whether as earlier, do follow-up portability. apologize in Australia term Europe what particularly PrecisionLender

Matt Flake

the seems some our picking up. Keep internationally, I in the side, PrecisionLender, products only mind, the is think Europe Europe. side and on we Lending in international allow activity So be banking on up PrecisionLender picking Cloud to

of have expect half Lending. Cloud side have – some In hope year. all the in kind on I to earlier, As wins back with is Steady Asia to Eddie Europe, I finance said this the of

with we with their bigger right trying necessarily I that but than less build as could to we yet, was it players now, back a a ‘XX we North can a have we than grace think there. – And say PrecisionLender as potentially wouldn’t deal good half was the Remember, out ClickSWITCH, product. getting are far but over. XX% some PrecisionLender, American in traction commit have to that it’s I of business. more shop some

products. hundreds salespeople with into So delivery story. dropping sure of have It’s make product our as going well fans product. we get our we telling to the to that acquisition raving what we doing our digital into of integrated want the digital right, is business are their them banking we’re And as be

North restrictions and international, ClickSWITCH X it technology. clients window. going We that’s I’d in it’s everything can it’s sure to think So right to before we at a travel in think need take may something now later. it look we doing but we X-year about America. And with make probably I scale I little report to But to but we’re – that’s something do overseas, with a excited talking tough back else, on the our that here

teams are said, relationship and I sales as well. our and prospects management As customers’

Michael Del Grosso

Okay, understood.

on of kind to that. just So recap

anticipated all contributing? international all their So – ClickSWITCH, the U.S., on change guidance, North to guidance, America, impact Yes. no

Matt Flake

Michael. right, That’s

Michael Del Grosso

Great. Thanks, Matt.

Matt Flake

Thanks. good Have day. a

Operator

[Operator Instructions] Our next Piper question Go please. Arvind comes Sandler. from Ramnani with line of ahead, the

open. Your line is

Arvind Ramnani

competitive kind environment scale also ago? of and sort kind of of comment are seeing for relative with Hi, had wanted of Can taking been my FIS then ask to you you you’ve as competitive the and sort players just thanks competitive your the really up. some Fiserv. win just haven’t XX rates now to digital environment, newer on overall that question. front, months about certainly I XX to and on the They

Matt Flake

on Internet the is same same for or digital – banking. it’s competitive group, Arvind, whether or acquisition the depending lending us. or Yes, It’s market the retail banking business it’s

FIS, every far Fiserv compete hell they still can. win I as deal So, and to like as know,

And Jack the Henry so them. rest does and of

win are number. matter around steady. a the on still X, in The the the But So we’re those holding tiers rates Tier X X, space, of then at our bit. little in XX% Tier that size Tier depending and

future. folks good we it over are – execute like target next very pipeline feel good I – but and that are, foreseeable the but on you still about your over ability I and to it’s with sometimes I against we’re got our feel there, the about feel the back, competitive a the So out where

Arvind Ramnani

Thank Perfect. you.

Matt Flake

Thanks, Arvind.

Operator

Joseph Our Canaccord. next please. ahead, from comes question Go line the with Vafi of

open. Your line is

Joseph Vafi

Good guys. morning. Hey,

Matt Flake

Hey, Joseph.

Joseph Vafi

circling we morning, just might Just you circling what that what Karma back talk for BaaS, if – what mean that? back to move could Credit forward there? competitive added good little Karma on you your and more impact your that can new a strategy profile some relative debit. think been may don’t more go an know to mentioned if detail function for Credit that into functionality BaaS added capability just a I on was bit win have Thanks. means expanded on Matt, you I little the product with about extra

Matt Flake

Yes. Thanks, Joseph.

us So their of from in us name. what sensitivity some Credit very both this enough is functions and to competitive Karma was allow gracious use to around environment There features the are.

differentiated I think large where is we really X what’s like tremendous Tier innovation give into build Karma us they to map. need us BaaS Credit go, other important and are helping and customers about that insight out customers it is, this highly road and

different the roll So on than customer look handle very that rollout, guys happy go-live, credibility. big can been great and up they at – It’s a with okay, has of and you that. It’s other are scale and running, get banking a side. and these say, prospects partner. no ton Credit you When that Karma that a out

We’re very with happy the relationship.

were of we’re we’ve are on that We’re are new going masters features. with it been for they to volumes the tremendous. But and happy a continue top to that just their out other the They at Debit, that they want clarify account. us. seeing was marketing, product rollout. success, rolled do savings really is to invest new was not There debit I in.

solutions and to people I we’re to us are opportunities taking what are what out to work and us like. the notice in see other reaching that with to think are our engage beginning

hard getting a the side very to in deals. we’re about BaaS really It’s that’s just everybody like on these of spot of positive, do, very feel sure in we’re execution So the doing at business. that good looking making and front

Joseph Vafi

it. appreciate Thanks, much Great, Matt.

Matt Flake

day. Thanks, Joseph. Have a good

Operator

Our next please. Go comes Comery of G. Steve Research. ahead, question line the from with

open. line Your is

Steve Comery

of QX’s ask morning. the acquisition Good essentially to strategy. the context deal about future wanted I ClickSWITCH just within Maybe

of future characteristics on commentary – a attractive made what So just maybe an play deal QX what how ClickSWITCH little sort deals? for those and out Thanks. in

Matt Flake

built like we’ve ClickSWITCH credit for acquisition things that or is Yes. banking one want really that done union. about fintech, product us the I first the to it’s that know we’ve of do and crosses both that’s unique

our sales product of can customers. all be this So force our by to all of sold

was one So was it. about unique the of that things that

known culture. at was too a talked to built was he is a product, it what he point, He for great passionate founder, list. the time. done and trying each For client long a the but And has started and a it had We’ve We great out. business, he built he me, other great early. When it built was one he all Cale. figure

so as places. And We execute. – far I and We aligned had But the like the different plenty the team. was, obviously product We they a to consumers like think seen and culturally allowed to as what to and think them him I portable. to mission different of it we’ve that we his options go where help to him help move are from premier then and fulfill relationships be perspective, which product think to switching is become we products.

So for and be next-generation bank profitable to with. more new off our legacy like us, clients and drive engage really banks people about we’re customers with it’s helping and to the more adoption move their their working

is great start fit for a at it. to jump in gotten pretty and good impact it’s to acquisitions. it’s for us. And team it. So excited going of pipeline the probably the quickest we’ve these to about The us. I I’m about one think I an be have excited think And

Steve Comery

Thank you very much.

Matt Flake

Steve. Thanks,

Operator

call are further I’d to questions over this to like at Matt back turn the There Flake. time. no

Matt Flake

point everybody. how the morning. report to and to think we company Thanks, It’s I map first document priorities future it’s and is how employees, released we’re customers road company, addressing ESG out going. and our ESG the wanted we’re very doing highlights I a also Yes. It that this our where for partners. company, meaningful this a for

that to ESG did the put document will proud what well. we’ve go, and So be company. the That become the work we of I’m very that to report read we as you the out. we team that I’d proud that put I’m and encourage together, of

have for and time, week. everybody, hope I a your great thanks, So you

Operator

call. This conference concludes today’s

disconnect. now You may

Q2 (QTWO) 9 May 212021 Q1 Earnings call transcript